EXHIBIT 10.6
MASTER LICENSE AGREEMENT
DATE: As of September 20, 1993
PARTIES: "PHI" - Pizza Hut, Inc.
0000 X. Xxxxxxx
X. X. Xxx 000
Xxxxxxx, XX 00000
"Licensee" - Jungle Jim's Playlands, Inc.
0000 Xxxxxxxx
Xxx Xxxxxxx, XX 00000
WHEREAS, PHI is the owner of a unique retail food business operated
by it and its franchisees and licensees throughout the United States and in many
foreign countries under the name and xxxx "Pizza Hut"; and
WHEREAS, PHI and Licensee each desire that PHI authorize Licensee
(and its wholly-owned operating subsidiaries who have adopted this Agreement by
signing one or more individual "Schedules", as defined below) to use some of
PHI's trademarks to sell from specified locations a limited variety of food
products that Licensee has prepared pursuant to PHI's proprietary recipes, all
as described in this Agreement and in the supplementary Schedules to this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth in this Agreement, PHI and Licensee agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
have the respective meanings given:
1.0 Affiliate. An "Affiliate" of a party is a person controlling,
controlled by, or under control with, the party. Affiliates do not include a
party's franchisees, unless the franchisee is controlled by the party through
common ownership or other means independent of the franchise agreement.
1.1 Agreement. "Agreement" means this Master License Agreement
between PHI and Licensee, as amended from time to time, including (unless the
context clearly requires otherwise) all Schedules.
1.2 Brand Umbrella. The "Brand Umbrella" is the area of the Licensed
Location that is associated with the Licensed Concept in such a way that it
appears to the average consumer to be related to the Marks. The size of the
Brand Umbrella may vary from installation to installation, depending upon the
context. The factors that will influence the extent of the Brand Umbrella
include the nature of the Licensed Concept; the decor; and the type, variety,
and number of other ready-to-eat products (unrelated to the Marks) sold from the
Licensed Location. As an example, and without limiting the generality of this
definition, the full area under a canopy bearing one of the Marks is within the
Brand Umbrella.
1.3 Gross Sales. Except as otherwise provided in this Section,
"Gross Sales" means the total of all cash or other payments received (including
by check, credit, charge account, or otherwise, regardless of whether any such
checks, credits, charge accounts, or other means of payment are ultimately paid,
and also including the fair value of any exchange) for the sale of (a) any item
that is sold under the Brand Umbrella, and (b) any item that is identified by
one or more of the Marks.
Gross Sales exclude only those taxes imposed directly on sales by
governmental authorities when the amount of the tax is added to or absorbed in
the selling price and is actually paid to the appropriate governmental
authority.
If prices of Licensed Products sold at the Licensed Location are not
priced separately from a "package" price for Licensed Products and other items
(as, for example, by inclusion of Licensed Products in Licensee's birthday party
or field trip packages), the parties will negotiate, in good faith, a proper
measure of Gross Sales.
1.4 Includes. The verb "to include" (in all of its forms, tenses,
and variations) is always used in the nonexclusive sense. As a result, the words
"includes" and "including" in this Agreement have the same meaning as they would
if followed by the phrase "but [is] not limited to" or the phrase "without
limitation".
1.5 Licensed Concept. The "Licensed Concept" is the type of
PHI-developed food service distribution outlet that PHI authorizes Licensee to
operate at a particular Licensed Location. For each Licensed Location, a
Schedule describes the Licensed Concept applicable to that Licensed Location.
Each Licensed Concept is more fully described in the Schedule
identifying the Licensed Concept applicable to a particular Licensed Location
and in the applicable portion of the Manual, and is identified by one or more of
the Marks.
1.6 Licensed Location. "Licensed Location" means a specific site,
designated in a Schedule, at which PHI authorizes Licensee to operate the
Licensed Concept designated in that Schedule. The extent of the Licensed
Location (for example, whether only a single cafeteria or an entire complex of
buildings is included) will vary, depending upon the nature of the Licensed
Concept designated in the Schedule; see the applicable Schedule for a more
extensive discussion of the extent of the Licensed Location.
1.7 Licensed Products. "Licensed Products" are the only food and
beverage items that Licensee may sell under the Brand Umbrella without PHI's
prior written consent; all Licensed Products must be prepared and served in
accordance with the Manual. The Licensed Products are Personal Pan Pizzas, other
items as identified in the definition of Licensed Concept in the appropriate
Schedule, and any other food or beverage item for which the Manual provides,
from time to time, recipes or preparation instructions.
1.8 Manual. The "Manual" is the set of documents (in one or more
volumes), as published, supplemented, and revised (from time to time), and
disseminated by PHI, containing policies, procedures, and instructions for
operating each of the Licensed Concepts. The Manual includes such matters as
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recipes for Licensed Products and various standards for their preparation, sale,
presentation, and marketing; design standards for facilities; instructions on
use of the Marks; and general standards of operations
1.9 Marks. "Marks" means all of the trademarks, trade names, service
marks, trade dress, symbols, slogans, emblems, logos, insignia, designs, and any
combination of them used from time to time by PHI and its licensees and
franchisees in connection with the offer and sale of goods and services.
1.10 Pizza Hut Information. "Pizza Hut Information" means all of the
trade secrets, knowledge, know-how, formulas, processes, recipes, ingredient
charts, the Manual, equipment layout plans, designs, specifications, marketing
strategies, and other confidential information shared by PHI with Licensee
pursuant to this Agreement.
1.11 Schedule. "Schedule" means a document associated with this
Agreement, pursuant to which PHI authorizes Licensee to operate a particular
Licensed Concept at a particular Licensed Location, and in which any terms or
conditions unique to the particular Licensed Concept or Licensed Location are
contained. There may be more than one Schedule associated with this Agreement.
1.12 Term. With respect to each Licensed Location, "Term" means the
period beginning on the date specified in the Schedule for that Licensed
Location as the "Starting Date", and ending 5 years from that date, unless this
Agreement or the applicable Schedule is terminated sooner as provided elsewhere
in this Agreement. Licensee has no right to renew this Agreement or any Schedule
upon expiration of the Term.
1.13 Transfer. The noun "transfer" and the verb "to transfer" mean
any activity or event, or series of activities or events, whether voluntary,
involuntary, or by operation of law, that result (or reasonably could result) in
an assignment or other change in the ultimate legal or beneficial ownership of,
or right to operate pursuant to, this Agreement, including grants of security
interests, conveyances of corporate stock, mergers, and the execution of
management agreements
2. Grant of Licenses. Subject to all of the terms and conditions of
this Agreement, PHI grants to Licensee, during the Term, (a) a nonexclusive
license to operate the Licensed Concept specified in an applicable Schedule, in
accordance with the Manual, at the Licensed Location specified in the same
Schedule, and (b) a nonexclusive license to use the Marks to promote the
operation of the Licensed Concept at the Licensed Location.
2.1 Scope of Licenses. The scope of the license extends only to the
Licensed Concept specified in an applicable Schedule at the Licensed Location
specified in the same Schedule. This license does not extend to any other
location, product, concept, or distribution channel.
Specifically, but without limiting the prior provisions of this
Section 2.1, this Agreement does not allow Licensee to operate the Licensed
Concept specified in any Schedule at any other location, nor does this Agreement
allow Licensee to operate any of PHI's other concepts at the Licensed Location.
