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EXHIBIT 10.16
TRADEMARK LICENSE AGREEMENT
This Agreement, dated the 10th day of October, 1997, is made
between BYB Properties, inc., a Delaware corporation with its sole office
located at suit 200, 000 Xxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx, 00000 ("BYB"), and
Back Yard Burgers, Inc., a Delaware corporation with its principal offices
located at 0000 Xxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxxx 00000 ("Burgers").
RECITALS
WHEREAS, BYB is the owner of all right, title and interest in
and to those certain trademarks, trade names and service marks, and all related
registrations and applications for registration, as more particularly identified
on Exhibit A which is attached hereto and made a part hereof (collectively, the
"Trademarks").
WHEREAS, Burgers desires to acquire the right to use the
Trademarks as part of its corporate name and in connection with its business of
operating and franchising a chain of fast-food restaurants in the Territory (as
defined herein), and to acquire the right to franchise or sub-license the
Trademarks to its franchisees, sublicensees, affiliates and subsidiaries;
WHEREAS, BYB is willing to authorize and license Burgers such
rights under the Trademarks.
NOW THEREFORE, for good and valuable consideration, the receipt
and adequacy of which are acknowledged by the parties, BYB and Burgers,
intending to be legally bound, agree as follows:
ARTICLE I - DEFINITIONS
1.1 "Trademarks" shall mean all those certain registered and
unregistered trade names, trademarks, service marks, and all
related registrations and applications for registration,
identified on Exhibit A hereto, and any future trade names,
trademarks and service marks added to the scope of this
Agreement by the mutual agreement of the parties.
1.2 "Licensed products" shall mean all services and products of
Burgers delivered under the Trademarks.
1.3 "Territory" shall mean the continental United States of
America.
1.4 "Affiliate" or "Subsidiary" - shall mean any entity in which
Burgers owns at least a majority of the voting control of such
entity.
1.5 "Franchisee" or "Sublicensee" - shall mean any entity in which
Burgers does not own a majority of the voting control of such
entity to whom Burgers grants a franchise or sublicense of the
Trademarks.
ARTICLE II - GRANT OF LICENSE
2.1 BYB grants Burgers the non-exclusive, non-assignable right and
license to use the Trademarks in Burgers' corporate name and in
connection with packaging, selling, marketing, operating and
distributing the Licensed Products within the Territory.
2.2 BYB further authorizes Burgers to grant appropriate sublicenses
hereunder to Affiliates or Subsidiaries, all subject to the
terms and conditions hereinafter stated.
2.3 BYB further authorizes Burgers to franchise and sublicense the
Trademarks to Franchisees and Sublicensees, all subject to the
terms and conditions hereinafter stated. BYB reserves the right
to disallow any Franchise or Sublicense of the Trademarks
within 30 days of BYB receiving notice of the grant of such
Franchise or Sublicense.
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ARTICLE III - QUALITY CONTROL
3.1 BYB shall have the right to exercise quality control over
Burgers' use of the Trademarks and Licensed Products to a
degree reasonably necessary to maintain the validity of the
Trademarks and to protect the goodwill associated therewith.
BYB recognizes and approves the quality of Burgers' products
heretofore sold by Burgers under the trademarks now termed the
Trademarks in the territory now termed the Territory.
3.2 Burgers shall use the Trademarks on or in connection only with
those Licensed products that conform to the specifications and
standards of quality which BYB prescribes. BYB adopts as said
standards of quality those standards embodied in said products
sold heretofore by Burgers, and Burgers will not deviate
materially from those standards without prior written approval
from BYB.
3.3 In order to verify compliance with Paragraph 3.2 hereof, BYB
may from time to time require Burgers to submit samples of
Licensed Products, packaging and promotional materials
therefor, and other items bearing the Trademarks, or submit
reports and documents prepared in the ordinary course of
business, and BYB, or its delegate, may inspect the licensed
Products, packaging, or promotional materials on Burgers'
premises during business hours, upon forty-eight (48) hours
advance notice.
