**EXHIBIT 10.17**

 

This agreement (sometimesreferred to as the “Content Integration Agreement”) is made as of February 27,2002 (“Effective Date”), by and between CenterSpan Communications Corp.,7175 NW Evergreen Parkway, Suite 400 Hillsboro, Oregon 97124 (hereinafter “SubscriptionService Agent”, “CenterSpan” or “you”) and Sony Music, aGroup of Sony Music Entertainment Inc., 550 Madison Avenue, New York, NewYork  10022-3211 (hereinafter “Sony”,“we” or “us”).

 

WHEREAS Sonyis in the business of, inter alia, developing, producing, marketing,promoting, distributing and otherwise exploiting recorded music;

 

WHEREASSubscription Service Agent would like to integrate, inter alia, the SonyMaterials, along with Recordings embodying the featured musical performances ofmusical recording artists that are not Sony Artists and other graphic, textualand multimedia materials, into the Service;

 

WHEREAS Sonywould like to, inter alia, sell Streams and Conditional Downloads ofSony Cleared Recordings to consumers via the Service;

 

WHEREASSubscription Service Agent desires to act as Sony’s agent in connection withthe sale of Streams and Conditional Downloads of the Sony Cleared Recordings toconsumers via the Service;

 

WHEREAS Sonydesires to appoint Subscription Service Agent as Sony’s agent on the terms andconditions set forth in this Content Integration Agreement;

 

NOW,THEREFORE, for good and valuable consideration the receipt and sufficiency ofwhich is hereby acknowledged, the parties agree as follows:

 

**1.      DEFINITIONS**

 

1.01.     “Above the Fold” shall mean situatedwithin the portion of a Web Page that is designed to be visible to end users ona standard computer screen with a resolution of 800 pixels by 600 pixelswithout requiring such end users to scroll horizontally or vertically throughthe Web Page concerned.

 

1.01.1.  “Adjusted Gross Revenue” shall have themeaning assigned to such term in section 6.03(b)(12) below.

 

1.02.     “Advance” shall mean a prepayment ofService Fees (as defined in subparagraph 6.03(a) below), including for theavoidance of doubt and without limitation, the Execution Advances and theAnniversary Advances (together, the “Syndication Advances”) payablepursuant to Schedule A attached hereto. Subscription Service Agent may recoup Advances solely from Service Feesto be paid or accrued to or on behalf of Sony pursuant to this ContentIntegration Agreement.   Except as andto the extent, if at all, expressly provided elsewhere herein, Advances paidunder this Content Integration Agreement shall not be returnable toSubscription Service Agent or any other Person.

 

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1.02.1.   “Advertisements” shall have themeaning assigned to such term in section 6.03(b)(1) below.

 

1.02.2.   “Affiliate” shall mean, with respectto any specified Person, any other Person that, directly or indirectly, throughone or more intermediaries, controls, is controlled by, or is under commonownership or control with, or is owned or controlled by, such specifiedPerson.  As used in this definition, theterm “control” (including the terms “controlling”, “controlled by” and “undercommon control with”) of a Person means the ownership of at least fifty percent(50%) of the equity of such other Person.

 

1.03.     “Agent Servers” shall mean thecomputer servers located in the Territory utilized by the Subscription ServiceAgent in connection with the Service, including, for the avoidance of doubt,such computer servers that are so-called “seeding peers”.

 

1.04.     “Aggregate Information” shall meansuch information concerning the usage habits, patterns and/or demographicclassification of End Users as a group without specifying the identity of anyindividual End Users, to the extent such information is compiled by or madeavailable to CenterSpan.  AggregateInformation shall include such items and categories of such information asCenterSpan and Sony shall mutually determine in good faith from time-to-timeduring the Term.  For the avoidance ofdoubt, examples of items and categories of information that may constitute“Aggregate Information” may include information regarding an End User’s postalcode, connection speed, ISP, household income and use of Recordings on theService.

 

1.04.1.  (a)     “Album”shall mean one (1) or more audio-only Records, at least forty (40) minutes inplaying time and embodying at least eight (8) different musical compositionssold by Sony in a single package for sale through normal retail channels (asthat term is commonly used in the U.S. phonograph record industry).  (b) “Single” - a vinyl audio-onlyRecord not more than seven (7) inches in diameter, or the equivalent innon-vinyl configurations.  (c) “Twelve-inchSingle” - an audio-only Record which contains not more than three (3) Sidesof different Compositions.  (d) “ExtendedPlay Record” or “EP” - an audio-only Record which contains four (4)or more Sides of different Compositions but does not constitute an Album.

 

1.04.2.  “Applicable Percentage” shall have themeaning assigned to such term in section 6.03(b)(11).

 

1.05.     “Approved Electronic Device” shallmean an Electronic Device approved by Sony in writing in advance in eachinstance for use in connection with the delivery of Sony Materials to End Usersvia the Service.

 

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***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELYWITH THE SEC]****

 

1.06.     “Approved Playback Format” shallhave the meaning assigned to such term in section 5.01(a)(ii) below.

 

1.06.1.  “Approved Streaming Format” shall havethe meaning assigned to such term in section 5.01(a)(i) below.

 

1.07.     “Approved Media Player” shall havethe meaning assigned to such term in section 5.06(b)(3) below.

 

1.08.     “Approved Security Features” shallhave the meaning assigned to such term in subparagraph 5.01(b) below.

 

1.09.     “Bounties” shall have the meaningassigned to such term in section 6.03(b)(2) below.

 

1.10.      “Buy Link” shall mean an activeLink on the Service Site or Syndication Agent Site, as the case may be, whichlinks such Service Site to a Web Site created, maintained and hosted by anauthorized reseller of Phonograph Records in the United States or Canada, asthe case may be, that processes and fulfills mail order sales of the PhonographRecords embodying Recordings that are Streamed or Conditionally Downloaded toEnd Users in the United States or Canada, as the case may be.

 

1.11.      “Canadian Authorized Recordings”shall mean those audio-only, stereo Recordings: (i) that are embodied onAlbums, Singles and EPs released by Sony’s principal Licensee in Canada for thedistribution of Phonograph Records in Canada for distribution through normalretail channels (as that term is understood in the U.S. Phonograph Recordindustry) in Canada and are listed in such Licensee’s then most recent activeCanadian product catalog (i.e. the product catalog currently known as the “SonyMusic Canada Catalogue”), as such catalog is updated from time to timethroughout the Term; and (ii) in respect of which the sound recording publicperformance and sound recording reproduction rights have been obtained underthe copyright laws of Canada and such Licensee’s recording and other applicablerights acquisition agreement(s), as applicable; and (iii) which are nototherwise excluded under paragraph 3.03 or section 4.03(e)(2) below.

 

1.11.1.  “Canadian Cleared Recordings” shallmean those audio-only, stereo Recordings: (i) that are Canadian AuthorizedRecordings; and (ii) in respect of all Publishing Rights have beenobtained.  For the avoidance of doubt,Canadian Cleared Recordings shall only be accessible by Canadian End Users.

 

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1.11.2.  “Canadian End User” shall mean, at anyparticular time, any Person who (i) has registered with Subscription ServiceAgent a valid billing address that is in Canada, (ii) either (A) subscribes tothe Service either through the Subscription Service Agent or a SyndicationAgent and uses the Service solely for personal, non-commercial use or (B) isotherwise eligible to subscribe to the Service but is given access to theService either through Subscription Service Agent or a Syndication Agent for alimited, free-trial membership, (iii) has registered for and been assigned byyou a User Account, (iv) has been assigned a unique password by SubscriptionService Agent in respect of each User Account which must be correctly enteredprior to the commencement of any period during which such Person is permittedto access the Service (i.e., Persons that do not have such a unique passwordcannot access the Service) and (v) remains in good standing pursuant to theService’s terms of service and privacy policy.

 

1.11.2.  “Canadian Street Date” shall have themeaning assigned to such term in subsection 3.03(c)(1)(ii) below.

 

1.12.     “Changeof Control” shall mean the occurrence of any of the following events:

 

(a)   ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]****

 

(b)   ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]****

 

1.12.1.  “Composition” shall mean (i) a singlemusical composition, irrespective of length, including all spoken words andbridging passages, or (ii) a spoken word or dramatic work (or portion thereof),irrespective of length, that is thematically related and embodied by Sony in anAlbum as a separate so-called “track” (as that term is understood in the UnitedStates Phonograph Record industry).

 

1.13.     “Conditional Download” shall mean adigital file containing a digitized copy of a Sony Cleared Recording that isaccessed by an End User from the Service that is subject to the followinglimitations and restrictions: (i) the digital copy resulting from such Downloadmay reside solely on the hard drive of one (1) Approved Electronic Device ownedor controlled exclusively by the End User that has requested the digital fileconcerned, either directly or indirectly, and cannot be retransmitted, moved orotherwise copied to any other computer hard drive or other digital storagedevice by any Person, including, without limitation, any portable device; (ii)the digital copy will automatically be permanently

 

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disabled and/or permanentlyerased from such hard drive of such End User’s Approved Electronic Device (asapplicable) upon the expiration or termination of the End User’s subscriptionto the Service; (iii) the digital copy will automatically be permanentlydisabled and/or permanently erased from the hard drives of the ApprovedElectronic Devices of all End Users immediately upon the termination orexpiration of the Term or upon the occurrence of an event hereunder thatexcludes the Sony Cleared Recording in question from the scope of the Grant ofRights; (iv) the digital copy will be encoded with a digital rights managementspecification that (A) complies in all respects with the provisions of Article5 below, and (B) complies with any other limitations or restrictions which maybe provided for pursuant to this Content Integration Agreement, or otherwiseagreed to between the parties hereto. For the avoidance of doubt, a digital file containing a digitized copyof a Sony Cleared Recording shall not fail to qualify as a Conditional Downloadby reason, alone, that an End User can create an analog copy thereof byutilizing an analog audio output jack resident on the Approved ElectronicDevice concerned.

 

1.14.     “Conditionally Download” shall meanthe act or process of receiving a Conditional Download.

 

1.14.1   ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]****

 

1.15.     “Default Event” shall have themeaning assigned to such term in subparagraph 11.01(b) below.

 

1.16.     Omitted without implication.

 

1.17.     Omitted without implication.

 

1.18.     Omitted without implication.

 

1.19.     Omitted without implication.

 

1.20.     Omitted without implication.

 

1.21.     “Domain Names” shall mean uniformresource locators (“URLs”) registered with any duly authorized internetdomain name registry (e.g., Network Solutions, Inc.).

 

1.22.     “Download” (as a noun) shall mean anelectronic transmission and delivery of digital data that is transferred from acentral server or the computer hard drive owned or controlled exclusively byanother End User (i.e., so-called “peer-to-peer file sharing”) to the End Userthrough the Electronic Medium which results in the creation of an ElectronicDigital Copy of the item of content concerned.

 

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1.23.     “Download” or “Downloading”(used as a verb or gerund) shall mean the process of creating Downloads.

 

1.24.     “Downloadable” shall mean thecapability of resulting in a Download.

 

1.25.     “Ephemeral Copy” shall have themeaning assigned to such term in section 3.01(b)(1) below.

 

1.26.     “Electronic Device” shall mean anymedium or device designed to (i) accept input of digital data; (ii) processthat input through computer programs and other sets of instructions thatcontrol the operation of such electronic device; (iii) accurately count andreport the number of performances of each Recording to the extent necessary toprepare Service Fee Reports and otherwise comply with the Subscription ServiceAgent’s reporting obligations hereunder; and (iv) produces output and causes adesired result which enables a Person utilizing such device to perceive a copyor performance, as the case may be, of the content embodied in the digital datatransmission concerned.

 

1.27.     “Electronic Digital Copy” shall meana copy (other than a Conditional Download or an Ephemeral Copy) of any content,including without limitation the Sony Materials, in a digital format.  A temporary copy of content resident on amachine or device while waiting to be transferred between two (2) locations inthe same machine or device in a manner that is substantially contemporaneouswith the transmission of such copy, as in the case of “buffering” or “caching”during the transmission of a Stream and a temporary Partial Data Cache residentin a so-called “obfuscated cache” (as described with greater particularity inthe Technical Specifications attached hereto) located in a machine or devicewhile waiting to be transferred or potentially transferred from one (1) EndUser to another End User via so-called “peer-to-peer file sharing,”respectively, shall not, for that reason alone, constitute an “ElectronicDigital Copy” of the content concerned.

 

1.28.     “Electronic Medium” shall mean thesubset of the Internet presently known as the World Wide Web and any otherpublic or private data networks utilized to provide Internet connectivity toconsumers, any digital telephone network, any digital cable televisiondistribution platform, and any digital satellite television platform thatprimarily delivers audiovisual materials.

 

1.29.     “End User” shall mean, at anyparticular time, any Person who (i) is located in the Territory, (ii) either(A) subscribes to the Service either through the Subscription Service Agent ora Syndication Agent and uses the Service solely for personal, non-commercialuse or (B) is otherwise eligible to subscribe to the Service but is givenaccess to the Service either through Subscription 

 

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Service Agent or a SyndicationAgent for a limited, free-trial membership, (iii) has registered for and beenassigned by you a User Account, (iv) has been assigned a unique password bySubscription Service Agent in respect of each User Account which must becorrectly entered prior to the commencement of any period during which suchPerson is permitted to access the Service (i.e., Persons that do not have sucha unique password cannot access the Service) and (v) remains in good standingpursuant to the Service’s terms of service and privacy policy.

 

1.30.     “End User Information” means,collectively, Aggregate Information and Personal Information whether suchinformation is in oral, or human readable and/or machine readable form.

 

1.31.     “Entity” shall mean any generalpartnership, limited partnership, corporation, limited liability company, jointventure, trust, business trust, cooperative, association or other businessorganization.

 

1.32.     “Equity Consideration” shall have themeaning assigned to such term in subparagraph 6.02(a).

 

1.33.     “Extranet” shall have the meaningassigned to such term in subparagraph 7.01(a) below.

 

1.33.1.  “Functionality Specifications” shallmean the functionality specifications and mock-ups of the Service attachedhereto as Exhibit A-1.

 

1.34.     “GAAP” shall mean generally acceptedaccounting principles set forth in the opinions and pronouncements of theAccounting Principles Board of the American Institute of Certified PublicAccountants and statements and pronouncements of the Financial AccountingStandards Board, which are in effect from time to time.

 

1.35.     “Grant of Rights” shall have themeaning assigned to such term in subparagraph 3.01(a) below.

 

1.35.1.  “Gross Margin” shall have the meaningassigned to such term in section 6.03(b)(3) below.

 

1.35.2.  “Gross Revenue” shall have the meaningassigned to such term in section 6.03(b)(1) below.

 

1.36.     “Home Page” shall mean theindividual Web Page of a Web Site intended by the Person maintaining the WebSite concerned to be the first Web Page viewed by end-users accessing such WebSite.

 

1.36.1.  “Imported Recordings” shall mean audioor audiovisual recordings for which you have not secured the sound recording publicperformance and sound recording reproduction rights from the Person owning orcontrolling the applicable sound recording copyright therein necessary toexploit such recording in connection with the Service.

 

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1.37.     “Launch Date” shall mean the datethat is the earlier of ***[CONFIDENTIALPORTION OMITTED AND FILED SEPARATELY WITH THE SEC]****

 

1.37.1.  “Licensee” shall mean a licensee ofrights from Sony, including, without limitation, wholly or partly owned subsidiaries,affiliates and other divisions and components of Sony Music Entertainment Inc.

 

1.38.     “Link” shall mean an embedded icon,object, graphic or text within a Web Page that consists of a hypertext pointerto the URL of another Web Page.

 

1.39.     Omitted without implication.

 

1.40.     Omitted without implication.

 

1.41.     “Media Player” shall have meaningassigned to such term in section 5.06(b)(1) below.

 

1.41.1.  “Minimum Monthly Amount” shall have themeaning assigned to such term in section 6.03(b)(5) below.

 

1.41.2.  “Monthly Playback Number” shall havethe meaning assigned to such term in section 6.03(b)(6) below.

 

1.41.3.  ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]****

 

1.41.4.  “New Recordings” shall mean Recordingsreleased by Sony on Phonograph Records for sale through normal retail channelsin the United States after the Effective Date or by Sony’s principal Licenseein Canada on Phonograph Records for sale through normal channels in Canadaafter the Effective Date.

 

1.41.5.  “Net Advertising Revenue” shall havethe meaning assigned to such term in section 6.03(b)(7) below.

 

1.41.6.  “Network Syndication Agent” shall meana Rank 1 Network Syndication Agent, Rank 2 Network Syndication Agent or Rank 3Network Syndication Agent.

 

1.41.7.  “Online Retailer Syndication Agent”shall mean a Syndication Agent that is actively engaged in the merchandising,marketing or promotion of the sale of Records via the Electronic Medium, eitherin whole or in part.

 

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1.41.8.  “Partial Data Cache” shall mean asingle, encrypted digital file containing a portion of a digitized copy of aSony Cleared Recording, which, solely when combined with not less than five (5)other single, encrypted digital files each, respectively, containing adifferent non-overlapping portion of a digitized copy of the Sony ClearedRecording concerned, with the aid of an Approved Electronic Device, enables theSony Cleared Recording to be perceived by such End User as a Stream of suchSony Cleared Recording or stored as a Conditional Download embodying such SonyCleared Recording.  Without limiting thegenerality of the foregoing, each Partial Data Cache shall be subject to thefollowing limitations, restrictions and attributes: (i) the digital file mayreside solely on the hard drive of an Approved Electronic Device owned orcontrolled exclusively by the End User in a so-called “obfuscated cache” (asdescribed with greater particularity in the Technical Specifications attachedhereto), (ii) the digital file cannot be retransmitted, moved or otherwisecopied to any other computer hard drive or other digital storage device by anyPerson, including, without limitation, any portable device except to theApproved Electronic Device of another End User in a so-called “obfuscatedcache” (as described with greater particularity in the Technical Specificationsattached hereto); (iii) the Sony Materials embodied in the digital file cannotbe perceived as Sony Materials, whether directly or with the aid of an ApprovedElectronic Device, without first verifying that the Person seeking access is anEnd User in good standing for the online session concerned and withoutreceiving from the Service the other such non-overlapping portions of the SonyCleared Recording concerned that corresponds to the digital file concerned;(iv) each Partial Data Cache shall be transferred solely under the control andauthority of Subscription Service Agent, and solely to End Users in goodstanding; (v) Subscription Service Agent shall track where each digital fileresides at all times; and (vi) the digital copy will be securely protected sothat it (A) complies in all respects with the provisions of Article 5 below,(B) utilizes effective technological means designed to prevent Persons fromediting, changing or removing any part of the Sony Materials contained thereinor from making a copy (including an Electronic Digital Copy) thereof, or frommoving or transferring such file to an Electronic Device that is not anApproved Electronic Device, and (C) complies with any other limitations orrestrictions which may be provided for pursuant to this Content IntegrationAgreement, or otherwise agreed to between the parties hereto.

 

1.42.     “Permitted Portable Device” means anEnd User’s SDMI-compliant portable Electronic Device that is capable of storingand playing the Sony Materials in accordance with and subject to the terms andconditions of this Content Integration Agreement and is an Approved ElectronicDevice hereunder.

 

1.43.     “Person” shall mean any individualand any Entity, and their respective heirs, executors, administrators, legalrepresentatives, successors and assigns.

 

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1.44.     “Personal Information” meansinformation about each individual End User from which it is possible toascertain the identity of such End User, including, without limitation (i) theEnd User’s name, (ii) the End User’s mailing address (including, without limitation,the End User’s zip or postal code or equivalent) and electronic mail addressand (iii) the End User’s personally identifiable transaction data (e.g., creditcard number and titles of Records purchased). Notwithstanding the foregoing or anything elsewhere herein, CenterSpanshall not be obligated to utilize Personal Information for any purpose otherthan enforcing and protecting the rights, restrictions and limitations setforth herein by taking appropriate actions in connection with individual End Usersand potential End Users that have or allegedly have violated (or thatCenterSpan should have known have or allegedly have violated) CenterSpan’s EndUser license agreement or other terms of service governing usage of the Serviceor the terms, conditions and limitations set forth herein regarding uses ofRecordings as and to the extent permitted herein.

 

1.45.     “Phonograph Record” shall mean aRecord as embodied by the manufacturer and/or distributor in a physical,non-interactive Record configuration (e.g., vinyl LP’s, cassettes, compactdiscs, videocassettes) prior to its distribution to the consumer, as opposed tothe transmission or communication of a Record to the consumer prior to beingembodied in a physical Record configuration, whether or not it may at somepoint be embodied in a physical Record configuration, by the consumer or underthe consumer’s direction or control.

 

1.45.1.  “Playback” (as a noun) shall mean asingle, encrypted digital transmission of a Sony Cleared Recording to an EndUser via a Conditional Download, through an Approved Playback Format, wherebysuch transmission is contemporaneous with the performance of the Recordingembodied therein and which, in all cases, cannot be digitally copied,duplicated or stored in any manner or medium in whole or in part, directly orindirectly.

 

1.45.2.  “Playedback” (as a verb) means the actor process of having transmitted Playbacks solely through an Approved PlaybackFormat.

 

1.46.     “Procedures Report” shall have themeaning assigned to such term in paragraph 6.06 below.