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2.2 Delivery. Licensee may, without exceeding the scope of this
license, deliver Licensed Products (on a nonexclusive basis) to customers in the
same building (but not to any other building(s), even if interconnected) as that
in which a particular Licensed Location is situated. Licensee may not deliver
any Licensed Products to any other locations.
2.3 Preferential Arrangements. Licensee may not allow, suffer, or
permit the production, distribution, or sale of (a) any ready-to-eat pizza
product (other than a Licensed Product) from the Licensed Location, or (b)
except as permitted by the remainder of this Section 2.3, any restaurant-branded
pizza product (except Licensed Products and frozen pizza products sold in their
frozen state) in, on, or from any location (including a Licensed Location) owned
or operated by Licensee or any parent, subsidiary, or other Affiliate of
Licensee.
Notwithstanding subparagraph (b) of the prior paragraph of this
Section 2.3, Licensee (or its parent, subsidiary, or other Affiliate) may sell
other non-frozen, restaurant-branded pizza products from locations other than a
Licensed Location under the following circumstances:
(i) If Licensee (or its parent, subsidiary, or other Affiliate)
applies to PHI for authority to sell PHI's proprietary brands of pizza
products from a location, and Licensee is not (at that time) in default
under this Agreement or any other license agreement from PHI, but PHI
refuses to grant that authority to Licensee, then Licensee may sell at
that location (but no others, without first complying with this
provision), restaurant-branded pizza products other than PHI's proprietary
brands.
(ii) If Licensee is a "contract feeder" (i.e., a person who, for a
fee, provides foodservice operations in a facility operated by a third
party) and Licensee's client for a specific site specifically requires
Licensee to sell another restaurant-branded pizza product at the site,
despite Licensee's best efforts to sell PHI's proprietary brands of pizza
at the site, and Licensee has given PHI a "meaningful opportunity" to
influence the client's decision, then Licensee may sell the brand required
by its client at that specific site. A "meaningful opportunity" to
influence the client's decision includes, at a minimum, an opportunity for
PHI to discuss the issue with Licensee's client at least 5 business days
before Licensee commits to using the other brand. Licensee may, at its
option, participate in these discussions, and must (in any event) notify
PHI of the name of Licensee's contact person at the client, the contact's
telephone number, and the reason (if known to Licensee) why another brand
is preferred.
For purposes of this Section 2.3, a "restaurant-branded pizza
product" is any brand of pizza product identified by or with a company engaged
in the operation or franchising of restaurants, whether or not those restaurants
primarily feature pizza, and whether or not the company that owns the brand
manufactures the pizza product. "Restaurant-branded pizza products" do not
include unbranded pizza products or pizza products identified solely by a brand
or trademark owned exclusively by Licensee for use in its own operations.
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3. Designation and Use of Marks. PHI will, from time to time,
designate certain Marks as applicable to each Licensed Concept. A list of the
word/logo Marks designated as applicable to a specified Licensed Concept or some
or all of the Licensed Products on the date of a Schedule will be included as
part of that Schedule. PHI may, from time to time, designate new Marks as
applicable to one or more Licensed Products or to a Licensed Concept as a whole.
In addition, PHI may, from time to time, modify or delete existing Marks or may
withdraw authority to use certain Marks in connection with one or more Licensed
Products or a Licensed Concept as a whole. PHI will give Licensee written notice
of the addition, modification, or deletion of Marks. Any additional or modified
Marks designated as applicable to particular Licensed Products or to a Licensed
Concept as a whole will be subject to the terms of this Agreement. Licensee may
use the Marks only where, when, and as approved by PHI. Licensee must cease use
of any deleted Marks or any Marks no longer applicable to a particular Licensed
Concept or Licensed Product within the time stated in the notice from PHI.
3.1 Use of Marks. The license granted to Licensee to use the
designated Marks is applicable only to the offer and sale of Licensed Products
prepared in accordance with the Manual from the Licensed Location. Licensee may
only use the designated Marks strictly according to the terms and conditions of
this Agreement. Licensee may not use, in any context associated in any way with
the Licensed Concept, any trademarks, service marks, trade names, trade dress,
symbols, slogans, emblems, logos, insignias, designs, or any combination thereof
other than the designated Marks, without PHI's prior, written consent in each
case.
Licensee may not offer or sell any Licensed Product(s) under or in
connection with any trademark, service xxxx, trade name, trade dress (including
product package design), symbol, slogan, emblem, logo, insignia, design, or any
combination thereof other than the Marks, without PHI's prior, written consent
in each case.
3.2 Ownership of Marks. Licensee acknowledges that PHI is the sole
and exclusive owner of the Marks. Nothing contained in this Agreement may be
construed to vest in Licensee any right, title, or interest in any of the Marks,
other than the limited license granted by this Agreement. All goodwill now or in
the future associated with the Marks (including any goodwill arising out of
Licensee's use of the Marks) belongs exclusively to PHI.
The licenses granted by this Agreement are nonexclusive. Except as
expressly limited by the terms and conditions of this Agreement, PHI retains the
right (in its sole and absolute discretion) to grant to any other person(s) the
license, in addition to any license(s) previously granted, to use for any
purpose all or any part of the Marks, including within the trade areas (if any)
of the Licensed Location.
3.3 Nonimpairment. Licensee covenants never (whether during or after
the Term) to misuse the Marks, to use the Marks in an unauthorized manner, or to
take any other actions whatever that may impair PHI's ownership of and goodwill
in the Marks. Licensee may not interfere in any manner with the use of the Marks
by PHI or by any other licensee or any franchisee of PHI. Without limiting the
foregoing, Licensee may not directly or indirectly object
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to, attack, or contest PHI's ownership of any or all of the Marks in connection
with any service or product whatever, nor may Licensee assist others to do so.
Licensee must exercise caution in its use of the Marks to ensure
that the Marks (and the goodwill associated with them) are not jeopardized in
any manner. Without limiting the foregoing, Licensee may not use the Marks in
any manner or in connection with any statement or material that may (in PHI's
good faith judgment) be in bad taste or inconsistent with PHI's public image, or
tend to involve PHI in a matter of political or public controversy, or tend to
bring disparagement, ridicule, or scorn upon PHI, the Marks, or the goodwill
associated with the Marks.
Licensee may not conduct any business operations, nor market any
products (other than Licensed Products sold by Licensee in accordance with this
Agreement or another license agreement from PHI), under any name or xxxx that,
in PHI's reasonable opinion, is confusingly similar to one or more of the Marks,
or to any portion of one or more of the Marks.
The provisions of this Section 3.3 survive the termination or
non-renewal of this Agreement.
3.4 Protection of Marks. Licensee must immediately notify PHI of any
challenge to Licensee's use of the Marks. In addition, Licensee must provide PHI
with copies of any such challenge (if written) and provide PHI with any
information known to Licensee concerning the challenging party. Licensee must
immediately notify PHI, in writing, of any known or suspected infringement of
the Marks by a third party, and supply PHI with any information known to
Licensee concerning the suspected infringement and the suspected infringing
party. Licensee may not take any action with respect to any such challenge, or
any such known or suspected infringements, absent PHI's prior, written approval
(which PHI may grant or withhold in its sole discretion).
