Exhibit 10.39
UNITED STATES
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REVENUE SHARING AGREEMENT
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THIS AGREEMENT (the "AGREEMENT") is made the 20th day of November, 1998.
BETWEEN:
(1) *
(2) VIDEO UPDATE INC. whose principal place of business is at 3100 World Trade
Center, 00 Xxxx 0xx Xxxxxx, Xx. Xxxx, Xxxxxxxxx, 00000 (hereinafter
referred to as "VIDEO UPDATE," which shall be deemed to include its
permitted assigns).
WHEREAS:
(A) Video Update owns and operates 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) * acquires, produces, markets and sells motion pictures on pre-recorded
videocassette tapes; and
(C) Video Update 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 Picture; and
(D) Video Update is willing to provide various marketing, advertising and
promotional services and activities in support of the Pictures; and
(E) Video Update is willing to report electronically on an ongoing basis
information as to the rental and sales of Pictures.
NOW THEREFORE, based on the above premises and in consideration of the mutual
covenants and agreements contained herein, the parties agree as follows:
1. AGREEMENT TERM:
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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."
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 2
2. TERRITORY:
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The territory for purposes of this Agreement with respect to each Picture
shall be the United States and its territories and possessions (the
"TERRITORY").
3. VIDEO UPDATE COMMITMENTS:
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Beginning as of the date of this Agreement, Video Update agrees as follows:
a. Purchasing: The following purchasing requirements shall apply to all
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Stores for the duration of the Term:
(1) *
(2) *
(3) *
(4) *
(a) *
(b) *
(c) *
b. Missing Copies: For all Copies in excess of * of the total number of
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aggregate copies shipped on a Rental Picture per Rental Picture basis,
which are lost, stolen or otherwise not reasonably accounted for, for more
than thirty (30) calendar days during the period commencing upon delivery
to Video Update's distribution center and ending on the last day of the
relevant Revenue Sharing Period (each, a "MISSING COPY"), Video Update
shall pay to * * standard distribution wholesale price only less the
relevant Upfront Price.
c. Payment: *
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d. Remedy: The parties acknowledge and agree that if Video Update fails
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to order the number of Copies required under this Paragraph 3, Video Update
shall pay to * as liquidated damages, an amount equal to * for each Copy
which Video Update failed to order. 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.
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 3
e. Placement: Video Update shall exercise good faith commercially
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reasonable efforts to maximize Rental Revenue on the Pictures. At all
times during the entire Revenue Sharing Period, Video Update shall display
for rental at each Store all of the Copies of the Picture purchased for
such Store, which are not currently being rented, in the "New Releases"
rental section of such Store (or another comparably prominent section of
such Store which has been pre-approved by *).
f. Sell-Off: * All sell-off copies will be prominently labeled as
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"Previously Viewed Rental Product."
g. Packing and Shipping: Video Update will be solely responsible for
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making the Copies ready for consumer rental and for shipping the Copies
from its distribution center to its Stores.
h. Delivery: As between * and Video Update, title in and to the Copies
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and risk of loss shall pass from * to Video Update upon delivery of the
Copies to Video Update's distribution center in accordance with Paragraph
5.b.
i. Defective Copies: The purchase requirements set forth in this
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Paragraph 3 shall not be subject to any returns by Video Update. * will
exchange defective Copies for a working Copy of the same title. Defective
Copies shall mean those videocassettes which are mechanically defective,
mispackaged or contain extraneous material. Video Update shall report
defective Copies to * promptly following discovery of such defect.
j. Store Count: Video Update will report to * on a calendar month basis
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the number of currently operation Stores, New Stores and newly closed
Stores.
k. Demographic Information: Video Update will provide to *, on an ongoing
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basis, information regarding the demographic make-up generally of those
customers renting the Copies.
l. Credit: Video Update agrees that on or before the execution of this
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Agreement, Video Update will execute the Security Deposit attached as
Exhibit B and incorporated by this reference and provide * with a check in
the amount of * ("SECURITY DEPOSIT"). If Video Update fails to do so, *
may immediately withdraw its offer to enter into this Agreement. Said
Security Deposit shall secure payment of Video Update's obligations
hereunder and under any other prior, concurrent or subsequent agreement
between the parties, including, but not limited to, the * between the
parties executed ____________________.] * shall only draw down on the
Security Deposit required hereunder in the event Video Update fails to
timely pay one or more monetary obligations secured by the Security
Deposit. In the event of one or more partial draws on such Security
Deposit, Video Update agrees to restore it to the full amount of * within
fifteen (15) days after the partial draw(s). Failure to restore to the full
amount within fifteen (15) days shall constitute a
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 4
material breach of this Agreement upon which * shall be entitled to
terminate immediately.
