Royalty Agreement - Gary Hansen, Anthony Kane, Burton S. Rosky and Hansen's Juice Creations LLC
ROYALTY AGREEMENT
This AGREEMENT ("Agreement") made as of April 26, 1996, by and between
GARY HANSEN, ANTHONY KANE and BURTON S. ROSKY, as Trustees (hereinafter
collectively referred to as the "Trustees") under that certain Trust Agreement
dated as of July 27, 1992 for the benefit of Hansen's Juices, Inc., a California
corporation (hereinafter referred to as "HJI") as "Licensor" and HANSEN'S JUICE
CREATIONS, Limited Liability Company, as "Licensee."
The Trustees have obtained by assignment the entire right, title and
interest in and to the trademark which is registered in the United States Patent
and Trademark Office as set forth below, including the goodwill of the business
in connection with which it is used and which is symbolized thereby:
Trademark: Hansen's (hereinafter referred to as the "Trademark.")
U.S. Trademark Registration Number: 1,258,780
Licensee desires to use, and to obtain from Licensor the right, license
and privilege to use, the Trademark worldwide in conjunction with the
manufacture, sale and distribution of fresh brewed coffee, coffee flavored
drinks, coffee beans and/or ground coffee, food spreads, and baked goods (all of
such products are hereinafter sometimes referred to collectively as "Licensed
Goods") and the Licensor is willing to grant such license on the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants of the parties
and for other good and valuable consideration, receipt of which is hereby
acknowledged by the Licensor, the parties hereto agree as follows:
1. License. Licensor grants to Licensee an exclusive worldwide right
and license to use the Trademark, under the state and federal law and under the
auspices and privileges provided by any registration covering said Trademark, on
the Licensed Goods. It is expressly agreed between the parties that the Licensor
retains the exclusive right to use or license the use of the "Hansen's" mark in
connection with the manufacture, sale and/or distribution of goods other than
the Licensed Goods.
Licensee, and any other entity organized by. Licensee for the purpose
of manufacturing, selling, and/or distributing the Licensed Goods shall be
entitled to use the "Hansen's" name in its company name or any assumed or "doing
business" name; provided, however, that Licensee's if its shares are publicly
traded on a recognized stock market, shall not be entitled to use the words
"beverage(s)" or "juice(s)" in conjunction with the "Hansen's" name in the name
of such publicly traded company.
2. Term. The term of this license shall commence upon receipt by the
Licensor of written notice from Licensee of Licensee's election to commence the
manufacture, sale and/or distribution of any of the Licensed Goods, provided
that such notice shall have been received by the Licensor within three years
following the date hereof (The date of such notice is hereinafter referred to as
the "Effective Date"). The license granted hereby shall continue thereafter in
perpetuity unless (i) terminated by Licensee upon written notice to Licensor
given not less than ninety (90) days prior to the end of any "License Year" or
(ii) terminated by the Licensor if, after making the election referred to above,
Licensee shall have failed to generate (a) a minimum of $500,000.00 of aggregate
"Net Sales" (as defined below) following the Effective Date, or (b) if Licensee
shall have failed to generate a minimum of $500,000.00 of aggregate Net Sales of
Licensed Goods during any License Year thereafter. Notwithstanding the
foregoing, however, if Licensee shall have failed to generate minimum aggregate
Net Sales for any License Year, as required in the preceding sentence, but
Licensee shall nonetheless elect to pay to Licensor an amount equal to the
"Royalties" (as defined below) which would have been payable to Licensor had
Licensee generated the required minimum aggregate net sales of Licensed Goods
for such License Year, as provided above, then Licensee shall be deemed to have
generated the minimum aggregate Net Sales for such License Years as required
hereunder and Licensor shall have no right to terminate this license by reason
of Licensee's failure to generate minimum aggregate Net Sales in such License
Year.
For purposes of this License, a "License Year" shall mean the twelve
(12) month period commencing on the Effective Date and each consecutive twelve
(12) month thereafter.
3. Quality of Goods. Licensee agrees to maintain the quality of goods sold under
the Trademark commensurate with the business position of the parties involved.
Licensor reserves the right, upon reasonable notice, to enter the premises of
Licensee and inspect the quality of goods manufactured, sold and/or distributed
by Licensee under the Trademark to insure that the quality of said Licensed
Goods is maintained.
