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EXHIBIT 10.14
Execution Copy
MILK PRODUCTS SUBLICENSE AGREEMENT
THIS SUBLICENSE AGREEMENT (this "AGREEMENT"), effective as of _______
on the 4th day of September 1997, by and between Southern Foods Group, L.P., a
Delaware limited partnership (hereinafter called "SFG"), and Milk Products,
LLC, a Delaware limited liability company (hereinafter called "MILK PRODUCTS").
WHEREAS, SFG has obtained a trademark license pursuant to the
Trademark License Agreement which is attached hereto as Exhibit A and
incorporated herein for all purposes (the "XXXXXX LICENSE") from Xxxxxx, Inc.,
a New Jersey corporation, and BDH Two, Inc., a Delaware corporation
(hereinafter "XXXXXX" and "BDH TWO" or collectively "LICENSOR"), to use and
sublicense the trademarks and service marks and registrations thereof listed in
Appendix A and Appendix B to the Xxxxxx License for use on the products listed
in Appendix C and Appendix D to the Xxxxxx License and on the Additional
Appendix C Products and Additional Appendix D Products (each as hereinafter
defined);
WHEREAS, Milk Products desires to use the trademarks and service marks
listed in Exhibit B to this Agreement and those listed in Appendix B to the
Xxxxxx License, including the federal and state trademark registrations and
applications therefore and all common law rights in such trademarks and any
trade dress or label designs associated with such trademarks (hereinafter
collectively called the "SUBLICENSED MARKS") in connection with its business;
WHEREAS, Xxxxxx and BDH Two have reserved the right to review and
approve the terms of this Agreement;
WHEREAS, Milk Products will obtain financing pursuant to the terms of
that certain Credit Agreement of even date herewith among Milk Products, Bank
of America National Trust and Savings Association, as Agent and Letter of
Credit Issuing Bank and other financial institutions party thereto (such Credit
Agreement, together with any amendments thereto and renewals, extensions, and
replacements thereof the "Milk Products Credit Agreement");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth, the parties agree as follows:
1. DEFINITIONS
The following terms shall have the meanings set forth below:
"ADDITIONAL APPENDIX C PRODUCTS" shall have the meaning
ascribed to such term in the Xxxxxx License.
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"ADDITIONAL APPENDIX D PRODUCTS" shall have the meaning
ascribed to such term in the Xxxxxx License.
"ADDITIONAL PRODUCTS" shall have the meaning ascribed to such
term in the Xxxxxx License.
"BofA AGENT" means Bank of America National Trust and Savings
Association in its capacity as agent under the terms of that certain Credit
Agreement of even date herewith among Milk Products, Bank of America National
Trust and Savings Association as Agent and Letter of Credit Issuing Bank and
the other financial institutions party thereto (the "Credit Agreement") and the
Security Agreement executed in conjunction therewith.
"PRODUCTS" shall have the meaning ascribed to such term in the
Xxxxxx License.
"TERRITORY" shall mean Alabama, Arkansas, Florida, Louisiana,
Mississippi, New Mexico, Tennessee, Texas and Mexico.
2. GRANT OF LICENSE
Subject to the terms and conditions of this Agreement and the Xxxxxx
License and subject to the existing License Agreements listed in Appendix E to
the Xxxxxx License, SFG hereby grants to Milk Products the following:
(a) An exclusive license to use the Sublicensed Marks listed in
Exhibit B to this Agreement solely on or in connection with Products
manufactured or processed in the United States and listed in Appendix C to the
Xxxxxx License, for sale to customers in Louisiana, New Mexico and Texas;
(b) A non-exclusive license to use the Sublicensed Marks listed in
Exhibit B to this Agreement solely on or in connection with Products
manufactured or processed in the United States and listed in Appendix C to the
Xxxxxx License, for sale to customers in Alabama, Arkansas, Florida,
Mississippi, Tennessee and Mexico;
(c) A non-exclusive license to use the Sublicensed Marks listed in
Exhibit B to this Agreement solely on or in connection with Additional Appendix
C Products currently sold by Xxxxxx/Meadow Gold Dairies, Inc. under the
Sublicensed Marks listed in Exhibit B to this Agreement, for sale to customers
in the United States or in Mexico;
(d) An exclusive license to use the Sublicensed Marks listed in
Appendix B to the Xxxxxx License solely on or in connection with Products
manufactured or processed in the United States and listed in Appendix D to the
Xxxxxx License, for sale to customers in Louisiana, New Mexico and Texas;
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(e) A non-exclusive license to use the Sublicensed Marks listed
in Appendix B to the Xxxxxx License solely on or in connection with the
Products manufactured or processed in the United States and listed in Appendix
D to the Xxxxxx License, for sale to customers in Alabama, Arkansas, Florida,
Mississippi, Tennessee and Mexico; and
(f) A non-exclusive license to use the Sublicensed Marks listed
in Appendix B to the Xxxxxx License solely on or in connection with Additional
Appendix D Products currently sold by Xxxxxx/Meadow Gold Dairies, Inc. under
the Sublicensed Marks listed in Appendix B to the Xxxxxx License, for sale to
customers in the United States or Mexico.
