LICENSE AGREEMENT
This "AGREEMENT" is between Jolles Corporation ("LICENSOR"), Xxxxxxx
Xxxxxx ("XXXXXX") and The Quizno's Acquisition Company ("COMPANY").
RECITALS
WHEREAS, Company has acquired all of the rights, title and interest in
the restaurant operation and franchise system of Xxxx'x Deli Franchise
Associates, L.P. ("XXXX'X DELI"), including the portion of the system using
the trademark and service xxxx "Xxxx'x Deli" (registered with the United
States Patent and Trademark Office under No. 959079) and related trademarks,
service marks, and trade dress (collectively, the "MARKS") and any rights in
the Marks owned by Xxxx'x Deli, pursuant to an asset purchase agreement and
related closing documents of even date herewith ("PURCHASE AGREEMENT");
WHEREAS, Jolles is a former partner of Xxxx'x Deli and the Marks are
currently registered in the name of Licensor; and
WHEREAS, Licensor and Jolles desire to allow Company to use the Marks
pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. GRANT OF LICENSE. Licensor hereby grants to Company a license to
use, and to authorize existing and new Xxxx'x Deli franchisees ("XXXX'X
FRANCHISEES") to use, the Marks in conjunction with the sale of products sold
and offered in and through Xxxx'x Deli restaurants ("LICENSE"). Licensor and
Jolles hereby specifically approve the transactions contemplated by the
Purchase Agreement.
2. NATURE AND GEOGRAPHIC SCOPE OF LICENSE. The License granted
hereby is an exclusive license to use the Marks and to grant sublicenses and
license to others to use the Marks anywhere in the world. Licensor will
defend ownership of the Marks and the Company's rights to use the Marks
against any third-party (including Xxxx'x Franchisees) challenging such
ownership and use.
3. TERM. The License shall be perpetual unless terminated early as
follows: Licensor may terminate this Agreement with written notice, effective
thirty (30) days after such notice is given, in the event that (1) the Company
is subject to a petition in bankruptcy, voluntary or involuntary; or (2) the
Company is found to have materially breached any of the terms of this
Agreement by a court of competent jurisdiction in a final nonappealable order
4. SALES OF NEW FRANCHISES. Licensor and Jolles shall have the right
to offer and sell on behalf of the Company franchises for Xxxx'x Deli
restaurants subject to the following conditions:
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4.1. Such offers and sales are done in accordance with all applicable
state and federal regulations and requirements that govern the offers and
sales of franchises, and pursuant to an effective and registered (where
applicable) Uniform Franchise Offering Circular ("UFOC") and franchise
agreement approved by the Company.
4.2. The Company shall have final approval, in the Company's sole
discretion, of any new franchisee and of the franchised location for such
franchisee.
4.3. The Independent Contractor Agreement between the Company and
Jolles of even date herewith (the "INDEPENDENT CONTRACTOR AGREEMENT") has not
been terminated.
5. PAYMENTS.
5.1. Existing Xxxx'x Franchisees. Neither Licensor nor Jolles will
be paid any fee for use of the Marks by Xxxx'x Franchisees or licensees
existing as of the date of this Agreement.
5.2. Sales Services Commissions and Conditions of Payment. During
the term of this Agreement, for any new Xxxx'x Franchisee who is sold a
franchise by Licensor or Jolles ("QUALIFIED XXXX'X FRANCHISEE"), Licensor
shall be paid a commission, as set forth in this Section, based on a
percentage of initial franchise fee paid by any Qualified Xxxx'x Franchisee
for the purchase of a franchise for a Xxxx'x Deli restaurant ("SALES SERVICES
COMMISSION"), subject to fulfillment of the following conditions ("FRANCHISE
SALES CONDITIONS"):
(a) The Qualified Xxxx'x Franchisee executes a franchise agreement
with the Company and an initial franchise fee has been paid and actually
received by the Company;
(b) The sale for which the initial franchise fee has been paid is not
a resale of any existing Xxxx'x Deli restaurant, or any interest therein; and
(c) Licensor has complied with all other of its obligations under
this Agreement and the Independent Contractor Agreement with respect to such
sale and has verified the same to Company, in writing in a form prescribed by
Company.
