-------------------------------
LICENSE AGREEMENT
between
THE XXX. XXXXXX' BRAND, INC.
and
XXX. XXXXXX' ORIGINAL COOKIES, INC.
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Dated as of September 18, 1996
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LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement") is made this September 18, 1996,
by and between THE XXX. XXXXXX' BRAND, INC., a Delaware corporation
("Licensor"), and XXX. XXXXXX' ORIGINAL COOKIES, INC., a Delaware corporation
("Licensee").
W I T N E S S E T H:
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of August 7,
1996, among Xxx. Xxxxxx Inc., a Delaware corporation ("MFI"), certain of its
subsidiaries, Capricorn Investors II, L.P., a Delaware limited partnership
("Capricorn"), and Licensee, MFI and its subsidiaries have sold and Licensee has
purchased substantially all of the assets of MFI and its subsidiaries, including
an undivided interest in the Pre-Existing Trade Secrets (as defined herein) but
excluding certain other intellectual property owned by Xxx. Xxxxxx Development
Corporation, a Delaware corporation ("MFD");
WHEREAS, pursuant to a Licensing Assets Purchase Agreement, dated as of
August 7, 1996, among MFD, Licensor and Capricorn, MFD has sold and Licensor has
purchased certain intellectual property, including the Licensed Property (as
defined herein) and an undivided interest in the Pre-Existing Trade Secrets; and
WHEREAS, Licensor desires to grant to Licensee, and Licensee desires to
accept, a license to sell Licensed Products (as defined herein) under the
Licensed Property upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the covenants and
agreements contained herein and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS
1.1 "Base Franchise Cash Flow" means $1,160,000 for each of
the first three calendar quarters in 1997 and $2,320,000 for the last calendar
quarter in 1997, $1,260,000 for each of the first three calendar quarters in
1998 and $2,520,000 for the last calendar quarter in 1998 and $1,300,000 for
each of the first three calendar quarters in 1999 and the first three calendar
quarters of each year thereafter and $2,600,000 for the last calendar quarter in
1999 and the last calendar quarter of each year thereafter.
1.1 "Base Gross Revenue" means $20,000,000 for each of the
first three calendar quarters in 1997 and $40,000,000 for the last calendar
quarter in 1997 and $19,000,000 for each of the first three calendar quarters in
1998 and the first three calendar quarters of each year thereafter and
$38,000,000 for the last calendar quarter in 1998 and the last calendar quarter
of each year thereafter.
1.3 "Franchise Cash Flow" means royalties, fees and other
revenues received during a given calendar quarter by Licensee and its
subsidiaries, whether domestic or international, from franchisees and
sub-franchisees of Licensee and its subsidiaries during such quarter. Cash flow
attributable to any franchised OCC Store shall not be included in the
calculation of Franchise Cash Flow unless such OCC Store has been converted into
a Xxx. Xxxxxx Store through the use of Xxx. Xxxxxx signage, such inclusion to
commence on the first day of the first calendar month following such conversion.
1.5 "Gross Revenues" means the aggregate amount of all
revenues from sales of products from Xxx. Xxxxxx Stores owned by Licensee and
its subsidiaries, whether domestic or international, during a given calendar
quarter, whether for cash or credit, less customary and usual trade discounts,
sales taxes, returns, promotional giveaways, cash or other discounts and
uncollectible accounts associated with the products sold at Xxx. Xxxxxx Stores
owned by Licensee and its subsidiaries during such quarter. Gross Revenues do
not, in any event, include Franchise Cash Flow or revenues attributable to mail
order sales by the Licensee made in compliance with Section 2.1 hereof. In
addition, revenues attributable to any OCC Store shall not be included in the
calculation of Gross Revenue unless such OCC Store has been converted into a
Xxx. Xxxxxx Store through the use of Xxx. Xxxxxx signage, such inclusion to
commence on the first day of the first calendar month following such conversion.
1.7 "Licensed Images" means such likenesses of Xxxxx Xxxxxx as
may be approved by Licensor from time to time, including without limitation the
image(s) reproduced on Exhibit A hereto.
1.9 "Licensed Names and Marks" means the names, trade names,
trademarks, service marks and logos listed and set forth on Exhibit B hereto, as
such names, trademarks, service marks and logos may be amended or changed from
time to time hereafter by Licensor.
1.11 "Licensed Products" means (i) fresh baked cookies,
brownies, muffins and croissants and any other fresh baked bakery products, and
(ii) any other items which Licensee and Licensor agree to designate as Licensed
Products.
1.13 "Licensed Property" means the Licensed Names and Marks
and the Licensed Images.
1.15 "Licensed Trade Secrets" means, as and when available,
all recipes, techniques, processes, methods of production and commercialization
and other know-how and/or improvements thereto acquired or reduced to practice
after the date hereof by Licensor or Licensee which are necessary or useful for
the formulation, composition, production and sale of Licensed Products.
