Redbox 2010 Annual Report Download - page 79

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DVD License Agreements
Paramount Agreement
On June 15, 2010, Paramount exercised its option to extend the term of the revenue sharing license agreement
(the “Paramount Agreement”) between Paramount and our Redbox subsidiary to December 31, 2014. As per the
terms of the original agreement, Redbox agrees to license minimum quantities of theatrical and direct-to-video
DVDs for rental at each location that has a DVD-rental kiosk owned and/or operated by Redbox in the United
States. Redbox will continue to receive delivery of the titles by the “street date,” the first date on which the
DVDs are available to the general public for home entertainment purposes, whether on a rental or sell-through
basis. At Paramount’s discretion, the Paramount Agreement may be terminated earlier on December 31, 2011. As
a result of the extension, we granted 200,000 shares of restricted stock to Paramount. Of these shares, 20,000
vested upon Paramount’s decision to extend the term of the agreement, and the remaining shares vest over the
term of the Paramount Agreement. Redbox estimates that it would pay Paramount approximately $288.6 million
beyond December 31, 2010. For addition information see Note 11: Share-Based Payments.
Universal Studios Agreement
On April 22, 2010, our Redbox subsidiary entered into a rental revenue sharing agreement (the “Universal
Studios Agreement”) with Universal Studios. Redbox estimates that it would pay Universal Studios
approximately $76.8 million beyond December 31, 2010.
Under the Universal Studios Agreement, Redbox agrees to license minimum quantities of theatrical and
direct-to-video DVDs for rental at each location that has a DVD-rental kiosk owned and/or operated by Redbox
in the United States. Under the Universal Studios Agreement, Redbox will make the DVDs available for rental
28 days after the “street date,” the earliest date established by Universal Studios on which the DVDs are initially
made available to the general public, whether on a rental or sell-through basis. In addition, and pursuant to the
terms of the Universal Studios Agreement, Redbox agreed to dismiss with prejudice its lawsuit against Universal
Studios relating to Redbox’s access to Universal Studios titles.
20th Century Fox Agreement
On April 22, 2010, our Redbox subsidiary entered into a disc output lease and rental agreement (the “Fox
Agreement”) with 20th Century Fox. Redbox estimates that it would pay Fox approximately $243.5 million
beyond December 31, 2010.
Under the Fox Agreement, Redbox agrees to license minimum quantities of theatrical and direct-to-video DVDs
for rental at each location that has a DVD-rental kiosk owned and/or operated by Redbox in the United States.
Under the Fox Agreement, Redbox will make the DVDs available for rental 28 days after the “retail street date,”
the earliest date established by Fox on which the DVDs are initially made available to the general public, whether
on a rental or sell-through basis. In addition, and pursuant to the terms of the Fox Agreement, Redbox agreed to
dismiss with prejudice its lawsuit against Fox relating to Redbox’s access to Fox titles.
Warner Agreement
On February 12, 2010, our Redbox subsidiary entered into a rental revenue sharing agreement (the “Warner
Agreement”) with Warner, a division of Warner Bros. Home Entertainment Inc. Under the Warner Agreement,
Redbox agrees to license minimum quantities of theatrical and direct-to-video DVDs for rental at each location
that has a DVD-rental kiosk owned and/or operated by Redbox in the U.S. Under the Warner Agreement, Redbox
will make the DVDs available for rental 28 days after the “street date,” the earliest date established by Warner on
which the DVDs are initially made available on physical home video formats to consumers, whether on a rental
or sell-through basis. In addition, and pursuant to the terms of the Warner Agreement, Redbox voluntarily
dismissed its lawsuit against Warner relating to Redbox’s access to Warner titles. Redbox estimates that it would
pay Warner approximately $66.2 million beyond December 31, 2010.
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