License Agreement - TGI Friday's Inc. and Poore Brothers Inc.
LICENSE AGREEMENT
By and between
TGI FRIDAY'S INC.
And
POORE BROTHERS, INC.
Dated as of April 3, 2000
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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TABLE OF CONTENTS
1. DEFINITIONS............................................................ 3
2. LICENSE, GRANT, TERM AND USE........................................... 6
3. OWNERSHIP, GOODWILL AND PROTECTION OF RIGHTS........................... 8
4. PROPRIETARY MARKS PROTECTION........................................... 9
5. APPROVALS AND QUALITY.................................................. 10
6. MARKETING.............................................................. 14
7. REPORTS, ROYALTIES, PAYMENTS, STATEMENTS............................... 15
8. BOOKS, RECORDS AND USE OF FACILITIES................................... 16
9. SALES BY LICENSEE AFTER TERMINATION OR EXPIRATION OF AGREEMENT......... 17
10. REPRESENTATIONS OF FRIDAY'S............................................ 18
11. REPRESENTATIONS OF LICENSEE............................................ 19
12. INDEMNIFICATION........................................................ 19
13. INSURANCE.............................................................. 20
14. CONFIDENTIAL INFORMATION............................................... 21
15. REMEDIES............................................................... 22
16. ASSIGNMENT............................................................. 22
17. DEFAULT AND TERMINATION................................................ 23
18. FORCE MAJEURE.......................................................... 25
19. BROKERS................................................................ 25
20. DISPUTE RESOLUTION..................................................... 25
21. RELATIONSHIP OF PARTIES/INDEPENDENT OPERATION.......................... 27
22. PROPRIETARY MARKS...................................................... 27
23. PURCHASE OPTION........................................................ 29
24. GOVERNING LAW; JURISDICTION............................................ 28
25. MISCELLANEOUS.......................................................... 29
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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LICENSE AGREEMENT
This LICENSE AGREEMENT (this "Agreement") is made and entered into as of
the 3RD day of April, 2000 (the "Effective Date"), by and between TGI FRIDAY'S
INC., a New York (U.S.) corporation ("Friday's") and Poore Brothers, Inc., a
Delaware corporation ("Licensee").
PREMISES
WHEREAS, Licensee desires to license from Friday's and Friday's is willing
to license to Licensee the right to utilize certain Proprietary Marks (defined
below) of Friday's in the manufacture, marketing, sale and distribution of
certain products and services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of these premises, hereinafter set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Friday's and Licensee agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
AAA - American Arbitration Association
ACCOUNT - an account designated by Friday's to receive Payments
ACTION - any cause of action, suit, proceeding, claim, demand,
investigation or inquiry (whether a formal proceeding or otherwise) with respect
to which Licensee's indemnity (described in Section 12) applies
AFFILIATE - Carlson Restaurants Worldwide Inc. or any subsidiary thereof or
any subsidiary of Friday's
BUSINESS DAYS - each calendar day, except Saturday, Sunday and national
legal holidays under the laws of the country of the recipient of the notice
COMMENCEMENT DATE - the first to occur of (i) the date Friday's Products
are first sold by Licensee; or (ii) the Marketing Date
CONFIDENTIAL INFORMATION - the terms of this Agreement and any amendments
hereto, and all other information, know-how, and techniques, including, but not
limited to, product specifications, materials, designs, styles, product sources,
computer systems, marketing decisions and directions, trade secrets, proposed
trademarks and other proprietary matters and data imparted or made available by
either party to the other which is (i) designated as confidential, (ii) known by
either party to be considered confidential by the other, or (iii) by its nature
inherently or reasonably considered confidential
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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DISTRIBUTION CHANNELS - airline sales, supermarkets, mass merchandisers,
warehouse clubs, convenience stores, drug stores, vending machines and wholesale
distributors servicing these operations and other traditional distribution
channels requested by Licensee and approved in writing by Friday's (but
specifically excluding direct mail, television marketing, carnivals, flea market
vendors, and other retailers which traditionally service a secondary, over-run,
off-price or irregular market) and, subject to the specific approval of
Friday's, internet.