3.4 Burgers shall use its best efforts to ensure that the Licensed
Products, and packaging or promotional materials therefor,
comply with all applicable ordinances, laws, and statutes
governing the manufacture, packaging, promotion, and sale of
such products.
ARTICLE IV - USE OF THE TRADEMARKS
4.1 Burgers shall use its best efforts to promote and extend demand
for the Licensed Products sold under the Trademarks in the
Territory.
4.2 Burgers recognizes the great value and goodwill associated with
the Trademarks and acknowledges BYB's ownership in same.
Burgers is a related company as defined in Section 45 of the
Trademark Act of the United States, 15 U.S.C. ss.1127, and
Burgers' use of the Trademarks inures to the benefit of BYB for
all purposes including trademark registration. Burgers shall
not, however:
(a) challenge the validity of the Trademarks or any
registration therefor;
(b) contest the fact that its rights under this Agreement
are solely those of a licensee;
(c) attempt to register any of the Trademarks in its own
name;
(d) use the Trademarks in any manner that would jeopardize
BYB's rights in the Trademarks; or
(e) knowingly do any act that would invalidate or be likely
to invalidate the BYB's trademark registrations.
4.3 Burgers shall affix as a trademark registration notice to the
Licensed Products, and on the packaging, advertising,
promotional items used in conjunction with the Licensed
products the symbol for registered trademarks and TM for
unregistered trademarks.
4.4 Burgers may not combine the Trademarks with any other marks,
names or symbols unless it obtains BYB's prior written consent.
4.5 Burgers may not make any significant change in the presentation
of the Trademarks as affixed to the licensed products, or used
on packaging or promotional materials, unless it obtains BYB's
prior written consent.
4.6 BYB shall be responsible for trademark registration and
maintenance. Burgers shall cooperate with BYB and shall execute
any documents reasonably required by BYB or supply BYB with any
samples or other materials reasonably necessary to maintain the
Trademarks.
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4.7 Burgers is authorized to use the Trademarks in connection with
the advertisement of its products and services in any manner it
deems appropriate, including without limitation use of the
Trademarks on apparel, print media, radio and television. This
authorization is conditioned, however, on such advertising
complying with all applicable local, state and federal laws.
Also, if sales of advertising products are made by Burgers,
such sales will be included with the calculation of the Royalty
under Section 7.1 of this Agreement.
ARTICLE V - TRADEMARK ENFORCEMENT
5.1 In the event that Burgers learns of any infringement or
unauthorized use of any of the Trademarks, it shall promptly
notify BYB. BYB has the right to transmit notices of
infringement to or bring infringement actions against
infringing parties. If requested to do so, Burgers shall
cooperate with and assist BYB in any such action, including
joining the action as a party if necessary, at BYB's expense.
Any award, or portion of an award, recovered by BYB in any such
action or proceeding commenced by BYB shall belong solely to
BYB after recovery by both parties of their respective actual
out-of-pocket costs.
5.2 If BYB determines not to bring any such action, Burgers may
then bring such action in its own name at its own expense
provided it obtains the consent of BYB, which consent shall not
be unreasonably withheld. If requested to do so, BYB shall
cooperate with Burgers in any such action, including joining
the action as a party if necessary, at Burgers' expense. Any
award, or portion of an award, recovered by Burgers shall
belong solely to Burgers after recovery by both parties of
their respective actual out-of-pocket costs.
5.3 In the event a third party institutes an infringement action
against Burgers for its use of the Trademarks as provided in
this Agreement, Burgers shall promptly notify BYB of such suit
in writing. BYB shall defend, at its own expense, any such
action, and Burgers shall cooperate in such defense as
reasonably requested by BYB, at BYB's expense. BYB shall pay
all judgments and settlements resulting from such suits. Any
award received by BYB in such an action shall belong solely to
BYB.
