Intellectual Property License - Hollywood Management Co. and Hollywood Entertainment Corp.
INTELLECTUAL PROPERTY LICENSE
THIS INTELLECTUAL PROPERTY LICENSE AGREEMENT ("Agreement") is by and
between: (1) Hollywood Management Company, an Oregon corporation, having its
principal place of business at 9275 Peyton Lane, Wilsonville, Oregon 97070-
9645, and its affiliates, successors, or assigns ("Licensor"); and (2)
Hollywood Entertainment Corporation, an Oregon Corporation, having its
principal place of business at 9275 Peyton Lane, Wilsonville, Oregon 97070-
9645, and its successors or assigns permitted by this Agreement ("Licensee").
1. BACKGROUND
1.1 Licensee operates a chain of retail stores in the United
States under the names and marks HOLLYWOOD VIDEOr, HOLLYWOOD DVD, and GAME
CRAZYr. These stores rent movies (in videotape format and also in digital video
disc ("DVD") format at many stores), video games, and/or related electronic
equipment, and sell various entertainment products, accessories and snack
items. Licensee also operates Internet websites featuring entertainment
content and other services ancillary to its retail activities.
1.2 In connection with its retail stores and websites, Licensee
owns certain intellectual property rights including marks and domain names.
1.3 Licensor is a wholly owned subsidiary of Licensee, and in
order to ensure the highest level of quality in the goods and services offered
under Licensee's trademarks, and to facilitate the efficient procurement,
maintenance, and enforcement of Licensee's intellectual property rights, the
parties, by this Agreement, desire to assign the intellectual property rights
to Licensor for the purpose of managing the rights, and to grant-back to
Licensee the right to use the intellectual property rights in the territory
identified in Exhibit D under the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing, the covenants set
forth below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
2. DEFINITIONS
The following terms shall have the following meanings as used herein:
(a) "Advertising Materials" shall mean all advertising,
marketing and promotional materials used in the
"Entertainment Business," including without limitation,
video, audio and print advertisements, pamphlets, brochures,
collateral materials, and Internet websites, whether in
existence currently or created, developed or obtained during
the "Term" of this Agreement.
(b) "And" shall also mean "or" and "or" shall also mean
"and" as the context permits or requires to provide the
broadest meaning or inclusion of the subject.
(c) "Business Materials" shall mean all stationery,
letterhead, envelopes, business cards, invoices, forms and
all other documents and things used in connection with the
"Entertainment Business," whether in existence currently or
created, developed or obtained during the "Term" of this
Agreement.
(d) "Confidential or Proprietary Information" shall mean
all confidential or proprietary information used by the
parties in the conduct of their respective businesses in the
Territory, including, without limitation, trade secrets,
confidential or proprietary methods of doing business,
marketing techniques, suppliers lists, training systems,
management techniques, personnel policies, research,
developments, new product ideas, processes, formulas, know-
how, business plans, budgets, unpublished financial
information, and the like, whether in existence currently or
created, developed or obtained during the "Term" of this
Agreement.
(e) "Copyrights" shall mean all copyrights in "Advertising
Materials", "Business Materials" and "Packaging Materials",
software, entertainment media or other works owned by the
parties, whether such rights are in existence currently or
are created, developed or obtained during the "Term" of this
Agreement.
(f) "Domain Names" shall mean all Internet or global
computing network addresses or locations, including all top-
level domains used or registered in the "Territory" currently
or during the "Term" of this Agreement in connection with the
"Entertainment Business," whether under the present domain-
name system in effect as of the "Effective Date" or under a
future domain-name system or replacement therefor, including,
without limitation, the domain names set forth in Exhibit A.
(g) "Effective Date" shall mean September 30, 2000.
(h) "Entertainment Business" shall mean the business of
operating company-owned stores, websites and other outlets to
provide entertainment products and services to consumers and
other third parties. As of the date of this Agreement,
Entertainment Business includes, without limitation, (i)
renting movies, video games, and computer games (all in
multiple formats and for multiple platforms), as well as
players and other associated electronic equipment for those
movies and games, and selling movies, accessories and snack
items under the names and marks HOLLYWOOD VIDEOr, HOLLYWOOD
DVD, and GAME CRAZYr (each store referred to individually as
the "Store" or collectively as the "Stores"); and (ii)
producing or providing certain other ancillary, collateral or
complementary goods and services, including, but not limited
to, "Advertising Materials", "Business Materials", "Packaging
Materials" and promotional items in the "Territory". The
parties understand and agree that the business activities of
Licensor and Licensee will evolve over time as a result of
changes in business strategy and technology, and that the
term "Entertainment Business" shall be deemed to be modified
to accommodate and incorporate such evolution in business
activities, to the extent such modification is otherwise in
accordance with this Agreement.