EARNED ROYALTIES - a royalty equal to [*] based upon cumulative Gross Sales
of all Products payable on a quarterly basis on prior quarterly sales. In the
event of a "close out" sale of the Products, the Earned Royalties shall be a
royalty equal to [*] of Gross Sales from such "close out" sale. "Close out" sale
shall mean a sale at which the Products are sold at a discount of not less than
fifty percent (50%) of the regular retail price of the Products sold by Licensee
to its customers, but a "close out" sale is not permitted unless approved in
advance by Friday's.
FRIDAY'S - TGI Friday's Inc.
FRIDAY'S STYLE GUIDE - a printed manual Friday's provides to Representative
and Licensee setting forth certain guidelines for using the Proprietary Marks
GROSS SALES - The total of:
A. actual sales price (whether for cash, credit or other consideration)
from the sale of Friday's Products by Licensee (including service charges added
to a customer's bill or invoices, if applicable including receipts from mail or
telephone orders received or filled by Licensee;
B. all deposits not refunded to purchasers;
C. orders taken at Licensee's place of business, although filled elsewhere;
D. payments to Licensee by any concessionaire, licensee or third party in
respect of use of Friday's Products; and
E. promotional or other allowances to customers in an amount equal to the
retail price thereof, to the extent that said amount for promotional allowances
exceeds [*] of Gross Sales, calculated without inclusion of said amount.
Promotional allowances provided in exchange for goods or services shall be
included in "Gross Sales" without exclusion.
Each charge or sale upon installment or credit shall be treated as a sale
for the full price in the accounting month during which such charge or sale is
made.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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"Gross Sales" shall not include receipts from sales of other extraordinary
items (unless bearing any Proprietary Mark) made outside the ordinary course of
business.
The following items shall be deducted from the total actual sales price, to
the extent such items were previously included therein:
1. the amount of any BONA FIDE cash or credit refunds made upon any sale
where the Products sold are returned by the customer and accepted by Licensee,
or where the sale results in a receivable are deemed non-collectible by Licensee
due to customer's bankruptcy; and
2. freight, sales tax or other taxes required to be separately collected by
Licensee directly from customers and accounted for and paid by Licensee to a
taxing authority; and
3. the amount of any cash discounts, not to exceed [*] of Gross Sales of
the Products.
INDEMNITEES - Friday's, its directors, officers, employees, agents,
shareholders, affiliates, successors and assignees, and the respective
directors, officers, employees, agents, shareholders and affiliates of each
MARKETING DATE - June 1, 2000
MINIMUM SALES - Minimum Sales means: [*].
PAYMENT(S)- all transfers of funds from Licensee to Friday's, including,
without limitation, the payment of the Royalty Fee and the reimbursement of
expenses
PREMIUMS - means any article given free or sold at less than the usual
selling price for the purpose of fund raising, sales, incentive, combination
sales, prices, publicizing any other product or service or for any other
give-away or promotional purpose
PRODUCT(S) - Friday's branded salted snacks and snack mixes offered for
retail sale and consumption outside any T.G.I. Friday's restaurant, which bear
one or more Proprietary Mark(s)
PROPRIETARY MARK(S) - certain trademarks, trade names, service marks,
emblems and indicia of origin or ownership, designated by Friday's and more
particularly described in Exhibit "A" hereto
RECALL- Any announcement by either party involving the return of Product to
stores by the public or the pulling of Product from stores, or Distribution
Channels due to public health concerns/emergency or as otherwise mutually agreed
upon by the parties as justified or commercially reasonable. Any recall shall be
at Licensee's expense, and any destruction of Product shall be attested to in a
certificate signed by an officer or principal of Licensee.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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ROYALTY FEE(S) means the Earned Royalties due from sales during a quarter.
TERM - a period commencing on the Effective Date and continuing, unless
terminated earlier pursuant to the terms of this Agreement, until [*]. The
parties agree to begin good faith renewal term negotiations at least 180 days
prior to the expiration of this Agreement.
