Exhibit 10.8
REVENUE SHARING AGREEMENT
THIS AGREEMENT (the "Agreement") is made the 25th day of August, 1998 (the
"Effective Date").
BETWEEN:
(1) BLOCKBUSTER VIDEOS, INC. whose principal place of business is at 0000 Xxx
Xxxxxx, Xxxxxx, Xxxxx 00000 (hereinafter referred to as "Blockbuster," which
following assignment shall include its actual assigns); and
(2) *
WHEREAS:
(A) Blockbuster and certain of its Affiliates (the terms initially capitalized
in this Agreement and not otherwise defined herein shall have the respective
meanings set forth in Paragraph 1 of this Agreement) own, operate and franchise
retail stores 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) * is willing to provide Copies of each Rental Picture and each * to
Blockbuster; and
(D) Blockbuster is willing to obtain, on the terms and subject to the conditions
hereinafter set forth, a specified number of Copies of each Rental Picture and
each * distributed by * during the Term; and
(E) Blockbuster is willing and has the operational capacity to report
electronically on an ongoing basis during the Revenue Sharing Period information
as to the rental of Copies per Rental Picture as set forth in Exhibit C,
attached hereto and made a part hereof.
----------
* Pages where confidential treatment has been requested are stamped
"Confidential material omitted and separately filed with the Commission
under an application for confidential treatment", and the confidential
section has been marked with a star (*).
2
NOW THEREFORE, based on the above premises and in consideration of the mutual
covenants and agreements contained herein, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS:
a. "Affiliate" shall mean (i) in the case of *; and (ii) in the case of
Blockbuster or Blockbuster Entertainment Inc., all companies which are
controlled by Blockbuster and/or Blockbuster Entertainment Inc. or which have a
common direct or indirect parent.
b. *
c. "Blockbuster Headquarters" shall mean the corporate office of
Blockbuster located at 0000 Xxx Xxxxxx, Xxxxxx, Xxxxx 00000.
d. "Copy(ies)" shall mean VHS videocassettes of the Rental Pictures and *
obtained by Blockbuster from * for Home Video Distribution. Other formats,
including, without limitation, laserdisc and DVD, are not included under this
Agreement.
e. *
f. "Distribution Center" shall mean Blockbuster's distribution center that
is currently in McKinney, Texas. Blockbuster may add an additional two (2)
delivery points at its option.
g. *
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
3
Video Distribution Rights in the Territory that fails to satisfy the
requirements set forth in this subparagraph shall not be subject to this
Agreement.
h. "Franchise Stores" shall mean Blockbuster franchise stores that are
operated pursuant to binding franchise agreements. If designated by Blockbuster
as ordering Copies through Blockbuster, such Franchise Store shall become a
Participating Store.
i. *
j. "Home Video Distribution" or "Home Video Distribution Rights" shall
mean the right to manufacture, record, sell and/or otherwise distribute a motion
picture on videocassette.
k. *
l. "Missing Copies" shall mean those Copies of a particular Rental Picture
that are unaccounted for due to theft or loss occurring outside of the ordinary
course of business. Blockbuster, in its good faith discretion, will determine if
a Copy is lost or stolen.
m. "Month" or "Monthly" shall mean Blockbuster's accounting cycle that is
based upon a four week, four week, five week rotation as set forth in Exhibit B,
attached hereto and made part hereof.
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
4
n. "Participating Store" shall mean (i) any Video Store in the United
States, which at the relevant time during the Term of this Agreement, is wholly
owned and/or operated by Blockbuster and/or its Affiliates under the Blockbuster
trademarks; (ii) if designated by Blockbuster as ordering Copies through
Blockbuster, any Video Store in the United States, which at the relevant time
during the Term of this Agreement, is wholly owned and/or operated by
Blockbuster and/or its Affiliates not under the Blockbuster trademarks which
elect to participate pursuant to the terms and conditions hereof; and (iii)
Franchise Stores which elect to participate pursuant to the terms and conditions
hereof. For Copy quantity allocation purposes, Kiosks and Video Vending Machines
(the "Special Formats") shall not be included in the definition of
"Participating Stores."
