CABLE CAR BEVERAGE CORPORATION
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
June 24, 1997
Xxxxxxx'x Restaurants, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Gentlemen:
Reference is made to the Agreement dated December 1, 1993, as
amended (as so amended the "Prior Fountain Agreement") between us and you.
This letter agreement confirms the amendments and modifications to the Prior
Fountain Agreement that we have agreed to. Except as amended by this letter
agreement, the Prior Fountain Agreement shall continue in full force and
effect. Unless otherwise defined herein, all capitalized terms used herein
shall have the meanings given to them in the Prior Fountain Agreement. To
the extent there is any inconsistency between the terms of this letter
agreement and the Prior Fountain Agreement, the terms of this letter
agreement shall govern.
Accordingly, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. Grant of License; Territory.
(a) Owner hereby grants to Licensee a perpetual exclusive
license to manufacture, distribute and sell, and to
license others to manufacture, distribute and sell post
mix syrups and pre mix beverages throughout the
world, except that Owner shall retain only the right to
sell post mix syrups and pre mix beverages to any of
Owner's company-owned, licensed or franchised XXXXXXX'X
Restaurants, Drive-Ins or mobile food and beverage
concession trailers, in each case where the XXXXXXX'X
brand is the primary brand associated with such
location. Licensee agrees to respect the geographic
limitations on sales of XXXXXXX'X products by Owner or
third parties to the extent that such limitations are
set forth in writing in an agreement existing on the
date hereof with Owner's licensees or franchisees.
Owner represents that in no circumstance, other than
with respect to a licensee in Huntington, West Virginia,
is the geographic limitation contained in any such
agreement in excess of 5 miles. To the extent permitted
by applicable law, Owner agrees not to enter into or
renew any license, franchise or similar agreement which
contains any geographic limitation on the right of
Licensee to sell any product under the XXXXXXX'X
trademark.
(b) Owner agrees to assign the Licensee all of its rights
under and with respect to its agreements with Somerset
Syrup, of Edison, New Jersey, General Carbonator, of
Philadelphia, Pennsylvania, Doug's Classic 57, in
Alliance, Ohio ("Doug's") and Arlene's Dog n' Suds, in
Elyria, Ohio ("Arlene's"); provided that Licensee shall
enter into a sublicense agreement with Owner pursuant to
which Owner may continue to sell XXXXXXX'X products to
Doug's and Arlene's.
2. Quality Control.
(a) Licensee and Owner shall comply with standards of
quality comparable to that maintained by Licensee in
selling and distributing XXXXXXX'X soft drinks (which
term, for all purposes of this letter agreement and the
Prior Fountain Agreement, shall mean all non-carbonated
and carbonated nonalcoholic beverages, in post mix syrup
and pre mix beverage form).
(b) Commencing January 1, 1998, Licensee may purchase soft
drink concentrates or syrups for making XXXXXXX'X post
mix syrup and premix beverages from any supplier without
the approval of Owner; provided, however that any
concentrates or syrups purchased shall comply with the
quality standards set forth in clause (a) above.
Licensee will submit to the Owner such samples and
analyses as Owner may from time to time reasonably
request in connection with XXXXXXX'X soft drinks, it
being understood however, that the Owner may object to
any such sample or analysis only if it does not comply
with the quality standards set forth in clause (a)
above. Licensee shall be permitted to deal directly
with and make payment to, any of such suppliers.
(c) Licensee agrees to comply in all material respects with
all applicable requirements of laws and regulations.
(d) Licensee agrees to use commercially reasonable effects
to require sublicensees to maintain uniform quality and
control over soft drinks made and offered for sale under
the XXXXXXX'X trademark.
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(e) Each party agrees to indemnify and hold the other party
harmless from any and all claims, suits, loss or damage
(including reasonable attorneys' fees and expenses) arising
out of or relating to any products produced, distributed
or sold by such party in accordance with the terms of this
letter agreement and the Prior Fountain Agreement.
