Revenue Sharing Agreement 1/20/99

Exhibit 10.10


*


January 20, 1999


Mr. Dean Wilson Executive Vice President General Merchandising Manager Blockbuster Inc. 1201 Elm Street Dallas, TX 75270


RE: VHS REVENUE SHARING * AGREEMENT


Dear Dean:


The following (the "Letter Agreement") sets forth the terms of the license agreement (the "License") between * and Blockbuster Inc. ("Blockbuster") for revenue sharing on * Rental Picture output.


1. TERM: * year period commencing upon the "Street Date" of the first "Rental
Picture" (as such terms are defined below) released by * on or after March
1, 1999.


2. TERRITORY: United States only; provided, however, Blockbuster shall have
the option to enter into an agreement with * (Canada) on substantially the
same terms and conditions, and for a term coextensive with the Term
hereof, upon one hundred and eighty (180) days prior written notice to *.


3. DEFINITIONS AND CALCULATIONS:


a. *


(i) *


- ---------------------- * 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 (*).


(A) *


(B) *


(C) *


(D) *


(E) *


(F) *


(ii) *


b. *


c. *


d. "Guarantee Program" shall mean the program under which Blockbuster
nationally advertises a money-back guarantee or free rental to
consumers if videocassettes of certain titles are not available for
rental from the Stores or another comparable program.


e. *


f. "Month" shall be defined as set forth on Exhibit 3(e) attached
hereto and by this reference made a part hereof.


g. "Picture Term" means for each Rental Picture the first 26 weeks of
rental release beginning with Street Date.


h. "Rental Picture" means each and every new release on videocassette
of a feature motion picture for which * owns or controls home video
distribution rights in the Territory (subject to any and all
approvals required by any third party) of not


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


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fewer than seventy (70) minutes in length, priced for rental in the
retail market; provided, however, the following shall be
specifically excluded from Rental Pictures: (i) * distributed lines
(unless and until the terms of this Letter Agreement are accepted
and agreed by any such distributed line), (ii) product controlled by
third parties who do not approve of the terms hereof and (iii)
videocassettes of sports events, concert footage, stage plays,
documentaries, video or theatrical re-releases, foreign language
titles or product rated NC-17 or more restrictive by the MPAA, or
library titles.


i. *


(i) *


(ii) *


(iii) "Taxes" shall mean any and all sales, excise, value added or
other taxes which meet the following qualifications: (A) the
taxes are separately stated, (B) the taxes are required by law
to be collected from Blockbuster's customers, and (C) the
taxes are actually paid by Blockbuster to taxing authorities.


j. "Stores" shall mean (i) all Blockbuster-owned rental retail stores,
(ii) any and all Blockbuster franchises that elect to participate
in, and comply with, the obligations set forth under this Letter
Agreement and any other obligations that Blockbuster may impose to
administer the terms hereof with respect to any such franchisees,
and (iii) Blockbuster-owned alternative direct-to-consumer VHS
rental distribution systems by which Blockbuster rents VHS
videocassettes to consumers for home use and/or sells PVTs to
consumers via internet, vending machines and/or kiosks
(collectively, "Alternative Distribution Systems"). * All
franchisees that participate shall be treated as Blockbuster Stores
for the purposes of this Letter Agreement, and the actual rental
transactions of such franchisees on Measurement Titles shall be
included in Blockbuster's total rental transactions. In the event
that there is insufficient historical data, the parties shall use
good faith efforts to agree on estimated rental transactions for
such franchisees. "Stores" shall specifically exclude any new store
or stores owned or controlled by Blockbuster operating under any
name other than Blockbuster. The parties agree


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


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that with respect to stores and/or chains of stores acquired by
Blockbuster during the Term, such stores shall be eligible to assume
the rights and obligations set forth hereunder provided Blockbuster
shall report for such new stores through its existing established
reporting mechanism, and, any existing revenue sharing agreement of
any such store with * shall terminate. Upon the addition or
acquisition of stores, Blockbuster shall notify * immediately in
writing, and the parties shall begin good faith discussions to
immediately increase the number of Base Units to reflect such store
acquisitions and/or additions.


k. "Street Date" means the first day retailers are permitted by * to
make a title available for rental to consumers.


4. LICENSED RIGHTS:


a. Homevideo Distribution License: * licenses to Blockbuster on a
limited and non-exclusive basis homevideo distribution rights to all
Rental Pictures in the VHS format for rental (i) only to consumers
for home use and (ii) only from Stores in the Territory during the
Term, subject to the terms hereunder.


b. Reservation of Title: Legal title to, and risk of loss of, the
Licensed Units hereunder shall remain vested in *, subject to
disposition of PVTs pursuant to Paragraph 8 below. Blockbuster shall
not permit any encumbrance to attach to any Licensed Units delivered
pursuant to this Letter Agreement.


5. *


a. *


(i) *


(ii) *


b. *


c. *


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


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6. *


a. *


b. *


c. *


7. STATEMENTS AND PAYMENTS:


a. Statements: On a Monthly basis, * Blockbuster shall provide to *, in
the formats reasonably requested and as periodically amended by *, a
statement (the "Statement") which reflects the rental and related
activities for such Month, *.


b. Payments: For each Rental Picture, to the extent any amounts are due
pursuant to the Statements, Blockbuster shall wire transfer such
amounts to an account designated by * no later than *.


8. DISPOSITION OF PREVIOUSLY VIEWED TAPES:


a. Sale: For each Rental Picture, * may direct Blockbuster, as its
licensee, to sell previously viewed tapes ("PVTs") to consumers
pursuant to the following conditions:


(i) *


(ii) *


(iii) *


(A) *


(B) *


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


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(iv) No Revenue Share: There shall be no revenue sharing between
Blockbuster and * with respect to the proceeds from sales of
PVTs by Blockbuster *.


(v) *


(vi) In the event * changes its current practice with respect to
directing Blockbuster to sell PVTs consistent with
Subparagraphs (i)-(v) of 8.a. above ("Redirection"), the
parties shall in good faith review and reduce * Revenue Share
effective with any Redirection, if necessary, to provide for
the sharing on a pre-established * basis of revenues generated
by Blockbuster under this Letter Agreement in excess of the
revenues Blockbuster would have earned prior to the parties'
revenue sharing relationship. The calculation of * Revenue
Share shall be based on historical data relating to revenues
generated from the Rental Pictures during the prior year and
shall be subject to audit. The Minimum Share shall be adjusted
on a pro rata basis to reflect any new * Revenue Share
percentage.


b. Other Disposition:


(i) *


(A) *


(B) *


(C) *


(ii) *


c. *


9. PLACEMENT OF LICENSED UNITS: Blockbuster shall place all licensed Units of
each Rental Picture licensed hereunder (except those units out for rental
by consumers) on prominent "new release" display walls or another agreed
equivalent in-store location


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


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for not fewer than * after Street Date, subject to prior sale pursuant to
the terms of Paragraph 8.a. above.


10. ADVERTISING SUPPORT: * shall provide advertising support to Blockbuster
for Base Units only, consistent with current practices, provided, however,
in the event that any two (2) other major motion picture studios (e.g., *)
(each, a "Major Studio") offer substantially different advertising support
that results in a material change in the video industry, * shall have the
option to modify its advertising support accordingly with respect to the
Rental Pictures hereunder. In such event, Blockbuster shall have the
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