o. *
p. "Rental Picture" shall mean each and every feature motion picture for
which * owns or controls Home Video Distribution Rights in the Territory,
provided such picture: (1) is at least seventy (70) minutes in length; (2) is
within Blockbuster's guidelines of the MPAA rating system (i.e., Blockbuster
does not make available for rental to its customers pictures which are not rated
or which have a rating of NC17 or more restrictive); (3) is not a documentary,
foreign language film (excepting those qualifying under subparagraph g. of this
Paragraph 1), sports event, concert film, stage play, video or theatrical
re-release, or library/category film; and (4) is one theatrically distributed,
which when initially released on videocassette is priced and distributed by * at
a "rental price" and no less than a "net effective unit price" of at least *, as
such terms are generally understood in the home video industry in Los Angeles,
California. "Net effective unit price" shall mean the price invoiced and accrued
(before adjustment for any marketing support funds) for each Copy of a specific
Rental Picture by the videocassette distributor, supplies and/or retail/rental
outlet which purchases videocassettes directly from * other than through leasing
and/or "buy back" programs. *. Every other feature motion picture for which *
owns or controls Home Video Distribution Rights in the Territory that is priced
and distributed by * that fails to satisfy the requirements set forth in this
subparagraph shall not be subject to this Agreement.
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
5
q. *
r. "Revenue Sharing Period" shall mean the period commencing on the Video
Street Date of the relevant Rental Picture and running through the end of
twenty-six (26) weeks immediately thereafter.
s. "Video Store" shall mean a retail outlet that has at least one thousand
five hundred (1,500) square feet and that is primarily engaged in the rental of
videocassettes to the public for home viewing entertainment purposes.
t. "Video Street Date" shall mean, with respect to any Rental Picture, the
first date on which, in the Territory, both: (i) such Rental Picture is
authorized by * for Home Video Distribution, and (ii) Copies of such Rental
Picture are actually available to the general public at Participating Stores.
2. AGREEMENT TERM:
The term of this Agreement shall be for * (the "Term"), commencing as of
September 1, 1998.
3. TERRITORY:
The territory for purposes of this Agreement with respect to each Rental
Picture shall be the United States, its territories and possessions, if any to
the extent * owns or controls such rights to territories and possessions of the
United States (the "Territory"). Blockbuster and * agree to discuss the
inclusion of Canada, its provinces, territories and possessions in the Territory
in accordance with the terms and conditions of this Agreement or comparable
terms mutually agreed upon by the parties; provided however, that neither party
shall have any obligation to agree to such inclusion.
----------
* "Confidential material omitted and separately filed with the Commission
under an application for confidential treatment".
6
4. BLOCKBUSTER COMMITMENTS:
Beginning as of the date of this Agreement for Participating Stores,
Blockbuster agrees as follows:
a. The following terms shall apply to Rental Pictures:
(1) *
(2) *
(3) *
Blockbuster may retain up to * of the Revenue Share Copies of each
Rental Picture (including * ) and up to * at its Distribution Center
for replenishment, new Participating Stores and unexpected spikes in
product performance (the "Replenishment Copies").
(4) *
(5) *
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
7
(6) *
(7) *
(8) *
(a) *
(b) *
(c) *
(9) Payment.-Blockbuster shall pay: *
b. Participating Franchisees: Blockbuster may distribute Copies of the
Rental Pictures received under this Agreement to its Franchise Stores
which have elected to be governed by the terms and conditions of this
Agreement for all Rental Pictures whose
----------
* "Confidential material omitted and separately filed with the Commission
under an application for confidential treatment".
8
Video Street Dates fall within a consecutive period of no less than six
(6) months, provided however, that if a Franchise Store elects to
discontinue participation hereunder, any Rental Pictures for which orders
have been placed or in its possession shall continue to be subject to the
terms of this Agreement for the applicable Revenue Sharing Period until
such Copies are returned to * or sold by Blockbuster (in accordance with
Paragraph 4.c below) and all parties shall remain obligated to perform
their respective obligations with respect thereto under this Agreement.