PHI has sole discretion over issues involving the defense or
protection of the Marks. Whenever so requested by PHI, Licensee must cooperate
fully in PHI's efforts to protect the Marks; PHI will reimburse Licensee's
actual out-of-pocket expenses (including reasonable attorneys' fees) incurred in
cooperating with PHI in accordance with this provision.
4. Duties of PHI. Except as expressly provided in this Agreement,
PHI is not obligated under this Agreement to Licensee (that is, this Agreement
may not be read as implying obligations on PHI that are not expressly stated).
4.1 Training Programs.
4.1.1 PHI Programs. PHI will offer a training program for the
person(s) who will manage the Licensed Concept for Licensee at the Licensed
Location. These training program classes will be conducted from time to time by
PHI at locations and at times selected by PHI. The training program, which may
include more than one segment, will be structured to provide practical training
in the operation of the Licensed Concept and the preparation of Licensed
Products. PHI will not be required to provide general training in restaurant
operation. PHI will bear its own costs in providing the training programs.
Licensee must pay all traveling, living, compensation, and other expenses
incurred by its employees in connection with attendance at the
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training programs. The training program content will be in the sole control
of PHI.
4.1.2 Training Mandatory. The Licensed Concept may be managed
only by persons who have successfully completed PHI's training course ("approved
managers"). If the approved manager transfers or is terminated, Licensee will
not be in default of this requirement so long as the successor manager
successfully completes the required training course within 45 days after the
departure of the former approved manager (or, if PHI has not offered a training
program within that period, as soon thereafter as the training program is
offered).
4.2 Marketing Programs. PHI may, from time to time, provide various
channel-specific marketing ideas to Licensee, designed specifically to enhance
Licensee's business pursuant to this Agreement. Licensee is under no obligation
to utilize these marketing ideas.
4.3 Additional Assistance. PHI will make available to Licensee, from
time to time, additional advice and assistance on performance of this Agreement
as Licensee may reasonably request. PHI may, in its sole discretion, establish
fees for various services made available pursuant to this Section 4.3; Licensee
must pay to PHI all such fees within 30 days of date of invoice for such
services provided at Licensee's request.
5. Manual. For each Licensed Location, PHI will loan to Licensee, at
no charge, one complete copy of the portions of the Manual applicable to the
Licensed Concept to be operated at that Licensed Location. Within reason,
Licensee may borrow from PHI further copies of the Manual, upon payment of the
reasonable fee set by PHI (from time to time) in its sole discretion.
5.1 Ownership of Manual. The Manual and all copies of the Manual
will remain the exclusive property of PHI. Licensee may not copy, and must use
its best efforts to keep all persons, including its Affiliates and their
respective employees, from copying, any portion of the Manual. Licensee must
return to PHI, upon the expiration or earlier termination of this Agreement, all
Manuals loaned to Licensee.
5.2 Updates. PHI may, from time to time, update or modify the Manual
by providing substitute pages or volumes to Licensee, or by informing Licensee
of changes or corrections to make to existing pages, Licensee must follow any
and all instructions from PHI concerning the changes.
5.3 Interpretation of Standards. PHI has sole discretion in
interpreting the standards set forth in the Manual.
5.4 Promulgation of Standards. In the Manual, PHI will promulgate
standards relating to the Licensed Concept. The standards may include quality,
cleanliness, appearance, service, food, brands, signage, supplies, fixtures, and
equipment to be used in connection with the Licensed Concept. PHI will also
promulgate standards of usage for the Marks. PHI may, from time to time, add,
delete, or change standards. At all times throughout the Term, Licensee must
comply with all then-current standards pertaining to the Licensed Concept, the
Licensed Products, and the Marks.
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At the time PHI promulgates a new standard, PHI will simultaneously
set forth a last date to implement the new standard. The last date, which will
be uniform as to all similar products and concepts (regardless of the operator),
will be at least 30 days after PHI omulates the new standard.
5.5 Product Quality. The Licensed Products sold by Licensee must
comply with this Agreement and with the instructions and recipes contained in
the Manual.
6. Duties of Licensee.
6.1 Inspections. Licensee grants to PHI's authorized representatives
the right to enter upon the premises relating to operation of the Licensed
Concept (including the right to pass over/through the remainder of the Licensed
Location) at any time during normal business hours, and at any other reasonable
time, for the purposes of: examining the facilities utilized in connection with
the Licensed Concept; conferring with Licensee's employees; inspecting and
checking operations, food, supplies, and fixtures and equipment; and determining
whether the portions of the business directly related to the Marks are being
conducted in accordance with PHI's standards and the terms of this Agreement.
PHI's representatives will comply, during these inspections, with the
non-discriminatory security rules (if any) applicable to the Licensed Location.
Furthermore, PHI will use reasonable care, in the course of all inspections, not
to disrupt Licensee's operations (and, if applicable, the operations of
Licensee's host/client/landlord).
If any inspection indicates any deficiency, Licensee must, within 2
business days after Licensee's receipt of a written report, correct or repair
the deficiency or unsatisfactory condition; but if the deficiency or
unsatisfactory condition is one that cannot be corrected or repaired within 2
business days Licensee will not be in default if Licensee begins (within the
2-business day period), and diligently pursues to completion, the necessary
corrections or repairs. In addition, if the deficiency or unsatisfactory
condition (in the reasonable opinion of PHI's authorized representative)
reflects a "critical deviation" from PHI's standards, or constitutes an imminent
danger to public health, Licensee will immediately cease sale of Licensed
Products until PHI's authorized representative agrees that the deficiency or
unsatisfactory condition has been corrected. Licensee's failure to comply with
the foregoing obligations to correct and repair constitutes a material default
under this Agreement.
6.2 Employees. Licensee must require all employees, while working in
connection with the Licensed Concept, to present a neat and clean appearance,
and to wear either PHI's standard uniform, or another uniform approved by PHI.
PHI may withhold its consent to any uniform; PHI will generally not approve a
substitute uniform: (a) that is identified with a company other than Licensee,
(b) that is not generally consistent with the uniforms worn by Licensee's other
employees at the building or other facility in which the Licensed Location is
situated, or (c) that is not in keeping with PHI's image.
6.3 No Unprepared Products. Licensee may not sell or distribute any
Licensed Product, any other products prepared substantially in accordance with
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the Manual, or any ingredient thereof, except as a complete and fully prepared
food product ready for immediate consumption.
6.4 Use of Licensed Location. Except with PHI's prior, written
consent, Licensee may not take any action that would lead consumers to believe
that items other than Licensed Products are identified by or with the Marks or
that items other than Licensed Products are endorsed by, or produced in
accordance with recipes and instructions of, PHI. Without limiting the
generality of the preceding sentence, Licensee may not (without PHI's prior,
written consent) prepare or sell any item (other than Licensed Products) under
the Brand Umbrella. PHI's consent to activities that would otherwise be in
violation of this Section 6.4 may be conditioned upon payment by Licensee of
royalties based upon Licensee's revenues from those activities. If Licensee
violates this Section 6.4 by engaging in prohibited activities without PHI's
consent, PHI may (in addition to its right to declare a default for Licensee's
breach) require Licensee to treat all revenue from sales of items that were
produced or sold in violation of this Section 6.4 as "Gross Sales" for purposes
of calculating royalties.