3. Labelling and Advertising. Licensee agrees that all labels,
containers, advertising and other promotional material of Licensee bearing
the XXXXXXX'X xxxx shall be in good taste and of good quality. Owner shall
not have approval rights with respect to any labels, containers, advertising
or other promotional matter of Licensee and its sublicensees. Licensee
agrees to provide to Owner, on or about July 1 of each year, commencing July
1, 1998, samples of all labels then used on Licensee's XXXXXXX'X products.
4. Sublicensees. The Licensee shall be permitted to use any form
of sublicensing agreement with sublicensees that is not inconsistent with the
Prior Fountain Agreement, as amended hereby.
5. Royalties.
(a) Licensee shall pay the royalties set forth in the Prior
Fountain Agreement on a monthly basis within 20 days after
the month for which such royalties apply and shall be
accompanied by documentation setting forth the calculation
of such royalties. Within 120 days of the end of each
fiscal year, the Licensee shall deliver to the Owner a
certification from a "Big-Six" accounting firm certifying
the amount of royalties due to the Owner with respect to such
fiscal year.
(b) The annual minimum royalties to be paid by Licensee to Owner
under the Prior Fountain Agreement, as amended hereby, shall
be (i) $20,000 for each of calendar years 1998 and 1999, (ii)
$40,000 for calendar year 2000, (iii) $60,000 for calendar
year 2001, (iv) $80,000 for calendar year 2002 and (v)
$100,000 for calendar year 2003 and thereafter. Such
minimum royalties shall be paid in advance, on or prior to
January 31 of each year, and shall be credited against actual
royalties due and payable by Licensee to Owner under the
Prior Fountain Agreement.
6. Notice of Infringement. Owner agrees to notify Licensee in
writing of any suspected infringement of the XXXXXXX'X xxxx and/or of any
claim made against it or adverse to or conflicting with the ownership of the
XXXXXXX'X xxxx by the Owner. Each party agrees that it will not
intentionally do anything harmful to the reputation of the XXXXXXX'X xxxx or
to the other party's interest therein.
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7. Registration.
(a) The Owner agrees that it will take whatever action may be
required by law to secure and maintain its federal
registration or registrations in the United States of
XXXXXXX'X for soft drinks (including with respect to soft
drinks in post mix syrup and pre mix beverage form) including
the timely filing of applications for registration and
acquisition of any renewals or extension thereof. Owner
hereby appoints Licensee its attorney and agent-in-fact, and
if the Owner fails to so act, Licensee may act on Owner's
behalf to maintain said registrations at Owner's expense,
provided that Licensee first makes written demand upon the
Owner to so act and the Owner fails to act within twenty (20)
days of its receipt of the demand.
(b) The Owner agrees to take whatever action may be requested by
Licensee to register and maintain the xxxx XXXXXXX'X for soft
drinks (including with respect to soft drinks in post mix
syrup and pre mix beverage form) in countries outside of the
United States, including the timely filing of applications
for registration and acquisition of any renewals or
extensions thereof. The filing and prosecution of such
applications shall be the responsibility of Owner, who shall
be promptly reimbursed for all reasonable expenses, including
attorney's fees, in connection therewith by the Licensee.
If it fails to so act, Licensee may act as an agent on
Owner's behalf to maintain said registrations at Owner's
expense, provided that Licensee first makes written demand
upon the Owner to so act and the Owner fails to act
within twenty (20) days of its receipt of the demand;
provided, further, that any costs incurred in connection
with the registration of the XXXXXXX'X trademark for soft
drinks in any foreign jurisdiction shall be paid by
Licensee, except that Licensee may credit any such amount
paid by it against royalties owed by Licensee to Owner with
respect to sales by License in such jurisdiction. The
Owner's obligations under this paragraph shall cease upon
the transfer of the foreign rights to the Licensee pursuant
to paragraph 17(b) of the Agreement dated July 11, 1989, as
amended, between the parties hereto.