1.17 "Licensee Confidential Information" means all
formulations, systems, programs, procedures, manuals, confidential reports and
communications, lists of customers and clients, marketing techniques and
arrangements, mailing lists, purchasing information, pricing policies, quoting
procedures, financial information, employee, customer, supplier and distributor
data, and all materials or information relating to the business or activities of
Licensee which are maintained by Licensee as confidential (including without
limitation Licensed Trade Secrets developed by Licensee) and which Licensor
receives, receives access to, or has received or received access to, in whole or
in part, directly or indirectly from Licensee. Information which is
independently developed by Licensor or which is or becomes part of the public
domain without breach of (i) this Agreement, (ii) any other agreement or
instrument to which Licensor is a party or a beneficiary or any other agreement
to keep the information confidential which is known to Licensor, or (iii) any
duty owed to Licensee by Licensor, shall not be considered Licensee Confidential
Information hereunder.
1.19 "Licensor Confidential Information" means all
formulations, systems, programs, procedures, manuals, confidential reports and
communications, lists of customers and clients, marketing techniques and
arrangements, mailing lists, purchasing information, pricing policies, quoting
procedures, financial information, employee, customer, supplier and distributor
data, all of the materials or information relating to the business or activities
of Licensor which are maintained by Licensor as confidential (including without
limitation Licensed Trade Secrets developed by Licensor) and which Licensee
receives, receives access to, or has received or received access to, in whole or
in part, directly or indirectly from Licensor. Information which is
independently developed by Licensee or which is or becomes part of the public
domain without breach of (i) this Agreement, (ii) any other agreement or
instrument to which Licensee is a party or a beneficiary or any other agreement
to keep the information confidential which is known to Licensee, or (iii) any
duty owed to Licensor by Licensee, shall not be considered Licensor Confidential
Information hereunder.
1.21 "Xxx. Xxxxxx Non-Traditional Outlets" means any in-store
bakery outlet located in a retail grocery, fast food, convenience or other
retail store or any other outlet or location (including carts and kiosks related
to such outlets or locations) selling or that in the future sells any Licensed
Products either directly or pursuant to a license agreement, in any such case
using the Licensed Property; provided, however, that the term "Xxx. Xxxxxx
Non-Traditional Outlets" shall not include Xxx. Xxxxxx Stores or any other
outlet, location, cart or kiosk if its primary product is fresh baked goods
other than pizzas, sandwiches, hamburgers, hot dogs, baked potatoes or other
comparable non-snack, non-dessert products.
1.23 "Xxx. Xxxxxx Store" means any retail snack, dessert and
beverage store or outlet, cart or kiosk selling or that in the future sells
Licensed Products under the Licensed Property as its primary products, including
but not limited to stores, outlets, carts and kiosks now or in the future owned
and operated by Licensee or its subsidiaries or existing or future franchisees
of Licensee or its subsidiaries. Notwithstanding the foregoing, any OCC Store
shall be treated as a Xxx. Xxxxxx Store for purposes of the grant of the license
under Section 2.1 hereof during the pendency of any test marketing of Licensed
Products in such OCC Store for a period of up to 90 days that is completed not
later than December 31, 1997 and from and after the time that such OCC Store is
converted to a Xxx. Xxxxxx Store through the use of Xxx. Xxxxxx signage.
1.25 "OCC Stores" means the retail snack, dessert and beverage
outlets bearing the Original Cookie Company name that Licensee may own,
franchise or license from time to time.
1.27 "Pre-Existing Licenses" means each of the licenses set
forth on Exhibit C hereto and all rights granted pursuant thereto without giving
effect to any amendment on or after the date hereof that expands the scope of
such license in a manner that would not be permitted to be made under this
Agreement if made under a new license.
1.29 "Pre-Existing Trade Secrets" means the recipes,
techniques, processes, methods of production and commercialization, training
methods and know-how pertaining to and necessary or useful to the production and
sale of Licensed Products in which each of Licensor and Licensee acquired an
undivided interest from MFD as of the date hereof.
1.31 "Related Products" means the items, articles or food
products described on Exhibit D hereto, as such may be amended or modified from
time to time hereafter by Licensor and Licensee, together with all
modifications, improvements and enhancements which are derived therefrom or
related thereto.
1.33 "Trade Secrets" means the Pre-Existing Trade Secrets and the Licensed
Trade Secrets.