Licensee agrees to allow Licensor's authorized agents to inspect said
Licensed Goods manufactured, sold and/or distributed by Licensee under the
Trademark at any time desired by Licensor upon reasonable notice and during
Licensee's regular business hours.
In the event that Licensor shall find that the quality of the Licensed
Goods has not been maintained by Licensee as required in this Paragraph 3 above,
Licensor shall notify Licensee in writing of any such dissatisfaction with the
quality of said Licensed Goods and Licensee shall have thirty (30) days in which
to bring the quality of such Licensed Goods up to a level reasonably
satisfactory to Licensor. If Licensor's complaints are such that a remedy or
cure cannot reasonably be completed within said thirty (30) day period, -then
Licensee shall commence to cure such dissatisfaction within such thirty (30) day
period and shall thereafter diligently and continuously take all reasonable
steps to effect such cure or remedy. In the event that Licensee shall fail to
perform its obligation to maintain the quality of any Licensed Goods and shall
fail to cure such failure as hereinabove provided, Licensor shall have the right
to terminate or suspend Licensee's right to manufacture, sell and/or distribute
such Licensed Goods so long as the quality thereof shall be below acceptable
standards, but nothing herein shall be deemed to terminate, suspend or otherwise
affect Licensee's continued right to manufacture, sell and/or distribute any
other Licensed Goods which shall be of a quality which is consistent with
Licensee's obligations hereunder.
4. Ownership of the Trademark. The parties agree that Licensor shall
retain full ownership of all rights and title in and to said Trademark, subject
only to the rights and license granted to Licensee hereunder or under any other
license agreement between the parties.
5. Use of Trademark. Licensee shall, upon request, provide Licensor
with representative samples of literature, brochures, signs and advertising
materials prepared by the Licensee bearing the Trademark at least fifteen (15)
days prior to the first use thereof If Licensor reasonably finds any of said
material objectionable, notice of objection citing specifics shall be given to
Licensee within eight (8) days after receipt of the materials by Licensor. If
the parties cannot resolve the objections among themselves, the matter shall be
submitted to arbitration pursuant to Paragraph 18 hereof. When using the
Trademark under this Agreement, Licensee shall use its best efforts to comply
substantially with all laws pertaining to trademarks in force at any time in any
country in which said Licensed Goods are sold. This provisions includes
compliance with trademark marking requirements of the country in which said
Licensed Goods are sold.
6. Covenants of Licensor and Licensee.
6.1. for a period of three (3) years following the date hereof
and so long there-after as this license shall remain in full
force and effect the Licensor shall not use or grant others
the right to use the Trademark on or in connection with
Licensed Goods in any area of the world. If Licensee shall not
have served written notice upon Licensor of it election to
commence the manufacture, sale and/or distribution of any
Licensed Goods within three (3) years following the date
hereof or if this License shall be terminated at any time
following the Effective Date, Licensor may thereafter grant to
others the right or license to use the Trademark on or in
connection with Licensed Goods in any area of the world;
provided, however, that if Licensor shall propose to grant a
license with respect to the use of the Trademark on Licensed
Goods to any third party as permitted above, Licensor shall
first offer to grant a license upon the same terms and
conditions to Licensee, and Licensee shall have the night, for
a period of thirty (30) days following its receipt of notice
thereof, to elect to enter into a new license agreement with
Licensor upon such terms and conditions.
