Exhibit 10.8
OPERATING AGREEMENT
BETWEEN
WEIGHT WATCHERS INTERNATIONAL, INC.
AND
X.X. XXXXX COMPANY
DATED AS OF
SEPTEMBER 29, 1999
OPERATING AGREEMENT
This Agreement made and entered into this 29th day of September, 1999 by
and between WEIGHT WATCHERS INTERNATIONAL, INC., a Virginia corporation with
offices located at 000 Xxxxxxxxx Xxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000
(hereinafter referred to as "Weight Watchers") and X.X. XXXXX COMPANY, a
Pennsylvania corporation with offices located at 000 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter referred to as "Heinz").
WHEREAS, WW Foods, LLC ("the LLC") has licensed to Heinz and to Weight
Watchers the right to use the Food Trademarks (as hereinafter defined) and
certain Program Information (as hereinafter defined) in connection with certain
food and beverage products; and
WHEREAS, Heinz and Weight Watchers therefore have a mutual interest in
preserving and enhancing the value of the Food Trademarks and the Program
Information, and of their respective licenses thereof, and in facilitating
orderly and effective use of the Food Trademarks and the Program Information;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, including
the Recapitalization and Stock Purchase Agreement dated the 22nd day of July,
1999 (the "Principal Agreement"), the receipt and adequacy of which is hereby
acknowledged, the parties intending to be legally bound agree as follows:
ARTICLE 1
GENERAL PROVISIONS
SECTION 1.01. Definitions. For the purposes of this Agreement:
"Affiliate" of any person shall mean any company controlled by,
controlling or under common control (that is, ownership of greater than 50% of
the voting securities) with a person after the Effective Date.
"Associated Food Trademarks" shall mean all Food & Beverage Trademarks the
transfer of which cannot be recorded prior to the closing under the Principal
Agreement because of required association under the laws of a particular
jurisdiction.
"Confidential Information" shall have the meaning set forth in Section
2.12.
"Effective Date" shall mean the day and year first above written.
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"Endorse" or "Endorsement" shall mean using the Weight Watchers Business
to endorse, recommend, promote, advertise, sponsor, or imply an association
with, expressly or impliedly, for cash or non-cash consideration.
"Food & Beverage Trademarks" shall mean all registered trademarks,
trademark applications, and common law trademarks covering food and beverage
products, falling in or that would fall within any Food Class, owned by Weight
Watchers and the Companies as defined in the Principal Agreement as of the
Effective Date.
"Food Classes" shall mean International Classes 1, 5, 29, 30, 31, 32, and
33 (or comparable classes) in relation to food and beverage products.
"Food Trademarks" shall mean the Formation Trademarks and New Food
Trademarks.
"Formation Trademarks" shall mean all Food & Beverage Trademarks less all
Weight Watchers Retained Trademarks, Parent Retained Trademarks, and any "Weight
Watchers From Heinz" trademarks.
"Heinz License" shall mean the license dated September 29, 1999 between
Heinz and the LLC, pursuant to which Heinz licenses the right to use the Food
Trademarks and the Program Information on certain food and beverage products,
as identified in Schedule __________ hereto and made a part hereof.
"Heinz Licensed Products" shall mean the "Licensed Products" as defined in
the Heinz License and as set forth in Schedule A attached hereto.
"HJH Food Trademarks" shall mean those trademarks used on food and
beverage products identified in Schedule B attached hereto and made a part
hereof.
"Licensed Products" means the Heinz Licensed Products and the Weight
Watchers Licensed Products, as the context may require.
"LLC" shall mean the WW Foods, LLC.
"LLC Agreement" shall mean the Limited Liability Company Agreement of the
LLC, having an Effective Date (as defined therein) of September 29, 1999.
"Multiclass Trademarks" shall mean all Food & Beverage Trademarks
consisting of registrations or applications for registration in multiple
registration classes, where such classes include both Food Classes and other
classes.
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"New Food Trademarks" shall mean all new common law trademarks, trademark
applications and trademark registrations that may be acquired by or contributed
to the LLC from time to time.
"Non-Recognition Food Trademarks" shall mean all Food & Beverage
Trademarks in jurisdictions where the local law or regulatory authority does not
permit, or will not recognize the validity of, ownership of trademarks by a
limited liability corporation.
"Non-Transferable Food Applications" shall mean all Food & Beverage
Trademarks that are pending applications or intent-to-use applications in
jurisdictions where the local law or regulatory authority does not permit, or
will not recognize the validity of, an assignment or transfer of such
applications.
"Parent Retained Trademarks" shall mean certain Food & Beverage Trademarks
to be transferred by Weight Watchers to Heinz and to be retained by Heinz, as
identified in Schedule 8.1 of the Principal Agreement.
"Program Information" shall mean the terminology used in connection with
the Weight Watchers Program identified in the attached Schedule [C], such
information owned by Weight Watchers as is reasonably necessary to develop,
manufacture, market and distribute food and beverage products in accordance with
such Weight Watchers Program and to calculate Points(R) or other measurements
relating thereto, as well as those trademarks owned by Weight Watchers and used
to identify such terminology and Weight Watchers Program, as such Weight
Watchers Program may exist from time to time ("Program Information Trademarks").
"Program Information Improvements" shall mean such information and
know-how as may be developed by Heinz through use of Program Information under
the Heinz License that Heinz determines would be useful for Weight Watchers in
the development and application of Program Information.
"Standards" shall have the meaning set forth in Section 2.04(a) below.