4. PRODUCT TO BE MADE AVAILABLE:
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a. * shall have the right, in its sole and absolute discretion, to
determine what titles shall be made available as Pictures. * shall also
have the right in its sole and absolute discretion, to determine the
release schedule of Pictures, including, but not limited to the Prebook
Dates and Street Dates, and to change such schedules.
b. * shall have the right to withdraw any Picture from further
distribution under this Agreement in its sole and absolute discretion. In
such event, * shall give Video Update written notice of such withdrawal,
and Video Update shall not sell or rent any Copies of the withdrawn Picture
after its receipt of such notice.
5. *COMMITMENTS:
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a. Marketing Support: In lieu of specific marketing support programs such
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as rebate, co-op, and MDF programs, and as payment and in consideration for
the various other services and activities which Video Update has agreed to
perform hereunder for the benefit of *, such as marketing, sales and rental
reporting functions:
(1) * agrees to credit, on a quarterly basis, Video Update with
marketing support funds ("MARKETING SUPPORT FUNDS") in the amount of *
of the Purchase Price of the Copies purchased by Video Update provided
Video Update has complied with the purchasing requirements set forth
in Paragraph 3 above. Video Update will use * of such Marketing
Support Funds solely to advertise in measured media one or more of the
Pictures released within the relevant quarter or within the sixty (60)
days prior to said quarter.
(2) Marketing Support Funds will accrue on a quarterly basis and will
be credited to Video Update upon submission of proof of the
advertising spend. With respect to said Marketing Funds, Video Update
agrees to consult with * and to keep * apprised of its advertising
plans and activities and to comply with * then-current marketing
support policies and practices, which policies and practices shall be
no more restrictive than any of * policies and practice as applied to
other rental retailers. Video Update shall be bound by changes in *
marketing support policies and practices only to the extent * has
given Video Update reasonable prior written notice of such changes. *
shall have the right to approve such advertising plans, and Video
Update shall provide a meaningful and timely opportunity for said
approval by *. * shall exercise approval rights in a timely and
reasonable manner.
(3) Marketing Support Funds must be spent within ninety (90) calendar
days of accrual, except as otherwise agreed in writing by *. Any
Marketing
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 5
Support Funds not spent within ninety (90) calendar days and
claimed by within one hundred eighty (180) calendar days of accrual
and shall be deemed waived and credited back to *. Marketing Support
Funds shall not be used to advertise, promote or otherwise market
product not distributed by *. Video Update shall provide evidence of
its compliance with this Paragraph 5.a as requested by *.
(4) Should Video Update fail to comply in good faith with the approval
rights of * or fail to keep * reasonably apprised of its marketing
plans and activities, * shall be entitled to give written notice to
Video Update of such failure. If Video Update fails to remedy such
failure to * reasonable satisfaction within fifteen (15) calendar days
following receipt of such notice, * shall have the right to terminate
Video Update's right to the Marketing Support Funds for six (6)
months.
b. Shipping: * will deliver the Copies at * expense to one (1) primary
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distribution center in the United States. * shall credit Video Update with
an amount determined by *, in * sole discretion, to help defray the cost of
picking, packing and shipping to Stores.
6. ELECTRONIC REPORTING:
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a. At no cost or expense to *, Video Update will provide to *,
electronically, daily access to complete and accurate information (along
with weekly summaries, in such reasonable form as may be specified by *
from time to time) as to Video Update's sale and rental of the Pictures,
including, but not limited to, daily rental turn data, daily inventory and
daily Rental Revenue on a Picture by Picture, Store by Store, Copy by Copy
basis. Video Update shall collect and maintain a computer database of
performance information on a per Picture, per Copy and per Store basis
recording Rental Transactions and Rental Revenue. In addition, * shall
have the unlimited right to use and equal access to, the database of
performance information of each of the Pictures and Video Update shall
provide a copy of such database * on request and without cost to *. Video
Update shall allow * access to all data, reports, and information Retailers
may generate from time to time with respect to the Pictures and shall
submit to * such other data, reports, and information with respect to the
Pictures as Video Update is reasonably able to produce and which * may
inform Video Update that it requires from time to time. * shall have no
right of access to and Video Update shall not provide electronic reporting
and data base information relating to any product not distributed by * or
any specific individual customer information.