7. Advertising.
7.1 Approval of Advertising. All materials advertising Licensed
Products or bearing one or more of the Marks must be submitted to PHI and
approved by PHI in writing. Any request by Licensee for PHI's approval should be
addressed to PHI (marked, "Attention: Licensing Department - Ad Review"), and
PHI will endeavor to respond within 5 business days. Until PHI notifies
Licensee, in writing, that the proposed advertisement is approved, the submitted
item is considered unapproved and may not be used by Licensee.
Upon written notice from PHI, Licensee must immediately discontinue
use of any unapproved advertising materials. If Licensee does not discontinue
and remove the unapproved materials within 24 hours after notice, PHI or its
authorized agents may, in addition to PHI's other remedies, at any time (subject
to the non-discriminatory security rules of the facility in which the materials
are located), enter upon Licensee's premises or elsewhere and remove and destroy
the materials without paying for them and without being liable for trespass or
other tort.
7.2 National Advertising. PHI may use a portion of the royalties
paid to PHI pursuant to Section 9.1, below, to develop and administer
advertising, promotional, and marketing programs designed to promote and enhance
the collective success of Pizza Hut products and services. PHI need not expend
the funds in the same year (or other period) as those payments are received, and
PHI need not prove that Licensee received any benefit from Licensee's payments.
PHI's good faith decisions on expenditures of advertising funds (including
allocation between research, production costs, and advertising; type, quantity,
timing, and placement of advertisements; choice of media, market areas, and
advertising agencies; and levels of expenditures on various products or
concepts, which may not correspond to fees paid in connection with those
products or concepts), are final and binding. PHI may, in its sole discretion,
seek input from Licensee as to expenditures of advertising funds, but that input
will be advisory only. PHI may, in its sole discretion, pay some or all national
advertising monies to "The Joint
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Advertising Committee of Pizza Hut, Inc. and I.P.H.F.H.A., Inc." ("Ad Comm"),
and delegate to Ad Comm some or all of PHI's duties under this Section 7.
7.3 Co-operative Advertising. PHI recognizes certain co-operative
advertising associations ("Co-ops") for various restaurants and other units
operated by its subsidiaries and franchisees. Licensee will not be a member of
any Co-op, and will not make a monthly contribution to any Co-op, relating to
operation of the Licensed Concept at the Licensed Location.
8. Use of Approved Supplies and Approved Distributors. PHI will,
from time to time, publish one or more listings of approved equipment, fixtures,
signage, supplies, and distributors. PHI may add to or delete from the listings
at any time. Licensee may lease, purchase, and use only approved equipment and
supplies in connection with Licensee's operations under this Agreement, and may
obtain the approved equipment and supplies only from approved distributors. If
Licensee desires to purchase or use any equipment or supplies that are not then
approved, or to purchase any approved items from or through an unapproved
distributor, Licensee must submit to PHI a written request for approval. PHI has
the right to inspect the facilities of the manufacturer, producer, or
distributor, and to require Licensee to submit samples, specifications, and
other information concerning any equipment or supplies for which approval is
sought. PHI reserves the right, at its option, to reinspect the facilities and
to retest the products of any approved manufacturer, producer, or distributor
from time to time, and to revoke PHI's approval upon failure to continue to meet
any of PHI's criteria as then in effect. All costs associated with inspection
and reinspection of manufacturers, producers, or distributors proposed by
Licensee, and all costs of testing and retesting samples of their products
(including salaries of PHI employees, travel costs, and laboratory charges) are
to be borne by Licensee (unless Licensee arranges for the proposed manufacturer,
producer, or distributor to reimburse PHI directly). Nothing in this Section
requires PHI to approve any particular manufacturer, producer, or distributor.
8.1 Trade Secret Items. Licensee acknowledges that PHI's spice blend
is a highly confidential secret recipe and is a trade secret of PHI. Because of
the importance of quality and uniformity of product, and the significance of the
spice blend in the preparation of Licensed Products to achieve and maintain that
quality and uniformity, it is to the mutual benefit of the parties that PHI
closely controls the production and distribution of the spice blend. Similar
considerations may also apply to other trade secret or patented items that PHI
may develop in the future. Accordingly, Licensee may use only PHI's secret spice
blend in the preparation of Licensed Products and may buy only from PHI, or a
source designated by PHI, Licensee's full requirements of PHI's spice blends as
well as any other trade secret or patented items that PHI may develop in the
future.
8.2 Beverages. Licensee may sell non-alcoholic beverages such as
milk, coffee, tea, juice, bottled water, and carbonated soft beverages, under
the Brand Umbrella. At PHI's option, PHI may set standards for these beverages,
and may publish listings of approved suppliers. If Licensee elects to sell
carbonated soft beverages under the Brand Umbrella, Licensee may not display
under the Brand Umbrella the brand of any carbonated soft beverage (even if that
brand is contained on or referenced within the approved brands
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list) unless the displayed brand identifies a beverage manufactured by or under
authority of the Pepsi-Cola Company.
9. License Fees.
9.1 Initial Fees and Royalties. As partial consideration for
Licensee's use of the Marks and the Pizza Hut Information during the Term,
Licensee must pay PHI the initial fee (if any) and monthly royalties specified
by the Schedule applicable to a particular Licensed Concept and Licensed
Location. Each monthly royalty payment is due on or before the 10th day of each
month for sales during the preceding month. All payments (both initial fees and
royalties) are fully earned when due, and are not refundable to Licensee, in
whole or in part, under any circumstances.
9.2 Late Payments. If any payment under this Agreement is more than
10 days overdue, then Licensee must pay a finance charge on all amounts due of
18% per annum, compounded monthly (or, if lower, the maximum rate permitted by
law), retroactively to the date due and continuing until paid in full. Moreover,
if Pizza Hut does not receive any payment within 30 days after the date due from
Licensee, then Licensee must pay Pizza Hut (in addition to applicable finance
charges) an administrative charge equal to 5% of the delinquent amount or $150,
whichever is greater, in addition to the amount due. Payments will be applied
first to the amounts longest over due.
10. Maintenance of Books and Records. Licensee must keep on the
premises of the Licensed Location or at Licensee's principal place of business,
and must preserve for at least 5 years after the date of their preparation
(regardless of any intervening expiration or termination of this Agreement),
accurate records, ledgers, accounts, books, and data reflecting Gross Sales and
all other sales of ready-to-eat foods from the entirety of the Licensed Location
(as defined in the applicable Schedule). Licensee must submit to PHI with its
payment of the monthly royalties a monthly statement (in the form of Exhibit A)
of Gross Sales and of the total sales of the particular business unit (such as a
cafeteria or concession stand) that includes the Licensed Concept. PHI reserves
the right to require such further information relating to Licensee's business
under this Agreement (including food and labor costs) as PHI may from time to
time reasonably prescribe.
10.1 Inspection and Audit. At all reasonable times, PHI and its
agents or representatives may examine and audit all records relating to
Licensee's operations under this Agreement; upon reasonable cause, PHI may also
examine and audit the records relating to the remainder of Licensee's sales of
ready-to-eat foods from the remainder of the Licensed Location. Licensee must
cooperate with any such examination or audit by gathering records, accounts and
books for easy access, and by providing other assistance PHI reasonably
requests.