"Sublicensee" shall mean any recipient of a license or sublicense for use
of the Food Trademarks, the Program Information, or the Weight Watchers Retained
Food Trademarks as the context may require, and shall include a party's
Affiliates, where applicable.
"Weight Watchers Business" shall mean the weight control classroom
meetings, business and related activities owned or controlled by Weight Watchers
or Weight Watchers Affiliates, and conducted under the Weight Watchers name
including the Weight Watchers Program, and all promotional activities relating
thereto, including without limitation any program materials, Program
Information, Weight Watchers meeting rooms, recipes, publications, newsletters,
direct mail
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solicitations, advertising, materials, posters, and other classroom media,
public relations programs, and Internet websites.
"Weight Watchers Franchisee" shall mean any franchisee of Weight Watchers
or its Affiliates using the Weight Watchers name or with respect to the Weight
Watchers Business.
"Weight Watchers License" shall mean the license dated September 29, 1999
between Weight Watchers and the LLC, pursuant to which Weight Watchers licenses
the right to use the Food Trademarks and Program Information Improvements on
certain food and beverage products, as identified in Schedule _____ hereto and
made a part hereof.
"Weight Watchers Licensed Products" shall mean the "Licensed Products" as
defined in the Weight Watchers License.
"Weight Watchers Non-Food Trademarks" shall mean all trademarks owned,
registered, applied for, used or intended to be used by Weight Watchers or the
Companies as defined in the Principal Agreement that are not Food Trademarks.
"Weight Watchers Program" shall mean current and future eating or
lifestyle regimens to facilitate weight loss or weight control employed,
designed, marketed or adopted in any part of the world by or on behalf of Weight
Watchers or Weight Watchers Affiliates under the Weight Watchers trademark or
service xxxx.
"Weight Watchers Retained Trademarks" shall mean all Associated Food
Trademarks, Non-Recognition Food Trademarks, Non-Transferable Food Applications,
Multiclass Trademarks, and Program Information Trademarks.
ARTICLE 2
FOOD TRADEMARKS
SECTION 2.01. Non-endorsement.
(a) (i) Weight Watchers may Endorse the Licensed Products; provided
however, that Weight Watchers shall not and shall cause Weight
Watchers Affiliates not to enter into any agreement of any nature or
adopt any policy to Endorse any branded food product that competes
with a Heinz Licensed Product in any country if Heinz, its
Affiliates or Sublicensees are selling or have sold a competing
Heinz Licensed Product in that country within the previous year. If
Heinz, on behalf of itself, its Affiliates or Sublicensees, intends
to commence or recommence sale of a
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Heinz Licensed Product in a country and wishes to avail itself of
this provision with regard to that country, it shall so notify
Weight Watchers no later than thirty (30) days before the
commencement of bona fide commercial sales of the Heinz Licensed
Product in that country. Weight Watchers thereupon shall use its
best efforts to cease and to cause Weight Watchers Affiliates to
cease to Endorse the branded food product in competition with the
Heinz Licensed Product within one year of receipt of such notice or
upon expiration of any contractual commitment to a third party
concerning that branded food product, whichever is later. It is
expressly understood and agreed that accurate, factual references to
branded food products other than Heinz Licensed Products made in the
ordinary course of the Weight Watchers Business other than for cash
or non-cash consideration shall not constitute an Endorsement.
(ii) Heinz acknowledges that Weight Watchers cannot control the
individual recommendations of Weight Watchers service providers;
however, Weight Watchers will not enter into any agreement or adopt
any policy to encourage such service providers to engage in conduct
that Weight Watchers is unable to engage in pursuant to the terms of
this provision.
(b) Weight Watchers may sell Licensed Products through the Weight Watchers
Business or otherwise but shall not, and shall cause Weight Watchers Affiliates
not to, sell any branded food product in any country if Heinz or its Affiliates
or Sublicensees is selling a competing Licensed Product in that country.
(c) Weight Watchers shall follow the same policies and practices in
dealing with Endorsement and sales by a Weight Watchers Franchisee of branded
food products that compete with Heinz Licensed Products, that Weight Watchers
would apply to dealing with Endorsement and sales by that franchisee of branded
food products that compete with Weight Watchers Licensed Products.
SECTION 2.02. Quality Control.
(a) All use of the Formation Trademarks, Weight Watchers Retained
Trademarks and Program Information by Heinz, Weight Watchers, their
respective Affiliates and their respective Sublicensees prior to the
Effective Date are deemed to comply with the Quality Control
Requirements as defined in the LLC Agreement.
(b) Heinz and Weight Watchers and their respective Affiliates shall
comply with all of the terms and conditions of their respective
licenses from the LLC.
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(c) It is expressly understood and agreed between Heinz and Weight
Watchers that the LLC shall have exclusive responsibility for
quality control of all Food Trademarks as set forth in Section 2.06
of the LLC Agreement. Heinz represents and warrants that the LLC has
been duly formed and is in good standing, that all assignments of
Formation Trademarks contemplated by the Principal Agreement and
this Agreement from Heinz to the LLC have been duly and properly
made in accordance with the terms thereof, and that the
representations and warranties made by or on behalf of Heinz and
Weight Watchers in Section 3.01 (b) of the LLC Agreement were true
and correct when made and are true and correct as of the date
hereof.
SECTION 2.03. Transitional Issues.