 

1.46.1.  “Prohibited Digital Output” shall meana digital output that forms a part of an Electronic Device that is capable ofrendering or transmitting unencrypted digital data containing a ConditionalDownload or a Partial Data Cache that is not subject to the Approved SecurityFeatures at a transfer rate that is faster than so-called “real time” (e.g.,capable of a transferring a Record that is intended to have a playing time ofsixty (60) minutes in less than that amount of time).

 

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1.46.2.  “Publishing Costs” shall mean allactual, out-of-pocket costs paid to music publishers or applicable rightssocieties with jurisdiction over reproduction rights in connection with exercising:(i) Publishing Rights and (ii) the rights, consents, licenses and permissionsnecessary for the mechanical reproduction of musical compositions embodied inall Recordings (other than Sony Cleared Recordings and Sony AuthorizedRecordings) in connection with the Service.

 

1.46.3.  “Publishing Rights” shall mean allrights, consents, licenses and permissions necessary for the mechanicalreproduction of musical compositions embodied in Sony Authorized Recordings inconnection with the Service.

 

1.46.4.  “Publishing Rights Date” shall mean thedate is nine (9) months after the Effective Date.

 

1.46.5.  ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]****

 

1.46.6.  ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]****

 

1.46.7.  ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]****

 

1.46.8.  ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]****

 

1.47.     “Record(s)” shall mean all forms ofreproductions, transmissions or communications of Recordings now or hereafterknown, manufactured, distributed, transmitted or communicated primarily forhome use, school use, jukebox use or use in means of transportation.

 

1.48.     “Recording” shall mean a recordingof sound (by any method and on any substance or material, or in any other formor format, whether now or hereafter known, which is used or useful in therecording, production and/or manufacture of Records) embodying the performanceof a single Composition.

 

1.48.1.  “Record Labels” shall mean any Personowning or controlling multiple Recordings featuring the performances of areasonably significant number of recording artists (including, but not limitedto, EMI Recorded Music, BMG Entertainment, Universal Music Group, Warner MusicGroup, Zomba Records Corporation) and any of Affiliate of any such Person.

 

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1.49.     “Service” shall mean the interactivesubscription music service owned and operated by Subscription Service Agentconforming to the Technical Specifications, which:

 

(a)   is accessible exclusively byEnd Users, exclusively through the Service Site and the Syndication Agent Sitesvia a maximum of ***[CONFIDENTIALPORTION OMITTED AND FILED SEPARATELY WITH THE SEC]**** ApprovedElectronic Devices at any one time per User Account; provided, however, that inrespect of any particular User Account, (x) no more than ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** such Approved Electronic Devicesmay be an Approved Electronic Device described in clause (i) of paragraph 1.05above and (y) no particular End User may utilize ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITHTHE SEC]**** or more of the Approved Electronic Devices describedin clause (ii) of paragraph 1.05 above or ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]**** or more of the Approved Electronic Devices described inclause (iii) of paragraph 1.05 above;

 

(b)   subject to paragraph 8.01below, is marketed exclusively under the name “scour”, “C-Star” or such othername as may be adopted by Subscription Service Agent in connection with asubstantial portion of its business, provided that such other name may not beconstrued by a reasonable Person as disparaging to Sony, its Affiliates and/orany of the Sony Parties, artists, producers, mixers, remixers or other Personsthat contributed to the recording of the Sony Cleared Recordings transmittedvia the Service;

 

(c)   offers, interalia,an End User the opportunity to receive one or more Stream(s) and/or ConditionalDownloads of the Sony Cleared Recordings from the Agent Server (or, in the caseof so-called “peer to peer file sharing”, from an Approved Electronic Device ofanother End User in full compliance with the terms of this Content IntegrationAgreement) promptly following such End User’s specific request or demandtherefor and prohibits the use of Imported Recordings (except as expresslypermitted under paragraph 5.06 below); provided that the copies of each SonyCleared Recording received by End Users must be initially delivered via theAgent Servers and must be derived from encoded digital files delivered by Sonyto Subscription Service Agent pursuant to subparagraph 3.01(d) below (for theavoidance of doubt, this paragraph shall not operate to preclude the Servicefrom authorizing End Users to facilitate serial copying of such encoded digitalfiles among End Users from an Approved Electronic Device of another End User infull compliance with the terms of this Content Integration Agreement in thecase of so-called “peer to peer file sharing”);

 

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(d)  requires each End User tofurnish Personal Information to the Subscription Service Agent or to theSyndication Agent concerned;

 

(e)  compiles AggregateInformation (subject to paragraph 1.04 above) and Personal Information (subjectto paragraph 1.44 above);

 

(f)   conforms to the TechnicalSpecifications; and

 

(g)  conforms to the FunctionalitySpecifications.

 

For the avoidanceof doubt and without limiting the generality of anything in clauses (a) through(g) of this paragraph 1.49, but subject to the allocation methodologyprescribed in subsection 6.03(b)(4)(B) below, Sony hereby acknowledges that:(i) nothing contained in this Content Integration Agreement shall be construedas a limitation of Subscription Service Agent’s right to bundle the Servicewith other services operated by Subscription Service Agent as part of the sameconsumer offering to an End User, and (ii) an End User’s opportunity to receiveone or more Stream(s) and/or Conditional Downloads of Sony Cleared Recordingsfrom an Approved Electronic Device of an End User in full compliance with theterms of this Content Integration Agreement (i.e., so-called “peer to peer filesharing” is a primary aspect of the functionality of the Service).

 

1.50.     “Service Fee” shall have the meaningassigned to it in subparagraph 6.03(a) below.

 

1.51.     “Service Fee Report” shall have themeaning assigned to such term in paragraph 6.04 below.

 

1.51.1.   “Service Release Date” shall have themeaning assigned to such term in section 3.03(c)(1) below.

 

1.52.     “Service Site” shall mean the WebSite, based in the United States, the Home Page of which is located at theUniform Resource Locator (“URL”) scour.com (or a successor URL designated bySubscription Service Agent and approved by Sony in writing in advance, whichapproval Sony shall not unreasonably withhold) and is owned and operated solelyby the Subscription Service Agent by which End Users can access the Service inaccordance with the terms of this Content Integration Agreement.

 

1.53.     “Sony Artist” shall mean recordingartists whose musical performances are embodied on Sony Cleared Recordings.

 

1.54.     “Sony Authorized Artwork” shall meanthe front album cover art, only, used by Sony in the packaging of the Recordsin which Sony Cleared Recordings concerned are originally released by Sony inthe United States for sale through normal retail 

 

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channels (as that term isunderstood in the U.S. Phonograph Record industry).  For the avoidance of doubt, Sony Authorized Artwork shall notinclude liner notes, lyrics or other artwork, pictorial, graphic, audiovisualor textual materials which are incorporated in the Album concerned or thepackaging or used in the marketing and/or promotion of Phonograph Recordsembodying the Sony Cleared Recordings.

 

1.55.       “Sony AuthorizedRecordings” shall mean: (a) solely with respect to United States End Users,United States Authorized Recordings and (b) solely with respect to Canadian EndUsers, Canadian Authorized Recordings.

 

1.56.       “Sony AuthorizedTrademarks” shall mean any Trademark owned and/or controlled by Sony andmade available to Subscription Service Agent pursuant to the terms andconditions of this Content Integration Agreement.

 

1.56.1.  “Sony Cleared Recordings” shall mean:(a) solely with respect to United States End Users, United States ClearedRecordings and (b) solely with respect to Canadian End Users, Canadian ClearedRecordings.

 

1.57.       “Sony Materials”shall mean the Sony Cleared Recordings and Sony Authorized Artwork.

 

1.58.       “Sony Parties”shall mean Sony Music Entertainment Inc. and its parent, subsidiaries,affiliates, divisions, components and Licensees and each of their officers,agents, employees, partners, directors, controlling persons and advisors.

 

1.58.1.  “Sony’s Pro Rata Share” shall have themeaning assigned to such term in section 6.03(b)(8) below.

 

1.58.2.  “Sony’s Usage Percentage” shall havethe meaning assigned to such term in section 6.03(b)(9) below.

 

1.59.       “Stream” (as anoun) shall mean a single, encrypted digital transmission of Recordings to EndUsers from the Agent Server (or, in the case of so-called “peer-to-peerStreaming,” from the Approved Electronic Device of an End User in fullcompliance with the terms of this Content Integration Agreement) solely throughthe Electronic Medium, which digital transmission is, in the case ofRecordings, contemporaneous with the performance of the Recording embodiedtherein and which, in all cases, is designed not to be digitally copied,duplicated or stored in any manner or medium in whole or in part, directly orindirectly (other than any temporary copies used solely for so-called “caching”or “buffering”).

 

1.60.       “Stream”,“Streaming” or “Streamed” (as a verb or gerund) shall mean  the act or process of transmitting Streamssolely through an Approved Streaming Format.

 

1.61.       “Street Date”shall have the meaning assigned to such term in section 3.03(c)(1) below.

 

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1.62.       “Stock PurchaseAgreement” shall have the meaning assigned to such terms in subparagraph6.02(b) below.

 

1.62.1.    “Subscription Fees”shall have the meaning assigned to such term in section 6.03(b)(10) below.

 

1.62.2.    “Syndication Agent”shall mean any Person who complies with the provisions of paragraph 8.02 below.

 

1.62.3.    “Syndication AgentAgreement” shall have the meaning assigned to such term in subparagraph8.02(a) below.

 

1.62.4.    Omitted withoutimplication.

 

1.62.5.    Omitted withoutimplication.

 

1.62.6.    “Syndication AgentSites” shall mean the Web Sites, based in the United States or Canada, thatare owned and operated solely by the Syndication Agents by which End Users canaccess the Service in accordance with the terms of this Content IntegrationAgreement.

 

1.63.       “TechnicalSpecifications” shall mean the technical specifications of the Serviceattached hereto as Exhibit A-2.

 

1.64.       “Term” shallhave the meaning assigned to it in paragraph 2.01 below.

 

1.65.       “Territory”shall have the meaning assigned to it in paragraph 2.02 below.

 

1.66.       “Trademarks”shall mean trademarks and service marks, trade names, brand names, corporatenames, logos, trade dress, and other words, designations, labels, symbols,designs, colors, color combinations or product configurations, whetherregistered or unregistered.

 

1.66.1.    “Triggering Person”shall mean ***[CONFIDENTIALPORTION OMITTED AND FILED SEPARATELY WITH THE SEC]****

 

1.66.2.    “United StatesAuthorized Recordings” shall mean those audio-only, stereo Recordings: (i)that are embodied on Albums, Singles and EPs released by Sony for distributionthrough normal retail channels (as that term is understood in the U.S. PhonographRecord industry) in United States and are listed in Sony’s then most recentactive United States product catalog (i.e., the 

 

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**** Confidential Portions Omitted.***

*** ***

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product catalog currently knownas the “U.S. Pocket Pop Alpha”), as such catalog is updated from time to timethroughout the Term; and (ii) in respect of which the sound recording publicperformance and sound recording reproduction rights have been obtained underthe copyright laws of United States and Sony’s recording and other applicablerights acquisition agreement(s), as applicable; and (iii) which are nototherwise excluded under paragraph 3.03 or section 4.03(e)(2) below.

 

1.66.3.    “United StatesCleared Recordings” shall mean those audio-only, stereo Recordings: (i)that are United States Authorized Recordings; and (ii) in respect of allPublishing Rights have been obtained. For the avoidance of doubt, United States Cleared Recordings shall onlybe accessible by United States End Users.

 

1.66.4.    “United States EndUser” shall mean, at any particular time, any Person who (i) has registeredwith Subscription Service Agent a valid billing address that is in the UnitedStates, (ii) either (A) subscribes to the Service either through theSubscription Service Agent or a Syndication Agent and uses the Service solelyfor personal, non-commercial use or (B) is otherwise eligible to subscribe tothe Service but is given access to the Service either through SubscriptionService Agent or a Syndication Agent for a limited, free-trial membership,(iii) has registered for and been assigned by you a User Account, (iv) has beenassigned a unique password by Subscription Service Agent in respect of eachUser Account which must be correctly entered prior to the commencement of anyperiod during which such Person is permitted to access the Service (i.e.,Persons that do not have such a unique password cannot access the Service) and(v) remains in good standing pursuant to the Service’s terms of service andprivacy policy.

 

1.66.5.    “United StatesStreet Date” shall have the meaning assigned to such term in subsection3.03(c)(1)(i) below.

 

1.67.       “User Account”shall mean, with respect to each End User, the unique account set up by theSubscription Service Agent to govern such End User’s access to the Service.

 

1.68.       “Web Page”shall mean a document that is either (A) written in HTML (i.e., HypertextMarkup Language), or another industry standard mark-up language, that is madeavailable for viewing by End Users at a single URL or Domain Name via the WorldWide Web portion of the Internet by server software using HTTP (i.e., HypertextTransfer Protocol) to effectuate data transmission (or server software usingany other generally accepted protocols utilized to effectuate datatransmissions via the World Wide Web portion of the Internet); or (B) writtenin any computer programming language other than HTML, that is intended to beaccessible, directly or indirectly, simultaneously to End Users via a computer orany other electronic device on any public data network that uses TransmissionControl Protocol/Internet Protocol (i.e., TCP/IP) or Wireless ApplicationProtocol (i.e., WAP) to effectuate data transmission (or any other generallyaccepted protocols utilized to effectuate data transmissions via public datanetworks).

 

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1.69.       “Web Site”shall mean a collection of Web Pages (or its functional equivalent in non-WorldWide Web based methods of transmitting, receiving and displaying textual andgraphic digital data) with a common theme or subject matter which are: (a)organized hierarchically, (b) owned, managed and operated by the same Person orat the direction of such Person, and (c) interconnected via Links.

 

**2.      TERM; TERRITORY**

 

2.01.       The term of thisContent Integration Agreement (“Term”) will begin as of the Launch Date andwill continue for a period ending on the date that is ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** after such Launch Date, unlesssooner terminated pursuant to Article 11 below.

 

2.02.       The territory of theGrant of Rights is the United States (including solely the territories and/orpossessions of Puerto Rico and the U.S. Virgin Islands) and Canada(“Territory”).  Without limiting theforegoing, you represent and warrant that: (i) neither you nor any SyndicationAgent, directly or indirectly, will market, promote or advertise the Service inany manner directed to, or designed to attract, visitors to the Service fromcountries outside the Territory; (ii) neither you nor any Syndication Agentwill allow any Person whose billing address is outside of the United States orCanada to be an End User; (iii) neither you nor any Syndication Agent willcreate or facilitate the creation of Links from Web Sites outside the Territoryto the Service Site or to any Syndication Agent Site; (iv) you will requireeach End User to represent and warrant to you in a click-through End Userlicense agreement governing such End User’s use of the Service that such EndUser resides in the United States or Canada, as the case may be; (v) UnitedStates End Users shall not have access to Canadian Cleared Recordings, directlyor indirectly, in whole or in part and Canadian End Users shall not have accessto United States Cleared Recordings, directly or indirectly, in whole or inpart; and (vi) you will immediately terminate the subscription of any End Userwho violates the terms of his or her End User license agreement.  You shall use your best good faithreasonable efforts to prevent other Web Sites outside of the Territory fromcreating Links from such Web Sites to the Service. Notwithstanding thepreceding three sentences, Sony hereby acknowledges and agrees that: (i) yourrights hereunder include the right to exploit the Sony Materials via theInternet, which by its nature extends beyond the Territory and (ii) you 

 

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**** Confidential Portions Omitted.***

 

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shall use effective,state-of-the-art technologies that (a) prevent Persons seeking access to theService from domains located outside the Territory from accessing the Serviceand (b) effectively block out access to the Service based upon billing oraddresses or other Personal Information that would lead a reasonable Person tobelieve that such Person is a resident of a territory outside the Territory;provided that such technologies are available to you on commercially reasonableterms (for the purpose hereof, “reasonableness” shall be determined by takinginto account the cost of implementing the technologies as compared to thegeneral operating costs of CenterSpan in general).

 

**3.      GRANT OF RIGHTS**

 

3.01.  (a)     Sonyhereby appoints you to act as its non-exclusive agent to solely perform thefunctions expressly authorized by Sony pursuant to subparagraph 3.01(b) belowin connection with the Sony Materials, as integrated by you into theService.  For the avoidance of doubt,this Content Integration Agreement may not be terminated during the Term exceptas otherwise specifically provided herein. Your right to integrate the Sony Materials into the Service and todistribute those Sony Materials in accordance with the terms of this ContentIntegration Agreement is sometimes referred to herein as the “Grant ofRights”.  Your rights to use the SonyMaterials shall be subject to all of the terms and conditions of this ContentIntegration Agreement, and your right to use such Sony Materials shall notconstitute a transfer of rights to you in or to the Sony Materials or any otherintellectual property associated therewith, except to the extent expresslyauthorized herein. For the avoidance of doubt, nothing contained in thisContent Integration Agreement shall be construed as giving you or anySyndication Agent the right to sell, resell or otherwise conduct or authorizethe transmission of Sony Materials, either in whole or in part, as a dealer,retailer, distributor, subdistributor, merchant or otherwise, except to theextent expressly authorized herein. Sony hereby acknowledges that you are a distributor of Records.  Notwithstanding the foregoing or anythingelsewhere herein, neither you nor any Person deriving rights from you shallenable or facilitate access, directly or indirectly, in whole or in part, to Records,Recordings, or other materials, owned or controlled by Sony or any of itsLicensees via the Service or otherwise that do not constitute Sony ClearedRecordings hereunder in the Territory or elsewhere.

 

(b)           Solely in order toeffectuate the Grant of Rights, Sony hereby authorizes you and grants to youthe non-exclusive power and authority to do only the following with respect toyour use of the Sony Materials:

 

(1)         Transfer a reasonable, limited numberof copies (each an “Ephemeral Copy”) of each of the Sony Cleared Recordings intheir entirety and corresponding Sony Authorized Artwork onto the AgentServers, provided that: (A) the total number of such Ephemeral Copies islimited to the number reasonably necessary to efficiently digitally transmit theSony Materials

 

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in accordance with the termsand conditions of this Content Integration Agreement; (B) all such EphemeralCopies shall be destroyed and/or erased, as Sony shall direct, upon the terminationor expiration of the Term; (C) the Agent Servers to the extent they contain anySony Materials (but, for the avoidance of doubt, not the hard drives ofApproved Electronic Devices of End Users accessing the Service via “peer topeer file sharing”) are not either directly or indirectly part of a network ofcomputer servers or computers except to the extent, if at all, described in theTechnical Specifications attached hereto; and (D) neither Subscription ServiceAgent nor any Person deriving rights from Subscription Service Agent shall haveany right to use or otherwise exploit Ephemeral Copies, either in whole or inpart, directly or indirectly, except as expressly provided in this ContentIntegration Agreement;

 

(2)        To maintain the Sony Cleared Recordingsand related Sony Authorized Artwork on the Agent Servers only until theexpiration of the Term (solely to the extent necessary to enable Streams andConditional Downloads of the Sony Cleared Recordings and the display of SonyAuthorized Artwork via the Service in accordance with the terms herein);

 

(3)        To integrate the Sony Materials into theService for transmission to End Users (including, for the avoidance of doubt,via so-called “peer to peer file sharing” as and to the extent expresslypermitted herein) in accordance with the following provisions as well as inaccordance with the other terms set forth elsewhere herein: (i) except to theextent your right to transmit the Sony Materials has been restricted by theprovisions hereunder, the Sony Materials must at all times during the Term beaccessible by End Users from the Agent Servers via the Service Site or via aSyndication Agent Site in accordance with the terms set forth herein; (ii)except to the extent your right to transmit the Sony Materials have beenrestricted by the provisions hereunder, the Sony Cleared Recordings may, at anytime during the Term, be accessible by End Users from  other End Users through so-called “peer to peer” file sharing;(iii) in all cases, the Sony Materials shall only be accessible by End Usersvia the Electronic Medium during the Term; (iv) United States End Users shallnot have access to Canadian Cleared Recordings, directly or indirectly, inwhole or in part; and (v) Canadian End Users shall not have access to UnitedStates Cleared Recordings, directly or indirectly, in whole or in part; and

 

(4)        To permit End Users to Stream SonyCleared Recordings and Playback Conditional Downloads of the Sony ClearedRecordings and to display (or refrain from displaying, as Subscription ServiceAgent may determine in its reasonable discretion) Sony Authorized Artwork viathe Service in accordance with the terms herein, including, but not limited tothe following requirement:  to the extentSubscription Service Agent displays Sony Authorized Artwork, each Stream andPlayback of a Sony Cleared Recording must be accompanied by an image (75 pixelsby 75 pixels in size) of the Sony Authorized Artwork corresponding to the SonyCleared Recording in question.

 

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For the avoidance of doubt, youshall not be required to display Sony Authorized Artwork via the Service.

 

(c)     (1)        Your rights hereunder are non-transferable, non-sublicensableand non-delegable and you acknowledge that: (i) all of the rights grantedherein are granted on a non-exclusive basis; and (ii) Sony reserves all rightsto use, and authorize third parties to use, the Sony Materials.

 

(2)        You may only transmit or allowauthorized Syndication Agents to transmit the Sony Materials to End Users aspart of the Service in the Territory, subject to the next sentence.  Notwithstanding the foregoing or anythingelsewhere herein, Syndication Agent may allow Persons other than End Users to accessthe Service to the extent permitted under section 4.06(a)(2); provided,however, that such Persons shall not be entitled to Stream or Playback any SonyCleared Recordings unless and until such Persons qualify as End Usershereunder.