TERRITORY - The United States, its territories and possessions, US Military
bases and Puerto Rico as geographically constituted on the Effective Date, and
such other geographic regions that are added with the mutual written consent of
the parties.
TGIFM - TGI Friday's of Minnesota Inc., a Minnesota (U.S.) corporation, and
a subsidiary of Friday's
TRADEMARK ACTION - an action, suit, proceeding, claim, demand,
investigation or inquiry alleging infringement or "passing-off," brought or made
against Licensee in connection with Licensee's use of any Proprietary Mark
(provided such use was made in accordance with the direction or written approval
of Friday's) pursuant to this Agreement
TRADEMARK DAMAGES - all fines, expenses, reasonable attorneys' fees, court
costs, settlement amounts, judgments, reasonable costs of advertising material
and media time/space, and costs of changing, substituting or placing the same,
and all expenses of recall, refunds, public notices and other such amounts
incurred by Licensee and directly and proximately attributable to a Trademark
Action; PROVIDED, HOWEVER, that "Trademark Damages" shall not include
compensatory, consequential, exemplary or punitive damages, lost sales or
profits, damage to goodwill or reputation, costs or damages resulting from delay
or other costs, expenses or other damages not directly or proximately
attributable to the Trademark Action
2. LICENSE, GRANT, TERM AND USE
A. LICENSE; GRANT; TERM. Subject to the terms and conditions of this
Agreement, Friday's hereby grants to Licensee the exclusive right, license and
privilege to use the Proprietary Marks during the Term in connection with, and
only in connection with, the manufacture, distribution and sale by Licensee of
the Products in types, presentations and styles approved by Friday's in writing
and in advance; PROVIDED, HOWEVER, that Friday's reserves the right unto itself
and for the benefit of its Affiliates and the franchisees or licensees of
Friday's or its Affiliates, the right to manufacture, distribute and sell items
and goods similar or identical to the Products using the Proprietary Marks in
restaurants and/or hotels owned, operated, managed or franchised by Friday's or
any Affiliates, and in offices occupied by Friday's or any Affiliates.
B. LIMITATIONS. The Proprietary Marks shall be used by Licensee only in
connection with the manufacture, distribution and sale of the Products during
the Term and may not be used for any other merchandise. The Proprietary Marks
shall be affixed to all Products in such a manner as will preserve the exclusive
rights of Friday's (subject to this Agreement) to the use thereof.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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C. MARKETING. Subject to the provisions of Sections 4, 5 and 17(A),
Licensee shall, at its sole expense, use diligent, good faith efforts to sell,
market and promote the Products in the Territory; PROVIDED, HOWEVER, that none
of such marketing activities or strategies shall be conducted or carried out in
such a manner as to have an adverse impact on the Proprietary Marks, or the
goodwill associated therewith all costs and expenses relating to such marketing
activities and strategy shall be borne by Licensee.
D. NON-COMPETITION. During the Term, neither Licensee nor its affiliated
corporations shall engage, by license or otherwise, in the manufacture,
distribution, retail sale, marketing or promotion of salted snacks and snack
mixes under the brand name of any [*]. Friday's acknowledges that Licensee
reserves the right to manufacture, distribute, sale, market and promote salted
snacks and snack mixes: (i) under its existing trademarks (such as Tato
Skins(R)) without any restrictions whatsoever; and (ii) under third party
private-label trademarks other than as expressly set forth above.
E. THIRD PARTY MANUFACTURERS. Subject to all terms of this Agreement,
Licensee has the limited right to authorize third party manufacturers to use the
Proprietary Marks in the manufacture or creation of the Products provided that
such authorization is limited to producing the Product for Licensee only.