(a) On the Effective Date, (i) all existing licenses by Weight Watchers to
parties including Heinz or its Affiliates granting rights to manufacture,
market, distribute or sell food products under the Food Trademarks (the "Direct
Food Trademark Licenses"), including but not limited to those identified in
Schedule ______ hereto, shall be assigned by Weight Watchers to Heinz, and Heinz
shall assume the obligations of Weight Watchers with respect thereto pursuant to
an assignment and assumption agreement in form and substance reasonably
satisfactory to Heinz and Weight Watchers, and (ii) Heinz shall retain all
existing sublicenses by Heinz or any Heinz Affiliates to third parties granting
rights to manufacture, market, distribute or sell food products under the Food
Trademarks (the "Heinz Sublicenses"), including but not limited to those
identified in Schedule ______ hereto. All subsequent use of the Food Trademarks
pursuant to this provision will otherwise be subject to the terms of the Heinz
License. Heinz and its Affiliates, as the case may be, may, in their discretion,
assign any of the Direct Food Trademark Licenses or the Heinz Sublicenses to any
Heinz Affiliate.
(b) Heinz shall be entitled to payment in full of all royalties and other
amounts payable under the Direct Food Trademark Licenses and the Heinz
Sublicenses (or agreements related thereto) for a period of five years from the
Effective Date (whether or not such agreements cover Heinz Licensed Products and
whether or not such agreements have been transitioned to Weight Watchers).
During such five-year period, the ownership of the Direct Food Trademark
Licenses and Heinz Sublicenses covering Weight Watchers Licensed Products will
be transitioned to Weight Watchers by Heinz or its Affiliates assigning such
agreements to Weight Watchers at the end of the five (5) year period or by
enabling Weight Watchers to renew such agreements as they expire or become
eligible for renewal, whichever is sooner. Heinz shall give Weight Watchers
ninety (90) days' notice of the expiration or renewal date of all Direct Food
Trademark Licenses and Heinz Sublicenses covering Weight Watchers Licensed
Products expiring or having a renewal date during the five year period, and
Weight Watchers shall have the option to determine, to the extent permissible
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under the terms of the agreement with the third party, to renew or not to renew
such agreement with regard to Weight Watchers Licensed Products. If any Direct
Food Trademark Licenses or Heinz Sublicenses covers both Heinz Licensed Products
and Weight Watchers Licensed Products (as of the date of renewal or assignment
pursuant to the two immediately preceding sentences), the parties will use their
reasonable best efforts to reach agreement with the licensees or sublicensees to
separate the products into separate license/sublicense agreements with Weight
Watchers (for Weight Watchers Licensed Products) and Heinz and its Affiliates
(for Heinz Licensed Products).
(c) If Heinz desires to terminate any Direct Food Trademark License or
Heinz Sublicense covering Weight Watchers Licensed Products, it will first
consult with Weight Watchers, which shall advise, within twenty-one (21) days
from the date of notice, whether it desires for Heinz to assign such license or
sublicense to Weight Watchers. To the extent that Weight Watchers assumes or
renews any of the Direct Food Trademark Licenses or Heinz Sublicenses, Heinz
shall assign or license at Heinz' discretion, such intellectual property rights
as may be necessary for Weight Watchers to continue to perform under any such
agreement with regard to Weight Watchers Licensed Products.
(d) In the event that any Direct Food Trademark License or Heinz
Sublicense is assigned to Weight Watchers or renewed by or on behalf of Weight
Watchers during the five-year transition period, the royalties or other payments
received by Weight Watchers from any such license/sublicense will be paid over
to Heinz upon receipt without demand until the expiration of the five-year
transition period. As between Heinz and Weight Watchers, Heinz shall assume all
administrative costs relating to such licenses/sublicenses. In the event that
any Direct Food Trademark License or Heinz Sublicense covering Weight Watchers
Licensed Products is not assigned to Weight Watchers and has not expired at the
end of the five-year transition period, the royalties or other payments received
by Heinz from any such license/sublicense will be paid over to Weight Watchers
upon receipt without demand thereafter, and Heinz shall assign or license (at
Heinz' discretion) such intellectual property rights as may be necessary to
perform Licensor's obligations thereunder. As between Heinz and Weight Watchers,
Weight Watchers shall assume all administrative costs relating to such
licenses/sublicenses.
(e) During the five-year transition period, Heinz will pay to Weight
Watchers annually a sum of $1.2 million as a custodial fee to hold certain of
the Weight Watchers Retained Trademarks for the benefit of the LLC, as
identified in Schedule ___________ hereto. Such annual payment shall be payable
in quarterly installments of $300,000 payable in arrears. Such trademarks shall
consist of the Associated Food Trademarks, the Non-Recognition Food Trademarks,
the Non Transferable Food Applications, and those portions of the Multiclass
Trademarks in Food Classes (the "Custodial Trademarks"). All use of, and
expenses relating to, such Custodial Trademarks shall be governed by the
provisions of this
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Agreement, the LLC Agreement and the terms of the license agreement between
Heinz and Weight Watchers attached as Schedule________ hereto. Heinz and Weight
Watchers shall take all reasonable steps necessary to transfer all such
Custodial Trademarks to the LLC at an appropriate time and in an appropriate
manner, consistent with the intent of this Agreement and the purpose of the LLC
when permissible to do so under local law.
(f) Notwithstanding any other provision of this Agreement, the LLC
Agreement, or any license between or among Heinz, Weight Watchers and the LLC,
Weight Watchers shall have the right to continue to sell through particular
channels of distribution in the Weight Watchers Business conducted in any
country all food and beverage products and comparable products sold in such
channels of distribution in that country within the preceding year (whether or
not such products are Weight Watchers Licensed Products) and to retain all
proceeds therefrom.