10.2 Limited Access Locations. If the Licensed Location is one to
which access is restricted by governmental authority or a need for strict
confidentiality of Licensee's client at the Licensed Location, then Licensee
must use commercially reasonable efforts to obtain access by representatives of
PHI to the Licensed Location for purposes of operational inspections and
financial audits. In the event access for PHI is not reasonably available, then
Licensee will use other reasonable means and otherwise cooperate with PHI
11
to assure PHI that Licensee is in full compliance with this Agreement at the
Licensed Location.
10.3 Reporting Errors. If any inspection or audit discloses that any
statement of Gross Sales delivered to PHI by Licensee is in error, Licensee
must, within 2 business days after notice from PHI, pay to PHI any deficiency
found to be owing, plus a finance charge at the rate of 18% per annum,
compounded monthly (or, if lower, the maximum rate permitted by law), accruing
from the date payment was first due. If the deficiency is 5% or more of the
amount due, then in addition, Licensee must reimburse PHI for the reasonable
cost and expense of the inspection or audit upon billing by PHI.
10.4 Product Purchase Data. PHI has developed certain auditing
techniques that allow PHI to estimate Gross Sales based upon a review of product
purchases. In support of that review, Licensee authorizes all of its suppliers
(including PFS) to provide data to PHI concerning purchases by Licensee with
respect to each Licensed Location.
11. Covenants Concerning Confidentiality.
11.1 Disclosure. In performance of this Agreement, each party has
disclosed and will disclose to the other party and its employees certain
confidential information, including the Pizza Hut Information and Licensee's
sales information.
11.2 Obligations and Restrictions. Except as expressly provided
otherwise elsewhere in this Agreement:
(a) Each party may use the other party's confidential information
only for purposes of performing its obligations and enforcing its rights
under this Agreement, and not for any other purpose, including for its own
account.
(b) Neither party may disclose any portion of the other party's
confidential information to anyone (including its employees and the
employees of its divisions, subsidiaries, and Affiliates) that does not
have a need to know the portion disclosed for purposes of this Agreement.
Each party must inform any person to whom it discloses any of the other
party's confidential information of the obligations of confidentiality and
the restrictions on use contained in this Agreement.
(c) Neither party may attempt to evade its obligations under this
Agreement by selecting a series of items of knowledge from unconnected
sources and fitting them together (through knowledge of the other party's
confidential information) to justify use of information substantially
duplicating the other party's confidential information for its own or any
other person's account or purposes.
(d) Each party must take all reasonable measures to enforce the
obligations of confidentiality and use contained in this Agreement with
respect to any of its employees or former employees who, while in its
employ, had access to any part of the other party's confidential
information.
12
(e) Immediately after termination of this Agreement (unless a
continuing agreement is in effect), each party must return to the other
party the originals and all copies of all documents containing any of the
other party's confidential information and not then used in connection
with a License Agreement then still in effect.
11.3 Exceptions and Exclusions. The limitations and restrictions
contained in Section 11.2 do not apply to any party's confidential information:
(a) that was previously known by the other party without limitations
of confidentiality or restrictions on use; or
(b) that is in, or that comes into, the public domain without the
fault of the other party.
11.4 Employee Agreements. To protect the Pizza Hut Information more
fully, and in implementation of Paragraph b. of Section 11.2, Licensee must
require each of its management-level employees who is given access to the Pizza
Hut Information to sign a Disclosure and Confidentiality Agreement in the form
of Exhibit B.
If Licensee knows that one of its employees has a conflicting
interest to PHI (such as a relative working for another pizza company), Licensee
may not train the employee in the production of Licensed Products or otherwise
disclose any of the Pizza Hut Information to the employee without PHI's prior
written consent.
11.5 Sales and Cost Data. Notwithstanding any other provisions of
this Section 11, PHI may: (a) disclose Licensee's sales and cost information as
part of general disclosures to regulators, potential licensees, and other third
parties, provided that the information is combined with other data from similar
licensees or is otherwise done in a fashion that protects the integrity of
Licensee's confidential information (as, for example, by disclosure without
identifying Licensee's identity or the location of any Licensed Location); (b)
disclose Licensee's sales data as necessary to enforce PHI's rights under this
Agreement; and (c) retain, after termination of this Agreement, the originals
of, as well as data derived from, Licensee's sales reports.
12. Transfers.
12.1 Transfers by Licensee. Under no circumstances may Licensee
transfer a Schedule (or any interest in a Schedule) independent of the entirety
of this Agreement without the prior, written consent of PHI. In addition,
Licensee may not assign this Agreement as a whole without the prior, written
consent of PHI. In each such case, PHI may withhold its consent in its sole
discretion, or may condition its consent upon payment of a transfer fee (in an
amount determined by PHI from time to time).
Licensee may make transfers (that do not constitute assignments) of
this Agreement as a whole without PHI's prior consent, but PHI may (after any
such transfer) terminate this Agreement in accordance with Section 16.4.
12.2 Transfer of Assets. Prior to a transfer by Licensee of any of
the fixtures, equipment, smallwares, or other personal property used in
13
connection with Licensee's operations pursuant to this Agreement, made to any
person other than PHI, a subsidiary of PHI, or a franchisee or licensee of PHI
that is authorized by PHI to utilize the items transferred, Licensee must remove
from any assets transferred or to be transferred any of the Marks that appear
thereon. Licensee may not transfer any equipment or smallwares that incorporate
PHI's proprietary designs or information, or any supplies, inventory,
ingredients, or packaging, to anyone other than PHI without the prior, written
consent of PHI.
12.3 Effect of Consent. PHI's consent to a transfer by Licensee is
not a waiver of the right to demand strict compliance with any of the terms of
this Agreement by the transferee. Consent to one transfer does not affect either
party's rights, including PHI's right to withhold consent to future proposed
transfers.
13. Indemnification and Waiver. Each party must indemnify the other,
its Affiliates, and their respective employees, officers, directors, and
shareholders against all losses (including reasonable attorney's fees and costs)
incurred by any of them owing to claims that arise from any breach of, or
operations under, this Agreement by the indemnifying party. Before beginning
operation of the Licensed Concept at the Licensed Location, Licensee must
provide to PHI a certificate of general liability insurance in form and content
(including with respect to policy limits and the primacy of Licensee's
insurance) reasonably acceptable to counsel for PHI.
Licensee waives all claims arising out of or based upon this
Agreement relating to training, establishment of procedures, and food and other
products distributed but not manufactured by PHI or its affiliates, that
Licensee may have against PHI, its Affiliates, and their respective officers,
directors, employees, and shareholders, except for claims arising from
intentional misconduct or gross negligence.
This Section 13 survives termination or expiration of this
Agreement.
14. PHI Authority. PHI warrants that it has the right to grant to
Licensee the rights granted in this Agreement and in each Schedule executed by
PHI; that the Marks PHI has designated for use with the Licensed Concept and the
Licensed Products, and the Pizza Hut Information, do not infringe upon any
patent, trademark, service xxxx, or copyright, whether statutory or common law;
and that the designated Marks and the Pizza Hut Information contain no unlawful
matter.
If Licensee loses the right to use (in their then-current forms) any
of the designated Marks, or any portion of the Pizza Hut Information, due to a
final, unappealable order of a court of competent jurisdiction in a case
alleging infringement of a patent, trademark, service xxxx, copyright, trade
secret, or other proprietary interest, PHI will, at its expense and option,
procure for Licensee the right to continue using those Marks and the applicable
portion of the Pizza Hut Information, replace or modify those Marks and the
applicable portion of the Pizza Hut Information so that they become
non-infringing, or otherwise provide Licensee with a reasonably equivalent
substitute.