The licenses being granted hereunder by SFG shall be royalty free and
shall be solely and to the same extent that SFG has been granted a license with
respect to the Products pursuant to the Xxxxxx License. Milk Products shall
not have any right to sell the Products bearing the Sublicensed Marks outside
the Territory and Milk Products agrees to be bound by the terms and provisions
of the Xxxxxx License as if Milk Products was named as the licensee under the
Xxxxxx License and SFG was named as the licensor under the Xxxxxx License;
provided, however, that if the rights granted herein are more restrictive than
those granted in the Xxxxxx License, Milk Products shall be bound by the more
restrictive rights granted herein.
3. OWNERSHIP OF SUBLICENSED MARKS
3.1 Milk Products acknowledges that Licensor is the sole owner of the
Sublicensed Marks. Milk Products shall not directly or indirectly question,
attack, contest, or in any other manner impugn the validity of Licensor's
ownership of the Sublicensed Marks, nor shall Milk Products willingly become an
adverse party to Licensor in litigation contesting the validity of Licensor's
ownership and other rights in and to the Sublicensed Marks.
3.2 Milk Products shall be deemed a "related company" under the U.S.
Xxxxxx Act, such that any use of the Sublicensed Marks by Milk Products, and
any goodwill generated thereby, shall inure to the sole benefit of Licensor.
4. QUALITY STANDARDS
4.1 Milk Products agrees that all Products bearing a Sublicensed Xxxx
pursuant to this Agreement shall be of a high standard and of such quality as
to protect and enhance the Sublicensed Marks and the goodwill and value
pertaining thereto and shall meet Licensor's quality standards and
specifications as set out specifically in the current formulae, ingredients and
manufacturing specifications ("FIMS") for such Products, a copy of which has
been made available to Milk Products, and/or such modified formulae as shall be
reasonably agreed in writing between Licensor and Milk Products in the future.
Milk Products and its Manufacturing Agents shall manufacture, sell, distribute
and promote the Products in accordance with all applicable federal, state and
local laws.
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5. QUALITY MAINTENANCE
5.1 In order to assure that Milk Products meets Licensor's quality
standards and specifications, once each quarter of the Term and/or for good
cause shown, Milk Products shall submit comprehensive affidavits that meet with
Licensor's reasonable approval from all of Milk Products' quality control
department managers responsible for the quality standards of the Products
produced by that part of Milk Products' or its Manufacturing Agents' business
for which they are responsible, attesting under oath that Licensor's quality
standards and Product specifications have been fully complied with during the
prior quarter, also submitting representative Product samples and listing the
number of customer complaints relating to Product quality during that quarter
and a summary of the actions taken by Milk Products in response to such
complaints.
5.2 Milk Products also agrees that Licensor will submit the quarterly
Product samples to an independent testing laboratory to determine if the FIMS
are being complied with, the expense thereof being borne by Milk Products.
Licensor also reserves the right periodically to conduct quality control
inspections, upon reasonable notice and during normal business hours, at Milk
Products' plants to determine if the Licensor's FIMS for the Products and the
processing thereof are being complied with.
