EXHIBIT
2.2
TRANSITION LICENSE AGREEMENT
TRADEMARK LICENSE AGREEMENT (the "Agreement") dated as of
September 26, 1998 by and between BLOCKBUSTER ENTERTAINMENT INC.,
a Delaware corporation ("Licensor") and Wherehouse Entertainment,
Inc., a Delaware corporation, Blockbuster Music Holding
Corporation, a Delaware corporation, Blockbuster SC Holding
Corporation, a Delaware corporation, Blockbuster Music Retail,
Inc., a Delaware corporation, Show Industries, Inc., a California
corporation, and Blockbuster SC Music Corporation, a Delaware
corporation (collectively "Licensee").
WHEREAS, pursuant to the Stock Purchase Agreement dated
August 10, 1998 between Viacom International Inc. ("Seller") and
Licensee (the "Purchase Agreement"), Seller has agreed to sell to
Licensee and Licensee has agreed to purchase from Seller the
Shares of the Holding Subsidiaries (the "Acquisition");
WHEREAS, Licensor, a direct subsidiary of Seller, is the
owner of certain trademarks, trade names and service marks that
are, as of the date hereof, used in the conduct of the Business;
WHEREAS, Licensee desires to use certain trade names,
trademarks or service marks owned by Licensor and used in the
conduct of the Business and Licensor is willing to grant certain
limited rights thereto in accordance with the terms, and subject
to the conditions of this License Agreement; and
WHEREAS, it is a condition to the closing of the Acquisition
that Licensor and Licensee enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the
parties hereto agree as follows:
1. Definitions.
1.1 Capitalized terms used herein and not otherwise defined
shall have their respective meanings set forth in the Purchase
Agreement.
1.2 As used in this License Agreement, the following terms
shall
have the meanings set forth below.
(a) "License Period" shall commence as of the date of
this
Agreement and continue through the following time periods for
each region more fully set forth on Schedule A hereto:
Los Angeles - February 28, 1999
Dallas - April 15, 1999
Atlanta - May 30, 1999
Chicago - June 30, 1999
(b) "Marks" shall refer to the trademarks, trade names
or
service marks owned by Licensor, including those specifically
listed on Schedule B hereto ("Schedule B Marks"), but excluding
any such Marks referring to Blockbuster Video.
(c) "Pornographic Materials" shall mean adult or
pornographic
material the sale or rental of which is inconsistent with the
standards in effect as of the date of the Agreement of
Blockbuster Video and Blockbuster Music.
(d) "Related Materials" shall mean stationery,
business cards,
invoices, catalogs, signs, purchase orders, brochures, labels,
letterheads, advertising, promotional goods, packaging and other
products and materials bearing the Marks.
(e) "Territory" shall mean the United States.
2. License.
2.1 Grant.
(a) Subject to the terms and conditions of this
Agreement,
Licensor hereby grants to Licensee a nonexclusive,
nontransferable license throughout the Territory to use the Marks
solely in the course of the Business (including on and in
connection with Related Materials) prior to removal or
destruction referred to in Section 2.l(b) below. Subject to 6.1
below, this Agreement is revocable by Licensor in the event of a
breach by Licensee.
(b) The license granted in Section 2.l(a) shall expire
for each
region as set forth in Section 1.2(a). Following the expiration
of the license granted in Section 2.l(a) in each region, Licensee
shall discontinue further use of the Marks and the Related
Materials and shall, at Licensee's option, return, destroy,
sticker or otherwise remove or cover the Marks from all remaining
Related Materials.
2.2 Limitation On Grant.
(a) Except as specifically set forth in Section 2.1,
no right or
license is granted to Licensee by implication or otherwise.
(b) Licensee shall have no right whatsoever to:
(i) sublicense or otherwise grant any rights to
any Xxxx to
any Person; or
(ii) use any trademarks, trade names, service
marks, logos,
imprint or other distinctive marks or
designations of
Licensor or its Affiliates other than the
Marks.
(iii) use the Marks as an Internet domain name or
address.
(iv) use the Marks in any manner for any purpose
other than as
expressly provided herein.
3. Ownership of Trademarks.
3.1 Right, Title and Interest.
(a) Licensor represents that there are no pending
Actions, and
to Licensor's knowledge none are threatened in writing, alleging
that Licensor is, through its use of the Marks infringing or
otherwise violating any rights of third parties.