2. GRANT OF LICENSE
1.1 Licensor hereby grants to Licensee and Licensee hereby
accepts from Licensor, upon the terms and conditions hereinafter specified, a
license (i) to use the Licensed Property in connection with the production,
marketing, sale, and distribution of Licensed Products by Xxx. Xxxxxx Stores or
by a mail order system operated by Licensee or its subsidiaries (A) in the
United States through Xxx. Xxxxxx Stores on an exclusive and perpetual basis,
(B) outside the United States through Xxx. Xxxxxx Stores on an exclusive basis
until the third anniversary of the date hereof, and thereafter on a
non-exclusive basis, and (C) in respect of the mail order system, on an
exclusive basis through the second anniversary of the date hereof, (ii) to use
the Licensed Names and Marks as part of its trade name for so long as it sells
or franchises Licensed Products, and (iii) to sublicense (including without
limitation by franchising) its rights hereunder as provided in Section 16.4
hereof. If requested to do so by Licensee prior to the second anniversary of the
date hereof, and on such second anniversary Licensee is then operating a mail
order system, Licensor will extend Licensee's exclusive license in respect of
the mail order system on then prevailing market terms (including as to scope and
term) for a license of such nature. The license pursuant to this Section 2.1 is
subject to rights previously granted by Licensor to third parties pursuant to
the Pre-Existing Licenses.
1.3 Each of Licensor and Licensee hereby grants to the other
and each of Licensor and Licensee hereby accepts from the other, upon the terms
and conditions hereinafter specified, a worldwide, nonexclusive, perpetual,
royalty free right to use and sublicense the Licensed Trade Secrets of the other
in connection with the production and sale of Licensed Products using the
Licensed Property, in each case as and to the extent such party is then
permitted under this Agreement to sell Licensed Products or license Licensed
Property.
1.5 Unless approved in writing by Licensor, Licensee may not
use the Licensed Property in connection with the marketing, sale and
distribution of Licensed Products through a mail order system operated by a
party other than Licensee or its subsidiaries.
1.7 Nothing herein shall be deemed to restrict Licensor's
ability to grant licenses to third parties to sell or offer for sale the
Licensed Products at or through Xxx. Xxxxxx Non-Traditional Outlets; provided,
however, that Licensor shall not, for so long as Licensee shall have an
exclusive license under this Agreement relating to a mail order system, directly
or through licensees other than Licensee, market, sell or distribute Licensed
Products using the Licensed Property through a mail order system.
1.9 Each of Licensor and Licensee agrees that it will not
engage in any activity that violates any franchise or other law.
1.11 From time to time during the term hereof, Licensee may,
at its sole discretion, construct, equip and operate, or franchise, additional
Xxx. Xxxxxx Stores. Within 30 days prior to the opening or franchising of any
such additional Xxx. Xxxxxx Store, Licensee shall provide Licensor notice of
such opening or franchising.
1.13 From time to time during the term hereof, and at its sole
discretion, Licensee may cease, or cause to cease, the operating of any Xxx.
Xxxxxx Store, and shall notify Licensor within 30 days following any cessation
of the operation of any Xxx. Xxxxxx Store (however caused).
2. ROYALTIES
1.1 Licensee shall pay Licensor a royalty for each calendar
quarter beginning with the quarter ended March 31, 1997 equal to the sum of (a)
4.5% of any Gross Revenue in excess of the Base Gross Revenue for such quarter
and (b) 35% of any Franchise Cash Flow in excess of the Base Franchise Cash Flow
for such quarter. Any such royalties payable by Licensee shall be paid in cash
to Licensor within 30 calendar days following the end of the relevant calendar
quarter, subject to any recoupment provided in Section 3.2 hereof.
1.3 Licensee shall be entitled to recoup amounts paid by it
pursuant to Section 7.2(b) in reimbursement of Licensor's direct costs in
obtaining or maintaining registration of the Licensed Property by reducing
royalty payments otherwise being made pursuant to Section 3.1 hereof in the
following circumstances: (a) in the case of reimbursement costs incurred
directly by Licensee with respect to any jurisdiction where registration is
obtained at the request of Licensee, such reimbursement costs shall be recouped
dollar for dollar but with no additional compensation, and (b) in the case of
reimbursement costs incurred directly by Licensee with respect to any
jurisdiction not covered by clause (a), such reimbursement costs shall be
recouped dollar for dollar with additional compensation of a 20% annual return
from the date of the reimbursement. In either case, the recoupment shall be
effected by subtracting from the royalty otherwise due an amount equal to the
lesser of the amount of then unreimbursed costs (including any required return)
and the amount of royalty attributable to revenues from such jurisdiction
(treating such revenues as the last revenues earned for the relevant quarter).
1.5 Upon reasonable request and 30 days' notice, Licensor
shall have the right to inspect and audit the books and records of Licensee to
insure the accurate payment of royalties hereunder.