b. Video Update represents, warrants and agrees that during the Term and
continuing until the expiration of the respective Revenue Sharing Periods
of Pictures sold prior to the expiration or termination of the Term, Video
Update shall have implemented and maintain in good working condition a
computer system, including any and all necessary hardware and software,
capable of accurately and timely
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 6
fulfilling the electronic reporting requirements set forth in this
Paragraph 6. To that end, Video Update may as necessary, at its sole cost
and expense, enter into a software licensing and support services agreement
with Supercomm Inc., Rentrak Corporation or such other supplier of revenue
sharing software systems and support services as * shall approve in its
sole and absolute discretion. Video Update acknowledges and agrees that *
shall have no liability to Video Update as a consequence of any damage or
injury caused by, relating to, or arising from Video Update's use of the
Supercomm system, the Rentrak system or any other approved revenue sharing
software system.
c. Video Update shall enter each Copy into its computer system either
prior to the relevant Street Date or within twenty four (24) hours of
delivery, whichever is later and process through said computer system all
Rental Transactions of all Copies. In the event that said computer system
shall be nonfunctional for any period of time, all Rental Transactions
occurring during such period shall be manually one hundred percent (100%)
captured and processed through said system as soon as practicable after it
is again functional.
d. In the event that said computer system shall become nonfunctional (i.e.
unable to contemporaneously provide all the data processing and reporting
functions described in this Paragraph 6), Video Update shall use its best
efforts to make such system fully functional as soon as possible.
7. REVIEW:
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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.
8. *
9. TERMINATION:
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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 and the * between
the parties dated _______________, 1998 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
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 7
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. 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.
10. PUBLIC DISCLOSURE AND CONFIDENTIALITY:
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a. Public Disclosure: Each party agrees that no press release or public
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announcement relating to the 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
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(3) years thereafter, Video Update 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
database referred to in Paragraph 6 above. Video Update 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 Video Update and *. Neither
Video Update nor * shall disclose such information to any third party
(other than to officers, directors, employees, attorneys, accountants and
agents of Video Update and * 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
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 8
information and shall promptly, to the greatest extent practicable,
notify the other party in advance of such disclosure;
(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.
11. NO RIGHT TO USE NAMES:
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Neither Video Update nor Stores 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, * alone
or in conjunction with other words or names, in any advertising, publicity or
promotion, either express or implied, without * prior consent in each case, and
in no case shall any Video Update or Store advertising, publicity, or promotion,
express or imply any endorsement of the same.
12. ASSIGNMENT:
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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 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 Video Update to any Person or Persons or any other
form of business combination, such that the Video Update 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
a motion picture studio. Provided, further, that any Assignment by either party
to an affiliate of said party shall also not require consent. In the event that
Video Update 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.
13. AUDIT RIGHTS:
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a. During the Term and continuing until the date one (1) year following
the date of expiration of earlier termination of this Agreement, * may,
audit the financial
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 9
books, information systems and records of Video Update as reasonably
necessary to verify Video Update'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 (5%), in
which case, in addition to all other rights which * may have, Video Update
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 Video Update. Video Update 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 one (1) year following
the date of expiration or earlier termination of this Agreement, * (and its
agents or representatives) may inspect, examine, audit, and make copies of
the books, records, invoices, and store premises of Stores. * rights
hereunder shall also include the right to inspect and examine the premises
and inventory of Copies of Stores, warehouses, transfer or storage
facilities, and any other locations under Video Update's operation or
control. Video Update and Store employees shall cooperate with * exercise
of its rights hereunder and provide * such assistance as * shall reasonably
request to enable * to verify Video Update's compliance with the terms of
this Agreement. 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.
