Exhibit 10.6
REVENUE SHARING AGREEMENT
THIS AGREEMENT (the "Agreement") is made the 21st day of November, 1997.
BETWEEN:
(1) * and
(2) BLOCKBUSTER VIDEO INC. whose principal place of business is at ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as
"Blockbuster," which shall be deemed to include its permitted assigns).
WHEREAS:
(A) Blockbuster and certain of its Affiliates own, operate and franchise
retail stores throughout the United States and Canada which, among other
things, rent, sell and market pre-recorded videocassette tapes to the
general public; and
(B) * and certain of its Affiliates acquire, produce, license market and sell
motion pictures on pre-recorded videocassette tapes; and
(C) Blockbuster is willing to purchase on a per Store (the terms initially
capitalized in this Agreement and not otherwise defined herein shall have
the respective meanings set forth in Paragraph 19 of this Agreement) basis
a specified number of videocassette copies of each Rental Picture; and
(D) Blockbuster is willing to provide various marketing, advertising and
promotional services and activities in support of the Rental Pictures; and
(E) Blockbuster is willing to report electronically on an ongoing basis
information as to the rental and sales of Rental Pictures.
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under an application for confidential treatment", and the confidential
section has been marked with a star (*).
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NOW THEREFORE, based on the above premises and in consideration of the covenants
and agreements contained herein, the parties agree as follows:
1. AGREEMENT TERM:
The term of this Agreement shall be for * (the "Term"), commencing as of
the date of this Agreement. Each year of the Term, as measured from the date of
this Agreement, is a "Contract Year."
2. TERRITORY:
The territory for purposes of this Agreement with respect to each Picture
shall be the United States and Canada, their territories and possessions (the
"Territory"), except with respect to those Pictures for which * has only United
States Home Video Distribution Rights, in which case, the Territory with respect
to such Pictures shall be limited to the United States and, if and to the extent
* owns or controls such rights, to territories and possessions of the United
States (the "U.S. Territory").
3. BLOCKBUSTER COMMITMENTS:
Beginning as of the date of this Agreement for Stores located in the
United States, for Stores located in Canada within three (3) calendar months
hereafter, and for Participating Franchises within twelve (12) calendar months
hereafter, Blockbuster agrees as follows:
a. Purchasing: The following purchasing requirements shall apply to
all Stores and Participating Franchises (as defined in Paragraph 3.c.
below):
(1) *
(2) *
(3) *
(a) *
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(b) *
(c) *
(4) Missing Copies: For each Copy that is lost, stolen or
otherwise not reasonably accounted for, for more than thirty (30)
calendar days during the period commencing upon delivery to
Blockbuster's distribution center and ending on the last day of the
relevant Revenue Sharing Period (each, a "Missing Copy"),
Blockbuster shall pay to *. For any such Missing Copy recovered by
Blockbuster or * will reimburse Blockbuster the applicable
distribution wholesale price less the applicable average Purchase
Price received by *.
(5) Payment: *
(6) Remedy: The parties acknowledge and agree that if
Blockbuster fails to order the number or Copies required under this
▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇ shall pay to *, as liquidated damages, an
amount equal to * for each Copy which Blockbuster failed to order.
If * fails to deliver the number or Copies ordered by Blockbuster
under this Paragraph 3, * shall pay to Blockbuster, as liquidated
damages, an amount equal to * for each Copy which * failed to
deliver. The parties hereto expressly agree and acknowledge that
actual damages for purposes of this Subparagraph would be difficult
to ascertain and that the amount set forth above represents the
parties' reasonable estimate of such damages.
b. Marketing:
(1) * With respect to said advertising of Rental Pictures,
Blockbuster agrees to consult with * and to keep * reasonably
apprised of its marketing plans and activities and to comply with *
then-current customary marketing support policies and practices to
the extent they are reasonable and practicable. * shall have the
right to approve such plans, and Blockbuster shall provide a
meaningful
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and timely opportunity for said approval by *. * shall exercise its
approval rights in a timely and reasonable manner.
(2) Should * fail to comply in good faith with its obligations
under Paragraph 3.b.(1), Blockbuster shall be entitled to give
written notice to * of such failure. *. In no event shall
Blockbuster be obligated to provide such advertising which it would
otherwise have been obligated to provide during such time as
Blockbuster's obligations hereunder were suspended because of *'s
failure to fulfill its obligations under this Paragraph 3.b.(1).
c. Participating Franchises: While Blockbuster cannot guarantee that
its Franchises will adopt the Agreement, Blockbuster will use good faith
commercially reasonable efforts to recommend adoption of the Agreement to
its Franchises and anticipates a high level of adoption thereby.