Terms for implementation of this Agreement at the franchise level and
franchise payments thereunder will be controlled and administered by
Blockbuster. For purposes of this Agreement and to the extent a Franchise
Store elects to participate under this Agreement, such Franchise Store
shall be considered a Participating Store. For the purposes of payment
only and in the event that a Franchise Store which has elected to
participate hereunder is unable to pay when due any amounts due and owing
to *, Blockbuster shall pay * any undisputed amount pursuant to Paragraph
4.a(9) of this Agreement.
c. *
d. Packing and Shipping: Blockbuster will be responsible for making the
Copies ready for consumer rental and for shipping the Copies for its
Distribution Center to its Participating Stores.
e. Missing Copies: During the first sixty (60) days of the applicable
Revenue Sharing Period, Blockbuster agrees to pay to * less the Upfront
Price and revenue share amounts already paid to * for any Missing Copy.
Blockbuster shall notify * of any theft or loss of any Copy that occurs
outside of the ordinary course of business at the time Blockbuster
discovers the same.
f. Damaged/Defective: "Damaged Copies" shall mean those videocassettes
which become materially damaged by Participating Store personnel,
customers, or otherwise, during the Revenue Sharing Period. "Defective
Copies" shall mean those Copies that are
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
9
mechanically defective, mispackaged or contain "extraneous material" (as
defined in Paragraph 9(i) below). * shall deliver to Blockbuster, at no
cost, additional Copies of each Rental Picture in the amount of * of the
Base Buy Copies as set forth on Exhibit A for Blockbuster to retain at its
Distribution Center and to use solely, in its discretion, as replacement
of Defective Copies and Damaged Copies; provided however, that if any of
these Copies are placed in the Participating Stores, * shall receive its
share of the Rental Revenue for the Copy used to replace the Damaged or
Defective Copy since no Rental Revenue will thereafter be generated from
the Damaged or Defective Copy.
g. *
5. * COMMITMENTS:
x. Xxxxx: * grants Blockbuster the right, and Blockbuster hereby obligates
itself, to distribute the Revenue Share Copies of the Rental Pictures
(excluding Replenishment Copies) for placement on the shelves of its
Participating Stores during the applicable Revenue Sharing Period, for the
transfer of possession on a temporary or permanent basis consistent with
this Agreement to members of the general public for home viewing purposes.
* is obligated to ship the Copies to Blockbuster pursuant to the terms and
conditions of this Agreement.
b. Marketing-Support: In lieu of specific marketing support programs and
as payment for services and in consideration for the various other
services and activities which Blockbuster has agreed to perform hereunder,
* agrees that Blockbuster shall accrue on a Qualified Rental Picture basis
marketing support funds (the "Marketing Support Funds") in a minimum
amount of * of the Minimum Guarantee for each Qualified Rental Price.
Blockbuster shall use the Marketing Support Funds to advertise the Rental
Pictures in its discretion and * and shall reimburse Blockbuster for the
Marketing Support Funds when used.
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
10
c. Shipping: * will deliver the Copies to the Distribution Center at least
three (3) weeks prior to Video Street Date per Rental Picture.
6. AUDIT:
During the Term and continuing until the date twelve (12) months following
the date of expiration or earlier termination of this Agreement, Blockbuster
agrees that *, with not less than three (3) business days advance notice, any
conduct, during normal business hours, Monday through Wednesday: (i) one (1)
audit per year of Blockbuster's business operation and records at the
Blockbuster Headquarters; and (ii) a total of ten (10) audits per year of the
business records at a Participating Store (i.e., ten (10) total audits and not
ten (10) audits per Participating Store), solely pertaining to the Copies
licensed by Blockbuster pursuant to this Agreement. Any additional audit request
of information not provided for above including, without limitation, any audit
of Bad Debt, Promotional or Operational Credits shall be performed by
Blockbuster's certified public accountant on an annual basis and provided to *
within fifteen (15) days of their request. Any audits conducted pursuant to this
section shall relate to Blockbuster's compliance with the terms of this
Agreement and shall not unreasonably interfere with Blockbuster' daily business
operations. * agrees that the data and other information collected by * may be
used by * only in connection with such audits and to fulfill * commitments under
this Agreement and to enable * to enforce its rights hereunder. Blockbuster
agrees to reimburse * for actual costs incurred if any audit results in
deviation in excess of ten percent (10%) or more between the percentage of
Rental Revenue paid to * by Blockbuster and the percentage of Rental Revenue due
to * by Blockbuster.
7. * 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 * articles or certificates of incorporation and
bylaws, or any contract or other agreement to which * is a party.
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
11
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,
commissions 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.
f. Copies shall be new and unused and comparable in quality to other
videocassette units being sold by * in rental distribution channels.
