Trademark License Agreement - HDN Development Corp. and Krispy Kreme Doughnut Corp.
TRADEMARK LICENSE AGREEMENT
This Agreement, effective as of the 27th day of May, 1996, is made
between HDN Development Corporation, a Delaware corporation with offices in
Florence, Kentucky ("HDN"), and Krispy Kreme Doughnut Corporation, a North
Carolina corporation with offices in Winston-Salem, North Carolina ("Krispy
Kreme").
RECITALS
WHEREAS, HDN 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, Krispy Kreme desires to acquire the right to use the
Trademarks: (i) at all of its retail locations; (ii) at the locations in which
it distributes the Licensed Products; (iii) as part of its corporate name; and
(iv) in connection with its business of manufacturing, packaging, selling,
marketing, and distributing the Licensed Products under the Trademarks in the
Territory, and to franchise or sub-license the right to do the same to
franchisees, sublicensees, affiliates and subsidiaries of Krispy Kreme;
WHEREAS, HDN is willing to authorize and license Krispy Kreme such
rights under the Trademarks.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are acknowledged by the parties, HDN and Krispy Kreme,
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
Krispy Kreme delivered under the Trademarks, including but not
limited to fresh and frozen doughnuts, fried pies, honeybuns,
bagels, muffins, sweet rolls, all products sold at Krispy
Kreme retail locations and such other products as the parties
shall agree from time to time.
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1.3 "Territory" shall mean the world.
1.4 "Affiliate" or "Subsidiary" - shall mean any entity in which
Krispy Kreme owns at least a majority of the voting control of
such entity.
1.5 "Franchisee" or "Sublicensee" - shall mean any entity in which
Krispy Kreme does not own a majority of the voting control of
such entity to whom Krispy Kreme grants a franchise or
sublicense of the Trademarks.
ARTICLE II - GRANT OF LICENSE
2.1 HDN grants Krispy Kreme the non-exclusive, non-assignable
right and license to use the Trademarks in Krispy Kreme's
corporate name and in connection with the manufacture,
packaging, sale, marketing, and distribution of the Licensed
Products within the Territory.
2.2 HDN further authorizes Krispy Kreme to grant appropriate
sublicenses hereunder to Affiliates or Subsidiaries, all
subject to the terms and conditions hereinafter stated.
2.3 HDN further authorizes Krispy Kreme to franchise and
sublicense the Trademarks to Franchisees and Sublicensees, all
subject to the terms and conditions hereinafter stated. This
authorization is conditioned, however, upon such Franchisee or
Sublicensee paying to HDN a Franchise Fee as provided in
Section 7.2 hereunder. HDN reserves the right to disallow any
Franchise or Sublicense of the Trademarks within 30 days of
HDN receiving notice of the grant of such Franchise or
Sublicense.
2.4 It is the intent of the parties to this Agreement to permit
Krispy Kreme to utilize the Trademarks at such retail
locations as it may operate, or, in the case of Franchisees
or Sublicensees of Krispy Kreme, at such locations as may be
operated by such Franchisees or Sublicensees, and at the
locations in which Krispy Kreme distributes the Licensed
Products. Additionally, the parties intend that Krispy Kreme
will utilize the Trademarks at non-retail locations for the
limited purposes of labeling, packaging, advertisement and for
use in its corporate name.
ARTICLE III - QUALITY CONTROL
3.1 HDN shall have the right to exercise quality control over
Krispy Kreme's 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.
HDN recognizes and approves the quality of Krispy Kreme
products
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heretofore sold by Krispy Kreme under the trademarks now
termed the Trademarks in the territory now termed the
Territory.
3.2 Krispy Kreme shall use the Trademarks on or in connection only
with those Licensed Products that conform to the
specifications and standards of quality which HDN prescribes.
HDN adopts as said standards of quality those standards
embodied in said products sold heretofore by Krispy Kreme, and
Krispy Kreme will not deviate materially from those standards
without prior written approval from HDN.
3.3 In order to verify compliance with Paragraph 3.2 hereof, HDN
may from time to time require Krispy Kreme to submit samples
of Licensed Products, packaging and promotional materials
therefor, and other items bearing the Trademarks, and HDN, or
its delegate, may inspect the Licensed Products, packaging, or
promotional materials on Krispy Kreme's premises during
business hours, upon forty-eight (48) hours advance notice.
3.4 In order to further verify compliance with Paragraph 3.2
hereof, Krispy Kreme shall be required to submit to HDN a
quarterly progress report summary and information concerning
the number of customer complaints. The report submitted to HDN
(which will accompany the quarterly progress report summary)
shall be in a form substantially similar to the form attached
as Exhibit B to this Agreement, and shall be submitted to HDN
no later than thirty (30) days after the last day of each
fiscal quarter of Krispy Kreme.