5.3 In the event that Licensor or its agents shall determine that any
Products sold or distributed by Milk Products and/or its Manufacturing Agents
bearing or using Sublicensed Marks do not conform to Licensor's FIMS, Milk
Products agrees, at its expense, to take such action as Licensor directs in
writing, including, but not limited to, withdrawal and/or recall of such
Products from the market and to refrain and cause its Manufacturing Agents to
refrain from further sale and/or distribution of such Products under the
Sublicensed Marks unless and until Milk Products and/or its Manufacturing
Agents have demonstrated to the reasonable satisfaction of Licensor that said
Products conform to said FIMS, as the case may be.
5.4 If Milk Products enters into co-packing agreements with suppliers or
any other arrangement with respect to the processing or packaging of final
Products by any person who is not a subsidiary of Milk Products, who will
process or package final Products for Milk Products, for sale in the Territory
("MANUFACTURING AGENTS"), Milk Products must submit such co-packing agreements
in draft form to Licensor or an individual designated by Licensor ("LICENSOR'S
LICENSE COORDINATOR") for prior approval to ensure they include trademark
protection and quality control provisions that safeguard the rights of both the
Licensor and Milk Products under this Agreement. Licensor agrees that such
prior approval shall not be withheld or delayed unreasonably, and that Licensor
shall respond promptly to any request for approval. If Licensor fails to
respond to such request within thirty (30) days, Licensor's approval shall be
deemed given.
5.5 On a semi-annual basis, Milk Products shall review with Licensor's
License Coordinator and obtain prior approval for, all advertising, promotional
and point-of-purchase materials published or distributed by Milk Products in
connection with Products bearing Sublicensed Marks. Licensor agrees that such
prior approval shall not be withheld or delayed unreasonably, and that Licensor
shall respond promptly to any request for approval. If Licensor fails to
respond to such request within thirty (30) days, Licensor's approval shall be
deemed given.
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5.6 If Milk Products desires to adopt new cartons or packaging bearing the
Sublicensed Marks, which package designs or trade dress are different from
those presently used by Licensor, Milk Products shall submit to Licensor's
License Coordinator at least one (1) representative sample of each such new
carton and packaging material and may not use any such material in connection
with the Sublicensed Marks without Licensor's prior written approval. Licensor
agrees that such prior approval shall not be withheld or delayed unreasonably,
and that Licensor shall respond promptly to any request for approval. If
Licensor fails to respond to such request within thirty (30) days, Licensor's
approval shall be deemed given.
5.7 Milk Products shall notify Licensor promptly in writing upon its
determination that it intends to use any Sublicensed Xxxx in connection with an
Additional Product, which notification shall include a description of the
Additional Product, and a certification that the Additional Product was
manufactured or processed by Holdings on the date of this Agreement. From and
after such notification, Licensor and Milk Products shall mutually agree upon
the FIMS that will be applicable to such Additional Product as if it were a
"Product" hereunder.
6. FORM OF USE
6.1 Milk Products hereby acknowledges and agrees that its use of the
Sublicensed Marks shall be subject to all times during the Term to the
reasonable control of Licensor in order for Licensor to maintain the consistent
standard of quality associated with the Sublicensed Marks. Milk Products will
preserve the good appearance of the Sublicensed Marks wherever and whenever
they are used and shall not use any Sublicensed Xxxx in a manner which is
likely to derogate from the integrity, distinctiveness, goodwill, value or
strength of such Sublicensed Xxxx.
6.2 From time to time, Licensor may determine that a previously published
use of the Sublicensed Marks by Milk Products may threaten the value of the
Sublicensed Marks, or is otherwise inconsistent with Licensor's quality
standards. Upon written notice from Licensor, Milk Products shall implement
Licensor's directions regarding the proper use of the Sublicensed Marks as
promptly as practicable using its best efforts and, in any event, within thirty
(30) days.
6.3 Except as required by law, Milk Products agrees not to use the
Sublicensed Marks in connection or combination with any other third-party
trademarks, names or logotypes, without Licensor's prior written approval, such
approval not to be withheld unreasonably. Milk Products shall at no time adopt
or use any variation of the Sublicensed Marks or any word or marks confusingly
similar thereto without Licensor's prior written approval.