8. Infringement. The Owner and Licensee jointly or singly may
police the xxxx XXXXXXX'X including the institution of proceedings in the
appropriate tribunals to prevent trademark infringement, unauthorized use of
the xxxx, colorable imitations, unfair competition and/or the registration by
others of confusingly similar marks, except that the Licensee shall not take
any such action without first advising Owner in writing of such intention to
act and giving Owner the first option to so act. Owner shall notify Licensee
within ten (10) business days after the date of receipt of such notice from
Licensee of Owner's decision to institute any proceeding or other action
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under this paragraph. If Owner fails to notify Licensee of its decision
within ten (10) business days or elects to take no action, Licensee shall be
free to take any action it deems appropriate to protect its interest under
this agreement. Where such action is instituted by either party, the other
party agrees to furnish such assistance as may reasonably be requested
including becoming a party to the action. The cost of all policing of the
xxxx xxxx be borne equally by the parties if the policing relates to a
third party use of a xxxx in connection with soft drinks; provided that
the cost borne by Owner pursuant to this sentence during any calendar year
shall not exceed the royalties paid by Licensee to Owner with respect to
such calendar year; provided, further, that the cost borne by Owner pursuant
to this sentence in any calendar year with respect to all unsuccessful
actions which were brought by Licensee after Owner elected not to bring such
actions shall not exceed 25% of the royalties paid by Licensee to Owner with
respect to such calendar year. The cost of any action (other than with
respect to soft drinks) under this paragraph shall be borne by the party
instituting such action. In the event that a monetary recovery is awarded
in any action brought pursuant to this paragraph, such recovery shall first
be used to reimburse each party (prorata) for any expenses that it incurred
as a result of such action, thereafter each party shall be entitled to
receive any damages that are expressly awarded to such party by the court
(pro rata based on the relative amounts of such awards) and thereafter, any
remaining amounts shall be paid to the party that brought such action.
9. Ownership. The Licensee shall own all formulae, rights to
packaging and other rights with respect to XXXXXXX'X soft drinks in post mix
syrup and pre mix beverage form (other than ownership of the XXXXXXX'X
trademark in the United States). Owner shall at Licensee's cost, assign
whatever rights it has to such formulae, packaging and other rights (other
than ownership of the XXXXXXX'X trademark in the United States) with respect
to such products. Owner agrees that, if Licensee shall change any formula
for any soft drink sold under the XXXXXXX'X trademark in post mix syrup or
pre mix beverage form, Owner shall change the formula that it uses for its
corresponding product so as to be substantially identical to Licensee's
formula so long as such change is being made by Licensee in its reasonable
business judgement (i) in order to enhance the quality or flavor of such soft
drink, (ii) if any formula ingredient becomes unavailable (by governmental
regulation or otherwise) or (iii) if the relative cost of any formula
ingredient becomes commercially unreasonable for use. Licensee agrees in any
such case to use commercially reasonable efforts to maintain the quality of
any such product.
10. Term. The Prior Fountain Agreement, as amended hereby, shall
be perpetual unless sooner terminated as provided in the Prior Fountain
Agreement, as amended hereby.
11. Termination.
(a) In the case of a material violation by either party of any
one or more of the material terms of this agreement and the
failure of the violating party to correct such violation
within forty-five (45) days following the receipt of
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written notice of violation from the other party, such other
party shall be entitled to terminate this letter agreement
and the Prior Fountain Agreement on forty-five (45) days
prior written notice; provided, however, that if any
such breach is curable by Licensee, then for so long as
Licensee is attempting in good faith to cure such breach,
the Owner may not terminate this letter agreement or the
Prior Fountain Agreement.