(g) Heinz shall change or cause to be changed the name of any Affiliate
using the Weight Watchers name or any derivative thereof that is not Weight
Watchers or one of the Companies as defined in the Principal Agreement to a name
not using the Weight Watchers name, or any derivative thereof.
SECTION 2.04. Compatibility with Weight Watchers Program. (a) Heinz shall,
and will cause its Sublicensees to, use the Food Trademarks, Weight Watchers
Retained Trademarks and Program Information only on Heinz Licensed Products that
have been specially formulated to be compatible with the dietary principles of
the Weight Watchers Program (the "Standards"). The Heinz Licensed Products being
marketed by Heinz on the Effective Date are deemed to meet the Standards.
(b) (i) Heinz shall not be required to change the formulation of
any Heinz Licensed Product due solely to changes in the Weight
Watchers Program. However, Heinz recognizes that as the Weight
Watchers Program changes over time, it is in the interest of
both parties that formulations for the food and beverage
products bearing the Food Trademarks should be changed in a
consistent manner. Heinz will use reasonable efforts to
reformulate, if possible, and in a manner and on a timetable
reasonably acceptable to Heinz, existing categories of
products sold under the Food Trademarks to meet over time the
new or evolving dietary principles incorporated into the
Weight Watchers Program with a goal of having such products
fit the Standards. Heinz will not be mandated to make changes
to meet the Weight Watchers Program that materially increase
costs, materially degrade palatability or consumer acceptance
or eliminate major ingredient types required in the production
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of Heinz Licensed Products. Other changes shall be implemented
on a reasonable timetable consistent with product development
and restage cycles.
(ii) Weight Watchers shall construe and interpret the Weight
Watchers Program in good faith (A) to apply its dietary
principles without discriminating between Heinz Licensed
Products and Weight Watchers Licensed Products, and (B) to
permit, where possible in Weight Watchers' reasonable
discretion, those ingredients and processing techniques
required to manufacture and market the Heinz Licensed Products
on a competitive basis in the marketplace.
(c) All new Heinz Licensed Products shall comply with the Standards then
in effect; provided, however, that a product that is a reformulation or
repackaging of an existing product, or a product that is an extension of an
existing product line that is substantially similar to other products in that
product line, shall not require approval as a new Heinz Licensed Product. Heinz
shall, and shall cause its Affiliates and Sublicensees to, submit to Weight
Watchers a minimum of two samples of any proposed new Heinz Licensed Product for
the determination of its compatibility with the dietary principles of the Weight
Watchers Program. Weight Watchers shall respond to Heinz or its Affiliates or
Sublicensees, as the case may be, in writing setting forth in detail any
concerns or questions with reasonable specificity. If Weight Watchers fails to
respond within twenty-one (21) days of receipt of such samples, such new Heinz
Licensed Products shall be deemed to be approved by Weight Watchers. For
purposes of this provision, Weight Watchers may object, subject to the terms of
Section 2.04(b)(ii) above, to any proposed new Heinz Licensed Product only in
the exercise of a reasonable good faith belief that such new Heinz Licensed
Product does not conform to the Standards that are in effect at the time of the
development of the new Heinz Licensed Product. Heinz shall not sell any new
Heinz Licensed Product to which Weight Watchers objects in accordance with this
Section 2.04(c) until Weight Watchers agrees that any such objection has been
satisfactorily resolved.
SECTION 2.05. Changes to Graphic Representation of the Food Trademarks.
Heinz recognizes that as the Weight Watchers Program changes its graphic
presentation over time, it is in the interest of both parties to continue having
similar graphic presentations. Accordingly, Heinz agrees to consult with Weight
Watchers and to use its reasonable efforts to develop and implement in a manner
and on a timetable reasonably acceptable to Heinz comparable graphic
presentations of the Food Trademarks. Heinz shall not be required to change
package design, coloration, or other trade dress features of its existing
products solely to conform to changes in Weight Watchers' graphic presentation.
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SECTION 2.06. Third Party Intellectual Property Licenses. Weight Watchers
shall exercise reasonable efforts to cause any license granted to Weight
Watchers for the use of any trademarks, service marks or other intellectual
property from a third party for use on Weight Watchers Licensed Products now or
in the future (excluding the license granted to Weight Watchers by the LLC), to
be offered to Heinz for use on the Heinz Licensed Products on comparable terms
and conditions; provided, however, that Weight Watchers shall have no obligation
to incur any substantial out-of-pocket expenses in exercising such efforts but
shall offer Heinz an opportunity to pay any additional amount necessary to
obtain such rights for Heinz to use.
SECTION 2.07. Proprietary Rights.
(a) Proprietary Rights of Heinz.
(i) Weight Watchers acknowledges and shall not contest Heinz' or
Heinz Affiliates' ownership of Program Information
Improvements and the HJH Food Trademarks. Weight Watchers
agrees that all use of HJH Food Trademarks shall inure to the
benefit of Heinz' or Heinz Affiliates' ownership rights in HJH
Food Trademarks as appropriate. The parties recognize that the
HJH Food Trademarks have been previously used together with
the Food Trademarks and Weight Watchers Retained Trademarks
(e.g., Smart Ones and Weight Watchers, Heinz and Weight
Watchers) on labels, advertising and promotions, and Weight
Watchers agrees that Heinz may continue to use the HJH Food
Trademarks together with the Food Trademarks and Weight
Watchers Retained Trademarks in the countries in which they
are in use as of the Effective Date, as specified in the
attached Schedule B. Weight Watchers acknowledges that
distribution and use may extend beyond these countries because
of external circumstances outside of the control of Heinz,
such as manufacturing, warehousing, and distribution logistics
or sales to multinational accounts. Any other use of the Food
Trademarks and Weight Watchers Retained Trademarks with any
other trademarks that may be adopted for use on food products
from time to time by Heinz or Heinz Affiliates or
Sublicensees, in such a manner as to create a material risk of
the establishment of a combination xxxx, shall not be
permitted without the permission of Weight Watchers. Heinz
shall make no claim of ownership or right in any permitted use
of the Food Trademarks and Weight Watchers Retained Trademarks
in combination with any
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other xxxx, and the parties shall take all steps necessary to
cause the cancellation of any existing registration or abandon
any pending application relating to any such combination,
including but not limited to "Weight Watchers from Heinz," at
Heinz' expense.