1. DISCLOSURE OF THE LICENSED TRADE SECRETS AND
ASSISTANCE
1.1 Each of Licensee and Licensor agrees to disclose the
Licensed Trade Secrets developed by it to the other party at such other party's
cost and expense upon request by any reasonable means requested by such other
party, including without limitation through the training of, meeting with, or
other communication with officers or employees designated by it, or the transfer
of written documentation.
2. LICENSOR CONFIDENTIAL INFORMATION
1.1 Licensee understands that the Licensor Confidential
Information is secret, proprietary and of great value to Licensor, which value
may be impaired if the secrecy of the Licensor Confidential Information is not
maintained.
1.3 Licensor has taken and will continue to take reasonable
security measures to preserve and protect the secrecy of the Licensor
Confidential Information and Licensee agrees to take all measures reasonably
necessary, including, without limitation, the measures hereinafter specified, to
protect the secrecy of such information in order to prevent it from falling into
the public domain or into the possession of persons not bound to maintain the
secrecy of such information.
1.5 Licensee agrees not to disclose Licensor Confidential
Information obtained pursuant to this Agreement or otherwise, either directly or
indirectly, to any person or entity (other than Licensee's subsidiaries,
franchisees, sublicensees and manufacturers to whom disclosure is necessary for
the production and sale of the Licensed Products and who have executed
agreements containing the confidentiality terms of this Agreement and other than
to the Licensee's and its subsidiaries' respective stockholders, directors,
officers, employees and their agents who have been advised of the confidential
nature of such information and been directed to preserve its confidentiality),
during the term of this Agreement or at any time following the expiration or
termination of this Agreement.
1.7 Licensee shall exercise reasonable precautions to
safeguard the secrecy of the Licensor Confidential Information disclosed
pursuant hereto and to prevent the unauthorized disclosure thereof to anyone
other than the parties described in Section 5.3; provided, however, that
Licensee shall in any event exercise such precautions of the nature and type
consistent with the precautions Licensee takes to protect its own confidential
information.
1. LICENSEE CONFIDENTIAL INFORMATION
1.1 Licensor understands that the Licensee Confidential
Information disclosed to Licensor by Licensee under this Agreement is secret,
proprietary and of great value to Licensee, and that such value may be impaired
if the secrecy of the Licensee Confidential Information is not maintained.
1.1 Licensee has taken and will continue to take reasonable
security measures to preserve and protect the secrecy of the Licensee
Confidential Information and Licensor agrees to take all measures reasonably
necessary, including, without limitation, the measures hereinafter specified, to
protect the secrecy of such information in order to prevent it from falling into
the public domain or into the possession of persons not bound to maintain the
secrecy of such information.
1.3 Licensor agrees not to disclose the Licensee Confidential
Information obtained pursuant to this Agreement or otherwise, either directly or
indirectly, to any person or entity (other than Licensor's subsidiaries,
licensees, sublicensees and manufacturers who have executed agreements
containing the confidentiality terms of this Agreement and other than to the
Licensor's and its subsidiaries' respective stockholders, directors, officers,
employees and their agents who have been advised of the confidential nature of
such information and been directed to preserve its confidentiality), during the
term of this Agreement or at any time following the expiration or termination of
this Agreement.
1.5 Licensor shall exercise reasonable precautions to
safeguard the secrecy of the Licensee Confidential Information disclosed
pursuant hereto and to prevent the unauthorized disclosure thereof to anyone
other than the parties described in Section 6.3; provided, however, that
Licensor shall in any event exercise such precautions of the nature and type
consistent with the precautions Licensor takes to protect its own confidential
information.
2. COVENANTS
1.1 Licensee acknowledges, agrees and covenants as follows:
a () Unless Licensor consents in writing, Licensee shall use
the Licensed Property:
(i) only for the purposes of and pursuant to this Agreement; and
(i) with respect to the Licensed Names and Marks, only in a manner
consistent with the scope of the relevant registrations of the Licensed Names
and Marks. b () Licensee will not, during the term of this Agreement or
thereafter, challenge the title or any rights of Licensor in and to any of the
Licensed Property or in or to any of the Trade Secrets (other than Licensed
Trade Secrets developed by Licensee) or the use thereof in Xxx. Xxxxxx
Non-Traditional Outlets or attack the validity of this Agreement or any
Pre-Existing Licenses.
d () Licensee will assist Licensor, at Licensor's request, cost and
expense, to the extent necessary, in the procurement of any protection or to
protect any of Licensor's rights in the Licensed Property. Licensee shall notify
Licensor in writing of any infringements or imitations by others of the Licensed
Property which may come to Licensee's attention. Licensor may commence or
prosecute any claims or suits of infringement of any of the Licensed Property in
its own name if Licensor determines, in its reasonable business judgment, that
such action is necessary or appropriate to protect the Licensed Property, and,
if such claim or suit pertains to any Licensed Products, Licensor may join
Licensee as a party thereto. In the event Licensor does not decide to institute
any suit or take any action on account of any such infringements or imitations,
with the written consent of Licensor, Licensee may take such action if it so
chooses and shall keep Licensor informed thereof; provided, however, that
Licensor shall reimburse Licensee for costs incurred by Licensee in connection
with defending against such infringements or imitations.