8. 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. 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 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,
commissions 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 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
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
12
and by general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
9. INDEMNIFICATION:
(i) * agrees to, at all times, defend, indemnify and hold Blockbuster, its
parent company, their affiliates, subsidiaries, franchisees and the
officers, directors, agents and employees of each, harmless from and
against any and all claims, suits, damages, losses, liabilities,
obligations, fines, penalties, costs and expenses (whether based on libel,
slander, invasion of privacy, breach of contract, product liability,
patent, trademark, license or copyright infringement or otherwise),
including legal fees and expenses, of whatever kind or nature
(collectively, "Loss"), arising out of or based on (a) a breach or
violation of this Agreement by * or any failure by * to perform any of the
agreements, terms, covenants, conditions, representations or warranties of
this Agreement to be performed by *; (b) any third party claim that any
Rental Picture infringes the copyright, trademark, contractual rights,
right of publicity, right of privacy, or otherwise defames such third
party; or (c) any third party claim regarding any extraneous material
contained on any Copy of a Rental Picture provided to Blockbuster pursuant
to this Agreement. Such extraneous material may include, without
limitation, pornographic, obscene material or scenes of an inappropriate
nature placed on such Copies, provided however, that such extraneous
material shall not include the actual feature motion picture content or
trailers so long as such content is not altered in any way and is in
compliance with the MPAA rating and the definition of Rental Pictures, *
and * contained in this Agreement.
(ii) Blockbuster agrees to, at all times, defend, indemnify and hold *,
its parent company, their affiliates, subsidiaries, and the officers,
directors, agents and employees of each, harmless from and against any
Loss arising out of or based on a breach or violation of this Agreement by
Blockbuster or any failure by Blockbuster to perform any of the
agreements, terms, covenants, conditions, representations or warranties of
this Agreement to be performed by Blockbuster.
(iii) The Indemnified Party shall give written notice to the Indemnifying
Party and the Indemnifying Party will promptly assume and diligently
conduct the entire defense of any third party suit or action, or the
making of any third party claim as to which indemnity may be sought
hereunder, including settlements and appeals, at the Indemnifying Party's
sole cost and expense, and the Indemnifying Party shall pay and discharge
any and all settlement amounts, judgments or decrees which may be
rendered.
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
13
(iv) The Indemnifying Party shall not, except with the consent of the
Indemnified Party, consent to entry of any judgment or administrative
order or enter into any settlement that (i) could affect the intellectual
property rights or other business interest of the Indemnified Party; or
(ii) does not include as an unconditional term thereof the giving by the
claimant or plaintiff to the Indemnified Party of a release from all
liability with respect to such claim or litigation.
(v) In the event that the Indemnifying Party does not accept the defense
of any matter as above provided, the Indemnified Party shall have the full
right to defend against any such claim or demand, and shall be entitled to
settle or agree to pay in full such claim or demand, in its sole
discretion without releasing any obligation or liability of the
Indemnifying Party.
10. TERMINATION:
A non-defaulting party may terminate this Agreement if a Default, as
defined below, by the other party has occurred and is continuing by giving
written notice to the defaulting party. The term "Default" shall mean any of the
following: (a) failure by a party to comply with or perform any provision or
condition of this Agreement that results in a material breach of this Agreement
and, if such material breach can be cured, continuance of such failure for
thirty (30) days after written notice to such party (if cure is not practicable,
the thirty (30) day notice period is not required); (b) a party becomes
insolvent, is unable to pay its debts as they mature or is the subject of a
petition in bankruptcy, whether voluntary or involuntary, or of any other
proceeding under bankruptcy, insolvency or similar laws; or makes an assignment
for the benefit of creditors; or is named in, or its property is subject to a
suit for appointment of a received; or is dissolved or liquidated; or (c) any
material warranty or representation made in this Agreement is breached, false or
misleading in any material respect. In the event of such termination, the
non-defaulting party shall be entitled to pursue any and all remedies provided
in law and in equity and recover any damages it may have suffered by reason of
such Default. The parties acknowledge that no specification of a particular
legal or equitable remedy by a non-defaulting party shall be construed as a
waiver, prohibition or limitation of any legal or equitable remedies in the
event of a breach of this Agreement. Upon Default, any Copies in Blockbuster's
possession at time of termination shall continue to be subject to the terms of
this Agreement until such Copies are returned to * or sold by Blockbuster and
both parties shall remain obligated to perform their respective obligations with
respect thereto under this Agreement.