(i) "Intellectual Property Rights" shall mean,
collectively, all rights in "Copyrights," "Domain Names,"
"Inventions,", "Marks," "Patents" and "Trade Secrets" in the
"Territory".
(j) "Inventions" shall mean all inventions, developments,
concepts or improvements, including but not limited to all
inventions, developments, concepts or improvements in or
relating to the "Entertainment Business," whether currently
in existence or created, developed or obtained during the
"Term" of this Agreement.
(k) "Marks" shall mean all trademarks, service marks, trade
names, trade dress, logos, slogans, designs and other
commercial symbols and source-identifying indicia, and all
applications and registrations therefor for use in any way in
connection with the "Entertainment Business," whether in use
or existence currently, or used, created, developed, obtained
or intended for use during the "Term" of this Agreement,
including, without limitation, the trademarks and service
marks set forth in Exhibit B.
(l) "Packaging Materials" shall mean and include all tags,
labels, cartons, bags, containers, wrapping and other
materials used in the "Entertainment Business," whether
currently in existence or created, developed or obtained
during the "Term" of this Agreement.
(m) "Patents" shall mean all U.S. and other patents issued
in the "Territory" and any continuations, continuations-in-
part, divisionals, reissues, or reexamined patents therefrom,
covering in whole or in part or relating to any aspect of the
"Entertainment Business," whether currently in existence or
created, developed or obtained during the "Term" of this
Agreement.
(n) "Royalty Fee" shall mean the amount payable by Licensee
under this Agreement as compensation for the license of the
"Intellectual Property Rights".
(o) "Royalty Rate" shall mean the rate or rates set forth
in Exhibit E to this Agreement.
(p) "Term" shall mean the time during which this Agreement
is in effect as provided for in Section 15 herein.
(q) "Territory" shall mean the territory set forth in
Exhibit D.
(r) "Trade Secrets" shall mean any valuable information,
not generally known to the public, including but not limited
to all technical information, used in the Entertainment
Business, whether currently in existence or created,
developed or obtained during the Term of this Agreement.
3. ASSIGNMENT OF RIGHTS
3.1 Licensee hereby assigns to Licensor all Intellectual Property
Rights associated with Licensed Products and Services, except those Reserved
Marks set forth in Exhibit C, and agrees that it shall assign, confirm, or
acknowledge such ownership on or at the request of Licensor, and shall execute
such assignments or other documents as may be requested by Licensor to confirm
Licensor's ownership of all past, present, or future Intellectual Property
Rights not set forth in Exhibit C, including such Intellectual Property Rights
which Licensee creates, develops, or obtains during the Term of this Agreement,
together with any and all such rights relating to any Advertising and
Promotional Materials, Business Materials, and Packaging and Instructional
Materials Licensee uses in connection therewith.
3.2 Upon the earlier of the timely filing of (a) an Amendment to
Allege Use or (b) a Statement of Use for any of the Reserved Marks listed in
Exhibit C, all right, title and interest in that trademark shall be assigned to
Licensor under the terms of this Agreement. Thereafter, Licensee shall assign,
confirm, or acknowledge the ownership of such trademark on or at the request of
Licensor, and shall execute such assignments or other documents as may be
requested by Licensor to confirm Licensor's ownership.
3.3 Notwithstanding the above, all rights to Licensee
Confidential or Proprietary Information, and all rights to tangible assets used
in the Entertainment Business, including all Advertising Materials, Business
Materials, and Packaging Materials, shall remain the sole property of Licensee,
apart from the Intellectual Property Rights therein.
4. GRANT OF LICENSE; RESERVATION OF RIGHTS
4.1 Licensor hereby grants to Licensee the exclusive license and
right to use and sublicense the Intellectual Property Rights solely in the
Territory and solely in connection with the Entertainment Business, subject to
Licensor' rights of approval and control under this Agreement, provided,
however that Licensee shall require all sublicensees to enter into a sublicense
agreement containing terms and conditions acceptable to Licensor. Licensee
must obtain Licensor's written approval prior to sublicensing the Intellectual
Property Rights under this Agreement.
4.2 Licensor further confirms that Licensee may use the Marks in
its corporate or business name(s), during the Term and subject to the terms and
conditions of this Agreement.