6.4 Milk Products shall not take any action to cause an abandonment or
forfeiture of any of Licensor's rights in the Sublicensed Marks and shall not
take any action to cancel any registration in the United States or elsewhere of
any Sublicensed Xxxx in the name of Licensor or to interfere with any renewal
of any such registration. Milk Products shall reasonably cooperate with and
shall not oppose any application by or on behalf of Licensor to register or
renew any federal or state registration of any Sublicensed Xxxx in the United
States or elsewhere.
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7. INFRINGEMENT PROCEEDINGS
Milk Products shall cooperate with Licensor in the protection of the
Sublicensed Marks and in connection therewith shall: (i) promptly inform
Licensor of any third-party use of any Sublicensed Marks or any infringement or
encroachment upon or any misuse whatsoever of any Sublicensed Marks which comes
to Milk Products' attention; and (ii) promptly inform Licensor of any claim
against Milk Products that the use of any Sublicensed Xxxx infringes the rights
of others or of the institution of any proceeding against Milk Products
predicated upon any such claimed infringement.
8. INDEMNIFICATION BY MILK PRODUCTS
Milk Products hereby indemnifies and undertakes to defend and hold SFG
and Licensor harmless from and against any and all claims, suits, losses,
damages, fines, penalties, and/or expenses including, but not limited to,
attorney's fees arising out of or based upon:
(a) Milk Products' or its Manufacturing Agents' processing,
distribution or sale of Products bearing a Sublicensed Xxxx; or
(b) Any breach by Milk Products or its Manufacturing Agents of
their obligations under this Agreement; or
(c) Any proceeding brought by any person, governmental agency or
consumer group in connection with the Products or Additional Products
processed, sold or distributed by Milk Products or its Manufacturing Agents
bearing or using a Sublicensed Xxxx; or
(d) Any violation of any applicable law or any regulation or civil
claims relating to the manufacture, processing, sale, distribution, promotion
or advertising of Products or Additional Products bearing or using a
Sublicensed Xxxx unless attributable to SFG's breach of its obligations under
this Agreement. SFG and Licensor may participate in the defense of any such
litigation.
9. RESPONSIBLE FOR ACTS OF MANUFACTURING AGENTS
Milk Products shall be solely responsible for the acts and omissions
of those with whom it or its Manufacturing Agents contract for any aspect of
the processing, distribution, or sale of the Products or Additional Products
bearing or using a Sublicensed Xxxx.
10. MAINTENANCE OF INSURANCE
In order to assure its ability to discharge its obligations to SFG and
Licensor , Milk Products agrees that it will maintain throughout the term of
this Agreement at its expense, comprehensive general liability insurance,
including product liability insurance and contractual liability coverage
specifically endorsed to cover the indemnity provisions in this Agreement, from
a carrier satisfactory to SFG and Licensor, in a minimum amount of Five Million
Dollars ($5,000,000) combined single limit for each single occurrence, for
bodily injury and property damage which shall designate SFG,
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Xxxxxx and BDH Two as additional insureds therein. The policy shall provide
for thirty (30) day prior written notice to SFG and Licensor from the insurer
in the event of any material modification, cancellation or termination. Milk
Products shall deliver certificates of such insurance coverage to SFG and
Licensor prior to the sale and/or distribution of any Products or Additional
Products bearing a Sublicensed Xxxx.
11. TERM
This Agreement shall continue in force and effect for the Term (as
defined in the Xxxxxx License) and each Renewal Period(s) (as defined in the
Xxxxxx License) of the Xxxxxx License, provided that, for the Sublicensed Marks
listed in Appendix B to the Xxxxxx License and the Products listed in Appendix
D to the Xxxxxx License and the Additional Appendix D Products, the licenses
granted under Section 2(d), (e) and (f) of this Agreement shall expire after
three (3) years from the date of this Agreement and cannot be renewed. SFG
agrees that it will not exercise any rights granted to it under the Xxxxxx
License to terminate the Xxxxxx License without the prior written consent of
Milk Products. Upon the termination of the Xxxxxx License, this Agreement
shall also terminate.