3.5 Krispy Kreme 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 Krispy Kreme shall use its best efforts to promote and extend
demand for the Licensed Products sold under the Trademarks in
the Territory.
4.2 Krispy Kreme recognizes the great value and goodwill
associated with the Trademarks and acknowledges HDN's
ownership in same. Krispy Kreme is a related company as
defined in Section 45 of the Trademark Act of the United
States, 15 U.S.C. ss. 1127, and Krispy Kreme's use of the
Trademarks inures to the benefit of HDN for all purposes
including trademark registration. Krispy Kreme shall not,
however:
(a) challenge the validity of the Trademarks or any
registration therefor;
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(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 HDN's rights in the Trademarks; or
(e) knowingly do any act that would invalidate or be
likely to invalidate the HDN's trademark
registrations.
4.3 Krispy Kreme 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 0 for registered trademarks and TM for
unregistered trademarks.
4.4 Krispy Kreme may not combine the Trademarks with any other
marks, names or symbols unless it obtains HDN's prior written
consent.
4.5 Krispy Kreme 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 HDN's prior written consent.
4.6 HDN shall be responsible for trademark registration and
maintenance. Krispy Kreme shall cooperate with HDN and shall
execute any documents reasonably required by HDN or supply HDN
with any samples or other materials reasonably necessary to
maintain the Trademarks.
4.7 Krispy Kreme 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 Krispy Kreme, 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 Krispy Kreme learns of any infringement or
unauthorized use of any of the Trademarks, it shall promptly
notify HDN. HDN has the right to transmit notices of
infringement to or bring infringement actions against
infringing parties. If requested to do so, Krispy Kreme shall
cooperate with and assist HDN in any such action, including
joining the action as a party if necessary, at HDN's expense.
Any award, or portion of an award, recovered by HDN in any
such
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action or proceeding commenced by HDN shall belong solely to
HDN after recovery by both parties of their respective actual
out-of-pocket costs.
5.2 If HDN determines not to bring any such action, Krispy Kreme
may then bring such action in its own name at its own expense
provided it obtains the consent of HDN, which consent shall
not be unreasonably withheld. If requested to do so, HDN shall
cooperate with Krispy Kreme in any such action, including
joining the action as a party if necessary, at Krispy Kreme's
expense. Any award, or portion of an award, recovered by
Krispy Kreme in any such action or proceeding commenced by
Krispy Kreme shall belong solely to Krispy Kreme 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 Krispy Kreme for its use of the Trademarks as provided
in this Agreement, Krispy Kreme shall promptly notify HDN of
such suit in writing. HDN shall defend, at its own expense,
any such action, and Krispy Kreme shall cooperate in such
defense as reasonably requested by HDN, at HDN's expense. HDN
shall pay all judgments and settlements resulting from such
suits. Any award received by HDN in such an action shall
belong solely to HDN.
5.4 HDN and Krispy Kreme shall keep one another informed of the
status of , and their respective activities regarding, any
litigation concerning the Trademarks. Krispy Kreme may not
enter into a settlement or consent judgment involving the
trademarks, however, unless it obtains HDN's prior written
consent.
ARTICLE VI - INDEMNITY
6.1 Krispy Kreme shall indemnify and hold harmless HDN 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 Krispy
Kreme's performance and activities under this Agreement,
whenever and however asserted and established.
6.2 HDN shall indemnify and hold harmless Krispy Kreme 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 Krispy Kreme.
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ARTICLE VII - ROYALTY
7.1 In consideration of the rights granted herein, Krispy Kreme
shall pay to HDN a royalty equivalent to a percentage of all
sales of the Licensed Products sold by Krispy Kreme, such
percentage currently being two percent (2%) (the "Royalty").
7.2 In consideration of the right to Franchise or Sublicense the
Trademarks hereunder, Krispy Kreme shall require, as an
integral part of any such Franchise or Sublicense of the
Trademarks, that all royalty fees payable to Krispy Kreme as a
result of such Franchise or Sublicense shall be payable to HDN
(the "Franchise Fees"). Krispy Kreme shall guaranty and shall
ultimately be responsible for payment of all Franchise Fees.