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
14
11. REMEDIES:
a. 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.
b. Except as provided herein, no civil action with respect to any dispute,
claim or controversy arising out of or relating to this Agreement may be
commenced until:
(i) The parties attempt in good faith to resolve through negotiation
any dispute, claim or controversy arising out of or relating to this
Agreement. Either party may initiate negotiations by providing written
notice in letter form to the other party, setting forth the subject of the
dispute and the relief requested. The recipient of such notice will
respond in writing within (5) business days with a statement of its
position on and recommended solution to the dispute. If the dispute is not
resolved by this exchange or correspondence, then representatives of each
party with full settlement authority will meet at a mutually agreeable
time and place within ten (10) business days of the date of the initial
notice in order to exchange relevant information and perspectives, and to
attempt to resolve the dispute. If the dispute is not resolved by these
negotiations, the matter will be submitted to J. A. M. S/ENDISPUTE, or its
successor, for non-binding arbitration; and
(ii) If the parties are unable to resolve the dispute, claim or
controversy arising out of or relating to this Agreement pursuant to the
above subparagraph b.(i), such dispute, claim or controversy shall be
submitted to non-final and non-binding arbitration before J. A. M.
S/ENDISPUTE, or its successor, pursuant to the United States Arbitration
Act, 9 U.S.C. Sec. 1 et seq. Either party may commence the arbitration
process called for in this Agreement by filing a written demand for
arbitration with J. A. M. S/ENDISPUTE, with a copy to the other party. The
arbitration will be conducted in accordance with the provisions of J. A.
M. S/ENDISPUTE'S Streamlined Arbitration Rules and Procedures in effect at
the time of filing of the demand for arbitration. The parties will
cooperate with J. A. M. S/ENDISPUTE and with one another in selecting an
arbitrator from J. A. M. S/ENDISPUTE'S panel of neutrals, and in
scheduling the arbitration proceedings. The parties covenant that they
will participate in the arbitration in good faith, and that they will
share equally in its costs. The provisions of this Paragraph may be
enforced by any court of competent jurisdiction, and the party seeking
enforcement shall be entitled to an award of all costs, fees and expenses,
including attorneys fees, to be paid by the party against whom enforcement
is ordered.
15
(iii) Notwithstanding the provisions of subparagraphs (i) and (ii)
above, a party seeking preliminary or temporary injunctive relief may, in
connection therewith, proceed before a court of competent jurisdiction (as
provided in Paragraph 12.14 below) for such purpose without regard to the
provisions of subparagraphs (i) and (ii) above.
12. MISCELLANEOUS:
12.1 FORCE MAJEURE: Neither party shall be considered in default of this
Agreement or be liable for damages, for any failure of performance hereunder
occasioned by an act of God, force of nature, war or warlike activity,
insurrection or civil commotion, labor dispute, transportation delay,
governmental regulatory action whether or not with proper authority or other
cause similar or dissimilar to the foregoing and beyond its reasonable control,
provided the party so affected gives prompt notice to the other. In the event of
a suspension of any obligation by reason of this section which extends beyond
ten (10) days, the party not affected may, at its option, elect to cancel those
aspects of this Agreement which are reasonably feasible to terminate, provided
however, that this Paragraph shall only excuse performance by the parties of the
stated obligations on the affected Rental Picture and shall not be a basis to
terminate the overall Agreement unless such suspension or nonperformance relates
to multiple Rental Pictures to the extent that such suspension or nonperformance
renders this Agreement impracticable for the party not affected. Such
cancellation shall be effective thirty (30) days after written notice of such
cancellation has been given to the other party.
12.2 NOTICE: Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given and received on the date
of delivery or on the third (3rd) business day following the day of mailing of
the same, or on the day of transmission by telecopier or other form of recorded
communication service of the same, as the case may be to the party to be
notified at the addresses set forth below:
If to Blockbuster: Blockbuster Videos, Inc.
0000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: General Counsel
If to * *
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
16
or such other address as may be designated by either party by written notice to
the other as hereinabove provided.