4.3 Licensee agrees that the essence of this Agreement is founded
on the goodwill associated with the Intellectual Property Rights and the value
of that goodwill in the minds of the public, and on the continued ability of
Licensor to protect and maintain the Intellectual Property Rights. Licensee
agrees that it is critical that such goodwill and Intellectual Property Rights
be protected and enhanced, and toward this end, Licensee agrees, both during
the term and thereafter, not to:
(a) attack the title or rights of Licensor in or to the
Intellectual Property Rights;
(b) apply to register or maintain any application or registration
respecting the Marks, Domain Names or any other mark or domain
name confusingly similar thereto, or respecting any of the
Intellectual Property Rights except with the consent and
direction of Licensor and in the name of Licensor, unless
otherwise directed by Licensor;
(c) use any colorable imitation of any of the Marks or Domain
Names, or any variant form (including variant design forms,
logos, colors, or type styles) of the Marks or Domain Names
not specifically approved by Licensor; or
(d) misuse the Marks, Domain Names or the other Intellectual
Property Rights, take any action that would bring the Marks,
Domain Names or the other Intellectual Property Rights into
public disrepute, or take any action that would tend to
destroy or diminish Licensor' ownership, value, or goodwill in
the Marks, Domain Names or the other Intellectual Property
Rights.
4.4 The parties agree that all use by Licensee and its
sublicensees of the Intellectual Property Rights under the terms of this
Agreement, including without limitation all use by Licensee and its
sublicensees of any of the Marks, inures to the benefit of Licensor.
4.5 Licensee agrees to: (i) cooperate fully with Licensor in
securing and maintaining the ownership and goodwill of Licensor in the Marks
and the Intellectual Property Rights; and (ii) to assist Licensor, at Licensor'
direction, in the protection, enhancement, and enforcement of the Intellectual
Property Rights.
5. DEVELOPMENT OF NEW INTELLECTUAL PROPERTY RIGHTS
5.1 The parties acknowledge that each may develop, discover or
acquire new Intellectual Property Rights associated with the Entertainment
Business. The parties acknowledge and agree that any and all new Intellectual
Property Rights shall be considered included within the definition of
"Intellectual Property Rights" for purposes of this entire Agreement.
5.2 Licensee shall promptly advise Licensor of any new
Intellectual Property Rights it develops, discovers or acquires. As soon as
practicable after Licensor becomes aware of any new Intellectual Property Right
developed, discovered or acquired by Licensee, Licensor shall have the right to
object to the new Intellectual Property Right, or the image or marketing
strategy represented by the new Intellectual Property Right, which it deems, in
its sole good faith discretion: (a) to be incompatible or inconsistent with any
other Intellectual Property Rights, (b) to be in violation of any law; or (c)
to be otherwise inappropriate or offensive (collectively "Objectionable
Grounds"). Upon Licensor' objection to a new Intellectual Property Right,
Licensee agrees to: (a) promptly modify the new Intellectual Property Right to
obviate Licensor' objections, or (b) cease usage of the new Intellectual
Property Right. Failure of Licensor to timely object to Licensee's use of a
new Intellectual Property Right on the basis of Objectionable Grounds shall be
deemed express approval by Licensor of Licensee's use of the new Intellectual
Property Right.
5.3 The parties agree that Licensor shall be deemed the owner of
any rights Licensee may have in a new Intellectual Property Right, whether the
right is developed, discovered or acquired by Licensee, or by Licensor during
the performance of any administrative services pursuant to that certain
Administrative Services Agreement effective January 1, 1998 between the parties
or any other applicable agreement between the parties. Upon request, Licensee
shall promptly provide a confirmatory assignment of any new Intellectual
Property Right to Licensor. Upon creation of a new Intellectual Property
Right, Licensee shall be deemed to have a license and right to use and
sublicense the new Intellectual Property Right in the Territory, in connection
with the Entertainment Business, subject to the terms and conditions of this
Agreement.
5.4 Licensee may request (but not require) that Licensor seek and
maintain appropriate federal and/or state protection (e.g., federal or state
trademark registrations or copyright registrations) for any new Intellectual
Property Right. The decision whether to seek or maintain any such federal or
state protection shall be made in the sole good faith discretion of Licensor.
At any time after the creation of a new Intellectual Property Right, Licensee
may request that Licensor provide copies of all documentation (if any) relating
to the federal and/or state protection sought by Licensor for a new
Intellectual Property Right. Upon receiving such a request for copies of
documentation from Licensee, Licensor shall provide copies of the requested
documentation (to the extent such documentation exists) to Licensee within
thirty (30) days of receiving Licensee's request.
6. QUALITY CONTROL BY LICENSOR OF LICENSEE'S USE OF THE INTELLECTUAL
PROPERTY RIGHTS
6.1 The parties acknowledge that the Marks and Domain Names have
come to signify a high level of quality to the purchasing public and that the
parties' use of the Marks and Domain Names has been in connection with high
quality products and services. The parties further agree that it is important
that the goodwill in the Marks and Domain Names be retained and enhanced, and
that the sale of high quality products and services under the Marks and Domains
is essential to this Agreement.