15. Requests for Waivers or Consents. Whenever Licensee desires
PHI's waiver of any obligation in this Agreement, and whenever this Agreement
14
requires Licensee to obtain PHI's prior, written consent, Licensee should
address its written request for that waiver or consent to PHI's New Concepts
Department or to any other person or department specified by this Agreement or
designated by PHI in writing. PHI will consider each request and advise Licensee
in writing of PHI's decision within 45 days after receipt of the request. PHI's
failure to advise Licensee on a timely basis that a request is granted
constitutes a denial of the request.
16. Default and Termination.
16.1 Default by Licensee. If Licensee does not comply promptly with
any term or condition of this Agreement at or with respect to any Licensed
Location, Licensee will be in default under this Agreement. In addition to all
other remedies PHI may have at law or in equity, PHI may (at its option but
subject to the notice and cure provisions described below and the terms of this
Agreement): (a) terminate the applicable Schedule and the Licensee's right to
operate the specified Licensed Concept at the specified Licensed Location, if
the default under the Schedule is material, or (b) terminate this Agreement as a
whole if Licensee's default relates to 20% or more of the Schedules issued to
Licensee pursuant to this Agreement. In addition, PHI may terminate this
Agreement (as a whole) if the schedules or license agreements issued by PHI to
Licensee for 20% or more of the total units operated by Licensee under authority
of PHI are terminated by PHI for Licensee's default.
PHI may not terminate any Schedule issued pursuant to this
Agreement, or this Agreement as a whole, unless PHI gives Licensee prior written
notice of, and (except as provided below) an opportunity to cure, the default
providing the basis for termination. Licensee will have 10 business days after
the effective date of notice from PHI to cure any default, except that Licensee
will have only 5 business days after the effective date of notice from PHI to
cure a default, if Licensee has previously been in default (and notified of the
default by PHI) under any individual Schedule issued pursuant to this Agreement
in the 12 months immediately preceding the effective date of the notice of the
current default, and will have no opportunity to cure the default if 3 or more
times in the 12 months, or 5 or more times in the 24 months, immediately
preceding the effective date of notice of the current default, PHI had given
Licensee notice of other defaults (even though cured) under the same Schedule.
Notwithstanding these notice provisions, if applicable law requires a longer
cure period, Licensee will have the longer cure period required by law.
16.2 Default by PHI. If PHI does not comply promptly with any term
or condition of this Agreement, PHI will be in default under this Agreement. In
addition to all other remedies Licensee may have at law or in equity, Licensee
may (at its option but subject to the notice and cure provision described below)
terminate this Agreement if the non-compliance by PHI is material to this
Agreement, taken as a whole. Licensee may not terminate this Agreement unless
Licensee first gives PHI written notice of, and an opportunity to cure, the
default providing the basis for termination. PHI will have 20 business days
after the effective date of notice from Licensee to cure any default, except
that if applicable law requires a longer cure period, PHI will have the longer
cure period required by law.
16.3 Voluntary Termination by Licensee. In addition to its other
rights, Licensee may terminate any Schedule issued pursuant to this Agreement
15
at any time if either of the following events occurs: (a) if Licensee is
operating at the Licensed Location specified in the Schedule pursuant to a right
granted by a third party, and (1) Licensee's contract or lease allowing Licensee
to operate at the Licensed Location is terminated or cancelled, or expires
without renewal, or (2) the third party has a right to control the products sold
by Licensee and requires Licensee to remove the Licensed Concept from Licensee's
foodservice operation at the Licensed Location; (b) Licensee's operation of the
Licensed Concept at the Licensed Location specified in the Schedule is conducted
at a loss for any 6 out of 12 consecutive months; or (c) Licensee ceases all
business operations at the Licensed Location.
Furthermore, Licensee may, After at least 90 days' prior written
notice to PHI, terminate this Agreement and all Schedules, with or without
cause. If Licensee exercises this right of termination, the Licensee must
simultaneously terminate all other license agreements from PHI. Licensee may not
terminate this Agreement pursuant to this provision without simultaneously
terminating all other license agreements (for the same or different Licensed
Concepts) from PHI.
16.4 Termination by PHI. PHI may, at its option, terminate this
Agreement as a whole on written notice to Licensee (without right to cure), if
any of the following transfers or attempted transfers occurs:
(a) an assignment of this Agreement to a party other than the
original Licensee, without PHI's prior written consent;
(b) a transfer of any interest in a Schedule independently of the
entirety of this Agreement without PHI's prior written consent;
(c) a transfer of ownership of Licensee to a transferee that would
not, in PHI's reasonable judgment, be able to maintain the operation of
the Licensed Concept at a quality level consistent with PHI's standards;
or
(d) a direct or indirect transfer of interests totalling 25% or more
of the ultimate ownership of this Agreement (as discussed in Section 1.13)
to a competitor of PHI or to an individual or entity whose image is
inconsistent with PHI's image as a family restaurant operator. For
purposes of this subsection "d", a competitor of PHI is defined as any
entity that directly or through subsidiary or affiliated entities conducts
a business that is primarily engaged in the manufacture and sale of
carbonated soft drinks or soft-drink concentrates, the manufacture and
sale of salty snack foods, or the operation and franchising of restaurants
or delivery units that primarily feature, pizza, moderately-priced
Mexican-style food, or fried chicken.
PHI's right to terminate pursuant to this Section 16.4 will continue
from the date of the transfer until Licensee (or the transferee) gives PHI full
details of the transfer and PHI (after an opportunity to review those details)
waives, in writing, its right to terminate for that transfer. The mere passage
of time after a transfer, without compliance with this process, will not impair
PHI's right to terminate.
16
16.5 Absence of Schedules. If all of the Schedules issued by PHI to
Licensee in accordance with this Agreement have expired or been terminated,
either party may terminate this Agreement on written notice to the other.
17. Post-Termination Provisions.
17.1 Use of Marks, Pizza Hut Information and Equipment. Upon
expiration or earlier termination of any Schedule issued pursuant to this
Agreement, Licensee must immediately discontinue use of the Marks and of all
Pizza Hut Information at the Licensed Location specified in that Schedule. In
addition, Licensee must immediately take all further steps that PHI directs to
effectively distinguish the specified Licensed Location from PHI's proprietary
design(s) and trade dress, and to reconfigure the ovens to their "stock" or
"standard" designs (i.e., without modifications to xxxx Licensed Products).
Because of the likelihood of confusion as to source, Licensee covenants not to
sell after termination any non-frozen pizza products from the Licensed Location
until the decor and configuration of the Licensed Location has been sufficiently
modified so as not (in PHI's reasonable opinion) to cause customer confusion.
Furthermore, upon such expiration or earlier termination, Licensee
must offer for sale to PHI each piece of equipment (excluding ovens and
proofers) used in the operation of the Licensed Concept at the Licensed Location
that: (a) PHI deems proprietary, such as certain parts of the kiosk assembly,
and (b) Licensee purchased from PHI or an Affiliate of PHI, or that is
manufactured to specifications promulgated by PHI. PHI will, upon request from
Licensee, notify Licensee of the pieces of equipment PHI deems proprietary. The
price to PHI for each piece of equipment will be the lower of fair market value
and Licensee's depreciated net book value at the time of sale to PHI. PHI's
right to purchase the equipment pursuant to this paragraph will expire 10
business days after Licensee has offered the equipment to PHI.