 

(3)        Except as expressly permitted hereinwith respect to Conditional Downloads, Subscription Service Agent shall not,and shall not authorize any Person to, whether through acts or omissions,either directly or indirectly, in whole or in part, to make any Downloads, orto create or facilitate the creation of Downloadable copies, of any SonyMaterials.

 

(4)        All rights not expressly granted toSubscription Service Agent hereunder are reserved by Sony.

 

(5)        As between Sony and Subscription ServiceAgent, the Sony Materials, all performances embodied therein, and allcopyrights, and Trademarks and other rights in and to the Sony Materials of anykind are, and shall remain, the sole and exclusive property of Sony.  Subscription Service Agent warrants,represents and agrees that it will not through its acts or omissions, directlyor indirectly, sell or otherwise dispose of, pledge, mortgage or in any wayencumber the Sony Materials, in whole or in part, directly or indirectly, or,attempt to pledge, mortgage or otherwise encumber Subscription Service Agent’srights under this Content Integration Agreement for the benefit of or on behalfof a Triggering Person.

 

(d)     In all cases, the SonyMaterials included on the Service shall be derived from encoded digital filesor other materials or formats (which shall contain the Album title as well asthe corresponding featured artist name, track title, ISRC number (whereavailable) and UPC number (where available)) provided to you by Sony or suchother Person(s) as Sony designates in its sole, unrestricted, discretion;provided, however, that neither End Users nor any other Persons shall haveaccess to any ISRC numbers or UPC numbers. For the avoidance of doubt, Sony’s delivery to you of any PhonographRecord or encoded digital files or other 

 

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materials or formats under thissubparagraph 3.01(d) shall not be deemed to constitute “clearance” for use inconnection with the Service in any manner, nor shall is be deemed to constitutea waiver of any of the restrictions and/or limitations on your use of anyRecordings embodied thereon set forth in this Content Integration Agreement.

 

(e)      You warrant and representthat you shall not directly or indirectly allow any of the Sony Materials to beedited, altered or otherwise modified.

 

3.02.      You hereby represent, warrant and covenantthat: (i) you have not and shall not grant any third party rights to use anySony Materials (a “Third Party Use”) not granted to you in this ContentIntegration Agreement; and (ii) you have exercised and will continue toexercise commercially reasonable efforts to monitor all Third Party Uses toensure that they abide by the terms of the preceding clause (i).  If you become aware of any unauthorizedmanufacture, advertising, distribution, lease or sale by any third party of theSony Materials, or any other Recordings (or related Sony Authorized Artwork)the copyrights to which are owned or controlled by Sony or its Licensees, youshall immediately advise Sony in writing thereof and shall cooperate with Sony (atSony’s reasonable expense, provided that such unauthorized use(s) is not due,in whole or in part, to Subscription Service Agent’s (or any Person derivingrights from Subscription Service Agent) acts or omissions) in the event thatSony commences any action or proceeding against such third party.  In the event that any Third Party Useviolates the terms of this Content Integration Agreement, you agree to assignto Sony any rights, now or hereafter in existence, which you may have to sue orotherwise bring an action in law or in equity against such third partyinfringer for violating the terms of this Content Integration Agreement orotherwise violating Sony’s rights in and to the Sony Materials.

 

3.03.     (a)     Atall times during the Term, Sony shall have the right at its sole discretion,effective immediately upon notice to you (which notice may, notwithstandinganything to the contrary herein, be via facsimile, electronic mail or any othereffective method of communication), to exclude any Sony Materials from thescope of the Grant of Rights for any of the following reasons:

 

(1)     Any so-called “artistrelations” and/or “marketing” reasons;

 

(2)     Anycontractual restriction or other limitation on Sony’s right to exploit the SonyMaterial concerned as contemplated herein in all or part of the Territory; or

 

(3)     Anyother legal reasons which, in the reasonable judgment of Sony’s attorneys,might subject you, the Syndication Agents or any Sony Party or other Person tounfavorable regulatory action or which might violate any law, 

 

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violate the rights of any Person, or subject you, the SyndicationAgents or any Sony Party or other Person to liability for any reason (or ifSony believes, in its sole reasonable judgment, that (i) Sony lacks the rightto authorize you to use the Sony Material concerned as contemplated herein,(ii) the Sony Material concerned might infringe upon the rights of any Person,(iii) any use of the Sony Materials in connection with the Service is patentlyoffensive or denigrating to Sony, any Sony Artist or any other Person, or (iv)the use of any Sony Materials in connection with the Service might subject anySony Party or any Sony Artist or other Person to unfavorable regulatory action,might violate any law, might infringe the rights of any Person, or mightsubject any Sony Party or any Sony Artist or other Person to liability for anyreason); and/or

 

(4)     Thefailure to secure or retain, as the case may be, the necessary PublishingRights, as required under section 4.03(e)(2) below, for the Sony Materialsconcerned.

 

(b)         (1)      Upon your receipt of Sony’s request toremove any Sony Materials from the Service, you agree that you shall,immediately thereafter but in no event later than ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITHTHE SEC]**** from the date of such demand, remove from the Serviceall Sony Materials referenced in Sony’s demand; provided, however, that yournon-habitual, non-repetitive failure to so remove any particular Sony Materialsin any instance(s) shall not constitute a material breach of this ContentIntegration Agreement.  At Sony’swritten request, you shall promptly notify Sony in writing of your compliancewith the terms of this subparagraph, which notice shall be accompanied by allcopies of the Sony Materials concerned. At Sony’s written request, you shall furnish Sony with an affidavit,signed by an officer of Subscription Service Agent, in a form satisfactory toSony in its reasonable discretion, accurately confirming that you havedestroyed and/or erased all copies of the Sony Materials that are removed fromthe Service pursuant to this subparagraph.

 

(2)     ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]****

 

(c)         (1)                 (i)      ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]****

 

(ii)     ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]****

 

(2)     (i)      Without limiting the generality of the foregoing andnotwithstanding anything to the contrary herein (and in addition to any otherexclusions set forth herein), during each ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]**** period of the Term Sony may at any time and for any reasonelect to withhold the availability of certain United States Cleared Recordingsvia the Service beyond the Street Date as follows: (A) a total of up to ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** (and all Recordings relatedthereto (including

 

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**** Confidential Portions Omitted.***

 

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remixesthereof)) or, at Sony’s option, selected Recordings from up to ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** for a total of ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** from the applicable UnitedStates Street Date for the Album concerned, and (B) up to an additional ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** (and all Recordings relatedthereto (including remixes thereof)) or, at Sony’s option, selected Recordingsfrom up to an additional ***[CONFIDENTIALPORTION OMITTED AND FILED SEPARATELY WITH THE SEC]**** for up to ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** from the applicable UnitedStates Street Date for the Album concerned.

 

(ii)     Without limiting the generality of theforegoing and notwithstanding anything to the contrary herein (and in additionto any other exclusions set forth herein), during each ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** of the Term Sony may at any timeand for any reason elect to withhold the availability of certain CanadianCleared Recordings via the Service beyond the Street Date as follows: (A) atotal of up to ***[CONFIDENTIALPORTION OMITTED AND FILED SEPARATELY WITH THE SEC]**** (and allRecordings related thereto (including remixes thereof)) or, at Sony’s option,selected Recordings from up to ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC]******for a total of ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** from the applicable Canadian StreetDate for the Album concerned, and (B) up to an additional ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** (and all Recordings relatedthereto (including remixes thereof)) or, at Sony’s option, selected Recordingsfrom up to an additional ***[CONFIDENTIALPORTION OMITTED AND FILED SEPARATELY WITH THE SEC]**** for up to ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** from the applicable CanadianStreet Date for the Album concerned.

 

(d)         (1)      (i)      Withoutlimiting the generality of the foregoing or anything elsewhere herein, Sonyshall advise you of the Album titles listed in Sony’s then most recent activeUnited States product catalog (i.e. the product catalog currently known as the“U.S. Pocket Pop Alpha”) that constitute United States Cleared Recordings as ofsuch date (such list is sometimes referred to herein as the “U.S. InitialClearance List”), it being understood and agreed that notwithstanding anythingelsewhere in this Content Integration Agreement: (i) no such Recordings shallbe deemed to constitute United States Cleared

 

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**** Confidential Portions Omitted.***

 

 

**** Confidential Portions Omitted.***

 

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Recordings hereunder until you have been so advised of the U.S. InitialClearance List, and (ii) all Recordings listed in the Initial Clearance Listshall be deemed to be United States Cleared Recordings unless and until Sonynotifies you otherwise in writing.  Sonyshall use reasonable efforts to provide you with the U.S. Initial ClearanceList, identified as the list of United States Sony Cleared Recordings, in anelectronic format reasonably available to Sony containing the Album title aswell as the corresponding featured artist name, track title, ISRC number (whereavailable) and UPC number (where available), provided that Sony shall not berequired to incur any non-de-minimus incremental costs to create or deliver toyou the U.S. Initial Clearance List in an electronic format.

 

(ii)     Without limiting the generality of the foregoingor anything elsewhere herein, Sony shall advise you of the Album titles listedin Sony’s principal Canadian Licensee’s then most recent active Canadianproduct catalog (i.e. the product catalog currently known as the “Sony MusicCanada Catalogue”) that constitute Canadian Cleared Recordings as of such date(such list is sometimes referred to herein as the “Canadian Initial ClearanceList”), it being understood and agreed that notwithstanding anything elsewherein this Content Integration Agreement: (i) no such Recordings shall be deemedto constitute Canadian Cleared Recordings hereunder until you have been soadvised of the Canadian Initial Clearance List, and (ii) all Recordings listedin the Canadian Initial Clearance List shall be deemed to be Canadian ClearedRecordings unless and until Sony notifies you otherwise in writing.

 

(2)     Without limiting thegenerality of the foregoing or anything elsewhere herein, at reasonableperiodic intervals during the Term (which periodic intervals shall be no lessfrequently than once per month), Sony shall endeavor to advise you of NewRecordings hereunder, it being understood and agreed that, notwithstandinganything elsewhere in this Content Integration Agreement, any Recordingsreleased (or re-released, as the case may be) by Sony on Phonograph Records forsale through normal retail channels in the United States or Canada, as the casemay be, after the Effective Date shall not be deemed to constitute NewRecordings that are Sony Cleared Recordings hereunder unless and untilconfirmed as such by Sony in writing in each instance.  Sony’s failure to so advise or so confirmany particular titles in any instance(s) shall not constitute a breach of thisContent Integration Agreement.

 

**4.             OPERATIONOF THE SERVICE; RESTRICTIONS**

 

4.01.    Omitted withoutimplication.

 

4.02.        (a)     All rights in any Sony Materials furnishedby Sony or used by Subscription Service Agent at Sony’s request in connectionwith the Subscription Service, including the copyright and the right to secure copyright,shall, as between you and Sony, be Sony’s property throughout the universe andin perpetuity.

 

(b)     All matters relating tothe Sony Authorized Trademarks or to notices or disclosures on the SubscriptionService, pursuant to subparagraph 4.05(a) below, deemed advisable by Sony’sattorneys shall be determined in Sony’s sole discretion.  Sony shall not be deemed unreasonable inrejecting any requested change to the use of the Sony Authorized Trademarkswith respect to the Subscription Service upon the advice of Sony’s attorneys.

 

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4.03.        (a)     Subscription Service Agent shall be solelyresponsible for creating, maintaining and hosting the Service in accordancewith the Technical Specifications and the Functionality Specifications.

 

(b)     Subscription Service Agentshall, at its sole expense, be solely responsible for conducting all businessactivities related to the Service, including, but not limited to the followingactivities: (i) setting the price End Users will pay for subscriptions to theService sold through the Service Site and delegating to Syndication Agents theauthority to set prices End Users will pay for subscriptions to the Servicesold through Syndication Agent Sites; (ii) processing all subscriptions to theService placed by End Users during the Term, (iii) overseeing all activities ofthe Syndication Agents in connection with the Service; (iv) subject tosubparagraph 12.01(t) below, providing pricing, billing and financialclearinghouse services in connection with the Service; (v) handling allcustomer service matters related to End Users; and (vi) handling all financialtransactions related to the Service (including, but not limited to, billing EndUsers, collecting income from and auditing Syndication Agents, processing allpayments, paying all applicable taxes). Except as expressly authorized by Sony in writing in each instance, Sonyshall have no responsibilities or obligations of any nature with respect to anySyndication Agents or End Users.

 

(c)     Except as expressly setforth herein (including, without limitation, in paragraph 16.01.1 below), asbetween Sony and Subscription Service Agent, Subscription Service Agent herebyassumes all liability which may arise from products and services, as the casemay be, rendered to End Users and liability for injuries to and by servants,agents, employees or the general public in connection with operation of theService.  Except as expressly set forthherein, all business risks related to the Service, including but not limited tothe risk of non-payment by End Users and Syndication Agents, shall be borne bySubscription Service Agent.

 

(d)     All costs and expensesincurred in insuring against loss, theft or damage of any materials deliveredto Subscription Service Agent by Sony (“Delivery Materials”) shall be borne bySubscription Service Agent. Upon the loss, theft, damage to or destruction ofany Delivery Materials, Subscription Service Agent shall promptly furnish Sonywith proof thereof by an affidavit executed by a duly authorized officer of theSubscription Service Agent which accurately confirms, with reasonableparticularity, the loss, theft or damage concerned.  For any Delivery Materials lost, stolen, destroyed or damagedafter delivery to Subscription Service Agent and prior to return to Sony,Subscription Service Agent shall promptly pay to Sony the reasonablereplacement cost thereof, which payment shall not transfer title thereto toSubscription Service Agent or any other Person.

 

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(e)     (1) Subscription Service Agent shall be solely responsible for any andall costs, fees, expenses or other charges in connection with the uses of theSony Materials permitted hereunder and the maintenance of the Sony Materialsand computer files embodying Sony Materials. For the avoidance of doubt, as between you and Sony, Sony shall beresponsible for making all union payments (if any) and all audio record royaltypayments required to be made by Sony under any agreements to which Sony is aparty to each recording artist, producer, mixer, remixer and other Person thatcontributed to the recording of the Sony Cleared Recordings transmitted via theService.

 

(2)  (i)      At all times through and including the Publishing Rights Date,Sony shall have the exclusive right and obligation to attempt to obtain allnecessary Publishing Rights.  After thePublishing Rights Date, you shall be solely responsible for obtaining allPublishing Rights to the extent not secured by Sony.  In all cases, notwithstanding anything elsewhere herein, no SonyAuthorized Recordings shall constitute Sony Cleared Recordings hereunder and beused in connection with the Service until either Sony or you have obtained allnecessary Publishing Rights in connection with such Sony AuthorizedRecording.   To the extent you areresponsible for obtaining Publishing Rights with respect to any Sony AuthorizedRecording, you shall be solely responsible for obtaining all necessary rightswith respect to (i) the musical compositions and other copyrighted literary,dramatic and other works, other than the Recording in question, embodied withinsuch Recording and (ii) publishing rights, consents, licenses and permissionswhich are necessary for your uses of the Recording in question in connectionwith the Service (e.g., currently effective performance and mechanicalcopyright licenses for use of the musical composition in question as well asliterary, dramatic and other works, other than the Recording in question, embodiedin the Sony Authorized Recording in question). Whether or not Sony has secured Publishing Rights with respect to anyparticular Sony Authorized Recording, you shall be solely responsible forsecuring currently effective performance licenses for the use by means ofpublic and/or private performance of Compositions embodied in all SonyAuthorized Recordings.

 

(ii)     In the event that thereare Excess Publishing Costs (as defined in section 6.03(b)(12)), Sony shallbear financial responsibility (subject to subsection 4.03(e)(2)(iii) below) for***[CONFIDENTIAL PORTIONOMITTED AND FILED SEPARATELY WITH THE SEC]**** of Sony’s UsagePercentage of Excess Publishing Costs (sometimes referred to as “Sony’s Shareof Excess Publishing Costs”) and Subscription Service Agent shall bearfinancial responsibility for all other Excess Publishing Costs (sometimesreferred to as “Subscription Service Agent’s Share of Excess PublishingCosts”).

 

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**** Confidential Portions Omitted.***

 

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(iii) With respect to Publishing Rights obtained bySony hereunder in connection with Sony Cleared Recordings, Sony shall performthe ministerial function of administering such Publishing Rights to the extentobtained and paying Publishing Costs; provided, however, that you shall pay(which, for the avoidance of doubt, may be in advance of the time Sony isrequired to make such payments to the music publishers and/or copyrightproprietors for the underlying Publishing Rights) Sony for the full amount ofall Publishing Costs paid or incurred by Sony in connection therewith, promptlyfollowing Sony’s written request therefor in each instance, regardless ofwhether Advances have theretofore been recouped from Service Fees payablehereunder, and to the extent that any such Publishing Costs constitute Sony’sShare of Excess Publishing Costs, the amount of Sony’s Share of ExcessPublishing Costs shall constitute an additional Advance hereunder.  With respect to Publishing Rights obtainedby Subscription Service Agent hereunder, you shall pay to the applicableholders of Publishing Rights all Publishing Costs (regardless of whetherAdvances have theretofore been recouped from Service Fees payable hereunder),and to the extent that any such Publishing Costs constitute Sony’s Share ofExcess Publishing Costs, the amount of Sony’s Share of Excess Publishing Costsshall constitute an additional Advance hereunder.

 

(3)       Upon your writtenrequest by notice to Sony (“Publishing Information Request Notice”),which notice, to be effective, shall be delivered to Sony no earlier thanthirty (30) days prior to the Publishing Rights Date and no later than thirty(30) days after the Publishing Rights Date, shall use reasonable efforts toprovide you with a list containing any relevant publishing information thatSony has in its possession as of the Publishing Rights Date regarding SonyAuthorized Recordings that are not Sony Cleared Recordings as of the PublishingRights Date within thirty (30) days following the date of Sony’s receipt of thePublishing Information Request Notice (which shall in no event be deemedreceived earlier than the Publishing Rights Date), provided, however, that (A)Sony shall not be required to incur any non-de-minimus incremental costs tocreate or deliver to you such list or information, and (B) Sony’s failure toprovide you with such list or information shall not be deemed a breach of thisContent Integration Agreement, and (C) notwithstanding anything to the contraryin this Content Integration Agreement, Sony makes no representations orwarranties with respect to such list or information (including, withoutlimitation, with respect to the accuracy or completeness thereof).

 

4.04.     Subscription ServiceAgent shall take such action as may be necessary to avail itself of the “safeharbor” limited liability provisions of the Digital Millennium Copyright Act of1998 (as it may be amended from time to time), and shall comply in full withall of the procedures detailed therein as may be necessary to take advantage ofsuch provisions.

 

4.05.     (a)      You warrant, represent and agree to complywith all formalities necessary to ensure the full protection of Sony’s or itslicensors’ copyrights in the Sony Materials and Sony Authorized Trademarks asSony may reasonably request.  Yourobligations 

 

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under thepreceding sentence shall include, but not be limited to causing the followinginformation to be prominently and legibly displayed in human readable form onthe Approved Media Player on which the Sony Cleared Recording concerned isStreamed or Conditionally Downloaded, provided that with respect to ApprovedElectronic Devices that are Permitted Portable Devices only to the extenttechnologically feasible using then current state-of-the art means:

 

(1)     the title of the SonyCleared Recording concerned;

 

(2)      thename of the featured musical recording artist(s) are embodied in the SonyMaterials concerned (as Sony shall designate); and

 

(3)      anyother appropriate notices, credits or identifying information specified by Sony(e.g., the names of producers, featured side artists, authors, publishers,directors, writers, performers, the name of the applicable Sony label thatmarkets the Sony Materials concerned, etc.) or any notices required by law.

 

The information set forth aboveshall be displayed on the Service in a manner no less prominent in terms ofsize, type, appearance and other features as Subscription Service Agentdisplays similar information regarding the same category of content (i.e. soundrecordings, artwork, etc.) made available for use on the Service according toan authorization from a Person other than Sony appearing on or in connectionwith the Service.

 

(b)       (1)      Sony hereby grants to you a non-exclusive,non-transferable right to use Sony Authorized Trademarks for use solely by youon the Service Site during the Term solely for advertising and purposes oftrade in connection with the Service, without payment of compensation to Sony,subject to Sony’s prior written consent in each instance regarding all elementsand aspects of your use of the Sony Authorized Trademark concerned in eachinstance.  Without limiting thegenerality of the foregoing, in each instance (i) you shall not make anymodifications to any Sony Authorized Trademarks (other than formatting the SonyAuthorized Trademark concerned to fit on the applicable Web Page on the ServiceSite) in connection with the license granted hereunder without Sony’s priorwritten consent, and (ii) you shall place a ® or TM symbol (as appropriate andas Sony directs you) in juxtaposition with the Sony Authorized Trademarks onthe Service Site.  You acknowledge thatthe use of the Sony Authorized Trademarks as contemplated in this subparagraph4.05(b) will not create in you, nor will you represent that you have, anyright, title or interest in or to any Sony Authorized Trademarks other than thetrademark right granted in the foregoing provisions of this subparagraph4.05(b).