6.2 Licensee agrees that the nature and quality of all services
rendered and products sold by Licensee in connection with the Marks and Domain
Names, together with all Advertising Materials, Business Materials, and
Packaging Materials used by Licensee therewith, shall conform to quality
standards established and controlled by Licensor. Any and all proposed uses or
usages of the Marks and Domain Names by Licensee shall be submitted to Licensor
for approval prior to such use, and no use or usage of the Marks shall be made
by Licensee without Licensor' prior approval.
6.3 Licensee shall supply Licensor with specimens of use or usage
of the Marks or Domain Names upon request. Furthermore, Licensor or its
authorized agent shall have the right upon twenty-four (24) hours' prior notice
to Licensee to inspect the operations of Licensee and any relevant documents,
materials and records pertaining to such businesses, to determine whether
Licensor has complied with the provisions hereof. Determination as to whether
Licensee is operating such businesses and conducting its affairs in compliance
with the standards, specifications and instructions set forth by Licensor and
in accordance with this Agreement shall be in the sole discretion of Licensor.
Licensee shall comply with all of Licensor' reasonable requests directed to
modifying, revising, or improving the quality of the services rendered or
products sold pursuant to this Agreement, and any Advertising Materials,
Business Materials and Packaging Materials used in connection therewith.
6.4 The parties further agree that Licensor shall have the right
to inspect, review and approve all Internet or global computer network websites
operated by or affiliated with Licensee in connection with the Entertainment
Business, to insure that the content of such websites is consistent with the
image and goodwill associated with the Intellectual Property Rights and the
Entertainment Business. Licensee shall comply with all of Licensor' reasonable
requests directed to modifying, revising, or improving the content of such
websites in order to insure that they are consistent with the image and
goodwill associated with the Intellectual Property Rights and the Entertainment
Business.
7. CONDITIONS APPLICABLE TO APPEARANCE OF INTELLECTUAL PROPERTY
RIGHTS, AND USE OF APPROPRIATE LEGENDS
7.1 Licensee shall comply with reasonable conditions set forth in
writing from time to time by Licensor with respect to style, appearance and
manner of use of the Marks and the Intellectual Property Rights.
7.2 In connection with its use of any of the Marks or the
Intellectual Property Rights, Licensee agrees to identify the licensed use
under the Agreement and the proprietary rights of Licensor. Examples of such
notices include "______ is a registered mark of Hollywood Management Company",
and "_________________ is a registered mark used under license from Hollywood
Management Company."
7.3 In connection with its use of any of the Marks, Licensee
agrees to make proper use of the "r" symbol or other proper notice to indicate
a registered mark, and the "SM" or "TM" symbol as directed by Licensor to
indicate an unregistered mark in which Licensor may claim rights and/or which
is the subject of registration. Upon receiving notice from Licensor that
Licensee's use of a registration notice or symbol is incorrect or otherwise
deemed unacceptable, Licensee shall promptly modify such uses to obviate
Licensor's objections.
7.4 In connection with its use of any material covered by the
Copyrights licensed pursuant to this Agreement, Licensee agrees to make proper
use of an appropriate copyright legend in substantially the following form:
"Copyright [insert appropriate year(s)] Hollywood Management Company," where
the year reflects the year in which the copyrightable materials were first
published, followed by the years in which material revisions thereto were
published. Upon receiving notice from Licensor that Licensee's use of a
copyright legend is incorrect or otherwise deemed unacceptable, Licensee shall
promptly modify such uses to obviate Licensor's objections.
7.5 In connection with its use of any Patents licensed pursuant
to this Agreement, Licensee agrees to indicate, where appropriate and as
directed by Licensor, that the resulting product or service was produced or
otherwise provided under the particular jurisdictions patent number licensed by
Licensor to Licensee. In connection with its use of any Proprietary
Information or Trade Secrets licensed pursuant to this agreement for which a
patent application is pending in the patent office of any jurisdiction,
Licensee agrees to indicate, where appropriate and as directed by Licensor,
that the resulting product or service was produced or otherwise provided under
a license by Licensor to Licensee, and to further provide notice of "Patent
Pending" where so directed by Licensor.
8. PROTECTION AND POLICING OF INTELLECTUAL PROPERTY RIGHTS
8.1 Licensor, if it so desires, may commence to prosecute any
proceedings, claims or suits to protect the Intellectual Property Rights in
Licensor's own name or in the name of Licensee or join Licensee as a party
thereto. Licensee agrees to assist Licensor, at Licensee's cost and expense,
to the extent reasonably necessary, in the procurement of any protection or to
protect any of Licensor's rights in and to the Intellectual Property Rights.