Weight Watchers agrees to the continued use of the appropriate Formation
Trademarks (e.g., Main Street Bistro, Sweet Celebrations, Chocolate Treat, etc.)
as sub-brands in a subordinate manner to the Weight Watchers name without prior
Weight Watchers approval. Heinz, its Affiliates and Sublicensees may continue to
use their names and corporate logos as corporate identifiers in a substantially
subordinate manner to the Weight Watchers name to identify Heinz, its Affiliates
or Sublicensees as the case may be, for the purpose of identifying them as the
manufacturer or distributor for Heinz Licensed Products. Subject to Weight
Watchers' ownership of Program Information and Weight Watchers Non-Food
Trademarks, Weight Watchers acknowledges Heinz' (or Heinz Affiliates' or Heinz
Sublicensees in appropriate circumstances) ownership of the specifications,
recipes, manufacturing process or other confidential or proprietary information
or materials related to Heinz Licensed Products and developed or owned by Heinz
and that all such information shall be considered Heinz' (or Heinz Affiliates'
in appropriate circumstances) Confidential Information and shall be subject to
the provisions of Section 2.12.
(b) Proprietary Rights of Weight Watchers.
(i) Heinz acknowledges and shall not contest Weight Watchers' or
Weight Watchers Affiliates' ownership of Program Information and Weight
Watchers Non-Food Trademarks. Heinz agrees that all use of Program
Information Trademarks and Weight Watchers Non-Food Trademarks shall inure
to the benefit of Weight Watchers' or Weight Watchers Affiliates'
ownership rights therein as appropriate.
(ii) Heinz acknowledges Weight Watchers' (or Weight Watchers
Affiliates' in appropriate circumstances) ownership of the specifications,
recipes, manufacturing process or other confidential or proprietary
information or materials related to Weight Watchers Licensed Products
developed or owned by Weight Watchers and that all such information shall
be considered Weight Watchers' (or Weight Watchers Affiliates' in
appropriate circumstances) Confidential Information and shall be subject
to the provisions of Section 2.14. Additionally, Heinz hereby grants to
Weight Watchers a Non-exclusive royalty-free license to use formulations
and recipes owned by Heinz and used in the past in Weight Watchers
Licensed Products as they are transferred.
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(iii) Heinz acknowledges and agrees that Weight Watchers shall own
and have the exclusive right to use all domain names or other means for
providing direct access to a website or dedicated portion of a website
using, incorporating, or derived from the Food Trademarks, the Program
Information or the Weight Watchers Non-Food Trademarks. Heinz shall not
use any Parent Retained Trademark as a domain name or as an identifier for
a means of providing access to a website or dedicated portion of a website
("Parent Retained Trademark Website") promoting, advertising or selling
Heinz Licensed Products. Heinz and Weight Watchers acknowledge and agree
further that (A) access to such Parent Retained Trademark Websites shall
only be through a website controlled by Weight Watchers, the primary Heinz
website in each of the U.S. and Canada, and the Heinz Frozen Food website;
(B) Heinz' websites promoting Licensed Products shall provide access by
display of a hyperlink or other means of transfer, to the primary website
controlled by Weight Watchers and the primary website controlled by Weight
Watchers shall provide access by display of a hyperlink or other means of
transfer to the Heinz websites promoting Licensed Products; and (C)
websites controlled by Heinz which advertise, promote or sell the Heinz
Licensed Products shall not include content substantially similar in
nature to the Weight Watchers websites but may include information
concerning the nutritional aspects of Heinz Licensed Products, recipes and
the like. For the avoidance of doubt, Heinz may promote, advertise and
sell Heinz Licensed Products on a website using any Heinz trademark as a
domain name or identifier, other than any domain name or identifier using,
incorporating, derived from or confusingly similar to the Parent Retained
Trademarks, the Food Trademarks, the Program Information or the Weight
Watchers Non-Food Trademarks.
(c) Limitation on Proprietary Rights. No party shall assert any
right or title to or interest in or to any slogan, trade name, symbol,
emblem, insignia, design, trade dress, or advertising theme devised by the
other party for use in connection with its products or services, except
for the rights granted to or received by that party under any agreement
between or among them and the LLC. Any new trademark used or intended to
be used by any party covering any food or beverage product that is derived
from, identical to or confusingly similar to any Food Trademark shall be
contributed to the LLC.
SECTION 2.08. Preservation of Trademarks; Responses to Third Party
Activity.
(a) Actions by Weight Watchers with Respect to Trademarks or Service Marks
Used in the Weight Watchers Business. If Weight Watchers determines not to renew
the registration of any Weight Watchers trademarks or service marks (other than
the Food Trademarks) used in the Weight Watchers
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Business, Weight Watchers will notify Heinz at least one hundred and twenty
(120) days prior to such renewal, except for intention to use applications, in
which case Weight Watchers will provide sixty (60) days' written notice of use
requirements. If Heinz thereafter requests, Weight Watchers will renew the
registration at Heinz's sole expense.