 

(2)      Without limiting theforegoing, Subscription Service Agent may not juxtapose any Sony AuthorizedTrademark with any other Trademark without Sony’s express, prior writtenapproval.  Notwithstanding theforegoing, Subscription Service Agent may juxtapose a Sony Authorized Trademarkwith other Trademarks made available for use on the Service according to 

 

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anauthorization from a Person other than Sony whose intellectual property orother content is made available via the Service; provided that the SonyAuthorized Trademark shall be displayed on the Service in a manner no lessprominent in terms of size, type, appearance and other features as SubscriptionService Agent displays such other Trademarks and all such Trademarks (includingthe Sony Authorized Trademark) shall be displayed in alphabetical order.

 

4.06.       (a)       (1)      SubscriptionService Agent shall not, without Sony’s prior written consent in each instance,which consent Sony may withhold in its unrestricted discretion, make any use(directly or indirectly) of or authorize any other Persons deriving rights fromSubscription Service Agent to use (directly or indirectly) any Sony AuthorizedTrademark or of the names, likenesses or biographical materials of any SonyArtist and/or any other Persons contributing to the recording or creation ofany Sony Materials (except as explicitly set forth herein), including, for theavoidance of doubt and without limitation, any producers, mixers and/orremixers, in advertisements, promotions, press releases or marketing materialsused in connection with the Service or otherwise. In instances where Sony hasgranted you consent to use the name or likeness of a particular Sony Artist orother Person: (i) your right to use the name and likeness of such Person shall belimited to the extent to which such Person’s name and likeness has beenapproved by Sony pursuant to the preceding sentence, and (ii) Sony may, at itssole election, terminate any rights granted to you in connection with suchPerson’s name and/or likeness upon forty-eight (48) hours notice to you (whichnotice may, notwithstanding anything to the contrary herein, be via facsimile,electronic mail or any other effective method of communication).  Upon your receipt of same, you and allSyndication Agents shall immediately cease to use the name and likeness of suchPerson on or in connection with the Service; provided, however, that solely tothe extent that you do not have the right or ability to prevent the further useor dissemination of the materials or advertisements concerned you may continueto use the name and likeness of such Person on materials previouslymanufactured and advertisements previously placed.   If you or any Syndication Agent do not cease using (directly orindirectly) any Sony Authorized Trademark or the names, likenesses orbiographical materials of any Sony Artist and/or any other Persons contributingto the recording or creation of any Sony Materials upon Sony’s request undersection 4.06(a)(i) above, then, upon Sony’s written request and withoutlimiting any of Sony’s other rights or remedies, you or the Syndication Agentconcerned, as applicable, shall terminate access to the Service (with respectto Sony Materials only).

 

4.06.       (a)       (2)      Notwithstanding the foregoing but subjectto section 4.06(c)(3) below, Subscription Service Agent shall have the right touse and to authorize Syndication Agents the right to use the names andlikenesses (solely to the extent such likenesses are contained in correspondingitems of Sony Authorized Artwork and are displayed in a size not to exceed 75pixels (height) by 

 

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75 pixels(width)) of the featured Sony Artists on the Service Site and the SyndicationAgent Sites solely on and in connection with the exploitation of Sony ClearedRecordings hereunder, provided that (A) you comply with subparagraph 4.06(b)below, (B) that such name and likeness of the featured Sony Artist concernedshall only be used in a manner that is accurately descriptive and representativeof the artists whose featured Recordings are available via the Service, andonly in a manner that appropriately and proportionately reflects suchavailability, such as by listing all such artists (including Sony Artists) inalphabetical order at all times, or alternatively, by rotating such names andlikenesses in a rotation consisting of no less than an aggregate of twenty-five(25) names of different artists such that no particular Sony Artist isdisproportionately used or emphasized, (C) such names and such likenesses ofSony Artists (to the extent such names and such likenesses are displayed inconnection with the Service on the Service Site or the Syndication Agent Siteconcerned, as the case may be) shall not be given more or less prominence thanall other artists made available via the Service by position of name, typesize, type style or otherwise, and (D) neither Subscription Service Agent norany Syndication Agent shall use any such Sony Artist’s name or likeness in amanner that can be construed by a reasonable person as an endorsement of aproduct or service, including the Service. Upon your receipt of Sony’s request to remove any Sony Materials fromthe Service, you agree that you shall, immediately thereafter but in no eventlater than ***[CONFIDENTIALPORTION OMITTED AND FILED SEPARATELY WITH THE SEC]**** from thedate of such demand, remove from the Service all Sony Materials referenced inSony’s demand; provided, however, that your non-habitual, non-repetitivefailure to so remove any particular Sony Materials in any instance(s) shall notconstitute a material breach of this Content Integration Agreement.  At Sony’s written request, you shallpromptly advise Sony in writing of your compliance with the terms of thissubparagraph, which notice shall be accompanied by all copies of the SonyMaterials concerned.  At Sony’s writtenrequest, you shall furnish Sony with an affidavit, signed by an officer ofSubscription Service Agent, in a form satisfactory to Sony in its reasonablediscretion, accurately confirming that you have destroyed and/or erased allcopies of the Sony Materials that are removed from the Service pursuant to thissubparagraph.

 

(3)      ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]****

 

(b)       You shall, promptlyfollowing Sony’s request, deliver to Sony sample copies and any other copiesrequested by Sony of artwork, packaging, containers, labels, printed programs,advertising copy and promotional material created in connection with theService along with a list of the artists, musical compositions and recordcompanies whose Recordings are used in connection 

 

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**** Confidential Portions Omitted.***

 

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with theService.  Without limiting any of Sony’srights herein, you warrant, represent and agree that, with respect to any SonyArtist whose performances are embodied on Sony Cleared Recordings, the creditsfor such artist, and the artist credits in any advertising containing theService, shall appear (in accordance with subparagraphs 4.05(c) and 4.06(a)above) in the same size, prominence and type style as the size, prominence, andtype style used in connection with credits and advertising for other artistswhose work is embodied on the Service.

 

4.07.         Subscription ServiceAgent shall not, under any circumstance, (i) attempt to pledge, mortgage orotherwise encumber the (A) Sony Materials, or, attempt to pledge, mortgage orotherwise encumber Subscription Service Agent’s rights under this ContentIntegration Agreement for the benefit of or on behalf of a Triggering Person or(B) any other tangible or intangible property of Sony provided to SubscriptionService Agent pursuant to this Content Integration Agreement (including,without limitation, End User Information) or (ii) attack or challenge thevalidity of any of Sony’s or its Affiliate’s copyrights, trademarks or otherintellectual property rights or licenses.

 

**5.**          **SECURITY**

 

5.01       (a)    All Sony Materials transmitted pursuant tothe Service shall be transmitted solely in either:

 

                           (i)        (Thisparagraph 5.01(a)(i) only applies to Streams of Sony Cleared Recordings thatare digitally transmitted directly from Agent Servers to End Users (or, in thecase of so-called “peer-to-peer Streaming”, Streams of Sony Cleared Recordingsfrom an Approved Electronic Device of another End User).)  A Streaming and Partial Data Cache formatthat:  (i) utilizes an encryptionmechanism (utilizing security features which Sony has previously approved inwriting) which is designed to prevent the creation or facilitation of anElectronic Digital Copy from Streams or Partial Data Caches (or any combinationthereof) of Sony Cleared Recordings Streamed as part of the Service hereunder,and (ii) has, in each instance, been approved by Sony in writing in advance (each,an “Approved Streaming Format”). Without limiting the generality of the preceding sentence, the followingStreaming formats are hereby deemed Approved Streaming Formats as of the datehereof: Windows Media Audio, Real G2 with Surestream, Real G2 and RealAudio 3.0only to the extent that such formats comply with and conform to the securityspecifications attached hereto as Exhibit A-2. In the event that a technology becomes generally available which isdesigned to prevent the creation or facilitation of an Electronic Digital Copyfrom Streams by means of computer software programs currently known asso-called “rippers” (e.g. the software program known as “Streambox”, orcomputer software programs with similar functionality, now known or laterdeveloped), then you shall promptly thereafter utilize such technology inconnection with all Streams of Sony Cleared Recordings hereunder.  ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]****

 

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(ii)       (Thisparagraph only applies to Playbacks of Conditional Downloads of Sony ClearedRecordings, whether or not derived from Partial Data Caches, either in whole orin part, that are digitally transmitted directly from Agent Servers or from theApproved Electronic Device of one (1) End User to another End User (i.e.,so-called “peer to peer file sharing”)). A Playback format that:  (i)utilizes an encryption mechanism (utilizing security features which Sony haspreviously approved in writing) which is designed to prevent the creation orfacilitation of an Electronic Digital Copy from Conditional Downloads and/orPartial Data Caches transmitted as part of the Service hereunder, (ii) in thecase of digital transmissions of Sony Cleared Recordings from the ApprovedElectronic Device of one (1) End User to another End User (i.e., so-called“peer to peer file sharing”), such transmissions do not cause any materialdegradation in audio quality or data loss of any kind as a result of serialcopying, in whole or in part, directly or indirectly, (iii) utilizes effectivetechnological means designed to prevent Persons from editing, changing orremoving (except as provided in this clause (ii)) any part of the SonyMaterials contained therein or from making a copy (including an ElectronicDigital Copy) thereof, or from moving or transferring such file to anElectronic Device that is not an Approved Electronic Device, and (iv) has, ineach instance, been approved by Sony in writing in advance (each, an “ApprovedPlayback Format”).  Without limitingthe generality of the preceding sentence, the following Playback format ishereby deemed an Approved Playback Format as of the date hereof: Windows MediaAudio only to the extent that such format complies with and conforms to thesecurity specifications attached hereto as Exhibit A-2.  In the event that a technology becomesgenerally available which is designed to prevent the creation or facilitationof an Electronic Digital Copy from Conditional Downloads by means of computersoftware programs currently known as so-called “sound card rippers” (e.g. thesoftware program known as “Total Recorder”, or computer software programs withsimilar functionality, now known or later developed), then you shall promptlythereafter utilize such technology in connection with all Conditional Downloadsand Partial Data Caches of Sony Cleared Recordings hereunder.  ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]****

 

 

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**** Confidential Portions Omitted.***

 

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(b)      (1)       The security features, specifications andformats referred to in subparagraph 5.01(a) above and subparagraph 5.01(c)below, including the Approval Streaming Format and the Approved PlaybackFormat, together with the features, specifications and attributes described inparagraphs 1.05, 1.13, 1.26, 1.29, 1.42, 5.02, 5.02.1 and 5.06 herein,respectively, and the Technical Specifications and the FunctionalitySpecifications attached hereto, respectively, are sometimes individually andcollectively referred to herein as “Approved Security Features”.  Without limiting the generality of thisArticle 5, the Approved Security Features utilized by Subscription ServiceAgent shall at all times be of the highest technical standards, which arewidely considered the so-called “state-of-the-art” in the United Stateselectronic commerce industry, including an encryption methodology which iseffectively designed to prevent any Person receiving a Stream or a Playback ofSony Materials via the Service from creating an Electronic Digital Copy of SonyCleared Recordings

 

(2)                 ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]****

 

(c)     (i)      Within ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITHTHE SEC]**** of the establishment of industry standards under theSecure Digital Music Initiative (SDMI) or any other similar standardizeddigital copy protection scheme for audio recordings (an “SDMI Standard”) andprovided that (i) the SDMI Standard is incorporated into formats that areavailable to CenterSpan on reasonable (for the purpose hereof, “reasonableness”shall be determined by taking into account the cost of implementing the SDMIStandard as compared to the general operating costs of CenterSpan in general)non-discriminatory terms (i.e., implementation will not impose adisproportionately greater financial or technical burden on CenterSpan than areimposed on similarly-situated competitors of CenterSpan) and (ii) if the SDMIStandard is or is likely to become a generally-accepted standard in the U.S.phonorecord and United States consumer electronics industries, respectively,then CenterSpan agrees to: (x) only transmit Sony Materials in a Streamingformat that complies fully with such standards and (y) license any proprietarytechnology duly adopted by the SDMI Plenary Body and/or the SDMI Foundation orany similar body or institute (to the extent such technology is available)including, without limitation, any watermarks. Unless and until such time as there shall have been established an SDMIStandard, you shall only transmit Sony Materials Streamed via the Service in anApproved Streaming Format or, in the case of Conditional Downloads, you shallonly transmit Sony Materials in an Approved Playback Format that complies fullywith the Streaming Security Functional Requirements attached hereto as ExhibitB, as same may be modified by the SDMI Foundation or any similar body orinstitute from time to time.

 

(ii)         If CenterSpan isunwilling or unable to: (x) transmit Sony Materials in a Streaming format thatcomplies fully with an SDMI Standard or (y) license any proprietary technologyduly adopted by the SDMI Plenary Body and/or the SDMI Foundation or 

 

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**** Confidential Portions Omitted.***

 

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any similar body or institute(to the extent such technology is available) including, without limitation, anywatermarks, as and when required under section 5.03(c)(i) above (taking intoaccount clause (i) of section 5.03(c)(i) above), then CenterSpan shall have theoption, exercisable by notice to Sony, to suspend the Term (such notice issometimes referred to herein as the “SDMI Suspension Notice”) until the date onwhich you comply with the requirements set forth in section 5.03(c)(i) above(the period commencing on the date of your SDMI Suspension Notice and ending onthe date on which you comply with the requirements set forth in section5.03(c)(i)  above is sometimes referredto herein as the “SDMI Suspension Period”). In the event you suspend the Term pursuant to the previous sentence, therunning of the Term as well as any of Sony’s obligations hereunder for theduration of any such suspension, shall be so suspended for a period equal tothe SDMI Suspension Period (i.e., the Term shall be extended); provided,however, that in no event shall the running of the Term be suspended for aperiod in excess of ***[CONFIDENTIALPORTION OMITTED AND FILED SEPARATELY WITH THE SEC]****.  No such suspension shall relieve you of yourobligations under this Content Integration Agreement.  For the avoidance of doubt, during the SDMI Suspension Period,you shall disable or remove from the Service all Sony Materials, all SonyAuthorized Trademarks and all Links to Web Sites owned or controlled bySony.  In the event that you do notcomply with the requirements set forth in section 5.03(c)(i) above within ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** in section 5.03(c)(i) abovethen, without limiting any of Sony’s rights or remedies hereunder or otherwise,Sony shall have the option, exercisable by notice to you and without limitingany of its rights or remedies, to deem such failure a Default Event.

 

5.02.       In order to ensurethat all Persons other than End Users are prevented from accessing any SonyMaterials contained in the Service, Subscription Service Agent shall cause theSubscription Service to operate in accordance with each of the followingsecurity features at all times during and after the Term:

 

(a)         TheService shall utilize systems which contain a mechanism which effectivelyprevents: (i) Persons other than End Users from accessing the Service, (ii) anEnd User from accessing the Service from more than one Electronic Devicesimultaneously and (iii) an End User from accessing the Service from an ElectronicDevice that is not a Permitted Electronic Device.

 

(b)         TheService shall utilize systems which contain a mechanism which is designed toprevent a Person other than the End User for whom any particular User Accountis established from accessing any Web Page pertaining to such User Account.

 

(c)         TheService shall utilize systems which contain a mechanism which effectivelyprevents the sharing of passwords and simultaneous access by more than onePerson to any one (1) User Account.

 

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**** Confidential Portions Omitted.***

 

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(d)         TheService shall utilize systems which contain a mechanism which effectivelyprevents the creation of Downloads or Electronic Digital Copies of Sony ClearedRecordings Streamed hereunder, including, without limitation, by means ofcomputer software programs currently known as so-called “stream rippers” (e.g.the software program known as “Streambox”, or computer software programs withsimilar functionality, now known or later developed).

 

(e)         TheService shall utilize systems which contain a mechanism which effectivelyprevents the creation of Downloads or Electronic Digital Copies of Sony ClearedRecordings Playedback hereunder.

 

(f)          TheService shall ensure that Persons shall not be able to access ConditionalDownloads after such Persons are no longer End Users in good standing or areotherwise no longer eligible to receive and/or retain the Conditional Downloadconcerned for any other reason.

 

5.02.1.     At all times duringthe Term you shall ensure that all Sony Cleared Recordings used in connectionwith Service shall at all times: (i) originate from files on the Agent Serversand (ii) be available to End Users directly from the Service Site or from theService Site indirectly via a Syndication Agent Site (in accordance with theterms and conditions of this Content Integration Agreement).  For the avoidance of doubt, in the case ofso-called “peer to peer file sharing”, Sony Cleared Recordings may originatefrom files on the hard drive of an Approved Electronic Device of an End User incompliance with the terms hereof.

 

5.06.        (a)       At all times during the Term, you shallactively monitor compliance by each Person accessing Sony Materials via theService or otherwise of the Approved Security Features.  In the event that you become aware that anyApproved Security Features are reasonably capable of circumvention by anyPerson, you shall immediately inform Sony thereof.  Upon being so informed by you, or alternatively, upon Sony’sinforming you that any Approved Security Features are reasonably capable ofcircumvention by any Person (the capability of such circumvention is sometimesreferred to herein as a “Security Flaw”), you and Sony shall immediatelydiscuss an appropriate course of action, taking into account, at a minimum, theseverity of the Security Flaw, the scope of any commercial impact upon Sonyresulting from the exploitation of the Security Flaw, the likelihood ofrepeated circumvention, the risk to any intellectual property rights of Sonyand its Licensees, and the cost to CenterSpan of addressing the SecurityFlaw.  CenterSpan shall (i) implementany reasonable resolution proposed by Sony after such discussions within theshortest possible time period that is commercially practicable (in no eventshall this period last more than ***[CONFIDENTIAL PORTION***

 

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***OMITTED AND FILEDSEPARATELY WITH THE SEC]**** from the date ofdiscovery of the Security Flaw concerned); and (ii) give Sony, within ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]**** of the date of discovery of theSecurity Flaw concerned, such assurances and furnish to Sony such plans as arereasonably satisfactory to Sony detailing, with reasonable particularity, thesteps that have been taken and the steps that you propose to take in connectionwith clause (i) of this sentence. Nothing in this paragraph 5.03 shall be deemed to limit any of Sony’srights or remedies hereunder or otherwise, including, for the avoidance of doubt,Sony’s right to recover damages (whether or not you have complied or attemptedto comply with the provisions of this paragraph), and the provisions ofparagraph 16.01 shall, for the avoidance of doubt, require you to indemnifySony for all damages arising from all Security Flaws in accordance with theprovisions thereof (whether or not you have complied or attempted to complywith the provisions of this paragraph).

 

(b)      Inthe event that any Security Flaw is not cured by you as and when required undersubparagraph 5.03(a) above, or alternatively, if you fail to implement anyresolution proposed by Sony on the basis that you dispute whether the breach ofthe Security Flaw concerned is material or damaging to Sony or its Licensees orAffiliates for any reason or on the basis that the resolution proposed by Sonyis “reasonable” in light of the criteria specified in the second sentence ofsubparagraph 5.03(a) or otherwise, then, without limiting any of Sony’s rightsor remedies hereunder or otherwise (the parties hereby acknowledge that, aftertaking into account such criteria, termination of the Service, to the extentSony Materials are utilized in connection therein, termination of the Term andthe triggering of an “Event of Default” hereunder might be “reasonable”;provided, however that Sony shall not have the right to terminate the Term andtrigger an “Event of Default” hereunder unless ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITHTHE SEC]**** Sony has first sent a Suspension Notice (as defined below)in respect of such Security Flaw), Sony shall have the option, exercisable bynotice to you (which notice, notwithstanding anything to the contrary herein,may be via facsimile, electronic mail or any other effective method ofcommunication), to suspend the Grant of Rights (such notice is sometimesreferred to herein as the “Suspension Notice”) until such time as: (x)you have taken all steps necessary to eliminate the Security Flaw concerned;(y) you have given Sony such assurances and have furnished to Sony such plansas are reasonably satisfactory to Sony detailing, with reasonableparticularity, the measures that have been taken and the steps that you proposeto take pursuant to clause (x) of this sentence; and (z) Sony has sent you anotice (the “Suspension Reversal Notice”) confirming that each of therequirements set forth in clauses (x) and (y) have been satisfied (the periodcommencing on the date of Sony’s Suspension Notice and ending on the date of aSuspension Reversal Notice is sometimes referred to herein as the “Suspension

 

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**** Confidential Portions Omitted.***

 

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Period”).  In the event Sony suspends the Grant ofRights pursuant to the previous sentence, the running of the Term as well as anyof Sony’s obligations hereunder for the duration of any such suspension, shallbe so suspended for a period equal to the Suspension Period (i.e., the Termshall be extended); provided, however, that in no event shall the running ofthe Term be suspended for a period in excess of thirty (30) days.  For the avoidance of doubt, during theSuspension Period, you shall disable or remove from the Service all SonyMaterials, all Sony Authorized Trademarks and all Links to Web Sites owned orcontrolled by Sony.  In the event thatany Security Flaw in respect of which Sony has sent Subscription Service Agenta Suspension Notice hereunder is not cured by Subscription Service Agent asrequired hereunder within ninety (90) days (or, if the Security Flaw is solelydirectly attributable to a failure of Microsoft’s digital rights managementtechnology or other Microsoft software, as described in greater particularityin the Technical Specifications attached hereto (excluding any reason directlyattributable to the acts or omissions of CenterSpan, directly or indirectly, inwhole or in part), one hundred twenty (120) days) of the date of the SuspensionNotice concerned then, without limiting any of Sony’s rights or remedieshereunder or otherwise, Sony shall have the option, exercisable by notice toSubscription Service Agent, to deem such failure a Default Event.