Licensee agrees to supply Licensor with such information as Licensor may
reasonably request, including information regarding sales and promotion
activities to aid Licensor in the acquisition, maintenance and renewal of
applications and registrations of the Intellectual Property Rights, in the
recordal of this Agreement, in the entry of Licensee as a registered or
authorized user of the Intellectual Property or in furtherance of any other
purpose related to the acquisition, preservation or protection of the
Intellectual Property Rights.
8.2 Licensee agrees to promptly notify Licensor in writing if it
becomes aware of any third party infringing, misusing, or otherwise violating
any of the Intellectual Property Rights, or who Licensee believes is, or may be
infringing, diluting, or otherwise derogating the Intellectual Property Rights.
Any and all proposed uses of the Intellectual Property Rights by Licensee
itself shall be submitted to Licensor for approval prior to such use, and no
use of the Intellectual Property Rights shall be made by Licensee without
Licensor prior approval.
8.3 Licensor may, in its sole discretion, take action against
such third party to enforce its interest in the Intellectual Property Rights,
and in such event shall be entitled to retain all monetary recovery from any
such third party by way of judgment, settlement, or otherwise. Licensee agrees
to cooperate promptly and fully with any such effort, provided, however, that
Licensor shall reimburse Licensee for all of the its out-of-pocket expenses,
not including attorneys' fees, incurred as a result of such assistance.
9. NON-TRANSFER; ASSIGNMENT OF AGREEMENT
The License granted hereunder is not intended to be, and shall not be
construed as, an assignment, in part or in whole, of any Mark or other
Intellectual Property rights from Licensor to Licensee. Licensee may not
assign or transfer its interests herein, or delegate its duties hereunder,
without the prior written consent of Licensor.
10. ROYALTY
10.1 Within thirty (30) days following the end of each calendar
month, Licensee shall pay to Licensor a Royalty Fee equal to the product of the
Royalty Rate and Licensee's gross sales for such month. This royalty rate will
be calculated by using arm's length standards as determined by commonly
accepted intercompany pricing methodologies, and shall be presented in a report
including an outline of the industry, the specific practices within the
industry, the property in question, the pricing methodologies considered, a
transfer pricing report from PricewaterhouseCoopers LLP as to the most
appropriate method to employ in such determinations, data in support of this
method, and the ultimate rate. Thirty (30) days after Licensee's books have
been closed for the fiscal year, in the event that the total Licensee year-end
gross sales figure varies from the sum of the twelve monthly gross sales
figures for that fiscal year, Licensee shall pay Licensor a single "true-up"
payment to compensate Licensor for any additional gross sales for which the
Royalty Fee was not paid, or, if appropriate, Licensor shall reimburse Licensee
for any overpayment.
10.2 Notwithstanding anything therein to the contrary, the parties
agree that the Royalty Fee shall be evaluated annually in connection with the
transfer pricing study prepared in accordance with Internal Revenue Code
Section 482 and regulations promulaged thereunder, and, if warranted, a new
Royalty Fee based on such evaluation may be established. In the event that the
new Royalty Fee is unacceptable to Licensee, Licensee may request that the
Royalty Fee be evaluated by a mutually agreed upon independent party, and a new
Royalty Fee based on such evaluation established. The cost of any such
evaluations shall be born by Licensee.
10.3 If Licensee and Licensor are not able to agree upon a new
Royalty Rate, such dispute shall be settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. The decision of the arbitrator(s) shall be
binding on the Parties.
11. CONFIDENTIAL OR PROPRIETARY INFORMATION
11.1 The parties acknowledge that, in connection with their rights
and obligations under this Agreement, they may disclose or release to each
other certain Confidential or Proprietary Information. The parties agree not
to use the other party's Confidential or Proprietary Information for any
purpose other than those purposes contemplated hereunder. The parties also
agree that each will establish and maintain security measures designed to
maintain the confidentiality of such information and to prevent the release or
disclosure of such information, without the express written consent of the
owner of the Confidential or Proprietary Information sought to be disclosed, to
any person or entity except those persons or entities who have a need to know
such information in order to perform the duties prescribed by this Agreement.
11.2 The foregoing obligations shall not apply to information that
(i) would otherwise be deemed Confidential or Proprietary Information but is in
the public domain through no fault of the disclosing party or its directors,
employees or agents, (ii) is already in the possession of or is rightfully
obtained by the disclosing party from a third party, or (iii) information that
is developed by the disclosing party independently of and without any reliance
on the Confidential or Proprietary Information.