(b) Licensee acknowledges that Licensor is the owner
of the
Marks and of all goodwill now or hereafter associated therewith.
Licensee shall not take any action that is inconsistent with
Licensor's ownership of the Marks. Licensee agrees that nothing
in this Agreement and no use of the Marks by Licensee pursuant to
this Agreement shall vest in Licensee, or shall be construed to
vest in Licensee, any right, ownership or interest in or to the
Marks or the goodwill now or hereafter associated therewith,
other than the right to use the Marks in accordance with this
Agreement.
3.2 Execute Documents.
(a) Licensee agrees both during the License Period and
thereafter, to perform all lawful acts and execute such
instruments as Licensor may reasonably request to confirm,
evidence, maintain or protect Licensor's rights in, and ownership
of the Marks at Licensor's cost.
(b) Without the prior written consent of Licensor,
Licensee
shall not during the License Period or thereafter register or
attempt to register any Xxxx or any variations thereof, or any
trade names, trademarks, service marks, collective marks,
certification marks or logos that are confusingly similar to, any
Xxxx in any country or jurisdiction.
3.3 Goodwill. All goodwill and improved reputation
generated by
Licensee's use of the Marks as set forth herein shall inure to
the benefit of Licensor.
3.4 Reservation of Rights. All rights not expressly
granted to
Licensee hereunder shall remain the exclusive property and right
of Licensor. Without limiting the foregoing, subject to this
Agreement, Licensor shall retain the exclusive right to use and
to license others to use the Marks (either alone or as a
composite xxxx with other marks), in connection with the
manufacture, marketing, advertising, promotion, distribution, and
sale of products.
4. Licensee Use of Trademarks.
4.1 Form of Use. Licensee shall use the Marks, other than
the
Schedule B Marks, only in a manner in all respects consistent
with the Acquired Subsidiaries' use of the Marks at the Closing
Date and subject to the quality control restrictions in 4.2
below. Licensee may use the Schedule B Marks (i) in a manner in
all respects consistent with the Acquired Subsidiaries' use of
the Schedule B Marks at the Closing Date and subject to such
Section 4.2, and (ii) in such other manners as Licensor may from
time to time during the term hereof approve in writing upon
presentment to Licensor under 4.4 below, such approval not to be
unreasonably withheld or delayed.
4.2 Quality Standard. Licensee acknowledges that Licensor
has
valuable property rights in the Marks and, accordingly, the
license granted hereunder is granted in reliance on Licensee's
acknowledgement that the reproduction of the Marks will be at a
level that meets or exceeds the industry standard for products of
a similar kind and value and at least commensurate with the
quality of the products used in connection with the Marks by the
Acquired Subsidiaries as of the date of this Agreement. Licensee
agrees that it shall not use any Xxxx in such a manner as could
cause Licensor to reasonably perceive any denigration or
tarnishment of such Xxxx.
4.3 Labeling. Licensee warrants that all Related Materials
used
under this Agreement will be manufactured, labeled, sold,
distributed and advertised in compliance with all applicable
federal, state and local laws and regulations. Licensee will
cause to appear on all materials displaying the Marks the
trademark notice R or TM, as requested by Licensor, and/or the
legend: "[Xxxx] is a trademark of Blockbuster Entertainment Inc.
used under license" and/or such other legend as reasonably
requested by Licensor from time to time, to appear on the first
and most prominent use of the Xxxx on Related Products.
4.4 Restrictions Upon Use. Nothing contained herein shall
be
deemed license or authority to use the Marks on or in connection
with the (i) rental of (x) video tapes, (y) DVD, or (z) Divix, or
(ii) any advertisement, promotion, sale, rental, display,
distribution or other use of any Pornographic Material. It is
expressly acknowledged and agreed that Licensee shall not use the
Marks for any of the aforesaid purposes at any time.
4.5 Right of Inspection. Licensee shall submit samples of
the
Related Products to Licensor, free of cost, for review by
Licensor in order to assure itself that the provisions of this
Agreement are being observed.
5. Infringement.
5.1 Notification of Infringement. During the License
Period and
six months thereafter, Licensee agrees promptly to notify
Licensor in writing of any conflicting uses of, or any
applications or registrations to use, any xxxx, name, symbol,
device or word that become known to Licensee that Licensee
believes, in good faith, constitute an act of infringement or of
unfair competition in relation to any Xxxx. Licensor shall have
the exclusive right to bring and defend all actions or
proceedings relating to the Marks.