If Licensee does not make all required changes and offer to sell the
proprietary equipment to PHI within 10 days after written notice, then PHI may
(in addition to its other remedies) enter upon the premises of the Licensed
Location and make or cause to be made all necessary changes, and take possession
of the proprietary equipment, at the expense of Licensee (without being liable
to Licensee for trespass or any other tort). In exercising its rights pursuant
to this provision, PHI will comply with the non-discriminatory security rules
(if any) applicable to the Licensed Location. Licensee must pay, upon demand,
all reasonable costs incurred by PHI pursuant to this provision.
17.2 Return of Manual. Upon termination or expiration of any
Schedule issued pursuant to this Agreement, Licensee must immediately return to
PHI all originals and copies of the Manual loaned to or made by Licensee with
respect to the Licensed Concept and Licensed Location specified in the Schedule.
17.3 Cessation of Rights and Duties. Licensee's obligation to pay
accrued monetary obligations, and all other provisions of this Agreement
providing for survival after termination of this Agreement (including the
covenants of confidentiality and against competition in Section 11) will survive
termination of each Schedule issued pursuant to this Agreement and of
17
this Agreement as a whole. All other rights and duties of both parties will
cease upon expiration or earlier termination of this Agreement as a whole.
17.4 Spice Blends. Upon expiration or earlier termination of this
Agreement as a whole, Licensee must sell and PHI must buy, at Licensee's cost,
all quantities of the secret spices and other trade secret items that Licensee
may have in stock on the date of expiration or earlier termination of this
Agreement as a whole.
18. Dispute Resolution.
18.1 Jurisdiction and Governing Law. This Agreement takes effect
upon its acceptance and execution by PHI, and is to be governed by and construed
in accordance with the internal laws of the State of Kansas. Licensee consents
(and waives any objections it might otherwise have) to the jurisdiction and
venue of any state or federal court of general jurisdiction in Sedgwick County,
Kansas, with respect to any proceedings arising out of this Agreement. Delivery
by any lawful means of written process to a party's respective address as
specified in, and pursuant to the requirements of Section 19.5, constitutes
lawful and valid process for purposes of this Agreement.
18.2 Attorneys' Fees. If PHI and Licensee become involved in
litigation, the losing party will reimburse the prevailing party's outside
attorneys' fees and expenses to the extent those fees and expenses are
reasonable.
19. Miscellaneous.
19.1 Relation of Parties. Licensee represents and warrants to PHI
that Licensee has in good faith determined that its sales contemplated by this
Agreement of Licensed Products will not constitute more than 20% of its business
(either at a specific Licensed Location or as a whole) in the foreseeable
future. PHI and Licensee are not and may not be considered as
franchisor/franchisee, joint venturers, partners, or agents of each other.
Neither Licensee nor PHI has the power to bind or obligate the other except as
set forth in this Agreement.
Licensee specifically acknowledges that the
relationship created by this Agreement is not a fiduciary or any other similar
or special relationship, but solely an arm's-length business relationship.
19.2 Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, is an original, but
all counterparts together constitute one and the same instrument.
19.3 No Third-Party Beneficiaries. Nothing in this Agreement confers
any rights or remedies on any person or legal entity not a party to this
Agreement.
19.4 Severability. The portions of this Agreement relating to the
payment of fees to PHI, and the portions relating to the protection and
preservation of the Marks and the Pizza Hut Information are critical to this
Agreement. If any portion of this Agreement relating to those matters is
18
declared invalid or unenforceable for any reason, PHI may terminate this
Agreement immediately, on written notice to Licensee.
All other terms and conditions of this Agreement, and every portion
of those other terms and conditions, are severable. If, for any reason, any
portion of this Agreement (other than the nonseverable portions, as defined in
the first paragraph of this Section 19.4) is determined to be invalid or
contrary to or in conflict with any applicable present or future law, rule, or
regulation, in a final, unappealable ruling issued by any court, agency, or
tribunal with valid jurisdiction in a proceeding to which PHI is a party, that
ruling does not impair the operation of, or have any other effect upon, any
other portion of this Agreement, each of which remains binding upon the parties
and should continue to be given full effect. Any invalid portion is deemed
removed from this Agreement as of the date upon which the ruling becomes final,
and is to be replaced by the closest enforceable provision.
19.5 Notices. All notices required or permitted by the terms of this
Agreement must writing and sent (a) by facsimile (or telecopier) machine
immediately confirmed by first-class mail, (b) by certified or registered mail
(return receipt requested), (c) by reputable private delivery service, or (d) by
hand delivery. All notices must be sent to the respective addresses on the first
page of this Agreement, if to PHI, marked, except as otherwise required by this
Agreement, "Attention: New Concepts Department", and if to Licensee, marked,
"Attention: Legal Compliance Officer", until PHI or Licensee (as the case may
be) gives notice, in writing, of a new address. Neither PHI nor Licensee need
send multiple notices; a single notice to the specified address is sufficient,
and if multiple addresses are specified by either party, the sending party may
send notices to any single address chosen in good faith. Notices are effective
on the day delivery is made (or, in the case of certified/registered mail,
overnight delivery service, or hand delivery, on the date delivery is first
attempted) at the specified address during normal business hours (8 a.m. to 5
p.m., Monday through Friday, except national or pertinent state holidays),
except that notices of change of address are effective 10 business days after
the date of delivery (or first attempted delivery).
19.6 Time of Essence. Time is of the essence of this Agreement and
of each provision of this Agreement.
19.7 Merger. This Agreement (together with each Schedule and the
Manual, as it exists from time to time, each of which is incorporated by
reference into this Agreement) contains the entire agreement of the parties with
respect to the subject matter discussed in this Agreement. All prior discussions
or negotiations (written or oral) are merged into this Agreement and no
representations, inducements, promises, or agreements not embodied in this
Agreement survive the execution of this Agreement. This Agreement may not be
modified or amended except (i) by issuance of a Schedule, signed by both
parties, (ii) by a modification, supplement, or revision to the Manual issued by
PHI in accordance with the terms of this Agreement, or (iii) by a written
document, signed by the party to be bound, specifically referring to this
Agreement.
The Offering Circular for Prospective Licensees (the "Offering
Circular") that was presented to Licensee by PHI before execution of this
Agreement is neither
19
part of this Agreement nor part of any prior negotiations. Rather, it is an
explanatory document that is (or may be) required by law. In case of conflict
between this Agreement and the Offering Circular, this Agreement will control;
however, if there is uncertainty about the intention of provisions contained in
this Agreement, the parties may refer to the Offering Circular for evidence of
PHI's understanding of this Agreement.
20. Representations and Warranties. PHI warrants that all of the
recitals set forth above are true as they pertain to PHI, its assets, and its
business.
Licensee warrants that all of the recitals set forth above are true
as they pertain to Licensee, its assets, and its business.
IN WITNESS WHEREOF, the parties through their duly authorized
signatories have executed this Agreement this 20th day of September, 1993.
ATTEST: PIZZA HUT, INC.
/s/ Xxxxx X. XxXxxxx
___________________________ By:_________________________
Xxxx X. Small, Secretary Xxxxx X. XxXxxxx,
Vice President-Non
traditional Development
WITNESS: JUNGLE JIM'S PLAYLANDS, INC.