Blockbuster hereby agrees that each Participating Franchise shall execute
a letter agreement, which has been approved by * in form and substance, in
favor of *, agreeing to be bound by the terms and conditions of this
Agreement as if it were a party hereto (the "Participating Franchise").
Blockbuster shall be liable for each Participating Franchise's performance
of its financial obligations hereunder as if such Participating Franchise
were a Store. * shall have the right to proceed against Blockbuster for
money only for any failure of a Participating Franchise to fully perform
the financial terms and conditions of this Agreement. Participating
Franchises shall be subject to the same terms and conditions under the
Agreement as Stores, unless specifically designated otherwise.
Implementation of the Agreement at the Franchise level and Franchise
payments thereunder will be administered by Blockbuster.
d. Overage: *.
e. Placement: Blockbuster shall exercise good faith commercially
reasonable efforts to maximize Rental Revenue on the Rental Pictures. At
all times during the entire Revenue Sharing Period, Blockbuster shall
display for rental at each Store all of the Copies of the Rental Picture
purchased for such Store, which are not currently being rented, in the
"New Releases" rental section of such Store (or another section of such
Store which has been preapproved by *).
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f. *. All sell-off copies will be prominently labeled as "Previously
Viewed Rental Product." Sell-off revenue is not included in Rental
Revenue.
g. Packing and Shipping: Blockbuster will be solely responsible for
making the Copies ready for consumer rental and for shipping the Copies
from its distribution center to its Stores.
h. Delivery: As between * and Blockbuster, title in and to the
Copies and risk of loss shall pass upon delivery of the Copies to
Blockbuster's distribution center in accordance with Paragraph 4.b.
i. Returns/Exchanges: The purchase requirements set forth in this
Paragraph 3 shall not be subject to any returns by Blockbuster. * will
exchange defective or damaged Copies for a working Copy of the same title.
Defective Copies shall mean those videocassettes which are mechanically
defective, mispackaged or contain extraneous material. Damaged Copies
shall mean those videocassettes which become materially damaged by Store
personnel, customers or otherwise, during the first * of the Revenue
Sharing Period. Blockbuster shall report defective or damaged Copies to *
promptly following discovery of such defect or damage.
j. Store Count: Blockbuster will report to * on a calendar month
basis the number of currently operating Stores, including Participating
Franchises, non-participating Franchises, New Blockbuster Stores and
recently store closed locations.
k. Demographic Information: Blockbuster will provide to *, on an
ongoing basis, information regarding the demographic make-up generally of
those customers renting the Copies.
4. * COMMITMENTS:
a. Marketing Support: In lieu of specific marketing support programs
such as rebate, co-op and MDF programs, and as payment for services and in
consideration for the various other services and activities which
Blockbuster has agreed to perform hereunder for the benefit of *, such as
sales and rental reporting functions, * agrees to credit on a per Rental
Picture basis (on the relevant invoice) Blockbuster with marketing
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support funds ("Marketing Support Funds") in the amount of * of the
Purchase Price generated by a Rental Picture for *, excluding any Purchase
Price generated by Overage Copies. Marketing Support Funds shall not be
used to advertise, promote or otherwise market product not distributed by
*. In addition to Marketing Support Funds, * shall continue to provide
Blockbuster with * standard in-store point of purchase marketing materials
as customarily utilized by Blockbuster.
(1) Blockbuster shall use * of the Marketing Support Funds to
advertise in measured media the availability of Rental Pictures in
Stores. With respect to said advertising of Rental Pictures,
Blockbuster agrees to consult with * and to keep * reasonably
apprised of its marketing plans and activities and to comply with *
then-current customary marketing support policies and practices to
the extent that they are reasonable and practicable. * shall have
the right to approve such plans, and Blockbuster shall provide a
meaningful and timely opportunity for said approval by *. * shall
exercise approval rights in a timely and reasonable manner.
(2) With respect to * of the Marketing Support Funds, * and
Blockbuster shall jointly determine how said monies will be used to
advertise, promote or otherwise market the Rental Pictures.