7.3 Unless agreed to the contrary, Krispy Kreme shall calculate
the Royalty and Franchise Fees payable to HDN on the last day
of each fiscal quarter of Krispy Kreme occurring during the
term of this Agreement, and shall pay or cause to have paid to
HDN such Royalty and Franchise Fees within thirty days of the
last day of each fiscal quarter 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, Krispy Kreme shall deliver to HDN a detailed report of
the Royalty and Franchise Fees payable for the quarter.
7.4 HDN shall have the right to assess interest on any Royalty or
Franchise Fee due and remaining unpaid in the manner and on
the date stipulated for payment hereunder at a rate of two
percent (2%) 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 Krispy Kreme shall maintain complete and accurate records
showing in detail the net sales of the Licensed Products. HDN,
or its duly authorized representative, is entitled to inspect
Krispy Kreme's records at all reasonable times.
7.6 HDN shall pay to Krispy Kreme a fee equal to twenty-five
percent (25%) of all collected Franchise Fees in consideration
for materials, marketing and know-how provided by Krispy Kreme
to Franchisees or Sublicensees, and for effort expended by
Krispy Kreme in increasing demand for products sold under the
Trademarks pursuant to Franchise and Sublicense arrangements.
This fee shall be paid to Krispy Kreme within ten days
following payment of the Franchisee Fee to HDN.
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
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yearly periods until either party provides written notice to
terminate the Agreement within sixty (80) 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 Krispy Kreme is not an agent of HDN, 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.
9.5 This Agreement is governed by the laws of the .Commonwealth of
Kentucky, without respect to the conflict of laws provisions
thereof.
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9.6 The parties will attempt in good faith to resolve any dispute
arising under this Agreement through negotiation Failing
resolution through negotiation within thirty (30) days, the
parties will submit the dispute for mediation in the
Commonwealth of Kentucky under the CPR Institute for Dispute
Resolution (CPR) Model Procedure for Mediation of Business
Disputes or, in the case of a trademark or unfair competition
dispute, under the CPR Institute for Dispute Resolution/
International Trademark Association (CPR/INTA) Model Procedure
for Mediation of Trademark and Unfair Competition Disputes.
If the mediation fails to produce a resolution within thirty
(30) days, the parties will submit the dispute for binding
arbitration in Kentucky under the CPR Model Rules for
Non-Administered Arbitration of Business Disputes or the
CPR/INTA Model Rules for Non-Administered Arbitration of
Trademark and Unfair Competition. A judgment upon such an
arbitration award may be entered in any Kentucky court having
competent jurisdiction, or application may be made to an
appropriate Kentucky court for a judicial acceptance of the
award and an order of enforcement, as the party seeking to
enforce such award may accept. The Commonwealth of Kentucky
shall have full jurisdiction to prescribe, adjudicate and
enforce each matter with respect to this Agreement and Krispy
Kreme hereby voluntarily submits to the jurisdiction of the
Kentucky court system. The agreements of the parties
contained in this Paragraph have been made in exchange for
mutual consideration and such agreements are irrevocable.
9.7 Notices are received when delivered in person, sent by
overnight courier, or mailed by certified mail to:
HDN: HDN DEVELOPMENT CORPORATION
c/o Tucci & Tannenbaum
Suite 206
Three Mill Road
Wilmington, Delaware 19806
Krispy Kreme: KRISPY KREME DOUGHNUT CORPORATION
c/o Mark T. Preston
1814 Ivy Avenue
Winston-Salem, NC 27102
9.8 This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
permitted assigns.
9.9 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.