/s/ Xxx Sandoloski
___________________________ By:_________________________
Xxxxx X. Xxxxxx, Secretary Xxx Sandoloski, Chairman
20
EXHIBIT A
SALES REPORT
for
PIZZA HUT LICENSEES
Licensee ____________________
Account ____________________
Pizza Hut K-Number ____________________
Period/Month ____________________
Pizza Hut Unit Sales $___________________
Royalties @ ___% $___________________
Total foodservice $___________________
sales of the food-
service business
unit of which the
Licensed Concept
is a portion
EXHIBIT B
Disclosure and
Confidentiality Agreement
I, ________________________________, agree as follows:
1. My employer, ____________________________, has asked me to learn
how to make and market Pizza Hut(R) pizzas at the facilities operated by my
employer.
2. I understand that the information concerning the preparation and
sale of Pizza Hut(R) pizzas is confidential, and that my employer has entered
into an agreement with Pizza Hut, Inc., to protect the confidentiality of this
information.
3. Neither I nor any of my relatives or close friends are employees
or franchisees of Godfather's Pizza, Domino's Pizza, Little Caesar's Pizza,
Pizza Inn, Sbarro's Rocky Roccoco's Pizza, Xxxxx X. Cheese Pizza, Show Time
Pizza, Pizzaria Uno, or any other pizza company, except as follows:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. I ageee not to use any of the information provided to me in the
training session except for making and selling Pizza Hut# pizzas, and I agree
not to reveal that information to anyone except other employees of my employer.
-------------------------------
(Signature)
April 14, 1998
Mr. Xxxxx Xxxxx
Vice President
Jungle Jim's Playlands, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Re: Pizza Hut Master License Agreement
Dear Xx. Xxxxx:
This Letter amends the Master License Agreement dated as of
September 20, 1993, including all Schedules to that Master License Agreement,
whether executed before or after the date of this letter (collectively, the
"MASTER LICENSE AGREEMENT"), by and between Jungle Jim's Playlands, Inc.
("LICENSEE") and Pizza Hut, Inc. ("PHI"). All bold-faced terms are used in this
Letter Agreement as they are defined in the MASTER LICENSE AGREEMENT, unless
another definition is specifically set forth in this Letter agreement. A list of
the Schedules outstanding on the date of this Letter, showing the site of the
Licensed Locations and other data is attached as Exhibit A to this letter.
For purposes of this Letter Agreement, "Franchised Locations" means
all Licensed Locations operated by Licensee that are within the exclusive
territory of a franchisee of PHI. On the date of this Letter, only the Licensed
Locations identified by Schedules 14 and 15 (as identified in Exhibit A) are
Franchised Locations. With respect to Licensed Locations developed in the
future, Licensee and PHI will sign a "Franchise Location Addendum" for all
Franchised Locations. All current and future Licensed Locations that are not
Franchised Locations are "Non-Franchised Locations" for purposes of this Letter
Agreement.
1. Notwithstanding Section 1.12 of the Master License Agreement, the term
for each current or future Non-Franchised location will be 10 years from the
Open Date.
2. Except as specifically amended by this Letter Agreement, the patties
reaffirm all provisions of the Master License Agreement.
Mr. Xxxxx Xxxxx
April 14, 1998
Page 2
To indicate your agreement to the modifications of the Master
License Agreement set forth in this Letter Agreement, please sign below. When
signed by both parties, this document will constitute an Amendment to the Master
License Agreement as contemplated by Section 19.7 of the Master License
Agreement.
Sincerely yours,
PIZZA HUT, INC.
By: PIZZA HUT, LTD.,
Its Agent
Xxxxxxx X. Xxxxx, Xx.
Senior Vice President
Concept Development and Franchise
Understood and Agreed:
JEEPERS! INC.
F/K/A JUNGLE JIM'S PLAYLAND, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Title: Senior Vice President
EXHIBIT A
NON-FRANCHISED LOCATIONS
----------- -------------------- -------------------------- ---------------- ------ ---------- ----------- ------------
CRNT AMEND
SCHD EXP. EXP.
# LOCATION ADDRESS CITY ST OPEN DATE DATE DATE
----------- -------------------- -------------------------- ---------------- ------ ---------- ----------- ------------
1 Jungle Jim's 00000 X. 00xx Xxxxxxx Xxxxxxx XX 09/28/93 09/27/98 09/27/03
Playland
----------- -------------------- -------------------------- ---------------- ------ ---------- ----------- ------------
2 Jungle Jim's 0000 X. Xxxx Xxxx Xx. Xxxx XX 12/21/94 12/20/99 12/20/04
Playland
----------- -------------------- -------------------------- ---------------- ------ ---------- ----------- ------------
3 Jungle Jim's 0000 Xxxx Xxxx Xx. Xxxxxxxx XX 12/15/94 12/14/99 12/14/04
Playland
----------- -------------------- -------------------------- ---------------- ------ ---------- ----------- ------------
4 Jeepers! @ 700 Xxxxxxxxxx Dr. Rockville MD 01/19/96 01/18/01 01/18/06
Rockville
----------- -------------------- -------------------------- ---------------- ------ ---------- ----------- ------------
5 Jeepers! @ 0000 Xxxxxxxxx Xx. Xxxxxxxxx XX 08/07/96 08/06/01 08/06/06
Greenbelt
----------- -------------------- -------------------------- ---------------- ------ ---------- ----------- ------------
6 Jeepers Jr. 000 Xxxxxx Xxxxx Xxxxxxxxx XX 10/25/96 10/24/01 10/24/06
----------- -------------------- -------------------------- ---------------- ------ ---------- ----------- ------------
7 Jeepers Jr. 00000 X. Xxxx Xxxxx Xxxxxxx XX 11/22/96 11/21/01 11/21/06
----------- -------------------- -------------------------- ---------------- ------ ---------- ----------- ------------
8 Jeepers! 0000 X. Xxxxxx Xxx. Xxxxxxxx XX 07/31/97 07/31/02 07/31/07
----------- -------------------- -------------------------- ---------------- ------ ---------- ----------- ------------
9 Jeepers! 00000 Xxxxxxx Xxx. Xxxxxxxxx XX 08/12/97 08/11/02 08/11/02
----------- -------------------- -------------------------- ---------------- ------ ---------- ----------- ------------
10 Jeepers! 00000 Xxxxxxxx Xx. Livonia MI 10/31/97 10/30/02 10/30/07
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11 Jeepers! 000 Xxxxxxxxxx Xxx. Xxxxxx XX 11/19/97 11/18/02 11/18/07
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12 Jeepers One Xxxxxx Galleria Buffalo NY 12/31/97 12/30/02 12/30/07
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13 Jeepers! NY Xxxxx Xx 000 Xxxx Xxxxx XX *
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*anticipated opening 5/1/98
FRANCHISED LOCATIONS
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CRNT AMEND
SCHD EXP. EXP.
# LOCATION ADDRESS CITY ST OPEN DATE DATE DATE
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14 Jeepers 0000 Xxxxxx Xxx Xxxx Xxxxxx XX 04/01/98 03/31/03 N/A
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15 Jeepers! 00000 X. 000xx Xxxxxx Xxxxxx XX 03/20/98 03/19/03 N/A
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