(3) Blockbuster shall use * of the Marketing Support Funds for
in-store Rental Picture specific marketing and promotion.
(4) Should Blockbuster fail to comply in good faith with its
obligations under paragraphs 4.a (1), (2) and (3), * shall be
entitled to give written notice to Blockbuster of such failure. If
Blockbuster fails to remedy such failure to *'s satisfaction within
ten (10) calendar days following receipt of such notice, * shall be
relieved of its obligations to provide Marketing Support Funds,
until such time as Blockbuster complies in good faith with its
obligations under this Paragraph 4.a. In no event shall Blockbuster
be entitled to receive Marketing Support Funds which would otherwise
have accrued during such time as Blockbuster's rights hereunder were
suspended because of its failure to fulfill its obligations under
this Paragraph 4.a.
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b. Shipping: * will deliver the Copies to one (1) primary
distribution center in the United States, currently in McKinney, Texas, at
least ten (10) calendar days prior to Street Date and will use good faith
efforts to deliver the Copies fourteen (14) calendar days prior to Street
date.
c. *
5. ELECTRONIC REPORTING:
At no cost or expense to *, Blockbuster will provide to *, electronically,
daily access to all * Rental Picture information along with weekly summaries, in
such form as may be reasonably specified by * from time to time, of all
performance information as to Blockbuster's rental of the Rental Pictures,
including, but not limited to, daily rental turn data, daily inventory and daily
Rental Revenue from each Store on a Store by Store, Rental Picture by Rental
Picture, Copy by Copy basis. *. At no cost or expense to Blockbuster, * will,
through SuperComm, assist in data collection services and facilitate electronic
reporting.
6. REVIEW:
Within thirty (30) calendar days following the end of each Contract Year,
the parties shall meet and in good faith review the terms of this Agreement.
Should no agreement be reached between the parties with respect to adjusting or
amending the terms of the Agreement, the then current terms of the Agreement
shall remain in full force and effect. Within the thirty (30) calendar days
following the end of the forty-second (42nd) month of the Term, either party may
give six (6) months' notice to terminate the Agreement. If such notice is given
by either party, from such notification forward, Blockbuster shall have no right
or obligation to purchase additional Rental Pictures under this Agreement and *
shall be relieved of any right or obligation to sell Rental Pictures to
Blockbuster under this Agreement.
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7. *
8. TERMINATION:
a. The following transactions or occurrences shall constitute
material events of default (each an "Event of Default") by the applicable
party (the "defaulting party") hereunder such that, in addition to and
without prejudice to or limiting any other rights and remedies available
to the non-defaulting party at law or in equity the non-defaulting party
may elect to immediately and prospectively terminate this Agreement at the
sole discretion of the non-defaulting party by giving written notice
thereof to the other party at any time after the occurrence of an Event of
Default setting forth sufficient facts to establish the existence of such
Event of Default:
(1) A material breach by a party of any material covenant,
material warranty, or material representation contained herein,
where such defaulting party fails to cure such breach within thirty
(30) calendar days after receipt of written notice thereof, or
within such specific cure period as is expressly provided for
elsewhere in this Agreement; or
(2) A party makes an attempt to make any arrangement for the
benefit of creditors, or a voluntary or involuntary bankruptcy,
insolvency or assignment for the benefit of creditors of a party or
in the event any action or proceeding is instituted relating to any
of the foregoing and the same is not dismissed within thirty (30)
calendar days after such institution; or
(3) A failure by either party to make payment of any monies
payable pursuant to this Agreement as and when due.
b. Should * terminate this Agreement pursuant to Paragraph 9.a., *
shall immediately be relieved from any further obligations under Paragraph
4 of this Agreement.
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c. Except as otherwise provided herein, no termination of this
Agreement for any reason shall relieve or discharge any party hereto from
any duty, obligation or liability hereunder which was accrued as of the
date of such termination.