11.3 Nothing herein is intended to prevent the parties from
disclosing or releasing any Confidential or Proprietary Information in response
to a subpoena, court order, or other legal process. Nor shall the Parties be
prevented from disclosing or releasing any Confidential or Proprietary
Information to appropriate supervisory or regulatory authorities or if such
disclosure or release is required by applicable federal, state or local law,
rule or regulation. Nor shall this agreement prevent the parties from
disclosing Confidential Information to any independent auditors, accountants,
attorneys, advisors, subcontractors, or other third parties provided that such
parties are advised of the confidential nature of the information and agree to
enter non-disclosure agreements requiring them to maintain the confidentiality
of the information in accordance with the terms of this Agreement.
12. WARRANTIES
12.1 Licensor represents and warrants to Licensee that it is
authorized to enter into and fully perform this Agreement and that: (a) the
marks in Exhibit B; (b) and all new Intellectual Property Rights created
developed or obtained during the Term of this Agreement and specifically
approved for use by Licensor; do not violate any copyrights, trademark or other
intellectual property rights of a third party, or a right of publicity or
privacy of a third party.
12.2 Licensee represents and warrants to Licensor that it is
authorized to enter into and fully perform this Agreement.
13. INDEMNITY/HOLD HARMLESS
13.1 Licensee agrees to defend, indemnify and hold harmless
Licensor, its affiliates, and its and their stockholders, directors, officers,
employees, agents and assignees during and after the term hereof from and
against any and all claims, demands, suits, judgments, losses, liabilities
(including settlements entered into in good faith with Licensor' consent not to
be unreasonably withheld), damages, fees, expenses or costs (including
reasonable attorneys' fees) incurred by them arising out of:
(a) Licensee's activities in connection with the Entertainment
Business, including, without limitation, (i) the use, sale or
offering of any products or services; (ii) Licensee's negligent
acts or omissions; (iii) any defect (whether obvious or hidden and
whether or not approved by Licensor as required hereunder) in any
product manufactured or distributed in connection with the
Entertainment Business; (iv) Licensee's failure to comply with
applicable laws, regulations and standards; (v) any claims,
actions or proceedings for infringement, violation or dilution of
copyright, trademark, domain name, license or other intellectual
property rights; and (vi) any claims, actions or proceedings for
libel, slander, invasion of a right of privacy or publicity,
piracy, plagiarism, idea misappropriation or unfair or improper
trade practices or wrongful business conduct; and
(b)(i) any incorrect facts, misappropriated ideas or intellectual
property, infringing material, or false or misleading, deceptive or
confusing data or information supplied by Licensee to Licensor
during the term of this Agreement; and (ii) any failure by Licensee
to perform any of the agreements, terms, covenants, conditions or
warranties of this Agreement.
13.2 Notwithstanding anything in the foregoing paragraph to the
contrary, the indemnity shall not apply to any claim or liability relating to:
(a) any infringement, violation or dilution of the copyright, trademark, domain
name, license or other intellectual property right of a third party; or (b)
invasion of a right of privacy or publicity, piracy, plagiarism, idea
misappropriation or unfair competition, if and to the extent the claims
described in 13.2(a) and (b) above were caused by Licensee's utilization of the
Intellectual Property Rights in Exhibit B or any new Intellectual Property
Rights specifically approved by Licensor in accordance with the provisions of
this Agreement.
13.3 Licensor agrees to defend, indemnify and hold harmless
Licensee, its sublicensees, affiliates, and its and their stockholders,
directors, officers, employees, agents and assignees during and after the term
hereof from and against any and all claims, demands, suits, judgments, losses,
liabilities (including settlements entered into in good faith with Licensee's
consent not to be unreasonably withheld), damages, fees, expenses or costs
(including reasonable attorneys' fees) incurred by them arising out of any
claim that any of the marks set forth in Exhibit B, and any new Intellectual
Property Rights expressly approved by Licensor: (1) infringe, violate or dilute
any copyright, trademark, domain name, license or other intellectual property
right of a third party; (2) invade a right of privacy or publicity; or (3)
constitute piracy, plagiarism, idea misappropriation or unfair competition.
Provided, however, that Licensor shall not be responsible for any liability,
claims, causes of action, suits, damages, or expenses incurred or suffered by
Licensee in connection with any suit or proceeding brought against Licensee or
Licensor which, if successful, would effectively result in a determination that
Licensee has materially breached the terms and conditions under this Agreement
and such breach directly caused the liability under this Agreement; and further
provided that the design or approval of Advertising Materials, Business
Materials, Packaging Materials or any other materials produced by Licensee
incorporating the Intellectual Property Rights shall not be deemed an action,
whether of omission or commission, that may be committed or suffered by
Licensor for purposes of this indemnification.