12. EFFECT OF TERMINATION
Upon termination of this Agreement, Milk Products agrees to
immediately discontinue all use of the Sublicensed Marks, to cooperate with SFG
or its appointed agent to apply to the appropriate authorities to cancel
recording of this Agreement from all government records, to destroy all printed
materials bearing any of the Sublicensed Marks, and that all rights in the
Sublicensed Marks and the goodwill connected therewith shall remain the
property of Xxxxxx and BDH Two. Notwithstanding the foregoing in the event of
termination of this Agreement as a result of termination of the Xxxxxx License
pursuant to Section 9.3(d) thereto, Xxxxxx and BDH Two acknowledge that BofA
Agent shall have a limited license in the Sublicensed Marks for a period not to
exceed one hundred twenty (120) days for the sole purpose of disposing of
finished goods inventory on hand of Products and Additional Products that bear
the Sublicensed Marks.
13. RELATIONSHIP
The relationship between SFG and Milk Products is that of sublicensor
and sublicensee. Milk Products, its contractors, agents and employees shall
under no circumstances be deemed agents, franchisees, representatives,
employees or partners of SFG, Xxxxxx or BDH Two.
14. NO ASSIGNMENT OR SUB-LICENSING
Milk Products shall not have the right to assign this Agreement, in
whole or in part, or sublicense the Sublicensed Marks without the prior written
approval of SFG, Xxxxxx and BDH Two. Notwithstanding anything contained in
this Agreement to the contrary, the provisions of this Section 14 shall not
apply to (a) Milk Products sale of equity interests in Milk Products to third
parties or (b) any change in the control or ownership of Milk Products.
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15. INTERPRETATION OF AGREEMENT
It is agreed that this Agreement shall be interpreted according to the
laws of the State of Delaware, United States of America.
16. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which taken together constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
SOUTHERN FOODS GROUP, L.P.
BY SFG MANAGEMENT LIMITED LIABILITY
COMPANY, ITS GENERAL PARTNER
By: /s/ XXXX XXXXXXXX
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Title: President & CEO
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MILK PRODUCTS, LLC
By: /s/ XXXXX X. XXXXX
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Title: President
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READ AND APPROVED BY:
XXXXXX, INC.
By: /s/
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Title:
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BDH TWO, INC.
By: /s/
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Title:
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EXHIBIT B - TRADEMARKS
SUBLICENSED TO MILK PRODUCTS
UNITED STATES TRADEMARK U.S. REG. NO.
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XXXXXX Corporate Logo 921,370
XXXXXX (Corporate Logo) &
Cow's Head (Xxxxx) Design 969,728
Xxxxxx Logotype with Cow's Head 1,859,074
Design of Cow's Head
(Elsie's Head with Flowers) 1,860,207
Design of Cow's Head
Xxxxx Design (Daisy) 397,158
Design of Cow's Head
Xxxxx (Design Plus Oval) 405,706
Design of Cow's Head 529,468
Xxxxx Design 810,861
Xxxxx 1,857,137
Xxxx Xxxxxx Signature 1,689,184
IF IT'S XXXXXX, IT'S GOT TO BE GOOD 1,042,420
IF IT'S XXXXXX, IT'S GOT TO BE GOOD 1,504,138
LADY XXXXXX 572,693
LADY XXXXXX & DESIGN 1,893,711
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STATE TRADEMARK STATE REG. NO.
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Xxxxxx (Alabama) 103,326
Xxxxxx (Arkansas) 124-87
Xxxxxx (Florida) T07258
Xxxxxx (Louisiana) 45-0849
Xxxxxx (New Mexico) TK87051105
Borden (Tennessee) 686-2060
Xxxxxx (Texas) 47,355
MEXICAN TRADEMARK REG. NO.
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Xxxxxx Label (milk carton) 379,964
Xxxxxx Corporate Logo 452,152
Xxxxxx Corporate Logotype 349,338
Xxxxxx and Design of Cow's Head
(Elsie's Head with Flowers in "New" Logo) 459,630
Xxxxxx and Design of Cow's Head
(Elsie's Head with Flowers in "New" Logo) 459,629
Xxxxxx Label (milk carton) 400,509
Xxxxxx and Design of Cow's Head
(Elsie's Head with Flowers in "New" Logo) 459,628
Cow's Head Design 379,768
Cow's Head Design 383,926
Cow's Head Design 400,235
Elsie's Market & Cow's head Design
(Service Xxxx) 457,129
Lady Xxxxxx 417,418
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