Licensee shall provide Friday's with a complete list of such manufacturers and
shall require all such manufacturers to sign the Subcontractor Agreement as set
forth in Exhibit "B" or to sign an agreement which incorporates the terms
contained in the Subcontractor Agreement which has been pre-approved in writing
by Friday's. Licensee shall be responsible for ensuring that its manufacturers'
use of the Proprietary Marks, production of the Products, and any other actions
in accordance with the Subcontractor Agreement satisfy all the requirements of
this Agreement. Licensee shall assume all responsibility for any actions
undertaken by such manufacturers relating to the use of the Proprietary Marks
and the manufacture, sale or distribution of the Products. Licensee shall
provide to Friday's a fully executed copy of each Subcontractor Agreement.
F. NO OTHER RIGHT TO LICENSED MARKS. This Agreement conveys to Licensee no
other rights in the Proprietary Marks or to other intellectual property of
Friday's; nor does this Agreement grant rights to intellectual property to any
other party.
G. NO RIGHTS OUTSIDE TERRITORY. Licensee agrees that it possesses no right
to sell the Product to exporters or others for resale or reshipment outside the
Territory. In the event that Licensee becomes aware that any party to whom it
sells the Product intends to sell or ship, or is selling or shipping, the
Product outside the territory, Licensee shall take actions which are both
commercially reasonable and legally permissible to prevent such sales or
shipment.
H. FRIDAY'S MODIFICATION OF PROPRIETARY MARKS. Licensee acknowledges that
from time to time and without Licensee's approval, Friday's may modify certain
elements of the Proprietary Marks, add new marks, or discontinue the use of
certain Proprietary Marks. Accordingly, Friday's does not represent or warrant
that the Proprietary Marks or any of its elements will be maintained or used in
any particular fashion. In the event that Friday's makes modification to the
Proprietary Marks, this Agreement will be subject to any such modifications
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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effective upon written notification from Friday's; provided, however, that: (i)
no such modifications or discontinuances shall materially impair Licensee's
rights or licenses hereunder; and (ii) Licensee may continue to sell and
distribute, and shall not be required to destroy or cease using, any Product
inventories (including packaging and labeling components thereof that have not
yet been consumed) that exist or are part of work in progress as of Licensee's
receipt of the modification notification.
I. PROPRIETARY MARKS. In connection therewith, Licensee agrees that (i)
Licensee shall not pledge, mortgage or otherwise encumber the Proprietary Marks
and (ii) Licensee shall not use any of the Proprietary Marks as part of its
corporate or other name.
3. OWNERSHIP, GOODWILL AND PROTECTION OF RIGHTS
A. ACKNOWLEDGMENT. Each party acknowledges the other party's exclusive
right, title, and interest in and to its trademarks, trade names, service marks,
emblems and indicia of origin or ownership ("Marks") (including in Friday's
case, the Proprietary Marks), and shall not at any time during the Term of this
Agreement or thereafter do or permit to be done any act or thing which impairs
the rights of the other party with respect to its Marks. Neither party will
represent that it has any ownership in the other party's Marks or in any
registration of them and shall not attempt to register such Marks alone or as
part of its own trademark or service mark in any jurisdiction. Each party agrees
that it will not, during the Term of this Agreement, or thereafter, attack the
validity or distinctiveness of the other party's Marks. Each party expressly
intends and agrees that all use of the other party's Marks shall inure to the
sole benefit of the other party.
B. CONFUSINGLY SIMILAR MARKS. Neither party shall use or authorize use,
either during or after the term of this Agreement, any configuration, mark,
name, design, logo or other designation confusingly similar to the other party's
Marks. Should a party, during the Term of this Agreement or anytime thereafter,
assert ownership in any insignia, mascot, designation, or trademark in any
jurisdiction, which is the same as, or confusingly similar to any of the other
party's Marks, such party will, upon request of the other party, transfer or
assign all right, title, and interest that it asserts in such insignia, mascot,
designation, or trademark, including but not limited to any registrations, to
the other party or its designee.
C. REGISTRATIONS. Each party agrees that it shall not, on the basis of its
use of the other party's Marks, oppose or seek to cancel in any court or state
or federal agency in any jurisdiction, including, but not limited to, the United
States Patent and Trademark Office, any registration for any mark which the
other party files an application or obtains a registration for, whether such use
by the other party is direct or through other licensees or authorized users.