13.4 Either party seeking indemnification under this Agreement
(the "Indemnified Party") shall give written notice to the party required to
provide indemnification hereunder (the "Indemnified Party") and upon receipt of
such written notice, the Indemnifying Party shall promptly assume and
diligently conduct the entire defense of any suit or action or the making of
any claim 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. Without releasing any obligation,
liability, or undertaking of the Indemnifying Party, the Indemnified Party
insofar as its interest are affected, may at its sole discretion, supersede the
Indemnifying Party in any such defense and thereafter assume control and
conduct the same according to the Indemnified Party's sole discretion in which
event the Indemnifying Party shall cooperate with the Indemnified Party in such
defense in such manner as the Indemnified Party shall reasonably require.
13.5 The Indemnifying Party shall not, except with the consent of
the Indemnified Party, consent to the 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.
13.5 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.
13.6 The prevailing party in any action between the parties which
is based on this Agreement shall have its reasonable attorneys' fees and other
costs incurred in such action or proceeding including any incurred for pre-
suit, trial, arbitration, post-judgment and appeal, paid by the other party.
14. COMPLIANCE WITH LAWS
14.1 Licensee shall comply with all applicable laws and
regulations and shall obtain all appropriate government approvals pertaining to
the operation of the Entertainment Business.
15. DURATION; DEFAULT; TERMINATION OF LICENSE
15.1 This Agreement shall remain in effect for a ten (10) year
term and shall be renewed automatically indefinitely thereafter for successive
10 year terms unless terminated as provided below:
(a) The license granted to Licensee under this Agreement,
together with any and all rights of Licensee or any of its assigns
or sublicensees, shall terminate ("Termination") one-hundred twenty
(120) days after receipt of written notice from Licensor of the
material failure of Licensee to fully and timely perform any of its
obligations under this Agreement ("Default"), unless Licensee has
substantially remedied the Default within the one-hundred twenty
(120) day period;
(b) Licensee may terminate this Agreement, "Termination", one-
hundred twenty (120) days after Licensor' receipt of written notice
from Licensee of the material failure of Licensor to fully and
timely perform any of its obligations under this Agreement
("Default"), unless Licensor has substantially remedied the Default
within the one-hundred twenty (120) day period;
(c) The parties may terminate this Agreement by written, mutual
agreement.
15.2 Upon Termination, Licensee shall refrain from further use of
the Intellectual Property Rights, as well as any domain name, mark, name or
trade dress reasonably deemed by Licensor to be confusingly similar to the
Marks or Domain Names, except that for a period of one hundred eighty (180)
days thereafter Licensee may use the Intellectual Property Rights to operate,
manufacture, promote, sell and distribute products in operation or on hand at
the time of such Termination. Within thirty (30) days of Termination, each
party shall return all documents containing any Confidential or Proprietary
Information of the other party that are in that party's possession (or in the
possession of any third party over which the parties maintain control with
respect to possession of such documents). The parties acknowledge that failure
to comply with this provision will result in immediate and irreparable harm,
and that an appropriate remedy shall include, but not be limited to, injunctive
relief in favor of the owner of the Confidential or Proprietary Information.
15.3 Licensee agrees that within one hundred eight (180) days
after Termination it will not operate its businesses in any manner which would
falsely suggest to the public that such license is still in force, or that any
relationship exists between Licensor and Licensee. Without limitation, it is
understood that this Section shall require Licensee to "de-identify" its
products and services so as to remove any references to Licensor or to any of
the Intellectual Property Rights from its signage, or other Advertising
Materials, Business Materials or Packaging Materials and to change the overall
appearance of its products and services and Advertising Materials, Business
Materials or Packaging Materials to eliminate the use of a trade dress
confusingly similar with the trade dress owned by Licensor.
15.4 Notwithstanding any Termination, the obligations of Licensee
under and with respect to Section 4.3 (Reservation of Rights), Sections 11
(Confidential or Proprietary Information), Section 13 (Indemnity), Sections
15.2 - 15.4 (Effect of Termination), Section 16 (Status of the Parties),
Section 17 (Notices), and Sections 18 - 28 (Miscellaneous), shall survive this
Agreement and shall remain in full force and effect in accordance with their
respective terms, without modification, limitation or impairment of any kind.
16. STATUS OF THE PARTIES
16.1 This Agreement does not create, is not intended to create,
and shall not be interpreted or construed as creating a partnership, joint
venture, agency, employment, master and servant, or similar relationship
between Licensor and Licensee, and no representation to the contrary shall be
binding upon either party.
16.2 It is the intention of the parties that the transactions
described in this Agreement shall not result in a relationship of franchiser
and franchisee Agreement between Licensor and Licensee under federal or state
law, and this Agreement shall be construed and interpreted in order to effect
that intent. Licensee agrees to execute such documents, and to cause its
officers, directors, owners, and/or employees to execute such documents, as may
be necessary to waive the application of any franchise laws and/or any rights
thereunder, or to document compliance by Licensor with the same.