5.3. Sales Services Commission Payments Sales Services Commission
Payments. Sales Services Commissions shall be an amount equal to 25% of the
total initial franchise fees paid to the Company by Qualified Xxxx'x
Franchisees, and will be payable to Licensor within 20 days after the
Franchise Sale Conditions have been satisfied or excused. Licensor shall not
receive any Sales Services Commission for Xxxx'x Deli restaurants owned and
operated by Company, its affiliates or designees ("COMPANY OWNED
RESTAURANTS"), if any.
5.4. Site Services Commissions Site Services Commissions.
During the term of this Agreement, Licensor shall be paid a commission in an
amount equal to 25% of the total initial franchise fees paid to Company ("SITE
SERVICES COMMISSION") by any Qualified Xxxx'x Franchisee, payable within 20
days after the Qualified Xxxx'x Franchisee's Xxxx'x Deli restaurant commences
operations, upon Licensor's completion of the Site Services as described in
Section 6.2. Licensor shall not receive Site Services Commissions for Company
Owned Restaurants.
5.5. Commissions on Royalty Fees Commissions on Royalty Fees.
Company shall pay to Licensor, within 20 days of the end of each four or five
week period as determined by Company, 50% of the royalty fees (which excludes
advertising fees and other fees, if any) actually received by Company from
each Qualified Xxxx'x Franchisee during the applicable period pursuant to the
Qualified Xxxx'x Franchisee's franchise agreement ("ROYALTY FEES"); provided
that if Licensor fails to conduct the periodic inspections or file reports
described in Section 6.3 or fails to perform in any material respect the other
services described in Section 6 to be provided to Xxxx'x Franchisees during
any applicable month, Licensor shall not be entitled to receive commissions on
Royalty Fees with respect to such Franchisees for the period during which
reports or services were not provided.
5.6. Application of Payments Application of Payments. Company's
payments to Licensor shall be based on amounts actually collected from
Qualified Xxxx'x Franchisees, not on payments accrued, due or owing. In the
event of termination of a franchise agreement for a Qualified Xxxx'x
Franchisee under circumstances entitling the Qualified Xxxx'x Franchisee to
the return of all or part of the initial franchise fee or Royalty Fees (or in
the event that Company becomes legally obligated or decides in its sole
discretion to return part or all of the initial franchise fee or Royalty
Fees), Company may deduct the portion of the amount to be returned to
Qualified Xxxx'x Franchisee in the same proportion as Licensor shared in the
initial franchise fee or Royalty Fees from any future amounts owed Licensor or
may require a refund from Licensor.
5.7. Setoffs Setoffs. Company shall be allowed to set off
amounts owed to Licensor against any monies owed to Company by Licensor.
6. LICENSOR'S OBLIGATIONS.6. LICENSOR'S OBLIGATIONS.
6.1. Designated Representative. Jolles shall be the designated
representative of Licensor for purposes of fulfilling Licensor's obligations
hereunder, and such obligations shall also be duties of Jolles under the
Independent Contractor Agreement Designated Representative. Jolles shall
be the designated representative of Licensor for purposes of fulfilling
Licensor's obligations hereunder, and such obligations shall also be duties of
Jolles under the Independent Contractor Agreement. Licensor and Jolles
acknowledge that compensation for services performed for Xxxx'x Franchisees
existing as of the effective date of this Agreement shall be set forth in the
Independent Contractor Agreement.
6.2. Site Services Site Services. Licensor shall perform the
pre-opening and site services on behalf of the Company in accordance with the
Company's specifications required under the franchise agreement with respect
to Qualified Xxxx'x Franchisees.
6.3. Ongoing Support Services Ongoing Support Services. With
respect to all Xxxx'x Franchisees, Licensor- shall perform the following
Support Services on behalf of Company in accordance with the Company's
specifications:
(a) Upon the reasonable request of the Xxxx'x Franchisee, provide
consultation by telephone regarding the continuing operation and management of
the restaurant and advice regarding restaurant services, product quality
control, menu items and customer relations issues;
(b) Provide on-going updates of information and programs regarding
menu items and their preparation, the restaurant business, including without
limitation information about special or new services of Company;
(c) Provide advice and assistance to the Xxxx'x Franchisee in
connection with the development of and improvements to the restaurant;
(d) Conduct at least one quality assurance inspection of each Xxxx'x
restaurant bi-monthly in the manner as required by Company from time to time,
said inspections to be verified by written reports in a form acceptable to
Company; and
(e) Submit periodic reports to Company using procedures and forms
prescribed by Company.