 

(c)        Without limiting thegenerality of anything elsewhere herein or any of Sony’s rights or remedies,each of which is hereby expressly reserved, immediately after becoming awarethat any Person has utilized or has exploited any Security Flaw, eitherdirectly or indirectly, or immediately after Sony has advised SubscriptionService Agent that Persons are utilizing or exploiting any Security Flaw,either directly or indirectly: (i) all such Persons shall no longer be deemedEnd Users hereunder, (ii) Subscription Service Agent shall immediately andunconditionally cancel, or require the applicable Syndication Agent to cancel,such Person’s User Account; and (iii) Subscription Service Agent shall take allnecessary steps to ensure that such Person can no longer access the Service atany time thereafter.

 

5.04.      Without limiting thegenerality of anything in this Content Integration Agreement, neitherSubscription Service Agent nor any Person deriving rights from SubscriptionService Agent shall, through Subscription Service Agent’s acts or omissions,either directly or indirectly, in whole or in part, create or facilitate thecreation of Electronic Digital Copies of any Sony Materials except to theextent expressly permitted herein in connection with the Service.

 

5.05.      Upon reasonable advancenotice and subject to paragraph 14.02, Sony shall have the right, at its ownexpense, to conduct technical audits of the Service including, for theavoidance of doubt and without limitation, all hardware and software componentsand systems utilized by Subscription Service Agent in connection with theService including server logs, and all documentation setting forth SubscriptionService Agent’s policies and procedures with respect to security features andformats including but not limited to, the Approved Security Features.  Sony shall use reasonable efforts to conductsuch technical audit in a

 

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non-intrusive manner and shallhave the right the conduct such technical audit only one time per semi-annualperiod; provided, however, that in the event Sony has notified you of aSecurity Flaw, the foregoing restriction shall not apply and Sony shall beentitled to conduct a technical audit whether or not a technical audit(s) haspreviously been conducted during that semi-annual period.  In addition, as and to the extent that youhave the right to conduct technical audits of Syndication Agents, Sony shall beallowed to actively participate, through Persons designated by Sony in its solediscretion, in technical audits of Syndication Agents conducted by you or, ifSony declines to so participate in the audit concerned, promptly following Sony’srequest therefor, in each instance, Sony shall be furnished with a copy of allreports, materials and other information received by you in connection with orarising out of each technical audit of each Syndication Agent conducted by you.  Without limiting the generality of theforegoing, at all times, you shall use best good faith reasonable efforts toobtain such technical audit rights from the Syndication Agents.

 

5.06.        (a)       You hereby represent and warrant that atall times during the Term only Approved Media Players (as defined below) shallbe used by End Users of the Service in connection with the transmission,performance and/or playback of Recordings during each session in which the EndUser concerned has access to reproductions, performances and/or transmissionsof Sony Cleared Recordings made available via the Service, either in whole orin part, directly or indirectly.

 

(b)      (1)      As used herein, a “Media Player”shall mean a computer program which is used or useful in the transmission,performance and/or playback of Recordings so that the digital data thatembodies the audio or audiovisual recording concerned can be perceived by andcommunicated to an End User of such computer program when used in conjunctionwith the aid of a machine or device. For the avoidance of doubt and without limitation, Microsoft’s “WindowsMedia Audio Version 7”, WMA8 and RealNetwork’s “RealPlayer 8” are “MediaPlayers” as of the date hereof.

 

(b)      (1)     Omittedwithout implication.

 

(b)      (3)     Asused herein, an  “Approved MediaPlayer” shall mean ***[CONFIDENTIALPORTION OMITTED AND FILED SEPARATELY WITH THE SEC]****

 

(c)       ***[***CONFIDENTIAL******PORTION***OMITTED AND FILED SEPARATELY WITHTHE SEC]****

 

----

**** Confidential Portions Omitted.***

 

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**6.             PAYMENTS AND FEES**

 

6.01.       (a)       You shall make the following payments toSony, by wire transfer or certified check, in immediately available funds onthe dates specified  in subparagraphs6.01(b) and (c) below: (i) a non-recoupable, non-returnable payment in the amountof One Million Dollars ($1,000,000) (the “Service Preparation Fee”) and (ii) arecoupable Advance in the amount of One Million Dollars ($1,000,000) (the“Initial Advance”).

 

(b)       The Service PreparationFee shall be payable as follows: (i) Five Hundred Thousand Dollars ($500,000)promptly (but in no event later than five (5) days) following completeexecution of this Content Integration Agreement and (ii) Five Hundred ThousandDollars ($500,000) on or before September 1, 2002.

 

(c)       The Initial Advance shallbe payable as follows:

 

(i) Two Hundred and Fifty Thousand Dollars($250,000) promptly (but in no event later than five (5) days) following theearlier of: (i) September 1, 2002 and (ii) that date on which you enter intothe first Syndication Agent Agreement hereunder;

 

(ii) Two Hundred and Fifty Thousand Dollars($250,000) promptly (but in no event later than five (5) days) following theearlier of: (i) December 1, 2002 and (ii) the date that is three months afterthe date on which you enter into the first Syndication Agent Agreementhereunder;

 

(iii) Two Hundred and Fifty Thousand Dollars($250,000) promptly (but in no event later than five (5) days) following theearlier of: (i) March 1, 2003 and (ii) the date that is six months after thedate on which you enter into the first Syndication Agent Agreement hereunder;

 

(iv) Two Hundred and Fifty Thousand Dollars($250,000) promptly (but in no event later than five (5) days) following theearlier of: (i) June 1, 2003 and (ii) the date that is nine months after thedate on which you enter into the first Syndication Agent Agreement hereunder.

 

6.02.       (a)        Simultaneous with the complete executionof this agreement, and in consideration of the mutual covenants containedherein, you hereby agree to award, transfer and assign to Sony Two HundredEighty Three Thousand Five Hundred Fifty Six (283,556) shares of common stockof Subscription Service Agent (representing an interest equal to at least threepercent (3%) of the total issued and outstanding capital stock of SubscriptionService Agent) (the “Equity Consideration”).

 

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               (b)        The transfer of theEquity Consideration shall be pursuant to a common stock acquisition andinvestor rights agreement (the “Stock Purchase Agreement”), in form andsubstance satisfactory to Sony and entered into by the parties simultaneouslyherewith.

 

               (c)        Simultaneous with thecomplete execution of this agreement, and in consideration of the mutualcovenants contained herein, you hereby agree to award, transfer and assign toSony warrants (“Warrants”) granting Sony the option to acquire an additionalinterest in CenterSpan equal to One Hundred Eighty Nine Thousand Thirty Seven(189,037) shares of common stock of Subscription Service Agent (representing aninterest equal to at least two percent (2%) of the total outstanding capitalstock of CenterSpan) at an exercise price equal to the thirty (30) day tradingday trailing volume weighted average price as of the sate that is thirty (30)days prior to the date first written above.

 

               (d)        The transfer of theWarrants shall be pursuant to a Warrant to Purchase Preferred Stock, in formand substance satisfactory to Sony and entered into by the partiessimultaneously herewith.

 

6.02.1.    (a)        ***[***CONFIDENTIAL***PORTION OMITTED AND FILED SEPARATELY WITH THE SEC]****

 

               (b)        (1)          ***[***CONFIDENTIAL***PORTION OMITTED AND FILED SEPARATELY WITH THE SEC]****

 

                           (2)          ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]****

 

               (c)        ***[***CONFIDENTIAL***PORTION OMITTED AND FILED SEPARATELYWITH THE SEC]****

 

6.02.2.    (a)        ***[***CONFIDENTIAL***PORTION OMITTED AND FILED SEPARATELY WITH THE SEC]****

 

               (b)       ***[***CONFIDENTIAL***PORTION OMITTED AND FILEDSEPARATELY WITH THE SEC]****

 

               (c)       ***[***CONFIDENTIAL***PORTION OMITTED AND FILEDSEPARATELY WITH THE SEC]****

 

6.03.       (a)       ***[***CONFIDENTIAL***PORTION OMITTED AND FILED SEPARATELY WITH THE SEC]****

 

               (b)       ***[***CONFIDENTIAL***PORTION OMITTED AND FILEDSEPARATELY WITH THE SEC]****

 

----

**** Confidential Portions Omitted.***

 

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6.04.     (a)    (i)        CenterSpanshall compute the Service Fees and any other payments accrued hereunder as ofthe end of each calendar quarter-annual period hereunder.  Within thirty (30) days following the end ofeach quarter-annual period hereunder, CenterSpan shall send Sony an accountingstatement covering that computation setting forth a description and calculationof the applicable payments in detail sufficient to support the calculations ofthe amounts paid, including the items of information described in section6.04(a)(ii) below (the “Service Fee Report”), together with any Service Feeswhich are due after deducting unrecouped Advances and other sums which are due;provided, however, that if Sony administers Publishing Rights pursuant tosubsection 4.03(e)(2)(iii), then you shall send Sony the Service Fee Report andany such Service Fees and other sums which are due thereunder, including anysums payable pursuant to section 4.03(e)(2)(ii) above, within fifteen (15) daysfollowing the end of each quarter-annual period hereunder (or such shorterperiods as may be reasonably necessary in order for Sony to effectively andtimely administer Publishing Rights obtained by Sony hereunder and payPublishing costs in connection therewith (e.g., monthly)).

 

(ii)              Withoutlimiting the generality of anything in section 6.04(a)(i) above, each suchService Fee Report shall contain, among other things, a description andcalculation of the applicable payments payable for the period concerned indetail sufficient to support the calculations of the amounts paid, as well assuch additional information as Sony may require for each Sony Cleared Recordingaccessed via the Service, including but not limited to:

 

(A) the number of Streams and the number ofPlaybacks of each Sony Cleared Recording accessed during the period inquestion, sorted by featured artist name, track title, the ISRC number for theRecording concerned (or such other alphanumeric identifier as Sony maydesignate in advance for the Recording concerned), the name of the SyndicationAgent from whom the End User obtained access to the Stream or ConditionalDownload in question, the Subscription Fees applicable to the Stream orConditional Download in question, and the allocated unit price per Stream orConditional Download in question.

 

(B) the Monthly Playback Number of all otherRecordings accessed in connection with the Service on an aggregate basis;

 

(C) the number of End Users and otherPersons, if any, who accessed Recordings in connection with the

Service; and

 

(D) a statement of Gross Revenue for theaccounting period concerned itemizing, with reasonable particularity, each ofthe items set forth in paragraph 6.03.

 

(b)       Atall times during the Term, Subscription Service Agent shall maintaincomprehensive standard management reporting systems capable of tracking allinformation which Sony reasonably requests be included in the Service FeeReports.

 

(c)        Allpayments becoming due to Sony under this Content Integration Agreement will bemade in full by Subscription Service Agent without any offset or deduction;provided, however, no Service Fees shall be due and payable to Sony until suchtime as all Advances theretofore paid have been recouped by or repaid to you.

 

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(d)    Subscription Service Agent shall payinterest at the rate per month equal to the rate reported by the Wall StreetJournal as the prime rate for major banks plus one percent (1%), or the maximumrate permitted by law, whichever is less, from the date due, on any requiredpayment that is not made on or before its due date, without prejudice to anyother rights Sony may have in connection with such delinquency.

 

6.05.     Omittedwithout implication.

 

6.06.     SubscriptionService Agent shall cause the independent public accounting firm that auditsSubscription Service Agent’s books and records to prepare in respect of eachfiscal year of Subscription Service Agent during the Term an agreed uponprocedures report (each, a “Procedures Report”) verifying that the financialand other information contained on the Service Fee Reports correspond directlyto the underlying books and records of Subscription Service Agent, withoutadjustment and/or reconciling items. Such books and records shall be the basis for Subscription ServiceAgent’s own audited financial statements and shall be subject to an adequatesystem of internal accounting controls surrounding the assertions ofcompleteness, accuracy, occurrence proper period and valuation.  Each such Procedures Report shall bedelivered to Sony by no later than forty-five (45) days following the end ofthe fiscal year covered by the Procedures Report.

 

6.07.     SubscriptionService Agent shall maintain accurate and complete records and books of accountin accordance with GAAP applied on a consistent basis, which shall include, ata minimum, all documentation needed by Sony to compute and verify the paymentspayable to Sony hereunder, and to verify all of the information required to bedelivered to or otherwise made available to Sony in connection with theperformance of this Content Integration Agreement.  No more than once per year, and only within three and one-half(3-1/2) years following the termination or expiration of the Term, Sony’srepresentatives will have the right to examine those books and records at anytime during Subscription Service Agent’s normal business hours, and to makecopies of them and extract information from them.  Subscription Service Agent will cooperate with Sony’srepresentatives to insure their reasonable (as construed broadly in order forSony to enforce and protect its interests in connection with this ContentIntegration Agreement) access to Subscription Service Agent’s books and recordsand will furnish such supplemental information and documents as Sony mayrequest. If the audit establishes that Subscription Service Agent hasunder-accounted and/or underpaid any Service Fees (deficiency) of elevenpercent (11%) or more of the Service Fees reported during the audit period thenthe total expenses of such inspection, including fees, shall be borne bySubscription Service Agent. Subscription Service Agent shall promptly pay the amount of suchdeficiency, plus interest, as provided herein.

 

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6.08.     Omittedwithout implication.

 

6.09.     Youwarrant and represent that you will bear and pay any and all taxes, duties andcustoms of any kind, however designated, levied or based in any way anywhere inthe Territory upon the performance of your obligations under this ContentIntegration Agreement or the sale or resale of any products or services by you,including, for the avoidance of doubt and without limitation, all sales, use,excise, purchase, value added or similar taxes (other than income taxes payableby Sony on monies earned by Sony under this Content IntegrationAgreement).  You will execute anydocuments Sony may deem necessary or desirable to evidence your liability forsuch taxes.  If any claim is madeagainst Sony for such taxes, you will promptly remit to Sony such sums togetherwith any penalties and interest assessed.

 

6.10.     Fora period of three and one-half (3-1/2) years following the last day of theTerm, Subscription Service Agent shall retain all transaction data, End UserInformation and other data or information reasonably necessary for Sony andSubscription Service Agent to determine and verify all amounts due or payablehereunder and for accounting purposes, including, without limitation, each ofthe items required in each Service Fee Report.

 

**7.**            **EXTRANET;END USER INFORMATION**

 

7.01.     (a)  Commencing as of the date that is thirty(30) days from the date hereof, you will make available to Sony for accesstwenty-four (24) hours per day, seven (7) days per week, an electronicmechanism (e.g., a so-called “extranet”) (the “Extranet”) whereby Sony shallhave access to detailed information in respect of the Service, whichinformation is updated at no less than daily intervals, including, withoutlimitation, with respect to the following types of information:

(1) a list of all Streams and ConditionalDownloads of Sony Cleared Recordings, organized by artist, title and “label”(e.g. Epic Records, Columbia Records, 550 Music);

 

(2) Aggregate Information; and

 

(3) a comparison of the number of Streams andConditional Downloads (as well as the number of Playbacks thereof) of SonyCleared Recordings hereunder with the total number of Streams and ConditionalDownloads (as well as the number of Playbacks thereof) of Recordings madeavailable on the Service.

 

(b)  Without limiting thegenerality of anything in subparagraph 7.01(a) above, the Extranet shall alsocontain, at a minimum, the following information regarding each Sony ClearedRecording Streamed hereunder and each Conditional Download Downloadedhereunder:

 

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(1) the name(s) of the recording artist(s)whose featured performances are embodied on the Sony Cleared Recording;

 

(2) title of the Sony Record from which theSony Cleared Recording concerned was encoded;

 

(3) the Sony label;

 

(4) the catalog number applicable to the SonyRecord from which the Sony Cleared Recording concerned was encoded;

 

(5) the initial release date that you makethe Sony Cleared Recording concerned available as part of the Service;

 

(6) the ISRC Code (or such other alphanumericidentifier as Sony may designate in advance for the Recording concerned)applicable to the Sony Record from which the Sony Cleared Recording concernedwas encoded; and

 

(7) the aggregate number of times such SonyCleared Recording was Streamed and Conditionally Downloaded of each Stream andConditional Download.

 

(c)  The Extranet shall also contain suchadditional information as Sony and Subscription Service Agent may mutuallyagree upon from time to time during the Term, and in no event shall theExtranet contain less information than the information provided to any otherPerson owning or controlling rights in or to Recordings made available on theService.

 

(d)  Subject to Article 14, at all times, Sonyshall have the unrestricted ability to make copies of any information containedin the Extranet, including, for the avoidance of doubt and without limitation,so-called “page views”, in both human readable form (e.g., printed copies) andmachine readable form (e.g., computer files).

 

7.02.        (a)             At all times during the Term, youshall collect and retain User Information from all End Users.  All such User Information, to the extent itis Aggregate Information, collected and retained by you shall be jointly andequally owned by each of you and Sony. Each of you and Sony shall at all times during the Term haveunrestricted access to all such Aggregate Information applicable to EndUsers.  Without limiting the generalityof this paragraph 7.02, Aggregate Information shall not be sold by Sony to anythird party or used by Sony for purposes other than in connection with Sony’sown internal analysis or review.

 

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(b)        EachEnd User shall, when registering to become a subscriber of the Service on theService Site (and specifically excluding those who join the Service via aSyndication Agent Site), be offered in clear, prominent and unambiguous terms(which terms shall be subject to Sony’s prior, written consent in eachinstance) the option to subscribe to Sony Music’s electronic mailing list (eachEnd User who has subscribed to Sony Music’s electronic mailing list shallhereinafter be referred to as a “Sony Subscriber”).  Without limiting the first sentence of this paragraph 7.02, youshall deliver to Sony in a file format reasonably acceptable to Sony, the nameand electronic mail address of each Sony Subscriber promptly following the datethat the Sony Subscriber concerned has subscribed to Sony Music’s electronicmailing list.

 

7.03.     Eachof the parties hereby represents and warrants to the other that: (a) all usesby such party and each Person deriving rights from such party of End UserInformation shall at all times comply with such party’s privacy policy ineffect at the time that the End User Information concerned was collected bysuch party, and (b) each party’s privacy policy with respect to the collectionand use of User Information shall at all times comply with any and allapplicable laws, and shall at all times otherwise be in accordance with allgenerally accepted customs and practices in the electronic commerce industry inthe United States.

 

**8.            SYNDICATIONAGENTS**

 

8.01.     Subjectin each case to the restrictions herein, you shall be permitted to enteragreements with Syndication Agents whereby such agents: (i) will facilitateSony’s sale of Streams and Conditional Downloads to End Users by providingaccess to the Service from Syndication Agent Sites and (ii) will provide accessto the Service from Syndication Agent Sites by creating a Link between such WebSites and the Service Site.  EachSyndication Agent’s ability to access and/or control the Sony Materials shallbe limited solely to the ability of the Syndication Agent to access and retransmitthe Service by Linking its Syndication Agent Site to the Service Site.  Except as set forth herein, no SyndicationAgent shall have the right to: (i) use any Sony Authorized Trademark or any ofthe Sony Materials for any purpose whatsoever (including marketing of theService or the Syndication Agent Site) without the express written consent ofSony or (ii) allow any Person other than an End User (or potential End Userpursuant to a limited, free-trial membership) to access the Service.  Notwithstanding the foregoing or anythingelsewhere herein, Syndication Agent may allow Persons other than End Users toaccess the Service to the extent permitted under section 4.06(a)(2); provided,however, that such Persons shall not be entitled to Stream or Playback any SonyCleared Recordings unless and until such Persons qualify as End Users 

 

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hereunder.  All aspects of the Service shall, at alltimes, remain under the sole control and authority of the Subscription ServiceAgent.  Syndication Agents may have theright, power or authority to “co-brand”, or otherwise market the Service underany other name, but shall not have the right, power or authority to “privatelabel” the Service (i.e., brand the Service in a manner that does notprominently and accurately attribute to Subscription Service Agent’s role inconnection with the Service).  For theavoidance of doubt, in the event that the Service is presented bearing aSyndication Agent’s brand, trademark or other identifying information, and alsoincludes the phrase “Presented by CenterSpan.com” or the phrase “Powered byC-Star” (or another equivalent phrase accurately denoting some affiliation withSubscription Service Agent) on each Web Page that forms a part of the Service,such presentation shall be deemed to be “co-branded” version of the Service andnot a “private label” version of the Service.

 

8.02.     APerson must satisfy all of the following conditions in order to constitute aSyndication Agent hereunder:

 

(a)    Itmust not be owned or controlled by you, directly or indirectly, and it mustenter into an agreement with the Subscription Service Agent that complies withthe terms of this Content Integration Agreement with respect to the use of theSony Materials by Syndication Agents (a “Syndication Agent Agreement”).

 

(b)    Itmust only have access to the Service during the Term of this ContentIntegration Agreement, and its use of the Sony Materials must comply with theterms, conditions and limitations set forth in this Content IntegrationAgreement.

 

(c)    (i)(This section 8.02(c)(i) shall only apply in respect of Syndication Agents thatare not Data Network Syndication Agents.) It must be based in the United States, its URL must end in “.com”,“.net”, “.biz”, “.info”, or similar top-level domain name used for generalcommercial purposes in the United States or Canada, respectively, it mustneither transmit nor retransmit the Service outside the United States eitherdirectly or indirectly via subdirectory or otherwise (subject to paragraph2.02), and it must not syndicate, frame or deep link the Service to a serverlocated outside the United States.

 

(ii) (This section 8.02(c)(ii) shall onlyapply in respect of Syndication Agents that are Data Network SyndicationAgents.)  It must neither transmit norretransmit the Service outside the United States or Canada, as the case may be,either directly or indirectly, in whole or in part.

 

 

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(d)    Itmust not engage in the endorsement of political positions or politicalcandidates (excluding endorsements that are solely incidental and notaffiliated with the Syndication Agent concerned, such as by displaying rotating“run of the site” banner advertisements over which the Syndication Agent has orhad no editorial discretion or endorsement, whether in whole or in part,directly or indirectly) and it must not engage in the sale of, or advertise,tobacco, firearms, personal hygiene products, pornography, religious causes orany other subject matter which Sony deems in its sole, reasonable discretion tobe objectionable or which, in the opinion of Sony’s attorneys could subjectSony or any other Person to liability.

 

(e)    Neitherit nor any Affiliate or licensee of it may engage in the sale of productsdesigned to circumvent copy protection mechanisms (e.g., audio and/or videostream capture software) or any services, Web Sites and/or products (e.g.,software) that directly or indirectly facilitate the reproduction (or otheruse), distribution, display and/or performance of copyrighted, trademarked orservice marked materials or other property or other tangible or intangiblerights of Sony, any Affiliate of Sony or any Sony Artist without the expressauthorization of the applicable rightsowners.

 

If at any time during the Termyou become aware that a Syndication Agent ceases to comply with conditions (b)— (e) above, you agree to notify Sony immediately thereafter and you agree toblock such Syndication Agent’s access to the Sony Materials as soon aspracticable but in no event later than twenty-four (24) hours thereafter,subject to the remainder of this paragraph 8.02.  If at any time during the Term Sony becomes aware that aSyndication Agent ceases to comply with condition (d) above, Sony agrees tonotify you (which notice, notwithstanding anything to the contrary herein, maybe via telephone, facsimile, electronic mail or any other effective method ofcommunication) and you shall notify the Syndication Agent concerned of suchnon-compliance and use your best efforts to cause such Syndication Agent tocure such non-compliance; provided that Sony’s failure to so notify you shallnot be deemed a breach of this Content Integration Agreement.  In the event that the non-compliance concernedis not cured to Sony’s satisfaction within ten (10) days following Sony’snotice to you, then you shall immediately and permanently deny such SyndicationAgent access to the Sony Materials and you shall promptly thereafter send Sonya notice which accurately confirms, with reasonable particularity, such denial.

 

8.03.     (a)    You shall use best efforts to cause eachSyndication Agent to abide by the applicable Syndication Agent Agreement (tothe extent applicable to the Sony Materials) and the terms of this ContentIntegration Agreement (to the extent they apply to the Syndication Agent).  If you become aware of any breach or if yoususpect any breach of any of the Syndication Agent Agreements, or if you becomeaware or you suspect that any Syndication Agent’s use of the Sony Materials orthe Sony Trademarks violates any terms of this Content Integration Agreement,you shall immediately notify Sony and the Syndication

 

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Agent thereof, and you agree to use your best efforts to cause suchSyndication Agent to cure such breach. In addition, if Sony notifies you of any such breach, or alleged breach,you shall notify the Syndication Agent concerned of such breach and use yourbest efforts to cause such Syndication Agent to cure such breach.  In the event that the material breachconcerned is not cured to Sony’s satisfaction within forty-eight (48) hoursfollowing your or Sony’s notice of breach to the Syndication Agent concerned(whichever is sooner) (which notice, notwithstanding anything to the contraryherein, may be via telephone, facsimile, electronic mail or any other effectivemethod of communication), then you shall so notify Sony and you shallimmediately and permanently deny such Syndication Agent access to the SonyMaterials.  You shall cooperate withSony in any action or proceeding Sony commences against any Syndication Agentwhose use of the Sony Materials violates the terms of this Content IntegrationAgreement or the Syndication Agent Agreements. The Subscription Service Agent assumes full responsibility for eachSyndication Agent’s compliance with the terms of this Content IntegrationAgreement.

 

(b)    SubscriptionService Agent covenants, warrants and represents to Sony that: (i) eachSyndication Agent Agreement shall be consistent in all material respects withthe terms and conditions of this Content Integration Agreement; (ii) eachSyndication Agent Agreement shall explicitly afford Sony, as a third partybeneficiary of such agreement, all of the same rights and remedies with respectto the Syndication Agent’s use of the Sony Materials (including, withoutlimitation, all rights of review, approval, withdrawal, removal andtermination) as granted to Sony pursuant to this Content Integration Agreement;and (iii) Sony shall have the right to require Subscription Service Agent toterminate any Syndication Agent Agreement with respect to the Sony Materials ifSony determines that said Syndication Agent has committed any act as wouldpermit Sony to terminate this Content Integration Agreement pursuant toparagraph 11.01 below.

 

**9.           PROMOTIONAL**OPPORTUNITIES

 

9.01.       ***[CONFIDENTIAL***PORTION***OMITTED AND FILED SEPARATELY WITHTHE SEC]****

 

**10.*         [CONFIDENTIAL*PORTION*OMITTED AND FILED SEPARATELY WITH THE SEC]****

 

10.01.     (a)***[CONFIDENTIAL***PORTION***OMITTED AND FILED SEPARATELY WITHTHE SEC]****

** **

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****  Confidential Portions Omitted.***

**** Confidential Portions Omitted.***

 

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(b)  **[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC]***

 

**11.   TERMINATION**

 

11.01.   (a)     Immediately following the occurrence of anyDefault Event (as defined below), Subscription Service Agent shall be deemed inmaterial breach and default hereof and Sony, in addition to any other rightsand remedies which Sony has under this Content Integration Agreement orotherwise, may upon notice to Subscription Service Agent, immediately terminatethis Content Integration Agreement and the Term, and the provisions ofparagraph 11.02  below shall apply.  No exercise of an option under thisparagraph shall limit Sony’s rights to recover damages by reason ofSubscription Service Agent’s default, Sony’s rights to exercise any otheroption under this paragraph, or any of Sony’s other rights or remedies.  No exercise of any right or remedy hereundershall limit Sony’s right to recover damages by reason of Subscription ServiceAgent’s default, Sony’s right to exercise any other right or remedy under thisparagraph 11.01, or any of Sony’s other rights or remedies.

 

(b)    A “Default Event”shall mean the occurrence of any of the following events listed below:

 

(1)        SubscriptionService Agent’s failure to timely make payments required hereunder or toexecute, deliver and comply with the terms of the Stock Purchase Agreement orrender Service Fee Reports or render any information or documents required tobe furnished or otherwise made available to Sony as and when requiredhereunder; provided, however, that, with respect to any such breach other thana breach under subparagraph 6.01(a) above, Subscription Service Agent shall havea period of ten (10) business days from the date of Sony’s notice of suchbreach in which to cure said breach before it shall be considered a “DefaultEvent”.

 

(2)        SubscriptionService Agent’s breach of any of Subscription Service Agent’s material representations,warranties, covenants or material obligations hereunder, or SubscriptionService Agent’s failure to fulfill any of Subscription Service Agent’s materialobligations hereunder; provided, however, that, with respect to any such breachin respect of which a shorter cure period is not expressly provided elsewhereherein, Subscription Service Agent shall have a period of ten (10) businessdays from the date of Sony’s notice of such breach in which to cure said breachbefore it shall be considered a “Default Event”.

 

 

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(3)        SubscriptionService Agent’s bankruptcy or insolvency, or the dissolution or the liquidationof Subscription Service Agent’s assets, or the filing of a petition inbankruptcy or insolvency for an arrangement or reorganization by, for oragainst Subscription Service Agent, or the appointment of a receiver or atrustee for all or a portion of Subscription Service Agent’s property, orSubscription Service Agent’s making an assignment for the benefit of creditors;provided, however, that Subscription Service Agent shall have a period of sixty(60) consecutive days from its receipt of any involuntary petition inbankruptcy filed against Subscription Service Agent in which to cure said breachbefore it shall be considered a “Default Event”.

 

(4)        SubscriptionService Agent’s attempt to assign any of Subscription Service Agent’s rightsunder this Content Integration Agreement in contravention of paragraph 16.06below without Sony’s prior written consent, or the succession of any of thoserights to any other Person by operation of law.

 

(5)        Inthe event that Subscription Service Agent, through its acts or omissions,directly or indirectly, permits or causes any liens, encumbrances or claims againstany of the Sony Materials or permits or causes any liens, encumbrances orclaims against its rights under this Content Integration Agreement for thebenefit of or on behalf of a Triggering Person.

 

(6)        ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]****

 

(7)        ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]****

 

(8)        Failureto cure a Security Flaw in accordance with the provisions of paragraph 5.03above.

 

11.02.            (a)         Upon *termination*or *expiration* of the Term:  (i) all rights granted to SubscriptionService Agent herein shall immediately terminate; (ii) neither SubscriptionService Agent nor, for the avoidance of doubt, any Syndication Agent shallthereafter have any right to make any use of any Sony Materials or Sony AuthorizedTrademarks; (iii) Subscription Service Agent shall immediately cease to use thecomputer files or software embodying the Sony Materials; (iv) SubscriptionService Agent and Syndication Agents shall immediately remove all Links to Web Sites owned or controlled by Sony;(v) Subscription Service Agent shall immediately return or destroy or remove,as the case may be, all of the foregoing materials and all copies of theforegoing materials, and Subscription Service Agent shall promptly furnish Sonywith a sworn affidavit, in a form satisfactory to Sony in its reasonablediscretion, accurately confirming the foregoing; and (vi) all monies then dueor to become due to Sony shall become immediately due and payable withoutpresentment, demand, protest or other notice of any kind, all of which arehereby waived by Subscription Service Agent. For the avoidance of doubt: (i) no termination or expiration of thisContent Integration Agreement shall 

 

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****Confidential Portions Omitted.***

 

 

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affect Sony’s right to payment of all monies due hereunder (and theassociated accounting in connection therewith) and (ii) in all cases, thoseprovisions herein that correspond to provisions in other agreements thatcustomarily survive the end of the term (including, but not limited to, theprovisions contained in paragraphs 6.04 through 6.08, 12.02, 16.01 and Article14 herein) shall survive the end of the Term.

 

(b)          (1)        ***[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THESEC]****

 

               (2)        ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]****

 

               (3)        ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]****

 

               (4)        ***[***CONFIDENTIAL***PORTION OMITTED AND FILEDSEPARATELY WITH THE SEC]****

 

               (5)        ***[***CONFIDENTIAL***PORTION OMITTED AND FILEDSEPARATELY WITH THE SEC]****

 

(c)          (1)        ***[***CONFIDENTIAL***PORTION OMITTED AND FILED SEPARATELY WITH THE SEC]****

 

               (2)        ***[CONFIDENTIAL PORTION OMITTED ANDFILED SEPARATELY WITH THE SEC]****

 

               (3)        ***[***CONFIDENTIAL***PORTION OMITTED AND FILEDSEPARATELY WITH THE SEC]****

 

               (4)        ***[***CONFIDENTIAL***PORTION OMITTED AND FILEDSEPARATELY WITH THE SEC]****

 

**12.          REPRESENTATIONSAND WARRANTIES**

 

12.01.   Subscription ServiceAgent covenants, represents and warrants that each of the following is true:

 

(a)          Subscription ServiceAgent has the right and power to enter into and fully perform this ContentIntegration Agreement and to make the commitments Subscription Service Agentmake herein, and has obtained or will obtain all necessary licenses,permissions and consents (including, for the avoidance of doubt, all necessarypublishing licenses in connection with the use of the Sony Cleared Recordings).

 

(b)          Sony shall not besubject to any costs, fees, royalties or other charges in respect of theService (including, without limitation, any mechanical royalties (except asotherwise expressly provided herein), synchronization royalties or any fees or 

 

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****  ConfidentialPortions Omitted.***

 

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royaltiespayable in respect of the public performance or reproduction of any musicalcomposition and any other dramatic, literary or other works embodied in a SonyCleared Recording).  For the avoidanceof doubt, as between you and Sony, Sony shall be responsible for making allunion payments (if any) and audio record royalty payments required to be madeby Sony under any agreements to which Sony is a party to each recording artist,producer, mixer, remixer and other Person that contributed to the recording ofthe Sony Cleared Recordings transmitted via the Service.

 

(c)          Subscription ServiceAgent is fully-qualified to perform all obligations as described herein and tomaintain and operate the Service as described herein.  Subscription Service Agent shall operate the Service to the bestof Subscription Service Agent’s abilities in accordance with the technicalspecifications approved by Sony, and shall not subcontract or otherwisedelegate any of Subscription Service Agent’s duties hereunder.

 

(d)          Subscription ServiceAgent shall own and/or control all times during the Term, all right, title andinterest in and to the Service and all materials embodied, reproduced orotherwise contained therein, and all copyrights and other rights therein,throughout the Territory, free and clear of any and all claims or encumbranceswhatsoever therein to the extent necessary for the operation of the Service asdescribed herein.  The Service, and theoperation and use thereof for the purposes described herein, shall not, and atno time shall during the Term, violate any law (including, without limitation,any federal law or regulation) or infringe upon or violate the rights of anyPerson, including, without limitation, any trademarks, names, logos,copyrights, materials or other content Subscription Service Agent creates,licenses, uses, publishes, performs, reproduces, distributes or displays (otherthan the Sony Materials or other materials furnished to Subscription ServiceAgent by Sony hereunder).

 

(e)          Subscription ServiceAgent has obtained from all necessary third parties all licenses and otherrights necessary or advisable in order to create and operate the Service, otherthan those licenses and other rights specifically required to be obtained bySony hereunder.

 

(f)           Subscription ServiceAgent is a corporation duly organized and in good standing under the laws ofOregon.

 

(g)          Subscription ServiceAgent shall accurately count and report the number of performances of eachRecording Playedback and Streamed by each potential End User during free-trials(e.g., by making the free-trial offering a “negative option” to unsubscribe) tothe extent necessary to prepare Service Fee Reports and otherwise comply withthe Subscription Service Agent’s reporting, payment and other obligationshereunder.

 

(h)          Omitted withoutimplication.

 

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(i)           The Service shallnot contain or utilize any content or other materials which Sony deems patentlyoffensive or which, in the judgment of its attorneys, might subject Sony tounfavorable regulatory action, nor shall any Web Page that forms a part of theService contain any Link to any Web Site which contains or features any suchmaterial.

 

(j)           Subscription ServiceAgent shall not enter into any agreement whatsoever on behalf of Sony, shallnot make any representations or warranties on behalf of Sony, and shall notrepresent to any Person that it has the power, whether express or implied, tobind Sony in any way or enter into contracts on Sony’s behalf.

 

(k)          Subscription ServiceAgent shall not make any use of any Sony Materials, or authorize any thirdparty to make any use of any Sony Materials, except as specifically permittedpursuant to the terms of this Content Integration Agreement.

 

(l)           Subscription ServiceAgent shall use best efforts to ensure the security of all data and informationcollected and/or transmitted by the Service, including without limitation theAggregate Information, and that in connection with such efforts it shall makeuse of current, effective and so-called “state of the art” encryption and anti-piracytechnologies.

 

(m)         Subscription ServiceAgent will not include the Sony Materials in computer files other than thosecomputer files created for use as part of the Service.

 

(n)          At all times,Subscription Service Agent shall comply with all applicable laws, rules,regulations and so-called “privacy policies” (including the privacy policy ofSony, as such policy may be amended from time to time, to the extent reasonablyapplicable) in its use of End User Information.  In connection therewith, Subscription Service Agent shallmaintain, and at all times comply with, a privacy policy with respect to theService and any Web Sites as may be owned, operated and/or maintained bySubscription Service Agent during the Term hereof, relating to the collection anduse of Aggregate Information as contemplated herein, in accordance with allapplicable laws, rules, regulations and generally accepted customs andpractices in the electronic commerce industry in the United States.

 

(o)          Subscription ServiceAgent shall not cut, edit, change, add to, delete from or revise any SonyMaterials (or authorize any Person to do any of the foregoing) without theexpress prior written consent of Sony in each instance.  Without limiting the scope of the foregoing,Subscription Service Agent expressly agrees that it will not alter or deleteany title, credit or copyright notice, any trademarks or service marks, or thetalent, writing, producing, directing or music credits contained in the SonyMaterials.

 

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(p)          Subscription ServiceAgent will not, directly or indirectly, sell or otherwise dispose of, pledge,mortgage or in any other way encumber the Sony Materials, or, attempt topledge, mortgage or otherwise encumber Subscription Service Agent’s rightsunder this Content Integration Agreement for the benefit of or on behalf of aTriggering Person.

 

(q)          At all times duringthe Term, any free-trial memberships that make Sony Cleared Recordingsavailable to potential End Users shall be limited to: (1) Streams of SonyCleared Recordings and other Recordings via the Service offered to End Users,(2) one (1) membership per household, and (3) only one (1) membership to anyPerson (or household) during the Term.

 

(r)           Omitted withoutimplication.

 

(s)          At all times duringthe Term, Agent Servers containing Sony Materials shall be located solely atsuch locations in the United States as Subscription Service Agent has notifiedSony with reasonable particularity as to its exact physical location (e.g., byproviding the name of the facility, the street address of such facility and themain phone number for such facility). Subscription Service Agent shall give Sony thirty (30) days’ priornotice before changing the location of any Agent Server containing SonyMaterials.  As of the date hereof, AgentServers containing Sony Materials are located at Inflow, 1233 N.W. 12th Avenue,Portland, Oregon (telephone: (503) 553-7800).

 

(t)           Except as and to theextent expressly provided elsewhere in this Content Integration Agreement, atall times during the Term, Subscription Service Agent shall exclusively provideall content hosting, bandwidth, rights clearinghouse, and other servicefunctions (other than billing and financial clearinghouse services) in connectionwith the Service.  For the avoidance ofdoubt, Subscription Service Agent may authorize Syndication Agents or otheragents designated by Subscription Service Agent in its reasonable discretion toprovide billing and financial clearinghouse services in connection with theService; provided that no such delegation of such duties shall relieveSubscription Service Agent of any of its obligations set forth in this ContentIntegration Agreement.

 

12.02.      (a)          Sony represents and warrants that thatit has the right, power and authority to enter into this Content IntegrationAgreement.

 

(b)          Sony represents andwarrants that, to the best of its knowledge, the use of the Sony ClearedRecordings (excluding any musical compositions and any dramatic, literary or othercopyrighted works (other than sound recordings) embodied therein) and thecorresponding Artwork in accordance with the terms of this Content IntegrationAgreement will not violate or infringe the rights of any third parties;provided, however, that in the event that Sony notifies you, under subparagraph3.03(a) above, that any of the Sony Materials is excluded from the Grant ofRights, then Sony’s representation and warranty in this subparagraph 12.02(b)with respect to the Sony Materials that are the subject of such notice shallterminate immediately upon your receipt of such notice (and Sony’sindemnification of you under paragraph 16.01.1 below shall not cover any causesof action arising from your use thereafter of the Sony Materials that are the subjectof such notice).

 

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(c)          Sony represents andwarrants that, to the best of its knowledge, it owns all right, title andinterest in the Sony Materials; provided, however, that in the event that Sonynotifies you, under subparagraph 3.03(a) above, that any of the Sony Materialsis excluded from the Grant of Rights, then Sony’s representation and warrantyin this subparagraph 12.02(c) with respect to the Sony Materials that are thesubject of such notice shall terminate immediately upon your receipt of suchnotice (and Sony’s indemnification of you under paragraph 16.01.1 below shallnot cover any causes of action arising from your use thereafter of the SonyMaterials that are the subject of such notice).

 

**13.          INFRINGEMENT**

 

13.01.                     SubscriptionService Agent agrees to notify Sony immediately after it becomes aware of anyactual or threatened infringement, dilution or other impairment (“Infringement”)of the Sony Materials or Sony Authorized Trademarks.  Upon receipt of such notice, Sony shall decide whether to assertor file any legal or equitable proceedings (an “Action”) with respect tosuch Infringement at its sole discretion. If such Infringement has occurred, at Sony’s sole option, exercisableupon notice to Subscription Service Agent, Sony may either prosecute the Actionor authorize Subscription Service Agent to prosecute the Action in its ownname.  In the event Sony elects toprosecute such Action, Subscription Service Agent shall cooperate with Sony inthe Action, at Sony’s reasonable expense.

 

13.02.                     SubscriptionService Agent agrees to notify Sony immediately after it becomes aware of anyasserted or threatened Action by any Person that the Sony Materials causes theInfringement of the intellectual property or other rights of such Person.  If such Person asserts or institutes anAction against Subscription Service Agent or against Sony alleging thatInfringement arises from or is related to Subscription Service Agent’s conductof the Service, Subscription Service Agent shall pay all expenses and fees(including attorneys’ fees and expenses and costs of investigation andlitigation) incurred in connection therewith, and shall pay any judgments,proceeds, damages or settlements resulting therefrom.  Subscription Service Agent may not compromise or settle any suchInfringement Action without Sony’s prior written consent, which can be withheldin its sole discretion.  Each of Sonyand Subscription Service Agent agrees to reasonably cooperate with each otheras necessary, in defending any such Action.

 

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**14.          CONFIDENTIALITY**

 

14.01.   (a)      Each of Sony and the Subscription ServiceAgent (each a “Disclosing Party”) agrees that it shall, and it shall instruct inwriting its respective attorneys, accountants and other professional advisors(collectively, “Advisors”) to, hold in confidence and not communicate,transmit, publish, disseminate or otherwise disclose any of the terms andconditions of this Content Integration Agreement or of the Syndication AgentAgreements (or, for the avoidance of doubt, any Outside Agreement) or any fact,matter, event or surrounding circumstance leading to or relating to thenegotiation thereof to which such party was privy or of which it was otherwisemade aware (e.g., by being copied on correspondence or by being advised of suchfact, matter, event or circumstance by another party to the negotiation)(collectively, “Confidential Information”); provided, however, that nothing in thisparagraph 14.01 shall prohibit disclosure of such Confidential Information: (i)by each such party to its respective financial officers, management, bankers orothers as may be reasonably necessary in the operation of its business, (ii) byeach such party to its respective Advisors to the extent that such disclosureis in the opinion of such Advisors required to enable such Advisors fully torepresent the party concerned, (iii) in connection with any legal orgovernmental proceeding, or (iv) to any judicial, governmental or regulatorybody.  At Sony’s request, you shallcause each of your Advisors to execute a confidentiality statement inaccordance with the preceding sentence. In addition, you will provide Sony with a reasonable opportunity toreview and comment on any disclosure in any of filings by you under the UnitedStates securities laws regarding this Content Integration Agreement and thetransactions contemplated hereunder and, if you are required to file thisContent Integration Agreement under applicable securities laws, you will usebest efforts to obtain confidential treatment for those portions of thisContent Integration Agreement that Sony designates.

 

(b)          Notwithstandinganything to the contrary herein, Confidential Information shall not includeinformation which:

 

(1)        ator prior to the time of disclosure by the Disclosing Party was known to orindependently developed by the party receiving such information (a “ReceivingParty”), except to the extent unlawfully appropriated by the Receiving Party orthird party;

 

(2)        ator after the time of disclosure by the Disclosing Party becomes generallyavailable to the public through no wrongful or negligent act or omission on theReceiving Party’s part; or

 

(3)        theReceiving Party receives from a third party free to make such disclosurewithout breach of any legal obligation.

 

(4)        isrequired to be disclosed pursuant to any statute, regulation, order, subpoenaor document discovery request.

 

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14.02.   Subscription ServiceAgent shall exercise best efforts to ensure that each Syndication Agent shall:(i) hold in confidence and not communicate, transmit, publish, disseminate orotherwise disclose any of the terms and conditions of the Syndication Agent Agreementsor any fact, matter, event or surrounding circumstance leading to or relatingto the negotiation thereof to which such party was privy or of which it wasotherwise made aware (e.g., by being copied on correspondence or by beingadvised of such fact, matter, event or circumstance by another party to thenegotiation) (collectively, “Agent Confidential Information”) and (ii) instructin writing its Advisors to hold in confidence and not communicate, transmit,publish, disseminate or otherwise disclose any of the terms and conditions ofthe Syndication Agent Agreements or any fact, matter, event or surroundingcircumstance leading to or relating to the negotiation thereof; provided,however, that the exceptions set forth in subparagraphs 14.01 above shall alsoapply hereto.  At Sony’s request, youshall cause each of the Syndication Agents to cause their Advisors to execute aconfidentiality statement in accordance with the preceding sentence.  In addition, you will cause the SyndicationAgents to provide Sony with a reasonable opportunity to review and comment onany disclosure in any of filings by you under the United States securities lawsregarding this Content Integration Agreement and the transactions contemplatedhereunder and, if they are required to file any Syndication Agent Agreementunder applicable securities laws, you will cause them to use best efforts toobtain confidential treatment for those portions of such agreement that Sonydesignates.

 

14.03.   (a)      Neither party hereto shall, without theprior written consent of the other party, issue any press release or make anyother public announcement or statement relating to any terms and conditions ofthis Content Integration Agreement or any fact, matter, event or surroundingcircumstance leading to or relating to the negotiation thereof to which suchparty was privy or of which it was otherwise made aware (e.g., by being copiedon correspondence or by being advised of such fact, matter, event orcircumstance by another party to the negotiation).  You and Sony shall endeavor to mutually prepare a press releaseto be issued after the complete execution of this Content IntegrationAgreement; provided that (i) the failure of you or Sony to agree on the wordingof the press release or the issuance thereof shall not constitute a breach ofthis agreement, and (ii) if you and Sony fail to agree on the wording of thepress release or the issuance thereof then neither you nor Sony shall issuesuch press release.

 

(b)      Subscription ServiceAgent shall exercise best efforts to prevent Syndication Agents from issuingany press release or making any other public announcement or statement relatingto any terms and conditions of this Content Integration Agreement or theSyndication Agent Agreements or any fact, matter, event or surroundingcircumstance leading to or relating to the negotiation thereof to which suchparty was privy or of which it was otherwise made aware (e.g., by being copiedon correspondence or by being advised of such fact, matter, event or circumstanceby another party to the negotiation).

 

**15.          NOTICES**

 

15.01.   (a)      Except as otherwise specifically providedherein, all notices under this Content Integration Agreement shall be inwriting and shall be given by courier or other personal delivery or byregistered or certified mail at the appropriate address below or at asubstitute address designated by notice by the party concerned.

 

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| TO YOU:  |   | The address  shown above.            |
|----------|--------|--------------------------------------|
|     |   |                                 |
| TO SONY: |   | 550 Madison  Avenue                  |
|     |   | New York,  New York  10022-3211 |

 

Each notice to Sony shall beaddressed for the attention of Sony’s Senior Vice President, Business Affairs& Administration, and a copy of each notice to Sony shall be sentsimultaneously to the Sony Music Entertainment Inc. Law Department for theattention of Sony’s Senior Vice President and General Counsel.  Sony shall undertake to send a copy of eachnotice sent to you to Myman Abell Fineman Greenspan & Light, LLP, 11601Wilshire Boulevard, Suite 2200, Los Angeles, California 90025-1758, Attention:Eric Greenspan, Esq. and Jeffrey Taylor Light, Esq., but Sony’s failure to sendany such copy shall not constitute a breach of this agreement or impair theeffectiveness of the notice concerned. Notices shall be deemed given when mailed or, if personally delivered,when so delivered, except that a notice of change of address shall be effectiveonly from the date of its receipt.

 

(b)   Notwithstanding anything insubparagraph 15.01(a) above, each Service Fee Report and accompanying paymentmade under subparagraph 6.03(a) above shall be addressed as follows: Sony MusicEntertainment Inc., Royalty Department, 550 Madison Avenue, New York, NewYork  10022-3211, Attention: VicePresident, Royalty Accounting.

 

**16.          MISCELLANEOUSPROVISIONS**

 

16.01.   Subscription Service Agent will at all timesindemnify and hold harmless the Sony Parties, from and against any and allclaims, damages, liabilities, costs and expenses (including legal expenses andcounsel fees) arising out of: (a) the operation of the Service, (b)Subscription Service Agent’s, Syndication Agents’, End Users’ and any otherPerson’s use (including but not limited to unauthorized use or duplication), inconnection with the Subscription Service, of any Sony Materials; or (c) anybreach or alleged breach by Subscription Service Agent of any representation,warranty, covenant or agreement made by Subscription Service Agent herein,including, without limitation, Subscription Service Agent’s representation,warranty and agreement to secure and pay for all third party licenses,permissions and consents (individually and collectively, “CenterSpanClaims”).  In the event of anyCenterSpan Claim: (i) Sony shall notify CenterSpan of the CenterSpan Claimconcerned promptly following the date that Sony become aware of it; (ii)CenterSpan shall defend against the CenterSpan Claim concerned (at CenterSpan’sown expense) through legal counsel selected by CenterSpan with Sony’s consent,which consent Sony shall not unreasonably withhold; and (iii) each party shallreasonably cooperate with the other in the defense of the CenterSpan Claimconcerned.  CenterSpan shall be solelyresponsible for the amount of any settlement or judgment for such CenterSpan Claimand all legal expenses and counsel fees incurred by CenterSpan in connectiontherewith, subject to subparagraph 16.01(b) below.

 

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(b)     Inthe event that CenterSpan is either unwilling to defend against the CenterSpanClaim concerned or is otherwise not reasonably defending against the CenterSpanClaim concerned, Sony shall have the right to assume the defense and settlementof the CenterSpan Claim concerned through legal counsel selected by Sony, butCenterSpan shall be solely responsible at all times for the amount of anysettlement or judgment for such CenterSpan Claim, as well as all reasonablelegal expenses and counsel fees incurred by Sony in connection therewith.  Any settlement of a CenterSpan Claim shallbe subject to CenterSpan’s consent, which consent CenterSpan shall notunreasonably withhold.  Notwithstandingthe foregoing, in the event that CenterSpan defends against the CenterSpanClaim concerned (at CenterSpan’s own expense) through legal counsel selected byCenterSpan as provided above, Sony shall have the right at all times toactively participate in the defense thereof, and to employ legal counselselected by Sony at Sony’s own expense, it being understood that CenterSpanshall have the right at all times, in CenterSpan’s sole discretion, to maintaincontrol of the conduct of the defense.

 

16.01.1.  (a)       Notwithstanding anything to the contraryin paragraph 16.11 below, except as provided in subparagraphs 12.02(b) and12.02(c) above, Sony shall at all times indemnify and hold harmless you fromand against any and all third-party claims, losses, damages, liabilities, costsand expenses, including, without limitation, legal expenses and reasonablecounsel fees arising out of any breach by Sony of any warranty, representation,covenant or obligation by Sony hereunder (including, without limitation, (1)any claims arising from Publishing Rights, but only in the event that Sonysecures such Publishing Rights pursuant to section 4.03(e)(2), and (2) anyclaims arising from your use of the Sony Cleared Recordings and correspondingArtwork as and to the extent authorized hereunder in accordance with the termsof this Content Integration Agreement), any claims that the Sony ClearedRecordings or Sony Materials cause the Infringement of the intellectualproperty or other rights of such third-party regardless of whether Sony is inbreach of the representations and warranties contained in subparagraphs12.02(b) and 12.02(c) above, and any claims arising out of legal actionsundertaken by Sony against Persons owing debts in accordance with and subjectto subsection 6.03(b)(4)(A)(II) above (individually and collectively, “SonyClaims”).  In the event of any SonyClaim: (i) you shall notify Sony of the Sony Claim concerned promptly followingthe date that you become aware of it; (ii) Sony shall defend against the SonyClaim concerned (at Sony’s own expense) through legal counsel selected by Sonywith your consent, which consent you shall not unreasonably withhold; and (iii)each party shall reasonably cooperate with the other in the defense of the SonyClaim concerned.  Sony shall be solelyresponsible for the amount of any settlement or judgment for such Sony Claimand all legal expenses and counsel fees incurred by Sony in connectiontherewith, subject to subparagraph 16.01.1(b) below.

 

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(b)      In the event that Sony iseither unwilling to defend against the Sony Claim concerned or is otherwise notreasonably defending against the Sony Claim concerned, you shall have the rightto assume the defense and settlement of the Sony Claim concerned through legalcounsel selected by you, but Sony shall be solely responsible at all times forthe amount of any settlement or judgment for such Sony Claim, as well as allreasonable legal expenses and reasonable counsel fees incurred by you inconnection therewith.  Any settlement ofa Sony Claim shall be subject to Sony’s consent, which consent Sony shall notunreasonably withhold.  Notwithstandingthe foregoing, in the event that Sony defends against the Sony Claim concerned(at Sony’s own expense) through legal counsel selected by Sony as providedabove, you shall have the right at all times to actively participate in thedefense thereof, and to employ legal counsel selected by you at your ownexpense, it being understood that Sony shall have the right at all times, inSony’s sole discretion, to maintain control of the conduct of the defense.

 

16.02.   Subscription ServiceAgent acknowledges that the Sony Materials and Sony Materials hereunder has aspecial, unique and extraordinary character which gives them a peculiar value,and that, in the event of a breach of any term, condition, representation,warranty, covenant or agreement contained in this Content Integration Agreement,Sony shall be caused irreparable injury, including loss of goodwill and harm toreputation, which cannot be adequately compensated in monetary damages.  Accordingly, in the event of any suchbreach, actual or threatened, Sony shall have, in addition to any other legalremedies, the right to injunctive or other equitable relief.

 

16.03.   All remedies provided forpursuant to this Content Integration Agreement are cumulative, and no exercise,or failure to exercise, any option by either party will limit such party’sright to recover damages or pursue any other remedies available at law or inequity.

 

16.04.    If any provision of thisContent Integration Agreement or the application thereof to any party, Personor circumstance shall be invalid, illegal or unenforceable to any extent, theremainder of this Content Integration Agreement and the application thereofshall not be affected and shall be enforceable to the fullest extent permittedby law.

 

16.05.   This Content Integration Agreement, includingthe various Exhibits attached hereto, shall constitute the entire agreementbetween the parties with respect to the subject matter hereof and shallsupersede all previous negotiations, commitments and writings with respect tosuch subject matter. No change or termination of this Content IntegrationAgreement shall be binding upon Sony or you unless it is made by an instrumentsigned by both parties hereto.  A waiverby either party of any provision of this Content Integration Agreement in anyinstance shall not be deemed a waiver of such provision, or any other provisionhereof, as to any future instance or occurrence.  All remedies, rights, undertakings, and obligations contained inthis Content Integration Agreement shall be cumulative and none of them shallbe in limitation of any other remedy, right, undertaking, or obligation ofeither party.  The captions of theArticles in this Content Integration Agreement are included for convenienceonly and shall not affect the interpretation of any provision.

 

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16.06.   (a)     Sonymay assign its rights under this Content Integration Agreement in whole or inpart to any subsidiary, affiliated or controlling corporation, to any Personowning or acquiring a substantial portion of the stock or assets of Sony, or toany partnership or other venture in which Sony participates, and such rightsmay be similarly assigned by any assignee. No such assignment shall relieve Sony of any of Sony’s obligationshereunder.  Subject to subparagraph16.06(b) below, you shall not have the right to assign this Content IntegrationAgreement or any of your rights or obligations hereunder, in whole or in part,without Sony’s prior written consent. Any purported assignment by you in violation of this paragraph shall bevoid.

 

(b)  (1) You may assign your rights under thisContent Integration Agreement to another Person, in connection with a sale ortransfer of substantially all assets associated with the Service, subject tothe following conditions:

 

(i) The acquiring Person, or anyAffiliate of such Person, cannot be: (A) a Triggering Person, (B) an entity (orthe parent, subsidiary, affiliate or licensee of any such entity) against whichSony or any licensee, either directly or indirectly, has a claim arising out ofthe unauthorized recording, manufacture, distribution, sale, reproduction (orother use) of any Sony Materials or other property or other tangible orintangible rights, (C) an entity (or the parent, subsidiary, affiliate orlicensee of any such entity) involved in litigation with Sony arising out ofthe unauthorized recording, manufacture, distribution, sale, reproduction (orother use) of any Sony Materials or other property or other tangible orintangible rights, or (D) an entity (or the parent, subsidiary, affiliate orlicensee of any such entity) engaged in any unauthorized recording,manufacture, distribution, sale or other activity in violation of Sony’s or itlicensee’s rights (any such entity described in clauses (B) – (D) is sometimesreferred to as a “Prohibited Entity”). (In each case, CenterSpan may request that Sony inform CenterSpanwhether a potential acquirer of CenterSpan constitutes a Prohibited Entity.)

 

(ii)          The assignment shallnot be effective until you have delivered to Sony an instrument approved bySony (such approval not to be unreasonably withheld or delayed) effecting theassignment and the assignee’s assumption of your obligations, and Sony hasexecuted that instrument to evidence Sony’s approval of it (which approvalshall not be unreasonably withheld if the conditions of subsections16.06(b)(1)(i) – (ii) and (iii) and (iv) below herein have been met);

 

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(iii)         No such assignmentshall relieve you of your obligations under this Content Integration Agreement(unless Sony otherwise agrees in writing); and

 

(iv)        If such an assignmenttakes place, any further transfer of the rights assigned shall be subject tothe same conditions.

 

(2)   Subject to section 11.01(b)(6),you may convey your rights under this Content Integration Agreement to asubsidiary or affiliate of CenterSpan, provided that: (i) fifty percent (50%)of the stock and assets of such subsidiary or affiliate are owned by CenterSpanat all times throughout the Term, (ii) CenterSpan wholly-controls suchsubsidiaries’ or affiliates’ operations at all times throughout the Term, and(iii) fifty percent (50%) of the Service is thereafter owned and operatedsolely by such subsidiary or affiliate.

 

(3)   Any purported assignment byyou in violation of this subparagraph 16.06(b) shall be void.  For the avoidance of doubt, CenterSpan’sobligations under this Content Integration Agreement shall not be diminished orotherwise affected by any such assignment.

 

16.07.   Unless specifically set forth in this ContentIntegration Agreement, neither party shall be entitled to recover damages or toterminate the Term by reason of any breach by the other party of its materialobligations, unless the latter party has failed to remedy the breach withinthirty (30) days following receipt of notice thereof (or, if the breachconcerned cannot be remedied within thirty (30) days, if the latter partycommences to remedy the breach within that time and proceeds to complete theremedy with reasonable promptness).

 

16.08.   In entering into this Content IntegrationAgreement, you have and shall have the status of independent contractor.  Nothing herein contained shall contemplateor constitute you or any Syndication Agent as Sony’s agent, except to theextent expressly set forth herein, or employee, and nothing herein shallconstitute a partnership, joint venture or fiduciary relationship between youand Sony.

 

16.09.   THIS CONTENT INTEGRATION AGREEMENT HAS BEENENTERED INTO IN THE STATE OF NEW YORK, AND THE VALIDITY, INTERPRETATION ANDLEGAL EFFECT OF THIS CONTENT INTEGRATION AGREEMENT SHALL BE GOVERNED BY THELAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED INTO ANDPERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANYCONFLICT OF LAW PRINCIPLES UNDER NEW YORK LAW).  THE NEW YORK COURTS (STATE AND FEDERAL), SHALL HAVE SOLE 

 

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JURISDICTION OF ANYCONTROVERSIES REGARDING THIS CONTENT INTEGRATION AGREEMENT; ANY ACTION OR OTHERPROCEEDING WHICH INVOLVES SUCH A CONTROVERSY SHALL BE BROUGHT IN THOSE COURTSIN NEW YORK COUNTY AND NOT ELSEWHERE. THE PARTIES WAIVE ANY AND ALL OBJECTIONS TO VENUE IN THOSE COURTS ANDHEREBY SUBMIT TO THE JURISDICTION OF THOSE COURTS.  ANY PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY, AMONG OTHERMETHODS, BE SERVED UPON YOU BY DELIVERING IT OR MAILING IT, BY REGISTERED ORCERTIFIED MAIL, DIRECTED TO THE ADDRESS FIRST ABOVE WRITTEN OR SUCH OTHERADDRESS AS YOU MAY DESIGNATE PURSUANT TO ARTICLE 16.  ANY SUCH DELIVERY OR MAIL SERVICE SHALL BE DEEMED TO HAVE THESAME FORCE AND EFFECT AS PERSONAL SERVICE WITHIN THE STATE OF NEW YORK.

 

16.10.   This Content Integration Agreement may beexecuted in one or more counterparts, each of which shall be deemed an originalbut all of which shall constitute one and the same instrument.  This Content Integration Agreement shall notbecome effective until executed by all proposed parties hereto.

 

16.11.   SONY MAKES NO WARRANTY OF MERCHANTABILITY,NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SONYMATERIALS.  IN NO EVENT SHALL SONY BELIABLE FOR INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, MULTIPLE, SPECIAL OR INDIRECTDAMAGES IN CONNECTION WITH THIS CONTENT INTEGRATION AGREEMENT (INCLUDING BUTNOT LIMITED TO LOST BUSINESS PROFITS) EVEN IF SONY HAS BEEN ADVISED OF THEPOSSIBILITY OF THE SAME.

 

16.12.   Subscription Service Agent recognizes thatthe sale of Records by means of Conditional Download and Streaming, is speculative and that Sony makesno warranties, representations or guarantees with respect to the number ofStreams or Conditional Downloads, if any, which will be sold by Sony hereunderor otherwise.

 

16.13.   Omitted without implication.

 

16.14.   Sony and Subscription Service Agent agree toexecute such further documentation and perform such further actions, includingthe recordation of such documentation with appropriate authorities, as may bereasonably requested by the other party hereto to evidence and effectuatefurther the purposes and intents set forth in this Content IntegrationAgreement.

 

16.15.   Subscription Service Agent shall, from timeto time, do and perform such other and further acts and duly execute anddeliver such further documents and assurances as may be required by applicablelaws or as requested by Sony to establish, maintain and protect Sony’s rightsand remedies and to carry out and effect the intent and purpose of this ContentIntegration Agreement, including, without limitation, the execution anddelivery of additional documentation and/or instruments, in recordable form,and the recording or filing of additional documentation and/or instruments,including, without limitation, any notice, UCC-1 and/or security agreement inaccordance with the laws of such jurisdictions in which Sony may in its solediscretion from time to time deem necessary. Without limiting the foregoing, Subscription Service Agent shall causeany such document and/or additional instruments which shall be executed to bekept, filed, deposited or recorded, at all times, in such places that Sonyshall designate in its sole discretion in order to perfect and preserve Sony’srights in and to the Sony Materials and the Sony Authorized Trademarks.