12.3 ENTIRE AGREEMENT: This Agreement, together with all Exhibits attached
hereto, represents the entire agreement and understanding between the parties
with respect to the subject matter of this Agreement, and supersedes any other
agreement or understanding, written or oral, that the parties hereto may have
had with respect thereto. No statement or inducement with respect to the subject
matter by either party or by any agent or representative of either party which
is not contained in this Agreement shall be valid or binding between the
parties.
12.4 RELATIONSHIP OF PARTIES: The parties are independent contractors, and
nothing in this Agreement shall be deemed or construed to create, or have been
intended to create a partnership, joint venture, employment or agency
relationship between the parties. Each party agrees that it neither has nor will
give the appearance or impression of possessing the legal authority to bind or
to commit any other party in any way except as provided in this Agreement.
12.5 EFFECT OF HEADINGS: The headings and subheadings of the sections of
this Agreement are inserted for convenience of reference only and shall not
control or affect the meaning or construction or any of the agreements, terms,
covenants and conditions of this Agreement in any manner.
12.6 CONSTRUCTION: This Agreement has been fully reviewed and negotiated
by the parties and their respective legal counsel. Accordingly, in interpreting
this Agreement, no weight shall be placed upon which party or its counsel
drafted the provision being interpreted.
12.7 AMENDMENTS: No provision of this Agreement may be modified, waived or
amended except by a written instrument duly executed by each of the parties. Any
such modifications, waivers or amendments shall not require additional
consideration to be effective.
12.8 COUNTERPARTS: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
12.9 IMPLIED WAIVER: Any failure on the part of either party to insist
upon the performance of this Agreement or any part of this Agreement, shall not
constitute a waiver of any right under this Agreement.
17
12.10 ASSIGNMENT:
a. By *: * may not assign its rights or delegate its obligations under
this Agreement without Blockbuster's prior written consent, subject to the
following (each, a "Permitted Transfer"): (i) * may assign its rights or
delegate its obligations to (1) an Affiliate or (2) an entity acquiring all or
substantially all of the U.S. videocassette distribution business of *, provided
that such entity obtains or retains substantially the same access to the * trade
names/trademarks and the Home Video Distribution Rights to * "new" (i.e., yet
to-be-released) theatrical releases as * enjoyed immediately prior to the
applicable transfer; and (ii) shall have the right to assign its right to
receive payments hereunder. A "change-of-control" of *, by direct transfer or by
operation of law, shall be considered to result in an assignment of * rights and
a delegation of * obligations under this Agreement; provided, that such
"change-of-control" shall be considered a Permitted Transfer if, following such
"change-of-control," * (or any successor entity) obtains or retains
substantially the same access to the "*" trade names/trademarks and Home Video
Distribution Rights to* "new" theatrical releases as * enjoyed at the time of
entering into this Agreement. In connection with any Permitted Transfer, the
permitted transferee shall assume * obligations hereunder. Any attempted
assignment or other transfer by *, other than a Permitted Transfer, without
Blockbuster's prior written consent shall be null and void.
b. By Blockbuster: Blockbuster may not assign its rights and delegate its
obligations under this Agreement without * prior written consent, subject to the
following (each a "Permitted Transfer"): (i) Blockbuster may assign its rights
or delegate its obligations to (1) an Affiliate or (2) any financially
responsible party, other than a Competing Major Studio (as defined below),
capable of performing all of Blockbuster's obligations under this Agreement,
provided that such assignment is coextensive with an assignment to such
financially responsible party of the video rental business of Blockbuster and
the "Blockbuster" trade names/trademarks. For the purposes of the foregoing, the
following entities shall be deemed to be financially responsible parties: (a) a
publicly traded entity into which or through which the video rental business of
Blockbuster and the "Blockbuster" trade names/trademarks are "spun-off" and
either directly or indirectly owned and (b) any other assignee that has a
Standard & Poor's or Xxxxx'x rating which is not less than one rating level
below that assigned to Blockbuster immediately prior to any such assignment. A
"change-of-control" of Blockbuster, by direct transfer or by operation of law,
shall be considered to result in an assignment of Blockbuster's rights and a
delegation of Blockbuster's obligations under this Agreement; provided, that
such "change-of-control," other than one involving a "Competing Major Studio,"
shall be considered a Permitted Transfer if, following such "change-of-control,"
Blockbuster (or any successor entity): (x) directly or indirectly obtains or
retains the video rental business of Blockbuster; (y) retains the rights to use
the "Blockbuster" trade names/trademarks; and (z) is financially responsible and
is capable of performing all of
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
18
Blockbuster's obligations under this Agreement (with any entity that satisfies
clauses (a) or (b) above being deemed to be financially responsible). In
connection with any Permitted Transfer, the permitted transferee shall assume
Blockbuster's obligations hereunder; provided that no such assignment or other
transfer by Blockbuster, other than a Permitted Transfer, without * (prior
written consent shall be null and void. As used herein, a "Competing Major
Studio" shall mean *, or any division or any of the foregoing, or any entity
which controls, is controlled by, or is under common control with any of the
foregoing.