6.4. Compliance with Franchise Agreement Compliance with
Franchise Agreement. Licensor acknowledges that it is being delegated certain
responsibilities of Company under the franchise agreements. Licensor shall
in all respects comply with the terms and conditions of any franchise
agreements or other agreement in effect between any Xxxx'x Franchisee and the
Company. Licensor and Jolles understand, however, that they are not in any
manner parties, third party beneficiaries or holders of any other right, title
or interest in or to any franchise agreement.
7. JOLLES CORPORATION FRANCHISES.
7.1. Current Franchises. The Company hereby acknowledges that Jolles
and/or Licensor own four Xxxx'x Deli restaurants as of the Effective Date of
this Agreement (the "JOLLES FRANCHISES"). The Company agrees that so long as
the Jolles Franchises remain wholly owned by Jolles (either individually or as
the sole shareholder of Licensor), Jolles shall not be required to pay
royalties to the Company for the Jolles Franchises for use of the Marks.
However, if any Jolles Franchise is transferred or sold to any third party,
such third party shall be required to sign the Company's then-current form of
franchise agreement and comply with all terms and conditions thereunder,
including payment of fees and royalties.
7.2. Future Franchises. If Jolles elects to open additional Xxxx'x
Deli restaurants ("ADDITIONAL FRANCHISES"), the Company acknowledges that
Jolles will not be required to pay an initial franchisee fee to the Company
for any such Additional Franchises, but shall be required to pay royalties to
the Company for any Additional Franchises in an amount equal to 5% of Gross
Sales from each Additional Franchise; provided, however, the locations for any
Additional Franchises have been approved by the Company, that Jolles sign the
Company's the-current form of franchise agreement, and any Additional
Franchises remain wholly owned by Jolles (otherwise Section 7.1 applies).
8. INDEMNIFICATION.
8.1. Indemnification by the Company. The Company agrees to indemnify
and hold harmless Licensor, its subsidiaries, directors, officers, agents, and
other representatives from and against any and all costs, losses, liabilities,
damages, claims or expenses (including, with-out limita-tion, attorneys' fees,
expert witness fees and expenses incurred in defending against any such claim)
incurred by Licensor that arise out of or result solely from (i) any
misrepresentation, breach of any warranty or the non-fulfillment of any duty
or obligation of the Company in this Agreement; or (ii) any claims or suits by
any person related to acts or omissions of the Company or the operation of the
Xxxx'x Deli franchise system other than Licensor's acts or omissions. To
qualify for such defense and indemnification, Licensor must give the Company
prompt written notice of any such claim and allow the Company, at its sole
expense, to conduct and control the defense of such claim and all related
settlement negotiations and Licensor shall reasonably cooperate with the
Company in such defense.
8.2. Indemnification by Licensor and Jolles. Licensor and Jolles
shall indemnify and hold harmless the Company from and against any and all
costs, losses, liabili-ties, damages, claims or expenses (including, with-out
limita-tion, attorneys' fees, expert witness fees and expenses incurred in
defending against any such claim) incurred by the Company arising out of or
resulting from (i) any misrepresentation, breach of any warranty or the
non-fulfillment of any duty or obligation of Licensor or Jolles in this
Agreement; (ii) any claims or suits by any person related to acts or omissions
of Licensor or Jolles; or (iii) claims relating to infringement or ownership
of the Marks. To qualify for such defense and indemnification, the Company
must give Licensor prompt written notice of any such claim and allow Licensor,
at its sole expense, to conduct and control the defense of such claim and all
related settlement negotiations, and the Company shall reasonably cooperate
with Licensor in such defense; provided, however, that if the claim alleges
equitable relief against the Company or its affiliates, the Company shall have
the right to conduct and control the defense of such equitable claims and
related settlement negotiations.
9. ADDITIONAL CONDITIONS AND UNDERSTANDINGS.
9.1. Notices. Any notice and similar communications concerning this
Agreement ("NOTICE") shall be in writing and shall be either (i) delivered in
person; or (ii) sent to the other party by certified mail with return receipt
requested or by facsimile, electronically confirmed. Notices shall be
delivered or sent to the following addresses or to such other address as
either party may hereafter establish by Notice. A Notice shall be considered
given when delivered.
If to Licensor or Jolles:
If to the Company:
The Quizno's Acquisition Company
0000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
9.2. Compliance With Other Agreements. The parties represent and
warrant that the execution and performance of this Agreement will not, with or
without the giving of notice or the passage of time, conflict with, result in
the breach of or the termination of, or constitute a default under any
agreement to which either party is a party or by which either party is or may
be bound.
9.3. Compliance with Laws. Company and Licensor shall comply with
all applicable federal, state, and local laws, regulations, rules and orders
with respect to their obligations under this Agreement.
9.4. Severability. The parties intend that the provisions of this
Agreement be enforced to the fullest extent permissible under the laws and the
applicable public policies of the states within which this Agreement is
performed. If any particular term of this Agreement is adjudicated or
determined to be invalid or unenforceable, such determination shall only apply
to that term and the remaining terms shall be enforceable to the fullest
extent permissible under the laws and public policies applying thereto.
9.5. Confidentiality. Except as specifically provided herein and to
the extent reasonably necessary to perform its obligations or exercise or
enforce its rights hereunder, neither party shall pro-vide or disclose to any
third party, or use, unless autho-rized in writing to do so by the other party
or properly directed or ordered to do so by public authority, any information
or matter that constitutes or concerns the terms and conditions of this
Agree-ment or that regards any dealings or negotiations with the other party
related to this Agreement or any other subject; provided, however, that the
parties may consult with their respec-tive counsel with respect to such
information and matter if said counsel agree to abide by the terms and
conditions of this Section.
9.6. Governing Law and
Jurisdiction. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Colorado. The parties hereto consent
to venue and jurisdiction in the District Court in and for the City and County
of Denver, Colorado, or in the United States District Court for the District
of Colorado, in any action commenced relating to this Agreement or the
transactions contemplated hereby. The parties agree that any action or
proceeding arising out of this Agreement shall be heard by a court sitting
without a jury and thus hereby waive all rights to a trial by jury.
9.7. Attorneys' Fees. In the event of any
dispute hereunder, or any default in the performance of any term or condition
of this Agreement, the prevailing party shall be entitled to recover all costs
and expenses associated therewith, including reasonable attorneys' fees.
9.8. Complete Agreement. This Agreement shall become binding upon
execution of both parties. This Agreement and the other agreements and
documents identi-fied herein (including without the Independent Contractor
Agreement) represent the complete agreement of the parties and shall supersede
all pre-vious and contemporaneous negotiations, corres-pondence, commitments,
agreements and under-standings of the parties, whether oral or written, with
respect to the transactions contemplated hereby, including, without limitation
any prior letters of intent between the parties.
9.9. Amendment and Waiver. No amendment, waiver or modifi-cation of
this Agreement shall be effective unless it is in writing and signed by the
party or parties against whom such amendment or waiver is to be enforced.
9.10. Counterparts. This Agreement may be executed in mutual
counterparts and by facsimile and each such counterpart shall bind the party
executing it.
9.11. Notice of Default. Neither party shall be in default or breach
of any obligation under this Agreement until that party has received written
notice specifying the circumstances that are claimed to result in a default or
breach, and that party has failed to cure the same within ten (10) days
following receipt of the written notice.
9.12. Assignment. Neither the License nor this Agreement shall be
assignable by the Licensor except with the express written consent of the
Company, which consent shall not be unreasonably withheld. The Company may
assign its rights or obligations hereunder in its sole and absolute
discretion.
9.13. Recitals and Headings. The recitals, titles and headings
herein are for convenience only. In case of ambiguity or inconsistency, the
text rather than the recitals, titles or headings shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement themselves
or by their authorized representatives.
THE QUIZNO'S ACQUISITION COMPANY JOLLES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxx
Its: VP and General Counsel Its: President
/s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
E:\LEGALADM\QUIZNO'S\XXXX'X\AGLICENS.
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