(b) Mutual Cooperation. The parties agree to cooperate with each other and
with the LLC in protecting and defending the Food Trademarks and the Program
Information in a manner consistent with the terms and conditions of this
Agreement, and Weight Watchers and Heinz agree to comply with the terms and
conditions of any license agreement between or among them and the LLC. The
parties will periodically (no less than once per year or otherwise upon
reasonable written request) furnish the LLC and each other with samples of all
labels, advertising, promotional and marketing material showing its use of the
Food Trademarks for the purpose of supporting the fame, notoriety and reputation
of the Food Trademarks and for registration, maintenance, and prosecution and
renewal purposes. The parties also agree to cooperate to furnish such other
information that is required for trademark prosecution and enforcement purposes,
including information concerning sales volume and dollar value of Licensed
Products bearing the Food Trademarks.
(c) Further Documents. The parties agree to execute such documents from
time to time as may be necessary to carry out the intent of this Section 2.08.
(d) Unauthorized Use of the Food Trademarks. Each party agrees to promptly
notify the other and the LLC in writing of any unauthorized use of the Food
Trademarks or Program Information by a third party promptly after such
unauthorized use comes to that party's attention. Either party, at its cost and
expense, may bring or cause to be brought or cause the LLC to bring or cause to
be brought any prosecution, lawsuit, action, or proceeding for infringement,
unauthorized use, or interference with or violation of any such right, to the
extent permissible under local law. Each party shall provide the other with such
assistance and information and advice as may be reasonably available to it and
which may be of assistance to the other in respect of proceedings involving a
third party concerning the Food Trademarks, including being joined as a party to
such proceedings, executing any and all documents and cooperating as may
reasonably be necessary to assist the other party's counsel in the conduct of
such defense or prosecution. For purposes of bringing such enforcement actions,
the parties agree to take such action or to execute such documents as may be
necessary to empower the other party to bring such action on its behalf. Each
party will pay its own costs in connection with any action taken in respect to
this Section and will pay the reasonable out of pocket costs of the LLC in
accordance with the applicable license. The party bringing or defending
proceedings against a third party will have the benefit or burden of any
settlement with such third party. Rights acquired by operation of law will be
assigned to the appropriate party.
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SECTION 2.09. Dispute Resolution. (a) If either party commits a breach of
or is in default under this Agreement, the other party shall provide written
notice thereof specifying the nature of the breach or default and identifying
the steps required to cure the same.
(b) Upon the occurrence of any breach or default under this Agreement,
each Party, in addition to any other right provided in this Agreement or
otherwise, shall have the right to make application for a temporary, preliminary
or permanent injunction and/or specific performance in order to prevent the
continuation of such breach or default. Each party waives any requirement that
the other party be required to post a bond in connection with any request for an
injunction. Each party acknowledges that an injunction or an order of specific
performance may be necessary to protect the Food Trademarks and Program
Information and the rights of Weight Watchers and Heinz hereunder as the case
may be, because the Food Trademarks and Program Information are unique and the
success and viability of sales of the Licensed Products and the marketing of the
Weight Watchers Business depends upon Weight Watchers and Heinz performance.
(c) Notwithstanding Section 2.09(b), it is agreed expressly by the parties
to this Agreement that termination is not available as a remedy for any breach
or default committed by another party under this Agreement.
SECTION 2.10. Insurance. (a) At all times during the term of this
Agreement, Weight Watchers and Heinz will maintain adequate professional/product
liability insurance to cover claims related to (i) Weight Watchers Business in
the case of insurance held by Weight Watchers; (ii) the Heinz Licensed Products
in the case of insurance held by Heinz and (iii) the Weight Watchers Licensed
Products in the case of insurance held by Weight Watchers. Weight Watchers'
insurance policy will name Heinz and its Sublicensees specified by Heinz as
additional insureds. Heinz' insurance policy will name Weight Watchers and
Weight Watchers Affiliates and Sublicensees specified by Weight Watchers as
additional insureds. A copy of each parties' current policy will be available to
the other party upon request. Heinz acknowledges that $10,000,000 of coverage is
adequate for purposes of this provision.
(b) The insurance requirements of the first sentence of Section 2.l0(a)
are waived for either party as long as that party has a senior unsecured
long-term debt rating of at least A- or its equivalent with at least two of the
following rating agencies: (i) Standard and Poor's; (ii) Xxxxx'x; (iii)
I.B.C.A.; (iv) Duff and Xxxxxx; and (v) Fitch. In the event that the above
agencies are no longer available the parties will use rating agencies of
equivalent standing.
SECTION 2.11. Indemnification. (a) Each party shall indemnify and agrees
to defend the other party and the other party's Affiliates and Sublicensees,
from
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any and all claims, liabilities and damages (but excluding any incidental or
consequential damages, or claims for lost profits) resulting from or arising out
of the manufacture, packaging, distribution, selling, handling, consumption or
marketing of the Licensed Products by the indemnifying party after the Effective
Date, except to the extent such claims, liabilities and damages are the result
of or caused by the negligence of the indemnified party or its Affiliates or
Sublicensees.
(b) Weight Watchers shall indemnify and agrees to defend Heinz and its
Affiliates and Sublicensees from any and all claims, liabilities and damages
(but excluding any incidental or consequential damages, or claims for lost
profits) resulting from or arising out of the conduct or operation of Weight
Watchers Business or any other use by Weight Watchers or Weight Watchers
Affiliates or their respective licensees of the Food Trademarks or the Program
Information, after the Effective Date, except to the extent Heinz is required to
indemnify and defend Weight Watchers and Weight Watchers Affiliates under
Section 2.12(a).
(c) Each party seeking indemnification hereunder: (i) shall provide the
other party with reasonable notice of any such claim and cooperate with the
defense of any such claim, and (ii) agrees that the provisions of this Section
2.11 shall survive any termination of this Agreement for the period of any
applicable statute of limitations.
SECTION 2.12. Obligations Concerning Confidentiality. The parties
acknowledge that they will exchange certain confidential or proprietary business
information and know-how (collectively the "Confidential Information"). The
receiving party shall not disclose such Confidential Information to any
unauthorized third party. Confidential Information of another party may be
disclosed internally by the receiving party only to those who have a
"need-to-know" such Confidential Information. The receiving party will make no
copies of the Confidential Information except upon the written permission of the
disclosing party. The obligation of confidentiality set forth herein shall not
apply to information which (a) was publicly available at the time of the
disclosure to the receiving party; (b) subsequently becomes publicly available
through no fault of the receiving party; (c) is rightfully acquired by the
receiving party from a third party who is not in breach of a confidential
obligation with regard to such information; (d) is independently known by the
receiving party whether prior to or during the term of this Agreement; or (e) is
disclosed with the written consent of the party who owns the Confidential
Information.
SECTION 2.13. Costs and Expenses. (a) Except as may be otherwise agreed,
each party agrees to be responsible for their respective costs and expenses
arising from their entry and continued performance of this Agreement.
(b) Except as may be otherwise agreed, each party will pay and discharge
any and all expenses, charges, fees and taxes arising out of and
16
incidental to the carrying on of its respective business and will save the other
party harmless against any and all claims by third parties for such expenses,
charges, fees and taxes (except for any taxes imposed on the income of the
other). This provision shall survive any termination of this Agreement for the
period of any applicable statute of limitations.
SECTION 2.14. Profits and Revenue Sharing; Assignment of Existing
Licenses. (a) Heinz hereby agrees to annually pay Weight Watchers an amount
equal to the amount that Weight Watchers is obligated to pay to Weight Watchers
Franchisees pursuant to agreements in effect on the Effective Date
(collectively, the "Sharing Agreements") between Weight Watchers and Weight
Watchers franchisees, but only in respect to and to the extent of distributions
such franchisees would be entitled to receive under such Sharing Agreements from
revenues of Weight Watchers arising from the sale and distribution of food
products based on the food licensing agreements between Weight Watchers and
Heinz Affiliates identified on Schedule [ ] (the "Food License Agreements") as
are in effect immediately prior to the Effective Date. Heinz will have sole
responsibility for any obligations under the Sharing Agreements pertaining to
Heinz Licensed Products or arising from the Heinz Sublicenses for the period
specified in Section 2.03 hereof. Weight Watchers will have sole responsibility
for any obligations under the Sharing Agreements pertaining to Weight Watchers
Licensed Products or arising from Heinz Sublicenses when transitioned to Weight
Watchers as contemplated in Section 2.03.
(b) The parties agree that, notwithstanding the calculations required to
be made pursuant to the Sharing Agreements, Heinz is not obligated to reimburse
Weight Watchers for amounts which otherwise would be paid to (i) franchisees
that have been reacquired by Weight Watchers or Weight Watchers Affiliates prior
to the Effective Date, and (ii) those Weight Watchers Franchisees that have
assigned their rights under Sharing Agreements to Weight Watchers or Weight
Watchers Affiliates prior to the Effective Date. Heinz acknowledges that the
membership statistics of the Weight Watchers Franchisees noted in (i) and (ii)
above, among others, will be used in calculating the Weight Watchers
Franchisees' payments pursuant to such Sharing Agreements and the amount of the
reimbursement required to be paid by Heinz to Weight Watchers hereunder.
(c) For purposes of Section 2.14(a) only, the royalty rate payable under
the Food License Agreements as of the Effective Date shall be used in
determining Weight Watchers Related Business Income and Franchisor's Shared
Revenues, as those terms are defined in the Sharing Agreements. Heinz
acknowledges that it has read and is familiar with the terms and conditions of
the Sharing Agreements and Heinz agrees that the information that it will supply
to Weight Watchers for purposes of Weight Watchers computing its obligations
under the Sharing Agreements will be true and accurate in all material respects
and in conformance with the requirements of the Sharing Agreements so that
Weight Watchers Franchisees will continue to receive the benefit of
distributions
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under the Sharing Agreements they would otherwise be entitled to receive
notwithstanding the assignment of the Food Licensing Agreements to Heinz
pursuant to a license agreement between Heinz and the LLC.
Heinz' obligations under Section 2.14(a) shall be limited to the
obligations of Weight Watchers to such Weight Watchers Franchisees as such
obligations exist as of the Effective Date and as they may be subsequently
reduced pursuant to Sections 2.14(b)(i) and (ii), it being understood that
Heinz' obligations hereunder shall not be increased in any way as a result of
any amendments or modifications to the Sharing Agreements which become effective
after the Effective Date.