f () Licensee agrees to use the registration symbol "R" in connection with
its use of the Licensed Names and Marks which are registered trademarks.
h () Licensee will take (or cause to be taken) at its own expense all steps
necessary to maintain the confidentiality of the Trade Secrets in accordance
with all relevant laws.
j () Licensee will do nothing to destroy, impair or in any way impede the
effect and validity of the Licensed Names and Marks.
l () Licensee will use its reasonable efforts to provide to Licensor and
any of its licensees access to and the right to receive cookie dough, cookie
tins, promotional materials and other supplies as MFI or MFD has customarily
provided to its licensees pursuant to any production agreement, contract or
arrangements of Licensee (including without limitation shipping arrangements)
now or hereafter in effect on terms and conditions comparable to those under
which Licensee purchases and receives shipments of cookie dough or such other
items; provided, that Licensor or its licensees shall be solely responsible for
making any required payments to the other parties to such agreements, contracts
or arrangements.
1.2 Licensor acknowledges, agrees and covenants as follows:
1.4 a () Licensor will not, during the term of this Agreement or
thereafter, challenge the title or any rights of Licensee in and to any of the
Trade Secrets (other than Licensed Trade Secrets developed by Licensor) or the
use thereof in Xxx. Xxxxxx Stores or attack the validity of this Agreement.
c () Licensor will take (or cause to be taken) all steps necessary to
prepare, execute, and file all documents, notices, applications, registrations
and timely renewals thereof or other documents required or necessary for the
protection and maintenance of the Licensed Property in any jurisdiction in which
Licensor currently owns or may in the future, as requested by Licensee, own
intellectual property, it being agreed and understood that (i) Licensor shall
take such actions at its own expense in jurisdictions where its licensing
activities (other than under this Licensing Agreement) require such actions for
the protection and maintenance of the Licensed Property in such jurisdiction and
(ii) Licensor may condition its taking such actions in other jurisdictions on
receiving reimbursement from Licensee for Licensor's expenses in connection
therewith; provided, however, that should Licensor undertake licensing
activities (other than under this Licensing Agreement) in jurisdictions where
Licensee has made reimbursement pursuant to clause (ii), Licensor shall promptly
pay to Licensee the amounts previously so reimbursed by Licensee with respect to
such jurisdiction less any amount recouped by Licensee in respect thereof
pursuant to Section 3.2 hereof.
e () Other than pursuant to the Pre-Existing Licenses, Licensor shall not
sell, or license (including without limitation by franchising) third parties to
sell, Licensed Products (i) through a mail order system for so long as Licensee
shall have an exclusive license under this Agreement relating to a mail order
system, (ii) otherwise in the United States other than through Xxx. Xxxxxx
Non-Traditional Outlets or (iii) otherwise outside the United States other than
through Xxx. Xxxxxx Non-Traditional Outlets until the third anniversary of the
date hereof .
g () Licensor will take (or cause to be taken) at its own expense all steps
necessary to maintain the confidentiality of the Trade Secrets in accordance
with all relevant laws.
1. REPRESENTATIONS AND WARRANTIES
1.1 Licensee represents and warrants as follows:
a () Licensee has full power and authority to enter into this Agreement and
the transactions contemplated hereby, and the entering into of this Agreement
does not contravene, infringe upon or constitute a default under any agreement
or covenant to which Licensee is a party or violate or conflict with any law or
regulation by which it is bound.
a () No filing, registration, approval or consent of any governmental
agency or instrumentality or of any stock exchange authority heretofore not
obtained is required for the authorization, delivery or performance by Licensee
of this Agreement.
1.2 Licensor represents and warrants as follows:
a () Licensor has full power and authority to enter into this Agreement and
the transactions contemplated hereby, and the entering into of this Agreement by
Licensor does not contravene, infringe upon or constitute a default under any
agreement or covenant to which Licensor is a party or violate or conflict with
any law or regulation by which it is bound.
c () No filing, registration, approval or consent of any governmental
agency or instrumentality or of any stock exchange authority heretofore not
obtained is required for the authorization, delivery or performance by Licensor
of this Agreement.
e () Subject to the Pre-Existing Licenses, the pledge of the Licensed
Property as security for Licensor's obligations under its debt instruments and
Licensee's rights under this Agreement, Licensor owns all right and title, free
and clear of any claims or encumbrances, in and to the Licensed Names and Marks,
and it possesses the rights to use the Licensed Images, without encumbrance, and
Licensee's use of the foregoing, as authorized hereunder, to the best of
Licensor's knowledge, will not violate or infringe any rights of any third
party.