5.2 Action Against Infringer. The maintenance,
enforcement, and
protection of the Marks shall be in the sole discretion and
control of Licensor, and any and all recoveries resulting from
such actions shall be retained by Licensor. Upon Licensor's
request and at Licensor's expense, Licensee shall cooperate with
and assist Licensor in any of Licensor's enforcement efforts with
respect to the Marks. In the event Licensor takes enforcement
action solely at Licensee's request, Licensee shall be solely
responsible for all costs and expenses (including, without
limitation, reasonable attorneys' fees) related to any such
action. Licensee shall not institute or take any action on
account of any unauthorized use, or enter into any agreement with
a third party with respect to such use, without the prior written
consent of Licensor.
6. Termination; Rights on Termination.
6.1 Termination. This Agreement may be terminated in
accordance
with any of the following provisions:
(a) Licensor may terminate this Agreement with respect
to any or
all uses of the Marks at any time in the event that Licensee is
in default or breach of any provision of this License Agreement,
and Licensee fails to cure such default or breach to Licensor's
reasonable satisfaction within 15 Business Days after written
notice thereof.
(b) Licensor may, at its option, immediately terminate
this
License Agreement if Licensee becomes insolvent or unable to pay
its debts as they mature, or makes an assignment for the benefit
of its creditors; seeks relief or if proceedings are commenced
against Licensee or on its behalf under any bankruptcy,
insolvency or debtors' relief law and such proceedings have not
been vacated or set aside within 60 days from the date of
commencement thereof.
6.2 Following Expiration or Termination. Upon expiration
of the
license(s) granted herein, or in the event of the termination of
this Agreement in accordance with any of the provisions of
Section 6.1, the parties agree to the following:
(a) Licensee, at its sole cost and expense, shall
immediately:
(i) cease any and all use of the Marks, as
applicable, in any
manner whatsoever;
(ii) destroy, sticker or otherwise remove or cover
the Marks
from all products and other materials bearing
any such
Marks; and
(iii) purge or otherwise delete any such Marks from
any
electronic media.
(b) Upon the termination of this Agreement, Licensee
agrees to
cooperate with Licensor or its appointed agent to apply to the
appropriate authorities to cancel all recording of this Agreement
as to the Marks and to destroy all products and printed materials
bearing any of the Marks.
7. Indemnification.
Licensee shall be solely responsible for and hereby agrees
to indemnify and defend Licensor, its affiliates, and their
respective officers, directors, shareholders, employees and
agents, and to hold each of them harmless from any and all
claims, demands, causes of action, or damages, including, without
limitation, attorneys' fees, (i) arising out of or in connection
with the use by Licensee, or anyone under Licensee's direct or
indirect control, of the Marks in breach of this Agreement; or
(ii) resulting from any claims in the nature of product liability
with respect to Licensee's use of the Marks. Licensee shall
obtain or maintain customary insurance coverage, in an amount
usual and customary for comparable companies against insurable
losses covered by this indemnification naming Licensor as an
additional insured and shall provide Licensor with proof that
such coverage is in full force and effect at all times. Licensor
shall keep Licensee fully informed of the status of each such
claim, demand or cause of action brought against Licensor, and
Licensee shall keep Licensor fully informed of the status of each
such claim, demand or cause of action brought against Licensee.
8. Remedies.
8.1 For Cause Termination. If Licensor terminates this
License
Agreement because of a default or breach under Section 6.l(a)
Licensor, in addition to such termination, shall have all rights
and remedies available at law and in equity.
8.2 Irreparable Injury. Licensee acknowledges and agrees
that
each covenant and agreement set forth herein is reasonable and
necessary to protect and preserve Licensor's ownership in the
Marks and that any breach by Licensee thereof will result in
irreparable injury to Licensor. Licensee, therefore, consents
and agrees that Licensor shall be entitled to seek and obtain a
temporary restraining order and a permanent injunction to prevent
a breach or contemplated breach hereof and waives any requirement
that Licensor post a bond in connection with such injunctive
relief.