5.4 BYB and Burgers shall keep one another informed of the status
of, and their respective activities regarding, any litigation
concerning the Trademarks. Burgers may not enter into a
settlement or consent judgment involving the trademarks,
however, unless it obtains BYB's prior written consent.
ARTICLE VI - INDEMNITY
6.1 Burgers shall indemnify and hold harmless BYB and its
affiliated entities and their respective officers, employees,
and agents, from any and all claims, suits, damages, attorney's
fees, costs, and expenses arising from Burgers' performance and
activities under this Agreement, whenever and however asserted
and established.
6.2 Burgers shall indemnify and hold harmless Burgers and its
affiliated entities and their respective officers, employees,
and agents, from any and all claims, suits, damages, attorney's
fees, costs, and expenses arising from any claim by any other
person, firm or corporation of either a superior right in and
to the Licensed Products or any feature thereof or infringement
action arising out of the manufacture and sale of the Licensed
Products by Burgers.
ARTICLE VII - ROYALTY
7.1 In consideration of the rights granted herein, burgers shall
pay to BYB a royalty equivalent to a percentage of all gross
sales (less sales tax) of the Licensed products sold by Burgers
and its Affiliates, such percentage currently being three and
one-half percent (3.5%) (the "Royalty"). Burgers and BYB shall
each have the right to require that a new royalty be determined
in accordance with an independent valuation of the Trademarks
which shall be performed by an independent appraiser mutually
agreed upon by the parties (costs to be paid by requesting
party). Once a party exercises its right to require a
valuation, that party shall not have the right to request
another valuation for three (3) years from the date of issuance
of the final draft of the valuation report. The royalty
percentage determined by the valuation study shall then be
applied prospectively to the gross sales (less sales tax) of
Burgers from the date of issuance of the final draft of the
valuation report.
7.2 In consideration of the right to Franchise or Sublicense the
Trademarks hereunder, Burgers shall pay a royalty equivalent to
the Royalty, which shall be calculated against all gross sales
(less sales tax) of Licensed products sold by Franchisees or
sublicensees in the Territory (the "Franchise Fees").
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7.3 Unless agreed to the contrary, Burgers shall calculate the
royalty and Franchise Fees payable to BYB on the last day of
each fiscal month of Burgers occurring during the term of this
Agreement, and shall pay or cause to have paid to BYB such
Royalty and Franchise Fees within thirty (30) days after the
last day of each fiscal month occurring during the term of this
Agreement. Notwithstanding the foregoing, the royalty and
Franchise Fees shall be deemed to accrue from day to day.
Simultaneous with submission of the royalty and Franchise Fees,
Burgers shall deliver to BYB a detailed report of the Royalty
and Franchise Fees payable for the month.
7.4 BYB shall have the right to assess interest on any royalty or
Franchise Fe due and remaining unpaid in the manner and on the
date stipulated for payment hereunder at a rate of one percent
(1%) point per annum above the average prime rate as reported
in The Wall Street Journal for the period of default, such
interest being compounded at the end of each fiscal year.
7.5 Burgers shall maintain complete and accurate records showing in
detail the net sales of the Licensed Products. BYB, or its duly
authorized representative, is entitled to inspect Burgers'
records at all reasonable times.
7.6 BYB agrees to provide instructions to, accept payments from,
and deliver any report, document, or other information
pertaining to this Agreement or the transactions contemplated
by this Agreement to, the management company or other designee
appointed to transact business on behalf of Burgers, if
requested to do so by Burgers.
ARTICLE VIII - TERM AND TERMINATION
8.1 This Agreement will remain in force and effect for a period of
one year from the effective date of this Agreement, and shall
renew automatically for successive yearly periods until either
party provides written notice to terminate the Agreement within
forty-five (45) days before the expiration of the then current
term.
