Revenue Sharing Agreement 11/21/97

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 1201 Elm
Street, 31st Floor, Dallas, Texas 75270 (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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* 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 (*).


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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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* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.


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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
Paragraph 3, Blockbuster 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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* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.


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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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* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.


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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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* "Confidential material omitted and separately filed with the Commission
under an application for confidential treatment".


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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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* Confidential material omitted and separately filed with the Commission
under an application for confidential treatment.


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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 respec ...