c. "Change of Control":
(i) A "change-of-control" of Blockbuster shall be deemed to have
occurred, if, following the applicable transaction: (A) a person, entity
or group of persons or entities, within the meaning of section 13(d) or
14(d) of the Securities Exchange Act of 1934, or any comparable successor
provisions, other than Viacom, Inc. ("Viacom"), shall, directly or
indirectly, own fifty percent (50%) or more of the equity interests in
Blockbuster; or (B) Viacom shall cease to own, indirectly or indirectly,
at least fifty-one percent (51%) of the equity interests in Blockbuster.
(ii) A "change-of-control" of * shall be deemed to have occurred if,
following the applicable transaction: (A) a person, entity or group of
persons or entities, within the meaning of section 13(d) or 14(d) of the
Securities Exchange Act of 1934, or any comparable successor provisions,
other than *, shall, directly or indirectly, own fifty percent (50%) or
more of the equity interests in *, or (B) * shall each cease to own,
directly or indirectly, at least fifty-one percent (51%) of the equity
interests in *.
12.11 SURVIVAL: All representations, warranties and indemnities made
herein shall survive the termination of this Agreement and shall remain in full
force and effect. All of a party's rights and privileges, to the extent they are
fairly attributable to events or conditions occurring or existing on or prior to
the termination of this Agreement, shall survive termination and shall be
enforceable by such party and its successors and assigns.
12.12 CONFIDENTIALITY: Except as otherwise required by applicable federal
and state securities laws, each party shall keep the information regarding the
details of this Agreement confidential and restrict dissemination to each of its
own personnel and to third parties to only a "need to know" basis, using the
standard of care which each uses to protect its own information from disclosure
during the Term of this Agreement and thereafter. The party disclosing
confidential information to its own personnel and third parties shall require
that these persons be bound by the confidentiality obligations set forth in this
Agreement. In addition to the
----------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.
19
foregoing, * must keep all information provided by Blockbuster in accordance
with this Agreement confidential and any unauthorized disclosure shall be
considered a material breach of this Agreement. Any press release issued by *
must be approved by Blockbuster prior to its release.
12.13 GOVERNING LAW: The substantive laws (as distinguished from the
choice of law rules) of the state of * applicable to contracts shall govern (i)
the validity and interpretation of this Agreement, (ii) the performance by the
parties of their respective obligations hereunder, and (iii) all other causes of
action (whether sounding in contract or in tort) arising out of or relating to
this Agreement or the termination of this Agreement. Only the * will have
jurisdiction over any controversies regarding this Agreement; any action or
other proceeding which involves such a controversy will be brought in these
courts and not elsewhere.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.
* BLOCKBUSTER VIDEOS, INC.
Name: * Name: Xxxxxx X. Xxxxx
-------------------------------------------
Signature: /s/ * Signature: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Title: * Title: EVP
-------------------------------------------
----------
* "Confidential material omitted and separately filed with the Commission
under an application for confidential treatment".
Exhibit A
Matrix
(See Attached)
BLOCKBUSTER PER STORE UNIT MATRIX
*
---------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment. Two pages have been
omitted from Exhibit A.
Exhibit B
Accounting Calendar denoting timing of certain events.
Exhibit C
Electronic Reporting
(See Attached)
*
---------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment. Two pages have been
omitted from Exhibit C.
Exhibit D
*
---------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment. Two pages have been
omitted from Exhibit D.
Exhibit E
*
---------
* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment. Two pages have been
omitted from Exhibit E.