(b) Notwithstanding anything to the contrary, the Prior Fountain
Agreement may be cancelled immediately by the Owner in the
event of Licensee's failure to prepare the soft drinks
identified by trademark XXXXXXX'X in substantial conformity
with the quality standards being met by Licensee as of the
date hereof. Such cancellation shall be effective on the
date written notice thereof is received by the Licensee;
provided, however, that if any of the foregoing violations
are the result of a mistake or oversight not involving any
bad faith or willful misconduct or adulteration or
substitution on the part of the Licensee, itself, then
cancellation shall only be effective in the event that
Licensee fails to correct such violation within ninety (90)
days following receipt of written notice of violation (which
shall include full details of such violation) from the Owner;
provided, further, that if any of the foregoing violations
are the result of a default by a sublicensee, the Owner's
sole remedy shall be to have the right to require Licensee to
terminate its sublicense with such sublicensee, except that
if Licensee shall fail, within sixty (60) days of the date
Owner makes such request, to take reasonable steps to pursue
the termination of such sublicense, then Owner shall have the
right to terminate this letter agreement and the Prior
Fountain Agreement.
12. Arbitration. All disputes under this letter agreement or the
Prior Fountain Agreement shall be resolved through binding arbitration in
Philadelphia, Pennsylvania under the commercial rules and regulations of the
American Arbitration Association. In any such dispute, the arbitrators
shall have the right in their discretion to award attorneys fees, costs and
damages.
13. Expenses. Licensee shall pay Owner within 10 days of the
date hereof the sum of $2,500 to compensate Owner for legal and other
expenses incurred in connection with this letter agreement.
14. Notices. Any notice given by either party hereunder shall
be deemed to have been properly given if sent by telecopy (provided that
receipt is acknowledged), registered or certified mail (return receipt
requested) or by reputable overnight courier to the address of the party
set forth below:
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If to Owner, to:
Xxxxxxx'x Restaurants, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: President
Telecopy: (000) 000-0000
If to Licensee, to:
Cable Car Beverage Corporation
000 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: President
Telecopy: (000) 000-0000
With a copy to:
Triarc Companies, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
Each party shall promptly advise the other in writing in the
manner provided above whenever its address for notices hereunder shall
change.
15. Assignment. This letter agreement shall be binding on the
successors and permitted assigns of the Licensee. This letter agreement may
not be assigned by Licensee (other than to an affiliate thereof) without the
prior written consent of the Owner, which consent shall not be unreasonably
withheld or delayed. Owner's right to assign its rights under this letter
agreement or under the Prior Fountain Agreement shall be subject to the terms
of the Agreement dated July 11, 1989, as amended, between us and you. Owner
hereby acknowledges and consents to the acquisition (including through a
merger where the Licensee is the surviving corporation) of all of the
outstanding capital stock of Licensee by Triarc Companies, Inc. or its
affiliates.
16. Governing Law. This letter agreement shall be governed by
the law of the State of New Jersey.
17. Amendment. This letter agreement may not be amended or
otherwise modified, and no provision hereof may be waived, except in writing
signed by each of the parties hereto.
18. Effectiveness. This letter agreement shall be effective upon
execution by each of the parties hereto. This letter agreement shall
supersede all prior agreements between the parties hereto with respect to the
subject matter hereof (including, without limitation, the Prior Fountain
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Agreement to the extent amended hereby). This letter agreement is the legal,
valid and binding obligation of each of the parties hereto. The parties
hereto intend to execute and deliver a definitive new Fountain Agreement
embodying the terms of this letter agreement, but until such time as it is
executed and delivered, this letter agreement shall be deemed the legal,
valid and binding obligation of each of the parties hereto. In consideration
for the execution, delivery and performance of this letter agreement,
Licensee agrees promptly to issue to Owner 140,000 shares of common stock of
Licensee.
19. Counterparts. This letter agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The parties
agree that a telecopied signature shall be deemed an original and shall be
sufficient to evidence execution and delivery of this letter agreement by the
applicable party.
IN WITNESS WHEREOF, this letter agreement has been duly executed
as of the day, month, and year first above written.
XXXXXXX'X RESTAURANTS, INC.
BY(Signature) /s/Xxxxxxx X. Xxxxxxx
(Title) President
CABLE CAR BEVERAGE CORPORATION
BY(Signature) /s/Xxxxxx X. Xxxxxxx
(Title) President
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