9. PUBLIC DISCLOSURE AND CONFIDENTIALITY:
a. Public Disclosure: Each party agrees that no press release or
public announcement relating to the existence or terms of this Agreement
(including within the context of a trade press or other interview or
advertisement in any media) shall be issued without the express prior
written approval of the other party hereto.
b. Confidential Information: During the Term and for a period of
three (3) years thereafter, Blockbuster and * shall hold, and shall cause
each of their directors, officers, employees and agents to hold in
confidence the terms of this Agreement (including the financial terms and
provisions hereof and all information received pursuant to, or developed
in accordance with, this Agreement) specifically including but not limited
to the *. Blockbuster and * hereby acknowledge and agree that all
information contained in, relating to or furnished pursuant to this
Agreement, not otherwise known to the public, is confidential and
proprietary and is not to be disclosed to third parties without the prior
written consent of both Blockbuster and *. Neither Blockbuster nor * shall
disclose such information to any third party (other than to officers,
directors, employees, attorneys, accountants and agents of Blockbuster and
* or the affiliates of either, who have a business reason to know or have
access to such information, and only after each of whom agrees to being
bound by this paragraph) except:
(1) To the extent necessary to comply with any Law or the
valid order of a governmental agency or court of competent
jurisdiction or as part of its normal reporting or review procedure
to regulatory agencies or as required by the rules of any major
stock exchange on which either party's stock may be listed;
provided, however, that the party making such disclosure shall seek,
and use reasonable efforts to obtain, confidential treatment of said
information and shall promptly, to the greatest extent practicable,
notify the other party in advance of such disclosure;
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(2) As part of the normal reporting or review procedure by its
parent company, its auditors and its attorneys;
(3) To the extent necessary to obtain appropriate insurance,
to its insurance agent or carrier, that such agent or carrier agrees
to the confidential treatment of such information; and
(4) To actual or potential successors in interest, provided,
however, that such person or entity shall have first agreed in
writing to the confidential treatment of such information.
10. NO RIGHT TO USE NAMES:
a. Neither Blockbuster nor Stores nor Participating Franchises shall
acquire any right to use, nor shall the same use any copyrights,
trademarks, characters or designs owned or controlled by * or any of its
Affiliates, including without limitation, the names *, alone or in
conjunction with other words or names, in any advertising, publicity or
promotion, either express or implied, without *'s prior consent in each
case, and in no case shall any Blockbuster or Store advertising,
publicity, or promotion, express or imply any endorsement of the same.
b. * shall not acquire any right to use, nor shall the same use, the
name Blockbuster alone or in conjunction with other words or names, or any
copyrights, trademarks, characters or designs of the same in any
advertising, publicity or promotion, either express or implied, with
Blockbuster's prior consent in each case, and in no case shall any *
advertising, publicity, or promotion, express or imply any endorsement of
the same.
11. ASSIGNMENT:
This Agreement and the rights and licenses granted hereunder are personal
and neither party shall have the right to sell, assign, transfer, mortgage,
pledge nor hypothecate (each an "Assignment") any such rights or licenses in
whole or in part without the prior written consent of the non-assigning party,
nor will any of said rights or licenses be assigned or transferred to any third
party by operation of law, including, without limitation, by merger or
consolidation or
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otherwise; provided, however, that an Assignment pursuant to or resulting from a
sale of all or substantially all of the assets or all or a majority of the
equity of Blockbuster to any Person or Persons or any other form of business
combination, such that the Blockbuster business as currently existing remains
substantially intact, including, without limitation, a sale to the public, shall
not require such consent so long as such Assignment is not to an unaffiliated
motion picture studio; and provided further that any Assignment by (i)
Blockbuster, to any Affiliate of Viacom or (ii) * to any Affiliate of *, where
such Affiliate has access to the * library of films generally equivalent to that
of * at the time of this Agreement, shall also not require consent. In the event
that Blockbuster or * assigns its rights or interest in or to this Agreement in
whole or in part, the assigning party will nevertheless continue to remain fully
and primarily responsible and liable to the other party for prompt, full,
complete and faithful performance of all terms and conditions of this Agreement.
12. AUDIT RIGHTS:
a. During the Term and continuing until the date six (6) months
following the date of expiration or earlier termination of this Agreement
* may, audit the financial books, information systems and records of
Blockbuster as reasonably necessary to verify Blockbuster's compliance
with its obligations under this Agreement; provided, however, that (a)
such audit shall be at the sole cost and expense of * (unless such audit
reveals that payments due to * for any twelve (12) month period were
understated by more than five percent (5%), in which case, in addition to
all other rights which * may have, Blockbuster shall promptly reimburse *
to the extent of its reasonable out-of-pocket costs of such audit), (b) *
may not audit more than twice per year (and no such audit shall continue
for more than thirty (30) calendar days from the date the auditors are
given access to the applicable records), and (c) any such audit shall be
conducted only during regular business hours and in such a manner as not
unreasonably to interfere with the normal business activities of
Blockbuster. Blockbuster shall keep and maintain complete and accurate
books of account and records in connection with its obligations under this
Agreement at its principal place of business until the date thirty-nine
(39) months following the date of rendering of the initial statement
reflecting such records unless a legal action with regard thereto is
commenced during such period.