6.2 Licensor agrees to maintain at its sole cost and expense
the federal registration of the Trademark in the United States
in full force and effect, including the filing of any
renewals, declarations or affidavits of use, or, if
appropriate, to file new applications for registration. Upon
written request of the Licensee, Licensor shall use its best
efforts to procure the registration of the Trademark or any
other trademark (including any label or logo) relating to the
Licensed Goods which incorporates or includes the Trademark in
any jurisdiction outside of the United States in which
Licensee shall have given written notice to Licensor of its
bona fide intention to manufacture, sell and/or distribute the
Licensed Goods, and shall maintain the same in full force and
effect, including the filing of any renewals, declarations or
affidavits of use; provided, however, that alI reasonable
costs and expenses associated with any such foreign
registrations or other filings with respect to the Trademark
shall be advanced by the Licensee for the account of Licensor
and Licensee shall recoup such costs and expenses only by
offsetting or deducting the same from any royalties which may
be payable by Licensee to Licensor on account of the sale of
any goods bearing the Trademark, or any related trademarks
licensed by Licensor to Licensee under this and/or any other
license agreement or arrangement between Licensor and
Licensee, or from any other monies owing by Licensee to
Licensor hereunder or under any other arrangement or agreement
between the parties. Without limiting the generality of the
foregoing, Licensor shall execute all documents reasonably
requested by the Licensee for filing and prosecuting such
applications for registration of the Trademark in any
jurisdiction throughout the world in which Licensee has a bona
fide intention to manufacture, sell and/or distribute the
Licensed Goods. Licensor shall also give to Licensee all
assistance Licensee reasonably requires including the giving
of testimony in any suit, action or proceeding in order to
obtain, maintain and protect the Licensee's rights therein and
thereto. If Licensor shall not so execute or deliver any such
instruments after reasonable opportunity to do so, Licensee
shall have the right to do so in Licensor's name, place and
stead and Licensee is hereby irrevocably appointed a
Licensor's attorney in fact for such purpose, which power is
coupled with an interest.
6.3 The Trust will take all steps necessary to defend,
preserve and maintain all its rights in the Tradename. If the
Trust shall fail to comply with the foregoing duties, the
Company may so comply in the Trust's name to the extent
permitted by law and to the extent necessary to defend or
preserve such trademarks, tradenames, service marks or logos.
If the Trust shall fail to comply with the foregoing duty, the
Company may so comply in the Trust's name to the extent
permitted by law and to the extent necessary to defend,
preserve, and maintain the Tradename, but all at the Trust's
expenses, and the Trust shall promptly reimburse the Company
in full for all expenses incurred for the Trust in defending,
preserving and maintaining the Tradename. In the event that
the Trust Elects to abandon or discontinue the use of any
Tradename in any territory, the Company shall have the right
to continue the usage of said Tradename in such abandoned
territory, provided that the Company pays for all costs,
expense, and legal fees with respect to the continued use of
said Tradename.
7. Use of Confusingly Similar Marks. Licensee agrees not to adopt and
use, without Licensor's written consent, any marks that are confusingly similar
to the Trademark, provided, however, that Licensee may adopt any trademark, logo
or label which includes or incorporates the Trademark in conjunction With its
sale and distribution of Licensed Goods.
8. Royalties. Licensee shall pay to Licensor percentage royalties
("Royalties") based upon "Net Sales" of Licensed Goods sold by Licensee during
each License Year at the percentage rages set forth on Schedule A annexed hereto
or at such other percentage rates as may be agreed between Licensor and Licensee
with respect to specific product categories. Royalties shall be payable
quarterly within forty five (45) days following the end of each quarter during
the License Year.
As used herein, the term "Net Sales" shall mean (i) the invoice price
charged by Licensee on account of the sale of Licensed Goods to customers,
sublicensees, distributors or others, less all credits and allowances granted
for returned or defective goods, by customers against payment for Licensed
Goods; or (ii) all royalties actually received from sublicensees pursuant to any
sublicense agreement or arrangement with respect to the manufacturer, sale
and/or distribution of the Licensed Goods.
9. Royalty Reports and Payments. Licensee agrees to make written
reports and make royalty payments to Licensor quarterly during each License Year
of the term hereof with respect to any Royalties payable to Licensor as provided
in Paragraph 8 above. Such written reports shall include an accounting of all
Net Sales of Licensed Goods during the preceding quarter and upon which
Royalties are payable hereunder. Said reports shall accompany full payment for
the Royalties due for the reporting quarter. Licensee also agrees to make a
written report to Licensor within forty five (45) days after any expiration or
termination of this license, stating in such report an accounting of all Net
Sales upon which Royalties are payable hereunder, but which have not be
previously reported to or paid to Licensor.
10. Records. Licensee shall obtain and keep records showing all Net
Sales of Licensed Goods and any Royalties due and/or paid as set forth in
Paragraph 8 of this license in sufficient detail to enable the Royalties payable
to be determined and Licensee agrees to permit such records to be examined from
time to time upon reasonable notice to the extent necessary to verify the
reports provided for hereunder. Such examination to be made at the expense of
Licensor by any auditor appointed by Licensor who shall be acceptable to
Licensee, or, at the option and expense of Licensee by a certified independent
public accountant appointed by Licensor and approved by Licensee, which approval
shall not be unreasonable withheld.