8.2 In the event either party commits a material breach of this
Agreement, the other party may, upon written notice, terminate
the Agreement; provided, however, that the Agreement will not
be terminated if the breaching party cures the breach within
thirty (30) days of receipt of said notice (the "Cure period").
Further, if the breaching party is unable to cure its breach
within the Cure Period for reasons of force majeure, or because
of actions or omissions of the non-breaching party, the
breaching party shall have up to an additional thirty (30) days
in which to cure, so long as the Agreement has not expired.
8.3 Notwithstanding anything to the contrary in paragraph 8.2,
either party may, by written notice to the other party,
terminate this Agreement if any of the following events occur:
(a) the other party goes into liquidation other than a
voluntary liquidation for the purpose of reorganization;
(b) the other party ceases to carry on business;
(c) the other party or a significant part of its business,
assets, ownership, management, or right of disposition
are confiscated, requisitioned, nationalized,
expropriated, or in any other manner acquired without
consent of the other party or its shareholders, as the
case may be, by or on behalf of or under any law or at
the instance of any Government de jure or de facto.
ARTICLE IX - MISCELLANEOUS
9.1 This Agreement contains the entire understanding between the
parties.
9.2 This Agreement may be amended, modified, or supplemented, and
any provision hereof waived, only by a written agreement of the
parties hereto.
9.3 Burgers is not an agent of BYB, and nothing in this Agreement
places the parties in a relationship as partners or joint
venturers.
9.4 any waiver of a breach by either party is not a waiver of any
subsequent or other breach.
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9.5 this Agreement has been executed and delivered by Burgers and
BYB (and will be deemed to be made) in the State of Delaware.
This Agreement will be interpreted and the rights and
liabilities of the parties hereto determined in accordance with
the laws of the State of Delaware. Each of Burgers and BYB
hereby submits to the jurisdiction of any state or federal
court located within New Castle County, Delaware, and consents
that all service of process be made by certified mail directed
to the relevant party at its address set forth above.
9.6 any notice required to be given to a party hereunder shall be
in writing and may be delivered by (I) hand, (ii) United States
first class mail, postage prepaid, (iii) Federal Express (or
any other nationally recognized courier), and delivery charge
prepaid, or (iv) telecopy or any other similar facsimile
device, provided a confirmation sheet is available to confirm
transmission. Each notice shall be addressed to the recipient
at such recipient's last known address (or telecopy number) as
it appears below. Such notice shall be effective: (I) if hand
delivered or couriered when received; (ii) if mailed five (5)
days after the same has been deposited into the U.S. Mails; and
(iii) if dispatched by telecopy or facsimile device, two (2)
days after dispatch. Addresses of the parties are as follows:
BYB: BYB Properties, Inc.
Xxxxx 000
000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Burgers: Back Yard Burgers, Inc.
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
(000) 000-0000
9.7 This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
permitted assigns.
9.8 This Agreement may be executed in counterparts, each of which
when so executed and delivered shall constitute a complete and
original instrument but all of which together shall constitute
one and the same agreement, and it shall not be necessary when
making proof of this Agreement or any counterpart thereof to
account for any other counterpart.
IN WITNESS WHEREOF, each of the undersigned represents that he or she
is authorized to bind his or her company to the terms of this Agreement, signed
to be effective this 10th day of October, 1997:
BYB PROPERTIES, INC.
By:
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Name:
Title:
BACK YARD BURGERS, INC.
By:
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Name:
Title:
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EXHIBIT A
TO
LICENSE AGREEMENT
IDENTIFICATION OF TRADEMARKS
U.S. TRADEMARKS
Xxxx Registration Number Issue Date
---- ------------------- ----------
Great Little Burger 1,744,113 December 29, 1992
Stylized Cooking Grill
w/Flames Emanating
From the Grill 1,679,739 March 17, 1992
Back Yard Burgers 1,679,702 March 17, 1992
BYBurgers 1,518,494 December 27, 1988
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