17. NOTICES
17.1 All notices contemplated herein, or required or permitted to
be given under this Agreement, must be in writing and will be deemed effective
when delivered in person, or via facsimile tested prior to transmission, or via
a reputable air courier, or by certified mail, return receipt requested, to the
following addresses:
If to Licensor: Hollywood Management Company
Attn: Senior Vice President and General Counsel
9275 Peyton Lane
Wilsonville, Oregon 97070-9645
If to Licensee: Hollywood Entertainment Corporation
Attn: Executive Vice President - Legal Affairs
9275 Peyton Lane
Wilsonville, Oregon 97070-9645
18. SEVERABILITY
18.1 The provisions of this Agreement are severable, and if any
such provision shall be held illegal, invalid, or unenforceable, such holding
shall not affect the legality, validity, or enforceability of any other
provision. Any such illegal, invalid, or unenforceable provision shall be
deemed stricken as if it had never been contained herein, but all other
provisions shall continue in full force and effect.
19. BINDING ON SUCCESSORS
19.1 This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their successors, and their permitted assigns.
Nothing in this Agreement will be construed as giving any person other than the
parties hereto and their successors any right, remedy or claim under or in
respect of this agreement or any provision hereof.
20. GOVERNING LAW
20.1 THIS AGREEMENT SHALL BE GOVERNED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF OREGON, AND ITS VALIDITY, CONSTRUCTION AND EFFECT SHALL BE
GOVERNED BY AND ENFORCED PURSUANT TO THE SUBSTANTIVE LAWS OF THE STATE OF
OREGON. THE PARTIES AGREE THAT ALL LEGAL PROCEEDINGS IN CONNECTION WITH THE
ENFORCEMENT, CONSTRUCTION, INTERPRETATION, BREACH OR VIOLATION OF THIS
AGREEMENT, SHALL BE SUBMITTED TO THE STATE OR FEDERAL COURTS IN PORTLAND,
MULTNOMAH COUNTY, OREGON, AND THAT JURISDICTION AND VENUE ARE PROPER IN SUCH
COURTS.
21. MODIFICATION; EXHIBITS; ENTIRE UNDERSTANDING
21.1 The parties agree that Exhibits A-D are a part of this
Agreement and may be modified to add, delete or otherwise change the terms of
this Agreement from time to time. Such modified Exhibits shall become a part
of this Agreement from the date of such modification.
21.2 This Agreement and the Exhibits hereto constitute the entire
understanding of the parties with respect to the subject matter hereof and the
rights, obligations and interests of the parties as they may pertain hereto may
not otherwise be changed, modified or amended except by written agreement of
the parties or party to be charged.
22. HEADINGS
22.1 The headings of the several Sections are inserted for
convenience of reference only and are not intended to affect the meaning or
interpretation of this Agreement.
23. NO IMPLIED WAIVER
23.1 Any failure on the party of either party to insist upon the
performance of this Agreement or any part thereof, shall not constitute a
waiver of any right under this Agreement.
24. COUNTERPARTS
24.1 This Agreement may be executed in multiple counterparts which
taken together shall have the legal effect as if all signatures appeared on a
single page.
25. EXCLUSIVE LICENSE
25.1 Licensor agrees not to license the Intellectual Property
Rights in the Territory to any person or entity other than Licensee during the
Term of this Agreement, except with the prior approval of Licensee.
26. DILIGENCE
26.1 Licensee shall use due diligence and its commercially
reasonable best efforts to promote the Intellectual Property Rights.
27. EXECUTION OF DOCUMENTS
27.1 If at any time any party hereto shall deem or be advised that
any further assignments, licenses, assurances in laws or other acts or
instruments, including lawful oaths, are necessary or desirable to vest in it
the rights provided for herein, the parties hereto agree to do all acts and
execute all documents as may reasonably be necessary or proper for that purpose
or otherwise to carry out the intent of this Agreement.
28. BINDING EFFECT
28.1 This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their successors, and their permitted assigns.
Nothing in this Agreement will be construed as giving any person other than the
parties hereto and their successors any right, remedy or claim under or in
respect of this agreement or any provision hereof.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in duplicate originals by its duly authorized representatives on the
respective dates entered below.
HOLLYWOOD MANAGEMENT HOLLYWOOD ENTERTAINMENT
COMPANY CORPORATION
By: /s/ David Martin By /s/ Donald J. Ekman
Name: David Martin Name: Donald J. Ekman
Title: Chief Financial Officer Title: EVP - Legal Affairs
Date: 1/15/01 Date: 1/15/01