Default and Termination. Licensor shall have the right to terminate
this Agreement by reason of a material breach by Licensee of its duties and
obligations hereunder provided that such material breach shall not have been
remedied or cured within thirty (30) days following receipt by Licensee of
written notice thereof from Licensor, of if Licensor's complaint of a material
breach is such that remedy or cure cannot reasonably be completed within said
thirty (30) day period, then Licensee shall have commenced to cure such material
breach Within such thirty (30) day period and shall thereafter have diligently
and continuously taken all reasonable steps to effect such remedy or cure. Such
termination shall be without prejudice to any rights that Licensor may otherwise
have against Licensee for damages or otherwise.
In the event of a breach or threatened breach by either party of its
obligations under this license, each party acknowledges that the other party may
not have any adequate remedy at law and may be entitled to seek such equitable
and injunctive relief as may be available to restrain the other party from any
violation of the provisions hereof The prevailing party in any such proceeding
shall be entitled to reimbursement from the other party of any expenses
(including, without limitation, reasonable attorney's fees) incurred in
connection with such proceeding. Nothing herein shall be construed as
prohibiting either party from pursuing any other remedies available for such
breach or threatened breach, including the recovery of damages.
12. Effect of Termination or Expiration. Upon and after the expiration
or termination of this license, all rights granted to Licensee hereunder shall
forthwith revert to Licensor and Licensee shall refrain from any further use of
the Trademark on Licensed Goods pursuant to this Agreement; provided, however
that Licensee may, for a period of one hundred eighty (180) days after the
expiration and termination of this license, dispose of any Licensed Goods
remaining in the Licensee's inventory or in process of manufactured at the date
of termination of this license. In any such event, Licensee shall continue to
pay Royalties and furnish statements with respect to any Period subsequent to
the termination of this license in accordance with the terms of this license as
though the same were still in effect.
13. Infringement. In the event that either party shall learn or be
advised that the Trademark is being infringed by a third party in connection
with the sale of Licensed Goods or any other goods under circumstances in which
there is created a likelihood of confusion with the Licensed Goods or which
could diminish the value of the Trademark, the party having knowledge thereof
shall promptly notify the other party of such infringement. Licensor shall have
the night to commence an action for infringement, to select counsel and control
the prosecution of such action (except that Licensee shall have the right to
participate with its own counsel, at its own cost and expense). Should Licensor
commence any such action for infringement, Licensor and Licensee shall share
equally all damages recovered from that suit after Licensor's costs and expenses
of suit have been recouped. In the event that Licensor does not desire to sue
for infringement, if shall so notify Licensee promptly that it does not desire
to sue, and Licensee shall thereafter have the right, but not the obligation, to
sue for infringement in its own name or in the name of the Licensor and Licensee
may retain all damages recovered therefrom. The party bringing the infringement
suit shall be responsible for all costs and expenses of the suit and shall have
the right to select counsel and control and prosecution of such suit. Licensee
and Licensor agree to cooperate in any such suit for infringement, at no expense
to the other, and provide any needed assistance to the other party. The
foregoing notwithstanding, the parties may otherwise agree in writing to share
the costs of and recoveries from any such suit.
14. Indemnification. Licensor assumes no liability to Licensee or to
third parties which respect to the sale of Licensed Goods by Licensee under the
Trademark, and Licensee shall indemnify Licensor against losses incurred by
claims of third parties against Licensor involving the sale by Licensee of
Licensed Goods and obtain product liability insurance in the amount of
$1,000,000.00 naming Licensor as an insured party and excess liability insurance
in the amount of $5,000,000.00 applicable to product liability claims. Licensee
shall provide written notice to Licensor of said product liability insurance and
shall not cancel the same without thirty (30) days written Notice to Licensor
prior to cancellation of the same.
15. Sublicenses. Licensee may sublicense and/or subcontract the
manufacture, sale and/or distribution of Licensed Goods, provided that any
sublicense shall be consistent with this license. However, Licensee shall not
have the right to grant to third parties licenses relating to the Trademark on
any products other than Licensed Goods Without the express written permission of
Licensor, except pursuant to any other license agreement or other arrangement
between the parties.
16. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered personally or three (3) days
after being sent by registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telecopy with oral confirmation, addressed as
follows or to such other address of which the parties may be given notice in
accordance with this paragraph:
In the case of the Licensor:
c/o Burton S. Rosky, Esq.
Rosky, Landau, Stahl & Sheehy
8383 Wilshire Boulevard, Suite 528
Beverly Hills, California 90211
Telecopy: (213) 655-0412
with a copy to:
Gary Hansen, President
Hansen's Juices, Inc.
875 West 8th Street
Azusa, California 91702
Telecopy: (818) 812-6077
In the case of the Licensee:
Hansen's Juice Creations
11777 San Vicente Boulevard, Suite 860
Los Angeles, California 90049
Telecopy: (310) 826-1252
and to:
Harvey Laderman
11777 San Vicente Boulevard, Suite 860
Los Angeles, California 90049
Telecopy: (310) 826-1252
with a copy to:
Roger H. Howard, Esq.
Christensen, White, Miller, Fink, Jacobs,
Glaser & Shapiro, LLP
2121 Avenue of the Stars, 18th Floor
Los Angeles, California 90067-5010
Telecopy: (310) 556-2920
17. Assignability. It is mutually understood and agreed that this
license shall inure to the benefit of and be binding upon Licensor, its
successors and/or assigns, and on Licensee, its successors and/or assigns. This
license and any of the rights or obligations created herein may be assigned, in
whole or in part, by Licensee; provided, however, that without the written
consent of the Licensor no such assignment shall be permitted to a direct
competitor of HJI which manufactures and/or sells fresh juices and/or any other
Licensed Goods (as defined in that certain Fresh Juices- License Agreement
between Licensor and HJI of even date hereof). Without limiting the generality
of the foregoing, it is specifically agreed that any bank, financial institution
or other lender or any transferee of any such entity may be substituted for
Licensee as a party to this license.
18. Arbitration. The parties hereby expressly agree that any
controversy or claim arising out of or relating to this license, or the breach
thereof, shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA") in Los
Angeles, California, before three (3) arbitrators selected from the panels of
arbitrators of the AAA. Any arbitration award shall be final binding and
conclusive upon the parties and judgment rendered thereon may be entered in any
court having jurisdiction thereof. The prevailing party in any such arbitration
shall be entitled to reimbursement from the other party of any expenses
(including, without limitation, reasonable attorney's fees) incurred in the
connection with such arbitration.
19. Miscellaneous. Nothing in this license shall be deemed to
constitute or create between Licensor or Licensee a partnership, association,
joint venture or agency nor shall either party have power or authority to
obligate or bind the other in any manner whatsoever, except as expressly
provided for herein and neither such party shall make any representation or
warranty on behalf or for the other party.
No change, modification, amendment, addition to this license or any
part thereof shall be valid unless in writing and signed by or on behalf of the
party to be charged therewith.
This license constitutes the entire agreement between the parties and
supersedes all prior understandings and agreements regarding the subject matter
hereof. Each of the parties acknowledges and agrees that the other has not made
and is not making and in executing this license neither party has relied upon
any representations, promises or inducements except to the extent that the same
are expressly set forth in this License.
If any clause, paragraph, sections or part of this license shall be
held or declared to be void, invalid or illegal for any reason by any court of
competent jurisdiction, such provision shall be ineffective but shall not in any
way invalidate or affect any other clause, paragraph, section or part of this
license.
This license shall be governed by and construed in accordance with the
laws of the State of California applicable to agreements made and to be
performed therein.
IN WITNESS WHEREOF, the parties have caused this license to be signed
as of the date and year first above written
Licensor: HANSEN'S TRUST
By: /s/ Gary Hansen, as Trustee
by: /s/ Anthony Kane, as Trustee
By: /s/Burton S. Rosky, as Trustee
Licensee: HANSEN'S JUICE CREATIONS, a LIMITED LIABILITY COMPANY
By: /s/ Timothy Kane, President
by: /s/ Harvey Laderman, Chairman
SCHEDULE A
Royalties:
One percent (1%) of Net sales: