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 July 11, 1989, as amended
(as so amended, the "Prior Master Agreement") between us and you. This
letter agreement confirms the amendments and modifications to the Prior
Master Agreement that we have agreed to. Except as amended by this letter
agreement, the Prior Master 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 Master Agreement. To the
extent there is any inconsistency between the terms of this letter agreement
and the Prior Master 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. Territory. Subject to continuing to meet the minimum case
requirements set forth in the last sentence of paragraph 3 of the Prior
Master Agreement after the date hereof, the territory of Licensee's rights
under the Prior Master Agreement is now worldwide as provided in paragraph
3 of the Prior Master Agreement.
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.
(b) Commencing January 1, 1998, Licensee may purchase soft
drink concentrates or syrups for making XXXXXXX'X soft
drinks (which term, for all purposes of this letter
agreement and the Prior Master Agreement, shall include
all non-carbonated and carbonated non-alcoholic
beverages, excluding postmix syrup and premix
beverages) from any supplier; provided that any
concentrates or syrups purchased shall comply with the
quality standards set forth in clause (a) above;
provided, further, that the Licensee will purchase
concentrates and syrups for a minimum of 1.75 million
cases of soft drinks per year for 1998, 1999 and 2000
from the existing supplier of concentrates and syrups
for XXXXXXX'X soft-drinks at existing prices. 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. Owner agrees
that it will from time to time as reasonably requested
by Licensee provide, at mutually agreed upon fees,
consulting services to Licensee with respect to the
production of XXXXXXX'X soft drinks.
(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.
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 Master Agreement, as amended hereby.
5. Royalties.Licensee shall pay the per case royalties set forth
in the Prior Master Agreement for all soft drinks sold by the Licensee under
the XXXXXXX'X trademark. Payment of such royalties shall be made monthly
within 20 days after the month for which such royalties shall apply and shall
be accompanied by documentation setting forth the calculation of such
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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.
6. New Products.
(a) In addition to all rights granted under the Prior Master
Agreement and this letter agreement with regard to soft
drinks, Licensee shall also be permitted to use the XXXXXXX'X
trademark, xxxx or other identifying means on any other
product of any type, (such other products are referred to as
"New Products"), provided that such New Products comply with
the quality standards set forth in paragraph 2(a) above;
provided that if the quality standard set forth in paragraph
2(a) would be inapplicable to such New Product, then such New
Product shall be of good quality. Owner shall be entitled to
a royalty of 2% of the "net sales" of any New Products
produced by the Licensee in accordance with the terms of this
paragraph. For purposes of this letter agreement,
"net sales" of a New Product means the sum of money actually
received by Licensee from sales of such New Product less,
to the extent applicable, the sum of (i) sales, excise, use,
currency, repatriation and similar taxes, (ii) returns, (iii)
trade discounts, (iv) sales commissions, (v) shipping costs
and (vi) credits (other than advertising credits).
(b) Owner shall not manufacture, distribute or sell any products
bearing the XXXXXXX'X trademark, xxxx or other identifying
means without the prior written consent of the Licensee,
which consent may be given or withheld by Licensee in its
sole discretion. Notwithstanding the foregoing, Licensee
acknowledges that Owner retains all rights to own, operate,
license or franchise XXXXXXX'X Restaurants, Drive-Ins and
mobile food and beverage concession trailers, in each case
where the XXXXXXX'X brand is the primary brand associated
with such location (collectively, "Owner's Locations"), and
to sell post mix syrups and pre mix beverages at or to
Owner's Locations. Licensee also acknowledges that (i)
Owner retains all rights to sell and market good quality ice
cream and hot dogs using the XXXXXXX'X trademark, (ii) Owner
retains all rights to do XXXXXXX'X advertising (provided that
such advertising is in good taste and of good quality) for,
and to sell paper goods and promotional items identified by
the XXXXXXX'X trademark at or to, Owner's Locations and (iii)
Owner may, subject to (x) such products meeting the quality
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standards set forth in paragraph 2(a) above and (y) obtaining
the prior approval of Licensee (which approval will not be
unreasonably withheld or delayed), sell and market popsicles,
water ice and chile using the XXXXXXX'X trademark. Licensee
shall not be entitled to a royalty with respect to sales of
any product produced, distributed or sold by Owner in
accordance with the terms of this paragraph 6.
Notwithstanding the foregoing, Owner's right to sell and
market any product listed in clause (iii) above shall
automatically revert to Licensee (A) if within four (4) years
of the date of this letter agreement Owner is not actively
selling or marketing such product or (B) if after Owner
has commenced selling or marketing such product a two-year
period shall have elapsed during which Owner shall not be
selling or marketing such product. Owner agrees to execute
and deliver to Licensee such documents as Licensee shall
reasonably request to evidence any such reversion of rights
to Licensee.
(c) 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
paragraph 6.
7. 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.
8. 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 or in connection with any of
Licensee's New Products, including the timely filing of
applications for registration and acquisition of any renewals
or extensions 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; and provided, further, that any costs incurred in
connection with the registration of New Products in the
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United States 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 such New Product.
(b) The Owner agrees to take whatever action may be requested by
Licensee to register and maintain the xxxx XXXXXXX'X for soft
drinks or in connection with any of Licensee's New Products,
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 or New Products 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 Licensee 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 Prior Master
Agreement.
9. 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
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
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xxxx shall 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; and 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 costs 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.
10. Ownership.
(a) The rights to be transferred in accordance with paragraph
13(B) of the Prior Master Agreement shall include the
associated goodwill.
(b) The Licensee shall own all formulae, rights to packaging and
other rights with respect to soft drinks and New Products
bearing the XXXXXXX'X trademark (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, Owner shall change the formula that
it uses for the corresponding post mix syrup and pre mix
beverage so as to be substantially identical with Licensee's
formula so long as such change is being made by Licensee in
its reasonable business judgment (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.
11. Term. The Prior Master Agreement, as amended hereby, shall
be perpetual unless sooner terminated as provided in the Prior Master
Agreement, as amended hereby.
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12. Termination.
(a) In the case of a material violation by either party of any
one or more of the material terms of this letter agreement
or the Prior Master Agreement and the failure of the
violating party to correct such violation within forty-five
(45) days following the receipt of written notice of
violation from the other party, such other party shall be
entitled to terminate this letter agreement and the Prior
Master 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
Master Agreement.
(b) Notwithstanding anything to the contrary, the Prior Master
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 Master
Agreement.
13. Right of First Refusal. Owner, Xxxxxxx Xxxxxxx and Xxxxxxx X.
Xxxxxxx hereby grant to Licensee a right of first refusal with respect to (i)
any shares of stock of Owner or any equity interest in any parent company of
Owner which is proposed to be sold, and (ii) any proposed sale of the Prior
Master Agreement, the Agreement dated December 1, 1993, as amended, between
the parties hereto or any of Owner's rights with respect to the XXXXXXX'X
trademark; provided that such shares of stock, equity interests or rights may
be transferred to immediate family members of Xxxxxxx Xxxxxxx or Xxxxxxx X.
Xxxxxxx so long as prior to such transfer such transferee agrees to be
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bound by the terms of this letter agreement as if such transferee were an
original signatory hereto. Licensee shall have fifteen (15) business days
from the date on which it receives a notice (which notice shall contain a
description of the proposed sale, the name and address of the proposed
purchaser and a copy of all agreements with such proposed purchaser) with
respect to such proposed sale (the "Notice Date") to notify Owner whether it
will exercise its right of first refusal. If Licensee shall elect to
exercise such right, the proposed sale to Licensee shall be consummated
within 45 days after the Notice Date, subject to extension for receipt of all
necessary governmental and regulatory approvals.
14. Arbitration. All disputes under this letter agreement or the
Prior Master 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.
15. 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.
16. 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:
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
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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.
17. Assignment. This letter agreement shall be binding on the
successors and permitted assigns of the Licensee, Owner, Xxxxxxx Xxxxxxx and
Xxxxxxx X. Xxxxxxx. 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 Master Agreement shall be subject to paragraph 13 of this letter
agreement. 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.
18. Governing Law. This letter agreement shall be governed by the
law of the State of New Jersey.
19. 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.
20. 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 Master
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 Master Agreement
embodying the terms of this letter agreement, but until such time as it is
executed and delivered, this letter agreement shall be deemed a 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 10,000 shares of common stock of Licensee.
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21. 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
PARAGRAPHS 13 AND 17 AGREED TO
AND ACCEPTED:
____________________________________
Xxxxxxx Xxxxxxx
BY(Signature) /s/Xxxxxxx X. Xxxxxxx
(Name) Xxxxxxx X. Xxxxxxx
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