b. During the Term and continuing until the date six (6) months
following the date of expiration or earlier termination of this Agreement,
* may inspect and audit
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the books, records and store premises of Stores and Participating
Franchises as reasonably necessary to verify compliance with this
Agreement; provided, however, that (a) such audit shall be at the sole
cost and expense of *(unless such audit reveals that payments due to * for
any twelve (12) month period were understated by more than five percent
(5%), in which case, in addition to all other rights which * may have,
Blockbuster shall promptly reimburse * to the extent of its reasonable
out-of-pocket costs of such audit), and (b) any such audit shall be
conducted only during regular business hours and in such a manner as not
unreasonably to interfere with the normal business activities of Store or
Participating Franchises.
13. *'S REPRESENTATIONS AND WARRANTIES:
* represents and warrants that:
a. It is a corporation organized and existing under the laws of the
* with its principal place of business in the *;
b. The undersigned has the full right, power and authority to sign
this Agreement on behalf of *;
c. The execution, delivery and performance of this Agreement does
not and will not, violate any provisions of *'s articles or certificates
or incorporation and bylaws, or any contract or other Agreement to which *
is a party;
d. There is no broker, finder or intermediary involved in connection
with the negotiations and discussions incident to the execution of this
Agreement, and no broker, finder, agent or intermediary who might be
entitled to a fee, commission or any other payment upon the consummation
of the transactions contemplated by this Agreement;
e. This Agreement has been duly executed and delivered and
constitutes the legal, valid and binding obligation of *, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereinafter in effect, affecting the enforcement of creditors'
rights in general and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at
law; and
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f. Copies shall be new and unused and comparable in quality to other
videocassette units being sold by * in rental distribution channels.
14. BLOCKBUSTER'S REPRESENTATIONS AND WARRANTIES:
Blockbuster represents and warrants that:
a. It is a corporation organized and existing under the laws of the
State of Delaware with its principal place of business in the State of
Texas;
b. The undersigned has the full right, power and authority to sign
this Agreement on behalf of Blockbuster;
c. There is no broker, finder or intermediary involved in connection
with the negotiations and discussions incident to the execution of this
Agreement, and no broker, finder, agent or intermediary who might be
entitled to a fee, commission or any other payment upon the consummation
of the transactions contemplated by this Agreement;
d. This Agreement has been duly executed and delivered and
constitutes the legal, valid and binding obligation of Blockbuster
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereinafter in effect, affecting the enforcement of
creditors' rights in general and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law; and
e. The execution, delivery and performance of this Agreement does
not, and will not, violate any provisions of Blockbuster's articles or
certificates of incorporation and bylaws, or any contract or other
Agreement to which Blockbuster is a party.
15. FORCE MAJEURE:
The duties and obligations of the parties hereunder may be suspended upon
the occurrence and continuation of any "Event of Force Majeure" which inhibits
or prevents performance hereunder, and for a reasonable start-up period
thereafter. An "Event of Force Majeure" shall mean any act, cause, contingency
or circumstance beyond the reasonable control
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of such party (whether or not reasonably foreseeable), including, without
limitation, to the extent beyond the reasonable control of such party, any
governmental action, nationalization, expropriation, confiscation, seizure,
allocation, embargo, prohibition of import or export of goods or products,
regulation, order or restriction (whether foreign, federal or state), war
(whether or not declared), civil commotion, disobedience or unrest,
insurrection, public strike, riot or revolution, lack or shortage of, or
inability to obtain, any labor, machinery, materials, fuel, supplies or
equipment from normal sources of supply, strike, work stoppage or slowdown,
lockout or other labor dispute, fire, flood, earthquake, drought or other
natural calamity, weather or damage or destruction to plants and/or equipment,
commandeering of vessels or other carriers resulting from acts of God, or any
other accident, condition, cause, contingency or circumstances including
(without limitation, acts of God) within or without the United States. Neither
party shall, in any manner whatsoever, be liable or otherwise responsible for
any delay or default in, or failure of, performance resulting from or arising
out of or in connection with any Event of Force Majeure and no such delay,
default in, or failure of, performance shall constitute a breach by either party
hereunder. As soon as reasonably possible following the occurrence of an Event
of Force Majeure, the affected party shall notify the other party, in writing,
as to the date and nature of such Event of Force Majeure and the effects of
same. If any Event of Force Majeure shall prevent the performance of a material
obligation of either party hereunder, and if the same shall have continued for a
period of longer than 180 days, then either party hereto shall have the right to
terminate this Agreement by written notice to the other party hereto.