(d) Heinz acknowledges that Weight Watchers is required to make payments
under the Sharing Agreements on or before the first day of the fifth calendar
month following the end of Weight Watchers Fiscal Year as defined in the Sharing
Agreements. Heinz shall provide Weight Watchers with the information concerning
its Revenues, as defined in the Food Licensing Agreements, and the reimbursement
payments pursuant to this Section 2.14, in sufficient time to enable Weight
Watchers to make the required calculations on a timely basis. Heinz shall
cooperate, and cause its auditors to cooperate, with Weight Watchers auditors in
furnishing Weight Watchers Franchisees with the audited information specified in
the Sharing Agreements. Heinz agrees to pay Weight Watchers its obligations
hereunder no later than ten (10) days prior to the date Weight Watchers is
obligated to make payment to Weight Watchers Franchisees or ten (10) days after
being advised by Weight Watchers of the amount of such obligation, whichever is
later.
SECTION 2.15. Term. This Agreement shall take effect as of the Effective
Date and shall continue for an initial term of twenty-five (25) years at which
time this Agreement will automatically renew for consecutive terms of
twenty-five (25) years each, unless terminated pursuant to Section 2.16.
SECTION 2.16. Termination.
(a) Notwithstanding anything herein to the contrary, either party shall
have the right to terminate this Agreement to be effective upon 365 days written
notice to the other party if the other party has ceased all bona fide commercial
sale of Licensed Products everywhere in the world for a continuous period in
excess of twenty-four (24) months and does not commence bona fide commercial
sale of any Licensed Product in any country within such 365 day notice period.
(b) Either party has the right to terminate this Agreement upon the
written consent of the other party.
SECTION 2.17. Assignment. Either party can assign or transfer its rights,
but not any partial interest therein, under this Agreement without the consent
of
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the other party to an Affiliate or in the event of a change-in-control of the
party or of a sale by the party of all or substantially all of the assets to
which the party's use of the Food Trademarks relates, provided that the buyer,
assignee or transferee agrees in writing to be bound to all of the terms of this
Agreement and that the party to whom this Agreement is transferred will also
assume ownership in the transferring party's membership interest in the LLC and
its rights and obligations in the LLC Agreement. Except as specified in this
provision, no sale, assignment or transfer of all or any portion of a party's
interest shall be made without the written consent of the other party, and any
purported sale, transfer or assignment made in violation of this provision shall
be null and void. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 2.18. Relationship of Parties. Nothing herein contained shall be
deemed to create the relationship of partnership or joint venture between the
parties. The parties shall have neither the right to incur any obligation to
third parties which shall be binding upon the other nor have any interest in the
profits and liabilities of the other arising out of or resulting from the
subject matter of this Agreement.
SECTION 2.19. Relationship with the LLC. Weight Watchers and Heinz agree
that they each shall conduct their respective affairs, and shall cause their
affiliates, licensees and franchisees to conduct their respective affairs, in
such a manner as to fully honor, recognize, preserve and maintain the LLC as a
separate and distinct entity with the sole right, title and interest in and to
its property. Without limiting the generality of the foregoing, the parties
agree that they and their affiliates, licensees and franchisees:
(a) shall maintain their place of business in locations separate from
those of the LLC;
(b) shall maintain their books and records separately from those of the
LLC;
(c) shall maintain their assets and funds separately from those of the
LLC;
(d) shall maintain their respective financial statements such that, to the
extent any interest in the LLC or their respective assets is reflected on such
financial statements, such financial statements shall disclose, in a footnote or
otherwise, the existence of the LLC and its sole and exclusive ownership of its
property;
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(e) shall not hold themselves out to any person as owner of or as having
any direct ownership in or as having any direct interest in the property of the
LLC and any reference to ownership of such property, whether written or oral,
shall disclose the ownership thereof by the LLC; and
(f) shall not guarantee or otherwise become a co-obligor on any debts of
the LLC.
SECTION 2.20. Notices. Unless otherwise specified herein, notices to the
parties shall be sent by prepaid certified or registered mail, or by a national
overnight courier service, to the parties at the following addresses (or at such
other address as shall be specified by like notice) and notice will be deemed to
have been received by the other party two days after mailing in the case of
certified or registered mail and the day after mailing in the case of notice
sent by overnight courier.
(A) if to Heinz:
X.X. Xxxxx Company
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: President with a copy to the General Counsel
(B) If to Weight Watchers:
Weight Watchers International, Inc.
000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Attn: President with a copy to the General Counsel
SECTION 2.21. Governing Law. This Agreement is entered into in the State
of New York and the validity, construction and effect of this Agreement (and all
performance related thereto) shall be governed, enforced and interpreted under
the laws of the State of New York relating to contracts entered into and to be
fully performed therein.
SECTION 2.22. Miscellaneous.
(a) Nothing expressed or implied in this Agreement is intended or shall be
construed to confer upon or give any person other than Weight Watchers or Heinz
any rights or remedies under this Agreement.
(b) The failure of either party to insist on compliance with any provision
hereof shall not constitute a waiver or modification of such provision or any
other provision nor shall resort to a remedy constitute a waiver of the right to
resort to another remedy provided for under this Agreement.
(c) If any provision hereof is held to be invalid or unenforceable by any
court of competent jurisdiction or any other authority vested with jurisdiction,
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such holding shall not affect the validity or enforceability of any other
provision hereto.
(d) The section order and headings are for convenience only and shall not
be deemed to affect in any way the language, obligations or the provisions to
which they refer.
(e) This Agreement may be amended or modified only in writing and when
executed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
WEIGHT WATCHERS INTERNATIONAL, INC.
By: ______________________________________________
Name: ____________________________________________
Title: ___________________________________________
X.X. XXXXX COMPANY
By: ______________________________________________
Name: ____________________________________________
Title: ___________________________________________
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