8.3 Trademark Infringement. Licensee acknowledges and
agrees
that each covenant and agreement set forth herein is reasonable
and necessary to protect and preserve the goodwill in the Marks
and Licensor's ownership thereof and that any use of the Marks by
Licensor (i) during the term hereof in any manner inconsistent
with the covenants and agreements set forth herein; and (ii)
following termination hereof (whether pursuant to Section 2.l(b)
or Section 6 hereof); shall constitute trademark infringement,
unfair competition and/or trademark dilution under federal and
state law.
9. General.
9.1 Amendment and Waiver. No amendment of any provision of
this
Agreement shall in any event be effective, unless the same shall
be in writing and signed by the parties hereto. Any failure of
any party to comply with any obligation, agreement or condition
hereunder may only be waived in writing by the other party but
such waiver shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. No failure by any
party to take any action against any breach of this Agreement or
default by the other party shall constitute a waiver of such
party's right to enforce any provision hereof or to take any such
action.
9.2 Assignment. This Agreement shall bind and inure to the
benefit of the parties named herein and their respective heirs,
successors and permitted assigns. No party to this Agreement may
assign any of its rights or obligations under this Agreement
without the prior written consent of the other party hereto.
Notwithstanding the foregoing, Licensor may assign all or any
portion of its rights and obligations pursuant to this Agreement
to one or more of its affiliates and/or in connection with a
merger, consolidation or sale of substantially all of the stock
or assets of Licensor or any affiliate that licenses a xxxx
hereunder, and in the event of such assignment the Licensor shall
remain secondarily liable.
9.3 Notices. Any notices or other communications required
to be
given pursuant to this Agreement shall be in writing and shall be
effective upon delivery by hand or upon receipt if sent by mail
(registered or certified mail, postage prepaid, return receipt
requested) or by express mail courier or upon transmission if
sent by telex or facsimile (with request for confirmation of
receipt in a manner customary for communications of such
respective type), except that if notice is received by telex or
facsimile after 5:00 P.M. on a business day at the place of
receipt, it shall be effective as of the following business day.
All notices hereunder shall be given as follows:
(a) If to Licensor:
Blockbuster Entertainment Inc.
0000 Xxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
with a copy to:
Viacom International Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Deputy General Counsel
Fax: (000) 000-0000
(b) If to Licensee:
Wherehouse Entertainment, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
Any party may change its address for receiving notice by
written notice given to the others names above in the manner
provided above.
9.4 Counterparts. This Agreement may be executed in two or
more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same Agreement.
9.5 Entire Transaction. This Agreement, together with the
Purchase Agreement, and the ancillary agreements thereto,
contains the entire understanding between the parties with
respect to the transactions contemplated hereby and supersedes
all other agreements, discussions, negotiations, and
understandings between the parties or any affiliate of the
parties. There are no warranties, representations or other
agreements between the parties in connection with the subject
matter of this Agreement except as specifically provided herein
and in any document delivered pursuant hereto. No supplement,
modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the party or parties to be
bound thereby.
9.6 No Binding Agreement. The parties hereto understand
and
agree that no contract or agreement providing for the
transactions contemplated hereby shall be deemed to exist unless
and until a definitive agreement has been executed and delivered.
Each party hereto also agrees that unless and until a definitive
agreement has been executed and delivered, neither party hereto
will have any legal obligations of any kind whatsoever with
respect to the transactions contemplated hereby.
9.7 APPLICABLE LAW; JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH INTERNAL SUBSTANTIVE
LAWS OF NEW YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF AND SHALL IN ALL RESPECTS BE REGARDED
AS A NEW YORK CONTRACT. The parties hereto consent to the
jurisdiction of the U.S. federal and state courts sitting in the
State of New York, Borough of Manhattan, and the parties hereto
shall not raise in connection therewith, and hereby irrevocably
waive, any defenses based upon venue, inconvenience of the forum,
lack of personal jurisdiction, sufficiency of service of process
or the like in any action or suit brought in the State of New
York.
9.8 Headings. The section and other headings contained in
this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
9.9 Third Parties. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any
person or entity other than the parties hereto and their
affiliates, successors or assigns, any rights or remedies under
or by reason of this Agreement.
9.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by
any Law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed as of the date and year first above written.
Wherehouse Entertainment, Inc. Blockbuster Entertainment
Inc.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------- ------------------------
---
Xxxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President- Title: Senior Vice
President
Chief Financial Officer
Blockbuster Music Holding Corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
Blockbuster SC Holding Corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
Blockbuster Music Retail, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
Show Industries, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
Blockbuster SC Music Corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