2. QUALITY CONTROL
1.1 For the protection of the goodwill associated with the
Licensed Property, Licensee will, and will cause its franchisees and
sublicensees to, only sell Licensed Products consistent with the good quality,
reputation and business integrity associated with the Licensed Property and
Licensed Products as of the date hereof, and in connection therewith and
consistent with the past practice of Xxx. Xxxxxx Inc. shall use only premium
ingredients and employ and follow recipes in order to make Licensed Products of
such quality, reputation and integrity.
1.1 Licensee will, and will cause its franchisees and
sublicensees to, conduct and operate Xxx. Xxxxxx Stores and Licensee will
conduct and operate its mail order operations so as to preserve the business
integrity and good reputation of Licensor and consistent with the past practice
of Xxx. Xxxxxx Inc.; and Licensee will refrain from all activity involving any
significant risk of bringing any of the Licensed Property into disrepute or in
any way damaging any of the Licensed Property, and Licensee shall not, and shall
not permit any franchisee or sublicensee to, use the Licensed Property to sell
any products which are not Licensed Products or Related Products in Xxx. Xxxxxx
Stores or in Licensee's mail order system, as such may be amended, modified or
restated from time to time hereafter.
1.3 The Licensed Products shall be of the high quality and
standards associated with the Licensed Property as of the date hereof, and shall
be of such style, appearance and quality as to be adequate for the protection
and enhancement of the Licensed Property and the goodwill pertaining thereto;
and will be prepared and sold in accordance with all applicable laws.
1.5 Licensor may request representative samples of the
Licensed Products from Licensee and if, at any time, Licensor deems the quality
of such products to be below the quality control standards in effect as of the
date hereof, Licensor may so notify Licensee, in writing, and Licensee will
promptly bring such sub-standard products up to the aforesaid quality control
standards as soon as reasonably practicable but in any event within 30 days.
1.7 Licensor shall have the right to inspect Xxx. Xxxxxx
Stores at any reasonable time and without notice, to the extent any such
inspection would not violate a franchise agreement, if any, relating to the Xxx.
Xxxxxx Store to be inspected, to determine whether Licensee's operations,
including, but not limited to, use of the Licensed Names and Marks and the
Licensed Products, are consistent with the standards set forth in this
Agreement. In this connection, Licensee agrees to use its reasonable efforts in
connection with entering into new franchise agreements to ensure that any such
inspection will be permitted thereunder. All inspections shall be made in a
manner so as to minimize any disruption to Xxx. Xxxxxx Stores. If Licensor
determines such operations do not comply with such standards and so notifies
Licensee of the same, Licensee shall thereafter take such steps or actions
necessary to bring its operations into compliance with such standards as soon as
reasonably practicable but in any event within 30 days.
1. DEVELOPMENT OF NEW PRODUCTS
1.1 The parties acknowledge that Licensee may, from time to
time, develop new Licensed Products (and related Licensed Trade Secrets) that it
intends to offer for sale in Xxx. Xxxxxx Stores or through its mail order system
under the Licensed Names and Marks. Any such Licensed Product (and related
Licensed Trade Secrets) shall be made available by Licensee for license to third
parties by Licensor under the Licensed Names and Marks where Licensor is then
permitted under this Agreement to provide such license, without other
consideration to Licensee than the mutual covenants and considerations of this
Agreement.
1.1 The parties acknowledge that Licensor may, from time to
time, develop new products (and related Licensed Trade Secrets) and, subject to
its compliance with Section 7.2(c) hereof, license such products to third
parties for sale under the Licensed Names and Marks. Any such products which are
Licensed Products (and related Licensed Trade Secrets) shall be made available
by Licensor for sale or license (including without limitation by franchising)
where Licensee is then permitted under this Agreement to make such sale or
provide such license, without other consideration to Licensor than the mutual
covenants and considerations of this Agreement.
2. PROPERTY OF LICENSOR; PROPERTY OF LICENSEE; OTHER OPERATIONS OF LICENSEE
1.1 Licensee recognizes the value of the goodwill associated
with the Licensed Names and Marks and acknowledges that the Licensed Names and
Marks and all rights therein and goodwill pertaining thereto belong exclusively
to Licensor.
1.3 Each of Licensor and Licensee (i) acknowledges that the
other party has an undivided interest in the Pre-Existing Trade Secrets, (ii)
agrees that, unless the other party consents in writing, it shall use the Trade
Secrets only in connection with the sale of Licensed Products using the Licensed
Property, and (iii) agrees that it shall maintain the Pre-Existing Trade Secrets
in the strictest confidence, in accordance with standards at least as high as
those set forth in Sections 5 and 6 hereof.