14. * REPRESENTATIONS AND WARRANTIES:
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* 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 * 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
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 10
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;
15. VIDEO UPDATE'S REPRESENTATIONS AND WARRANTIES:
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Video Update 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 Minnesota;
b. The undersigned has the full right, power and authority to sign this
Agreement on behalf of Video Update;
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 Video Update 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;
e. The execution, delivery and performance of this Agreement does not, and
will not, violate any provisions of Video Update's articles or certificates
of incorporation and bylaws, or any contract or other agreement to which
Video Update is a party;
16. FORCE MAJEURE:
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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
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 11
control 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.
17. INDEMNIFICATION:
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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.
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 12
18. REMEDIES:
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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.
19. DEFINITIONS:
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a. "Copy" or "Copies" shall mean VHS videocassette units. Other formats,
including laserdisc and DVD are not included under this Agreement.
b. "Escalator" shall mean the annual percent increase or decrease, if any,
in * weighted average standard rental distribution wholesale price but in
no event shall it exceed *.
c. *
d. "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.
e. "Laws" shall mean all international, federal, national, state,
provincial, municipal or other laws, ordinances, orders, statutes, rules or
regulations.
f. "New Store" shall mean a Store which Video Update first owns or
operates after the commencement date of this Agreement.
g. "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, and which * has determined to make generally
available for sale 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.
h. *
i. "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.
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 13
j. "Revenue Sharing Period" shall mean the period commencing on the Street
Date of the relevant Picture and running through the one hundred eighty-
second (182nd) day thereafter.
k. "Store" shall mean any retail operation in the United States which, at
any time during the Term of this Agreement, is wholly owned and/or operated
by Video Update, whether or not such retail operation is operated under the
"Video Update" trademarks, including non-traditional stores, such as by way
of example, kiosks, carts, "stores within a store", "rack jobbing"
operations, or vending machines.
l. "Street Date" shall mean, with respect to an 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.
20. MISCELLANEOUS:
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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.
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.
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 14
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. Video Update hereby consents to and submits to the
jurisdiction of the * and any action or suit under this Agreement may be
brought in any federal or state court 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:
If to Video Update:
Video Update
3100 World Trade Center
00 Xxxx 0 0x Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxx Xxxxxx, CEO
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
Video Update U.S. Revenue Sharing Agreement
Page 15
If to *:
*
*
*
*
*
IN WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
*
*
----------------------------------------------
By: *
Title: *
VIDEO UPDATE, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Title: CEO
---------------------------------------
EXHIBIT A
VIDEO UPDATE BUY MATRIX
Copies per Rental Picture per Store
*
*Confidential material omitted and separately filed with the Commission under an
application for confidential treatment.
EXHIBIT B
---------
*
*
*
SECURITY DEPOSIT
----------------
Video Update, Inc. ("Customer") hereby delivers to * the attached check
(describe check, bank) * for * to secure certain obligations and liabilities as
set forth below ("Security Deposit").
Customer hereby pledges and grants to * a lien, charge and security interest in,
all right title and interest of Customer in and to Security Deposit and all
interest, dividends, cash and other property from time to time received,
receivable or otherwise distributed with respect to the Security Deposit and all
proceeds of the foregoing, to secure the prompt payment and performance in full
when due of all obligations and liabilities of Customer now or hereafter
existing to *.
* may apply the Security Deposit to such obligations and liabilities and
exercise all other rights and remedies with respect thereto available to * under
applicable law. The Security Deposit may not be allocated to invoices by
Customer until the net balance due *, according to * records, is at or below the
credit availability established with the Security Deposit.
The accounts payable will be issued as a credit to Customer's account. Interest
will be paid at the thirty (30) day commercial rate as published in the Wall
Street Journal on the date the accounts payable are credited to Customer's
account until the account balance falls below the established credit
availability without the Security Deposit or upon default by Customer in the
prompt payment of its obligations and liabilities as set forth above. Interest
will be issued as a credit to Customer's account with *. Interest will not be
paid on the Security Deposit if Customer's balance, according to * records,
falls below the credit availability without the Security Deposit in less than
thirty (30) days from the date of deposit into * bank account.
By:/s/ Xxxxxx X. Xxxxxx, CEO
-------------------------
Video Update, Inc.
----------------------------
Debtor
Date 20--November--98
-----------------------
* Confidential material omitted and separately filed with the Commission under
an application for confidential treatment.