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[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURES ONLY TO FOLLOW]
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IN WITNESS WHEREOF each of the undersigned represents that he is
authorized to bind his company to the terms of this Agreement, signed to be
effective this 27th day of May, 1996:
HDN DEVELOPMENT CORPORATION
By: /s/ Mark T. Preston
Name: Mark T. Preston
Title: President
KRISPY KREME DOUGHNUT CORPORATION
By: /s/ Randy S. Casstevens
Name: Randy S. Casstevens
Title: VP-Finance
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EXHIBIT A
TO
LICENSE AGREEMENT
[SEE ATTACHED IDENTIFICATION OF TRADEMARKS]
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EXHIBIT A
TO
LICENSE AGREEMENT
IDENTIFICATION OF U.S. REGISTERED TRADEMARKS
Trademark Registration Number
--------- -------------------
EARLY MORN 1,454,537
EARLY MORN 1,366,921
HOT DOUGHNUTS NOW 1,973,398
HOT DOUGHNUTS NOW and Design 1,719,628
KING OF AMERICA'S DOUGHNUTS 945,871
KK (and Design) 967,682
KK (Walking K's logo w/circle) 939,105
KK and Design 622,399
KRISPY CRULLERS 1,894,237
KRISPY DELIGHT 1,723,019
KRISPY DIPPERS 1,798,838
KRISPY JUNIORS 1,776,001
KRISPY KNIBBLES 1,663,032
KRISPY KREME 967,683
KRISPY KREME 967,684
KRISPY KREME 995,291
KRISPY KREME 938,245
KRISPY KREME 961,976
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Trademark Registration Number
--------- -------------------
KRISPY KREME (Stylized) 1,001,792
KRISPY KREME (Stylized) 539,165
KRISPY KREME (Stylized) 961,975
KRISPY KREME and Design 1,068,228
KRISPY KREME and Design 1,907,245
KRISPY KREME and Design 1,066,864
KRISPY KREME in Bowtie Design 1,683,112
KRISPY-ETTES 1,617,814
THORNTON'S 1,316,008
YOU KNOW BY THE GLOW 1,840,750
IDENTIFICATION OF U.S. TRADEMARK APPLICATIONS
Trademark Serial Number
--------- -------------
HOT DOUGHNUTS NOW 75/022,750
KK (and Design) 75,022,751
KRISPY KREME 75,022,752
KRISPY KREME 75,022,753
KRISPY KREME 74/734,791
KRISPY KREME DOUGHNUTS 75/022,754
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IDENTIFICATION OF FOREIGN TRADEMARK
REGISTRATIONS AND APPLICATIONS
Trademark Registration/Serial Number Jurisdiction
--------- -------------------------- ------------
KRISPY KREME (Stylized) 417,435 Switzerland
KRISPY KREME 448,289 Canada
KRISPY KREME 06690/1993 Denmark
KRISPY KREME 395 15 768.4 Germany
KRISPY KREME 190552 France
KRISPY KREME 89311 Israel
KRISPY KREME RM93C/003400 Italy
KRISPY KREME 106782/1993 Japan
KRISPY KREME 158,578 Ireland
KRISPY KREME 11788.797 Spain
KRISPY KREME 1551084 U.K.
KRISPY KREME and Design 152 017 Austria
KRISPY KREME (Device) 667633 Australia
KRISPY KREME 96-14382 South Korea
KRISPY KREME DOUGHNUTS
and Design 538,038 Benelux
KRISPY KREME DOUGHNUTS
and Design 458,880 Mexico
KRISPY KREME DOUGHNUTS
(Device) 93 5338 Norway
KRISPY KREME DOUGHNUTS 266,235 Sweden
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IDENTIFICATION OF STATE TRADEMARK REGISTRATIONS
Trademark Registration Number Jurisdiction
--------- ------------------- ------------
EARLY MORN DOUGHNUTS Tennessee
KRISPY KREME DOUGHNUTS Tennessee
KRISPY KREME 677 North Carolina
IDENTIFICATION OF UNREGISTERED TRADEMARKS
Trademark Products
--------- --------
Race to Daytona Sweepstakes
Doughnuts with Davey
At Your House Sweepstakes
Red-E-Made Products of the Nashville, TN fresh
bakery division of Rich Products
Corporation, acquired by Krispy Kreme
Doughnut Corporation on July 6, 19898.
Early Morn Fried pies, honey buns, and dunkin'
sticks
America's Favorite Doughnuts, fried pies, honey buns and
dunkin' sticks
Thornton's the Donut King [trademark]
Thornton's Flav-O-Rich [tradename]
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EXHIBIT B
TO
LICENSE AGREEMENT
[FORM OF QUALITY CONTROL STANDARDS REPORT]
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QUALITY CONTROL STANDARDS REPORT
THIS QUALITY CONTROL STANDARDS REPORT (the "Report") is given by Krispy
Kreme Doughnut Corporation (the "Licensee") to HDN Corporation (the 'Licensor")
pursuant to Section 3.4 of the License Agreement made effective as of May 27,
1996, by and between HDN Development Corporation and the Licensee (the "License
Agreement").
The Licensee does hereby certify to the Licensor that the Standards
were being substantially maintained with respect to each of the Services and
Products for the Quarter ended __________________, _____ (the "Report Period").
Licensee further certifies that it has received less than _________
customer complaints for the Report Period.
A progress report summary for the Report Period is attached hereto.
Except as otherwise set forth herein, capitalized terms as used herein
have the same meaning as set forth in the License Agreement.
IN WITNESS WHEREOF, the Licensee has caused this Quality Control
Standards Report to be executed on its behalf by one of its officers and
delivered to the Licensor this the _____ day of ___________________, ______.
KRISPY KREME DOUGHNUT CORPORATION
By ________________________________
Name ______________________________
Title _____________________________
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