1.5 Licensor acknowledges that Licensee may operate and/or
license others to operate cookie shops, restaurant operations or other food
retail or wholesale sales or service outlets under various trade names and
trademarks other than the Licensed Names and Marks, and that nothing in this
Agreement shall be deemed to restrict Licensee from operating or licensing any
cookie shops, restaurants or other operations under any other trade names or
trademarks or at any location that does not utilize the Licensed Property.
1. CURE PERIOD
1.1 In the event that Licensor determines that Licensee has
breached the quality control standards described in Section 9 hereof, Licensee
shall have 90 days following notice thereof by Licensor to cure the same as
provided in such Section 9; provided, however, that Licensee shall have such
additional time to cure such breach following such 90 day period for so long as
such breach is by its nature curable and Licensee continues to diligently
attempt to cure such breach; provided, however, that in any case such breach is
cured within 360 days after the initial notice thereof.
1. INDEMNIFICATION
1.1 Licensor agrees to indemnify, defend and hold Licensee
harmless from any claims, liabilities, lawsuits, demands, actions, damages and
expenses (including reasonable attorneys' fees) (collectively, "Damages")
arising from or out of (i) any breach of the agreements, covenants,
representations or warranties of Licensor contained in this Agreement, (ii) any
damages or injury to any person, including, but not limited to customers,
employees of Licensor, and members of the public, suffered and incurred on or
about stores or locations, or arising out of mail order activities, of licensees
of Licensor (other than Licensee) or sublicensees of Licensor, or (iii) the
activities hereunder of Licensor, including without limitation activities
arising under sublicense or franchise agreements to which Licensee may from time
to time be a party, other than any such Damages which arise due to the gross
negligence or wrongful acts of Licensee or its sublicensees or franchisees.
1.3 Licensee agrees to indemnify, defend and hold Licensor
harmless from and against any and all Damages arising from or out of (i) any
breach of the agreements, covenants, representations, or warranties of Licensee
contained in this Agreement, (ii) any damages or injury to any person,
including, but not limited to customers, employees of Licensee, and members of
the public, suffered and incurred on or about Xxx. Xxxxxx Stores or arising out
of mail order activities of the Licensee hereunder or sublicensees of Licensee,
or (iii) the activities hereunder of Licensee, including without limitation
activities under license agreements to which Licensor may from time to time be a
party other than any such Damages to the extent attributable to the gross
negligence or wrongful acts of Licensor or its sublicensees or franchisees.
1. MANAGEMENT ARRANGEMENTS
1.1 Licensee will provide to Licensor reasonable managerial
and administrative support as requested by it, subject to the right of each
party to terminate such arrangement upon not less than six months' written
notice, and in connection therewith Licensor (acting through its Board of
Managers) and Licensee (acting through its Board of Directors) will by the end
of January for each year beginning in 1997, establish a budget in reasonable
detail for the costs expected to be reimbursed by Licensor under this Section
14.1 for such year. Licensor will reimburse Licensee quarterly for such
managerial and administrative support in an amount equal to all direct costs and
indirect costs allocated on a reasonable basis incurred by Licensee in the
applicable fiscal quarter in connection with providing such support, including
for compensation paid to personnel substantially dedicated to Licensor's
operations, provided that the costs to be reimbursed in any calendar year shall
not exceed the costs budgeted for such year in the budget for such year. Such
reimbursement shall be made on a quarterly basis within 30 days following
receipt by Licensor of a xxxx summarizing such costs in reasonable detail.
1. NOTICES
1.1 All notices provided by this Agreement shall be in writing
and shall be given by overnight courier, facsimile transmission, or by personal
delivery, by one party to the other, addressed to such other party at the
applicable address set forth below, or to such other address as may be given for
such purpose by such other party by notice duly given hereunder. Notice shall be
deemed properly given on the date of delivery:
To Licensee: Xxx. Xxxxxx' Original Cookies,
Inc.
c/o Capricorn Investors II, L.P.
00 Xxxx Xxx Xx.
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx,Xx.
Fax: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Fax: (000) 000-0000
To Licensor: The Xxx. Xxxxxx' Brand, Inc.
c/o Capricorn Investors II, L.P.
00 Xxxx Xxx Xx.
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx,Xx.
Fax: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Fax: (000) 000-0000
1. GENERAL PROVISIONS
1.1 Independent Contractors. It is understood and agreed by
the parties hereto that this Agreement does not create a fiduciary relationship
between them, that Licensor and Licensee are and shall be independent
contractors, and that nothing in this Agreement is intended to make either party
a general or special agent, joint venturer, partner or employee of the other for
any purpose whatsoever.
1.1 Entire Agreement. This Agreement and the Exhibits and
other documents referred to herein which form a part hereof contain the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement supersedes all prior agreements and understandings, oral and
written, with respect to its subject matter.
. Should any provision of this Agreement for any reason be declared invalid or
unenforceable, such declaration shall not affect the validity or enforceability
of any other provision of this Agreement, all of which other provisions shall
remain in full force and effect.
. This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, successors and permitted assigns. Licensee may not assign its
respective rights and obligations hereunder except to its wholly-owned
subsidiaries, its parent company, or a wholly-owned subsidiary of its parent
company, or pursuant to the sale of all or substantially all of its assets;
provided that Licensee may assign its rights hereunder as security for its
obligations, including its obligations under its debt instruments. Subject to
Sections 2.1 and 2.3 Licensee may freely sublicense (including without
limitation by franchising) its rights hereunder pursuant to franchise and
international sublicense agreements in the nature of franchise agreements
consistent in form and substance with those used by Xxx. Xxxxxx Inc. as of the
date hereof with such material variations therefrom to be approved by Licensor
in its sole reasonable discretion.
. This Agreement may be amended, modified or supplemented at any time by written
agreement of the parties hereto. Any failure by either party to comply with any
term or provision of this Agreement may be waived by the other party at any time
by an instrument in writing signed by or on behalf of both parties, but such
waiver or failure to insist upon strict compliance with such term or provision
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure to comply. . This Agreement is not intended, and shall not be
deemed, to confer upon or give any person except the parties hereto and their
respective successors and permitted assigns, any remedy, claim, liability,
reimbursement, cause of action or other right under or by reason of this
Agreement.
. This Agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
. The section headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall not in any way
affect the meaning or interpretation of this Agreement. Reference in this
Agreement to "subsidiaries" of Licensee shall be deemed to include any
corporation, limited liability company, partnership or other entity of which
Licensee or other subsidiaries owns at least 50% of the voting common stock or
equivalent security.
1.15 Governing Law. This Agreement shall be governed by the
laws of the State of New York, without regard to the principles of conflicts of
law thereof.
. The parties will attempt to settle any claim or controversy arising out of
this Agreement through consultation and negotiation in good faith and in a
spirit of mutual cooperation. Licensee and Licensor shall each appoint two
individuals to a four-person committee, which committee will oversee the
negotiation of all disputes arising hereunder. All disputes shall be first
submitted to such committee for negotiation before instituting any formal
mediation or arbitration. If such negotiations fail, then such dispute will be
mediated by a mediator mutually acceptable to the parties. By mutual agreement,
however, the parties may postpone mediation until they have each completed some
specified but limited discovery regarding the dispute. The parties may also
mutually agree to replace mediation with some other form of alternative dispute
resolution ("ADR"), such as neutral fact-finding or a mini-trial. Any dispute
which the parties cannot resolve through negotiation, mediation, or another form
of ADR within 60 days may be submitted to binding arbitration, in accordance
with Section 16.11.
. Except as set forth in Section 16.10, and in this Section, any controversy,
claim, or dispute arising out of or related to this Agreement, or the breach or
alleged breach hereof, will be submitted by the parties for arbitration by the
American Arbitration Association in the City of New York, New York, United
States, in accordance with the international commercial arbitration rules then
in effect of the American Arbitration Association (the "AAA Rules") by three
arbitrators appointed in accordance with the AAA Rules. The decision of the
arbitrators shall be final and binding, and judgment on the award rendered by
the arbitrators may be entered in any court having jurisdiction thereof. The
award rendered by the arbitration board shall include costs of arbitration,
reasonable attorneys' fees and reasonable costs for expert and other witnesses.
The parties shall be entitled to discovery as provided in the AAA Rules. A
transcribed record of the proceedings shall be prepared in English. Nothing in
this Agreement shall prevent either party from seeking injunctive relief (or any
other provisional remedy or equitable relief) from any court having jurisdiction
over the parties and the subject matter of the dispute to protect their
respective rights.
1.21 Further Assurances. From time to time, as and when
requested by either party hereto, the other party shall execute and deliver, or
cause to be executed and delivered, all such documents and instruments and shall
take, or cause to be taken all such further or other actions, as such other
party may reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
XXX. XXXXXX' ORIGINAL COOKIES, INC.
By:/s/Herbeet X. Xxxxxxx
Name:Xxxxxxx X. Xxxxxxx
Title:President
THE XXX. XXXXXX' BRAND, INC.
By:/s/Xxxxxx X. Xxxxxxx
Name:Xxxxxxx X. Xxxxxxx
Title:President
EXHIBIT A
LICENSED IMAGES
EXHIBIT B
LICENSED NAMES AND MARKS
EXHIBIT C
PRE-EXISTING LICENSES
0118466.21-01S6a
EXHIBIT D
RELATED PRODUCTS