16. INDEMNIFICATION:
Each party (the "Indemnifying Party") shall indemnify and hold the other
party and its affiliates and their respective employees, officers, agents,
attorneys, stockholders and directors, and their respective permitted
successors, licensees and assigns (the "Indemnified Party(ies)") harmless from
and against (and shall pay as incurred) any and all claims, proceedings,
actions, damages, costs, expenses and other liabilities and losses (whether
under a theory of strict liability, or otherwise) of whatsoever kind or nature
("Claim(s)") incurred by, or threatened, imposed or filed against, any
Indemnified Party (including, without limitation, (a) actual and reasonable
costs of defense, which shall include without limitation court costs and
reasonable attorney and other reasonable expert and reasonable third party fees;
and (b) to the extent permitted by Law, any fines, penalties and forfeitures) in
connection with any proceedings against an Indemnified Party caused by any
breach (or, with respect to third party claims only, alleged breach) by the
Indemnifying Party of any representation, term, warranty or agreement hereunder.
Neither party shall settle, compromise or consent to the entry of any judgment
in or otherwise seek to terminate any pending or threatened Claim in respect of
which the Indemnified Party is entitled to indemnification hereunder (whether or
not the Indemnified Party is a party thereto), without the prior written consent
of the other party hereto; provided, however, that the Indemnifying Party shall
be entitled to settle any claim without the written consent of the Indemnified
Party so long as such settlement only involves the payment of money by the
Indemnifying Party and in no way affects any rights of the Indemnified Party.
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17. REMEDIES:
No remedy conferred by any of the specific provisions of this Agreement is
intended to be exclusive of any other remedy which is otherwise available at
law, in equity, by statute or otherwise, and except as otherwise expressly
provided for herein, each and every other remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law, in equity, by statute or otherwise and no provision hereof
shall be construed so as to limit any party's available remedies in the event of
a breach by the other party hereto. The election of any one or more of such
remedies by any of the parties hereto shall not constitute a waiver by such
party of the right to pursue any other available remedies.
18. DEFINITIONS:
a. "Affiliate" shall mean an entity in which either party has a
controlling interest.
b. "Copy" or "Copies" shall mean VHS videocassette units. Other
formats, including laserdisc and DVD are not included under this
Agreement.
c. *
d. "Franchises" shall mean all Blockbuster stores which Blockbuster
informs * are Franchises.
e. *
f. "Home Video" shall mean the providing of motion pictures and
other programming to members of the general public by means of the
temporary or permanent transfer of physical possession of a VHS
videocassette for non-public viewing on a home television receiver.
g. "Home Video Distribution Rights" shall mean the right to record
and distribute a motion picture on videocassette.
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h. "Laws" shall mean all international, federal, national, state,
provincial, municipal or other laws, ordinances, orders, statutes, rules
or regulations.
i. "New Blockbuster Store" shall mean a Store which Blockbuster or
any of its Franchisees first owns or operates after the commencement date
of this Agreement, excluding Blockbuster's acquisition of franchised
Blockbuster Stores.
j. "Non-Theatrical Pictures" shall mean audio-visual Pictures
initially distributed in the Territory via a medium other than theatrical
release (e.g., via Home Video, cable, pay or free television exhibition)
and which are being distributed to all rental channels of home video
distribution.
k. "Picture" shall mean any motion picture, including but not
limited to live-action, animated or other medium, or any other programming
for which * owns or controls Home Video Distribution Rights in the
Territory or in the U.S. Territory as applicable. Further, * shall
exercise equivalent practices relating to the acquisition and distribution
of Rental Pictures throughout the Term of this Agreement as it does
currently. Every Picture for which * or its Affiliates has home video
distribution rights in the Territory and elects to distribute as a Rental
Picture in the Territory shall be made available to Blockbuster under the
terms of this Agreement.
l. *
m. "Prebook Date" shall mean, with respect to any Picture, the date
specified by *, in its sole discretion, when * videocassette orders are
due for all channels of distribution.
n. "Rental Picture" shall mean each and every Picture provided such
Picture is at least seventy (70) minutes in length and is not a sports
event, concert film, stage play, video or theatrical re-release or library
film, distributed by *, which when initially released on videocassette is
priced by * at a "rental price" (as opposed to a "sell-through price"), as
such terms are generally understood in the Home Video industry in Los
Angeles, California.
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
17
o. "Revenue Sharing Period" shall mean the period commencing on the
Video Street Date of the relevant Picture and running through the end of
the twenty-sixth (26th) week thereafter.
p. "Store" shall mean any video store in the United States or
Canada, which, at any time during the Term of this Agreement, is wholly
owned and/or operated by Blockbuster, whether or not such store is
operated under the "Blockbuster" trademarks, excluding only the "Sixteen
Thousand Video" stores operated by Blockbuster in Florida. Should
Blockbuster undertake to own or operate retail outlets different than the
retail outlets it has traditionally operated, such as by way of example,
kiosks, carts, "stores within a store", "rack jobbing" operations or
vending machines, the parties shall negotiate in good faith to agree upon
terms for the inclusion of such retail outlets in this Agreement.
q. "Video Street Date" shall mean, with respect to any Picture, the
first date on which, in the Territory, both: (i) such Picture is
authorized by * for Home Video distribution, and (ii) Home Video copies of
such Picture are actually available to the general public.
19. MISCELLANEOUS:
a. This Agreement shall not constitute any partnership, joint
venture or agency relationship between the parties hereto. The parties
shall be considered independent contractors.
b. This Agreement, together with the attached Exhibits, embodies the
entire understanding of the parties with respect to the subject matter
hereof and may not be altered, amended or otherwise modified except by an
instrument in writing executed by both parties.
c. The headings in this Agreement are for convenience of reference
only and shall not have any substantive effect.
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
18
d. All rights and remedies granted to the parties hereunder are
cumulative and are in addition to any other rights or remedies that the
parties may have at law or in equity.
e. Should any non-material provision of this Agreement be held to be
void, invalid or inoperative, as a matter of law the remaining provisions
hereof shall not be affected and shall continue in effect as though such
unenforceable provision(s) have been deleted herefrom.
f. Unless otherwise indicated, all dollar amounts referenced herein
shall refer to and be paid in United States dollars.
g. No waiver of any right under or breach of this Agreement shall be
effective unless it is in writing and signed by the party to be charged.
h. This Agreement shall be governed by and construed in accordance
with the internal Laws of the *, applicable to Agreements entered into and
wholly performed therein. Blockbuster hereby consents to and submits to
the jurisdiction of the * and any action or suit under this Agreement may
be brought in any * with appropriate jurisdiction over the subject matter
established or sitting within the *.
i. None of the provisions of this Agreement is intended for the
benefit of or shall be enforceable by any third parties.
j. This Agreement may be executed in separate counterparts each of
which shall be an original and all of which taken together shall
constitute one and the same Agreement.
k. All notices shall be in writing and either personally delivered,
mailed first-class mail (postage prepaid), sent by reputable overnight
courier service (charges prepaid), or sent by transmittal by any
electronic means whether now known or hereafter developed, including, but
not limited to, telex, telecopier or laser transmissions, able to be
received by the party intended to receive notice, to the parties at the
following addresses:
----------
* "Confidential material omitted and separately filed with the Commission
under an application for confidential treatment".
19
If to Blockbuster:
Blockbuster Entertainment Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Chairman and CEO
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice President and General Counsel
If to *:
*
*
*
*
Attention:*
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
20
IN WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
*
/s/ *
----------------------------------
By: *
Title: *
BLOCKBUSTER VIDEO INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and General Counsel
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
By: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
----------
* "Confidential material omitted and separately filed with the Commission
under an application for confidential treatment".
Exhibit A
BLOCKBUSTER BUY MATRIX
Copies per Rental Picture per Store
*
----------
* "Confidential material omitted and separately filed with the Commission
under an application for confidential treatment".