 

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IN WITNESSWHEREOF, the parties hereto have executed this Content Integration Agreement,effective as of the date first above written.

 
|   | SONY MUSIC,  A Group of Sony Music Entertainment Inc.                  |
|--------|------------------------------------------------------------------------|
|   |                                                                   |
|   |                                                                   |
|   | By:                                                                    |  /s/ Ron Wilcox |   |
|   | Name: Ron  Wilcox                                                      |
|   | Title: EVP,  BA + NT, SMEI SVP, BA + ADM., SONY MUSIC, A Group of SMEI |
|   |                                                                   |
|   | CENTERSPAN  COMMUNICATIONS CORP.                                       |
|   |                                                                   |
|   |                                                                   |
|   | By:                                                                    |  /s/ Frank G. Hausman |   |
|   | Name: Frank  G. Hausman                                                |
|   | Title:  Chairman + CEO                                                 |
|   |                                                                   |

 

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**Schedule A**

 

***[CONFIDENTIAL PORTION OMITTED AND FILEDSEPARATELY WITH THE SEC]****

 

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**** Confidential Portions Omitted.***

 

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**Exhibit A-1**

 

Functionality Specifications

 

***[CONFIDENTIAL PORTION OMITTED AND FILEDSEPARATELY WITH THE SEC]****

 

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**** Confidential Portions Omitted.***

 

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**Exhibit A-2**

 

Technical Specifications

 

***[CONFIDENTIAL PORTION OMITTED AND FILEDSEPARATELY WITH THE SEC]****

 

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**** Confidential Portions Omitted.***

 

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**Exhibit B**

 

**STREAMING SECURITY FUNCTIONAL REQUIREMENTS**

 

Introduction

 

This document outlines theissues around the security of streamed media and enumerates the requirements ofthe international Recording Industry of such systems.

 

Capitalized terms in thisdocument are defined in Annex A or in the SDMI Portable Device SpecificationPart 1 Version 1.0 (henceforth the “SDMI PD Specification”).

 

**FUNCTIONAL REQUIREMENTS**

 

The following are requirementsof a Streaming Security System.

 

SCOPE

 

This Streaming FunctionalRequirement Document shall be able to be applied to all types of Streaming, inparticular digital broadcasting, other forms of digital communications to thepublic (such as cable transmission systems) and streaming over packet-basednetworks (such as the Internet).

 

CONTENT SECURITY

 

A Streaming Security Systemshall not allow Content to be accessible digitally except in accordance withthis document.

 

In particular:

 

•                                        Contentshall be Protected at all points in the system,

 

•                                        AStreaming Security System shall ensure that the Content is not accessible bysystems and applications that do not enforce the Usage Rules.  This requirement shall, as a minimum, applyboth to connections between software modules and hardware connections betweenconsumer devices.

 

•                                        AStreaming Security System shall ensure that after Content is rendered, it isinaccessible within the system that performed the rendering.

 

•                                        Unprotectedand unauthenticated digital outputs shall not be enabled or supported forContent that carries Streaming Usage Rules that do not authorize suchoutputs.  This requirement shall notapply to existing, widely deployed devices such as USB speakers.  The level of protection of the Content shallbe no less than that provided by encryption, using technology customarilyaccepted within the applicable industry, to the extent necessary to protectContent.

 

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A Streaming Security Systemshall ensure that Content which is removed from the system other than inaccordance with the Content’s Streaming Usage Rules (for example by analoguecopying) is, to the extent possible, unable to be used in a manner inconsistentwith these Functional Requirements. This might be achieved by adding or re-marking a watermark in theContent into a state whereby systems compliant with other securityspecifications (such as the SDMI PD Specification) cannot accept it.

 

STORED CONTENT

 

If Streamed Content containsStreaming Usage Rules that permit the storage of a copy of the Content by therecipient of the Stream, then that copy may only be stored as SDMI ProtectedContent for Local Use and the Usage Rules of the stored copy shall be the UsageRules required by the Streaming Usage Rules.

 

ROBUSTNESS

 

A Streaming Security Systemshall conform to agreed robustness Requirements that set out the strength ofthe security and response to new circumstances which is required.  The SDMI PD Specification containsappropriate language and is attached to this document for reference as Annex B.

 

SELECTION OF SYSTEM

 

Where the law does not soprohibit, Rights Holders shall be able to specify whether their Content isauthorized to be delivered over a particular Streaming Security System.

 

STREAMING USAGE RULES

 

A Streaming Security Systemshall allow Streaming Usage Rules to be expressed as associated or embeddedinformation, or else inherently implied by the Service’s design, and shallensure that all forms are obeyed.

 

Streaming Usage Rules shall belinked persistently to the Content, implicitly or explicitly.

 

A Streaming Security Systemshall provide a sufficiently rich vocabulary in its expression of StreamingUsage Rules that all possible business models are accommodated.  There is a discussion of this in the next section.

 

DEFAULT USAGE RULE ENFORCEMENT

 

Where there are no StreamingUsage Rules relating to Content, a Streaming Security System shall apply theDefault Streaming Usage Rules.  

 

The Default Streaming UsageRule shall be that streamed Content may be rendered for immediate consumptionbut that no copy shall be retained before or after rendering.

 

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STREAMING USAGE RULEENFORCEMENT

 

A Streaming Security Systemshall ensure that Streaming Usage Rules are obeyed within it and also thatStreaming Usage Rules and consequent Usage Rules are obeyed in systems to whichContent is transferred.

 

PERFORMANCE

 

IMPACT ON END-USERS

 

So far as is possible, aStreaming Security System shall be transparent to end-users.  It shall neither materially increase thetime to listen when a Stream is demanded by an end-user, nor materially degradethe sonic quality of the system, compared to an insecure system.

 

CONTENT SELECTION

 

A Streaming System shall allowRights Holders to specify the type of service for which a particular piece ofcontent is authorized.  This mightinclude:

 

RETRANSMISSION

 

A Streaming Security Systemshall allow Rights Holders to specify whether another streaming system ispermitted to further stream a particular piece of Content, or to placeconditions on such further streaming.

 

QUALITY ASSURANCE

 

A Streaming Security Systemshall, where not prohibited by law, allow Rights Holders to specify thatContent shall not be delivered over Best Effort Systems (i.e., that it shallonly be delivered over Quality of Service (QoS) Assured Systems, orconventional broadcasting systems).

 

Where not prohibited by law, aStreaming Security System shall allow Rights Holders to specify the limits onaudio quality at which Content may be delivered by reference to bit rates,acceptable codecs, etc.

 

IDENTIFICATION DATA

 

A Streaming Security Systemshall allow Rights Holders to control how the identification data, which isassociated with Content being Streamed, is used by applications and end users.

 

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COMPLIANCE

 

A Streaming Security Systemshall have adequate means for enforcing compliance.

 

**USAGE RULES**

 

The following is anon-exhaustive list of the type of Streaming Usage Rules which a StreamingSecurity System may be required by Rights Holders to support.

 

RECORD CONTROL

 

A Streaming Security Systemshall allow Rights Holders to specify whether the end-user is permitted toretain a copy of a particular piece of Content (excluding temporary copies madein rendering the stream).  It shall alsoallow Rights Holders to place constraints on the use of this copy by allocatingUsage Rules to the retained Content.

 

COPYING

 

Content may be authorized forretention only for a specified period or for a specified number of listens.

 

SECURITY

 

Content may be authorized forretention only if it is held on a system or device of security meeting therequirements of the Rights Holder, e.g.,

 

• “only on an SDMI compliant device”

 

• “on a CD-R with the SCMS copy prohibit bit set”

 

• “only in a particular type of secure container”

 

NAVIGATION

 

A Streaming Security Systemshall be able to allow or prevent various sorts of navigation within streamedContent – such as skipping or fast-forwarding over musical Content oradvertising.

 

DISTRIBUTION

 

A Streaming Security Systemshall allow Rights Holders to specify whether the end-user is permitted totransmit a copy of a particular piece of Content to other end-users.  It shall also allow Rights Holders to placerestrictions on this transmission, for example by restricting the copy to aparticular audio quality level, or to a particular excerpt.

 

 

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TERRITORIALITY

 

A Streaming Security Systemshall allow Rights Holders to specify into which geographic or otherwisedefined territories delivery of the Content is authorized.  A Streaming Security System shall alsosupport the application of different Default Streaming Usage Rules in differentgeographic or otherwise defined territories.

 

SUBSCRIPTION PAYMENT

 

A Streaming Security Systemshall allow Rights Holders to restrict a stream for delivery only to end-userswho have paid a subscription fee or otherwise become eligible to have aparticular Stream delivered to them. For instance, streams could be limited to end-users who have purchased amembership in a fan club or responded to an advertisement.

 

PAY PER LISTEN/MINUTE

 

A Streaming Security Systemshall allow Rights Holders to restrict distribution of a stream to end-userswho pay a fee to have the Stream delivered, whether by the song, the minute orsome other measure.

 

IMPULSE PURCHASE

 

A Streaming Security Systemshall allow Rights Holders to specify that Streamed Content may be retained inaccordance with Streaming Usage Rules that permit purchase of the StreamedContent under explicitly controlled circumstances.  For example, a Rights Holder might authorize the “purchase” of atrack played over a Streaming Security System.

 

**Annex A – Definitions**

 

STREAMING

 

*Streaming* is delivering audio or audio-visualContent (henceforth Content) to an end-user such that it is consumed atapproximately the same time as it is sent.

 

DOWNLOADING

 

By contrast, *Downloading* is delivering Content to anend-user so that it is intended to be consumed at a later time, possibly inaccordance with Usage Rules (see below).

 

Rights Holder

 

The *Rights Holder* is the owner or licensee of Copyright orNeighboring Rights in the sound recording being streamed.

 

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STREAMING USAGE RULES

 

*Streaming Usage Rules* are rules for the use ofContent, defined by Rights Holders in the Content.  Streaming Usage Rules may allow or disallow the immediateconsumption of the Content.  They may alsoallow or disallow other uses of the Content such as, retention, onwardtransmission etc.

 

*Streaming Usage Rules* may differ for differentdelivery systems and Rights Holders.

 

*Streaming Usage Rules* may be attached to orembedded within Content, or else inherently implied by the Service’s design.

 

DEFAULT STREAMING USAGE RULES

 

*Default Streaming Usage Rules* are the rulesdefined for end-users in the absence of Streaming Usage Rules from RightsHolders.  Default Streaming Usage Rulesmay differ for different delivery systems. They may also differ from Default Usage Rules set out in otherspecifications, such as the SDMI Portable Device Specification Part 1 Version1.0.

 

STREAMING SECURITY SYSTEM

 

A*Streaming Security System* is able to ensure that StreamingUsage Rules (or where relevant, Default Streaming Usage Rules) are obeyed.  It includes the entire system, from thepoint where Content is introduced into it to the point where Content is eitherrendered in accordance with Streaming Usage Rules or handed off to anothersystem in accordance with Streaming Usage Rules.

 

PROTECTED

 

*Protected* Content is in a state in whichunauthorized access is restricted by technical means (e.g., encryption orscrambling).

 

QUALITY OF SERVICE (Q0S)ASSURED SYSTEMS

 

*QoS Assured Systems* are systems where the pathfrom source to end-user is subject to guarantees over the available bandwidthand error rate.

 

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BEST EFFORT SYSTEMS

* *

*Best Effort Systems* are systems where the pathfrom source to end-user is NOT subject to guarantees over the availablebandwidth and error rate.

 

**Annex B – Robustness Requirements**

 

The following text is copiedfrom the SDMI PD Specification Section 10:

 

**GENERAL**

 

SCOPE

 

These Robustness Requirementsapply to implementations (“Implementations”) of the SDMI Portable DeviceSpecification, Part 1, Version 1.0 (the “Specification”) and are incorporatedin the Specification.  Capitalized termsnot defined herein shall have the meanings set forth in the Specification.

 

OBJECTIVE

 

Implementations shall protectSDMI Protected Content against unauthorized access, copying anddistribution.  Implementations shallmaintain SDMI Protected Content in a protected state or a protected environmentat all times except while such Content is being rendered in decompressed form.

 

CONSTRUCTION

 

Implementations shall complywith the Specification and be designed and manufactured so as effectively tofrustrate attempts to modify such products so as to defeat the functions of theSpecification, as more specifically described below.

 

DEFEATING FUNCTIONS ANDFEATURES

 

Implementations shall notinclude switches, jumpers or traces that may be cut, or control functions means(such as end user remote control functions or keyboard, command or keystroke bypass)by which content protection technologies or other mandatory provisions of theSpecification may be defeated or by which compressed, decrypted SDMI ProtectedContent may be exposed to unauthorized copying, usage or distribution.

 

MAINTAIN SECURITY

 

Implementations shall bedesigned and manufactured so as to effectively frustrate attempts to:  (i) discover or reveal non-public keys orcryptographic algorithms or other secrets/confidential information used to protectContent in Implementations, (ii) defeat the functions related toAuthentication, encryption, decryption, SDMI screening, watermark screening,watermark insertion, the Secure Authenticated Channel and Storage of SDMIProtected Content, as defined and required in Specification, including the controlfunctions or Usage Rules, to the extent such functions and rules areimplemented in the foregoing, and (iii) change embedded identities(collectively, clauses (i), (ii), and (iii) of this Section 10.1.4 are referredto herein as the “Security Functions and Features”).  Furthermore, in SDMI-Complaint products, where SDMI ProtectedContent is delivered from one part of the SDMI-Complaint product toanother–whether among integrated circuits, software modules, or a combinationthereof–the portions of such product that perform the Security Functions andFeatures shall be designed and otherwise integrated and associated with eachother such that SDMI Protected Content in a usable form flowing between themshall be Protected from being intercepted and copied or distributed.

 

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METHODS OF MAKING FUNCTIONSROBUST

 

Implementations shall use atleast the following techniques to be designed to effectively frustrate effortsto circumvent or defeat the functions and protections in the Specification andthese Robustness Requirements:

 

ACCESSIBILITY OF CONTENT

 

Decrypted SDMI ProtectedContent shall not be available on outputs other than those specified in theSpecification or these Robustness Requirements and, within Implementations,such Content shall not be present on any user accessible buses in useable formin such a manner that permits users to circumvent or defeat the SecurityFunctions and Features.  For thesepurposes, a “user accessible bus” shall mean a data bus which is designed forend user upgrades or access, such as PCMCIA, device bay, IEEE 1394 or Cardbus,but not PCI buses, memory buses, CPU buses, and similar portions of a device’sinternal architecture.  The foregoingshall also apply to interfaces between or among SDMI-Compliant products, suchthat SDMI Protected Content is transmitted in a Protected manner.

 

PLAYBACK

 

Unprotected digital playback(e.g., via USB speakers) shall be limited to linear PCM at 48 kHz 16 bit orbelow, and any playback at a rate higher than 1.5 times normal speed shall benoticeably degraded unless the pitch is corrected to the pitch at the normalspeed.

 

ROBUSTNESS REQUIREMENTSAPPLICABLE  TO SOFTWARE IMPLEMENTATIONS

 

Any portion of anImplementation that implements one or more of the security functions set forthin the Specification in software that could allow compromise of SDMI ProtectedContent shall include all of the characteristics set forth in Sections 10.1 and10.2.1 of these Robustness Requirements. In addition, such Implementations shall:

 

Use one or more reasonablemethods, which may include, but shall not be limited to: encryption, executionof a portion of the implementation in ring zero or supervisor mode, and/orembodiment in a secure physical implementation; and in every case ofimplementation of software, using techniques of obfuscation to disguise andhamper attempts to discover the approaches used.

 

Be designed so as to performself-checking of the integrity of its component parts and be designed to resultin a failure of the Implementation to provide the authorized Authenticationand/or decryption function in the event of unauthorized modification.  For these purposes, a “modification”includes any change in, or disturbance or invasion of features or characteristics,or interruption of processing.  Thisprovision requires at a minimum the use of “signed code” or other means oftagging or operating throughout the code which are equivalent or more robust.  For purposes hereof, “component parts” arethose that interact with SDMI Protected Content.

 

ROBUSTNESS REQUIREMENTSAPPLICABLE TO HARDWARE IMPLEMENTATIONS

 

Any portion of anSDMI-Complaint product that implements a part of the Specification in hardwareshall include all of the characteristics set forth in Sections 10.1 and 10.2.1of these Robustness Requirements.  Thefact that a software Implementation operates on a hardware computing platformshall not, in and of itself, cause such hardware computer platform to be subjectto the requirements set forth in Sections 10.2.4 and 10.2.5.  If, however, the software Implementationrelies on hardware or any hardware component to satisfy these RobustnessRequirements, then such hardware or hardware component shall be governed by therobustness rules set forth herein for hardware implementations.  In addition, such Implementation shall:

 

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1)                                   Useany reasonable means including, but not limited to: embedding encryption keysand algorithms in silicon circuitry or firmware which cannot be read, or thetechniques described above for software.

 

2)                                   Bedesigned such that attempts to remove or replace hardware elements in a waythat would compromise the content protection features of the Specificationwould pose a serious risk of damaging such product so that it would no longerbe able to receive playback SDMI Protected Content.  By way of example, a component that is soldered rather thansocketed may be appropriate for these means.

 

3)                                   Bedesigned such that the failure of a Security Function or Feature would causethe product to no longer be able to receive or playback SDMI Protected Content.

 

ROBUSTNESS REQUIREMENTSAPPLICABLE TO HYBRID IMPLEMENTATIONS

 

The interfaces between hardwareand software Implementations of an SDMI-Compliant product or between or amongSDMI-Complaint products shall be designed so that they provide the level ofprotection that would be provided by a purely hardware or purely softwareImplementation as described above.

 

REQUIRED LEVELS OF ROBUSTNESS

 

1)                                   TheSecurity Functions and Features and the characteristics set forth in Section10.1.4 shall be implemented so that it is reasonably certain that they:

 

2)                                   Cannotbe defeated or circumvented using Widely Available Tools (as defined below) orSpecialized Tools (as defined below) and

 

Can only with difficulty bedefeated or circumvented using Professional Tools (as defined below).

 

Widely Available Tools shallmean general-purpose tools or equipment that are widely available at areasonable price, such as screwdrivers, jumpers, clips, and soldering irons.

 

Specialized Tools shall meanspecialized electronic tools that are widely available at a reasonable price,such as memory readers and writers, debuggers, decompilers, or similar softwaredevelopment products other than devices or technologies that are designed andmade available for the specific purpose of bypassing or circumventing theprotection technologies that are required by the Specification, i.e.,“Circumvention Devices”.

 

Professional Tools shall mean professionaltools or equipment, such as logic analyzers, chip disassembly systems, or incircuit emulators, but not including either professional tools or equipmentthat are made available on the basis of a non-disclosure agreement orCircumvention Devices.

 

NEW CIRCUMSTANCES

 

If an Implementation whendesigned and shipped complies with the requirements set forth above, but at anytime thereafter circumstances arise which – had they been existing at the timeof design – would have caused such Implementation to fail to comply with theSpecification (“New Circumstances”), then upon having reasonable notice of suchNew Circumstances, the developer of such Implementation (the “SDMIParticipant”) shall promptly redesign affected product(s) or make available upgradesto its affected product(s), and, as soon as reasonable practicable, consistentwith ordinary product cycles and taking into account the level of threat toContent under the New Circumstances, shall incorporate such redesign orreplacement into its affected product(s), cease manufacturing such affectedproduct(s) and cease selling such affected product(s).

 

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EXAMINATION / INSPECTION

 

Under reasonable terms,including execution of mutually acceptable non-disclosure/non-use agreements,and upon reasonable notice to the SDMI Participant and the SDMI Foundation byone of the RIAA, the IFPI or the RIAJ (each referred to herein as a “RecordingCompany Association”), such Recording Company Association may at its ownexpense have an independent expert (acceptable to the SDMI Participant whoseproduct(s) are to be inspected) inspect the details necessary to anunderstanding of such product(s)’ implementation of the Specification and theseRobustness Requirements and such details sufficient to determine whether suchproduct(s) is/are SDMI-Compliant.

 

Such SDMI Participant’sapproval of such proposed expert shall not be unreasonably withheld.  Details which may be inspected include theexecutable object code, functional design diagrams, examples of the product, orblock diagrams, but shall not include the source code, the Verilog HardwareDescription Language (VHDL) or similar highly confidential information asreasonable designated by the SDMI Participant. Any report made by the independent expert shall be made available toboth the Recording Company Association and the SDMI Participant.  The SDMI Participant shall not be precludedor estopped from challenging the opinion of such expert in any forum.  Nothing in this paragraph shall limit therole or testimony of such expert, if any, in a judicial proceeding under suchprotective orders as a court may impose. This provision may not be invoked more than once per implementation,model or version, provided that such right of inspection shall include theright to re-inspect such implementation, model or version if it has beenrevised in an effort to cure any alleged failure or compliance.  Any investigation conducted hereunder shallbe based on reasonable grounds and commenced in a good faith attempt todetermine whether an Implementation is SDMI-Compliant.

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