D. MODIFICATIONS BY LICENSEE. Neither party shall, without prior express
written permission of the other, develop or authorize the development of
variations of the other party's Marks or elements included within such Marks. In
the event that Friday's grants such rights, any designs created shall be
included in the Proprietary Marks licensed hereunder, Friday's shall own all the
rights in such new design, and Licensee shall execute any documents required to
transfer such rights to Friday's. All uses and rights of and to the new designs
shall inure to the exclusive benefit of Friday's and Friday's may register and
protect the same in its own name, as it deems necessary or appropriate.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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E. GOODWILL. Licensee recognizes the value of the publicity and goodwill
associated with the Proprietary Marks, acknowledges that the Proprietary Marks
and any marks confusingly similar to the Proprietary Marks have acquired
secondary meaning, and that all related rights and goodwill belong exclusively
to Friday's. Neither party shall conduct any activity or produce goods, which in
any way question the other's ethics or lawful practices, nor shall either party
do anything that damages or reflects adversely upon the other. Friday's
recognizes the value of the publicity and goodwill associated with Licensee's
Marks, acknowledges that Licensee's Marks and any marks confusingly similar to
Licensee's Marks have acquired secondary meaning, and that all related rights
and goodwill belong exclusively to Licensee. The parties agree that: (i)
Licensee's current Mark - Tato Skins(R) -- is not and will not be deemed
confusingly similar to the Proprietary Marks under which the Products will be
marketed and sold.
4. PROPRIETARY MARKS PROTECTION
A. UNAUTHORIZED USE. Licensee's use of the Proprietary Marks without
Friday's prior written approval as required herein shall constitute a breach of
this Agreement and shall be promptly cured by Licensee pursuant to Section 17(A)
below. Licensee also acknowledges that irreparable injury to Friday's shall
occur if the use continues, and that Friday's shall be entitled to injunctive
relief, and applicable damages, costs and attorneys' fees arising from
Licensee's failure to timely cure any such unauthorized use.
B. THIRD PARTY UNAUTHORIZED USE OF PROPRIETARY MARKS.
1. NOTIFY FRIDAY'S. Licensee shall use its best efforts to notify
Friday's, in writing, if Licensee learns of any manufacture, distribution,
sale or advertisement of any product or service that is of the same general
type or class as the Products that Licensee is authorized to use and that
is marketed or distributed using confusingly similar marks as the
Proprietary Marks. Licensee shall not commence, prosecute or institute any
action or proceeding against any person, firm or corporation alleging
infringement, imitation or unauthorized use of the Proprietary Marks
without the prior written consent of Friday's.
2. APPROPRIATE ACTION. Friday's shall have the sole right to determine
the appropriate action to be taken against any such infringement,
imitation, unauthorized use, improper registration of, or improper attempt
to register the Proprietary Marks, including the sole discretion to settle
any claims or any controversy arising out of any such claims. Except as set
forth below, Licensee shall not have any rights against Friday's for
damages or otherwise by reason of any determination by Friday's not to act
with respect to any alleged infringement, imitation or unauthorized use by
others of the Proprietary Marks and/or the Products; nor shall any such
determination of Friday's affect the validity or enforceability of this
Agreement. Should an alleged infringement materially impair Licensee's
rights under this Agreement, and should Licensee request in writing (with
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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reference to this Section and the rights set forth herein) that Friday's
take appropriate action against the alleged infringer, and should Friday's
thereafter fail to take reasonable and appropriate action, then Licensee
may terminate this Agreement for convenience upon 30 days prior notice to
Friday's unless within such 30 day period Friday's shall have commenced
(and thereafter pursue) reasonable and appropriate action against the
infringer. Any and all damages/settlements recovered in any action or
proceeding shall belong solely and exclusively to Friday's, unless
otherwise agreed to in writing by Friday's.
C. REASONABLE ASSISTANCE. Licensee agrees to provide Friday's with such
reasonable assistance as Friday's may require in obtaining any protection of
Friday's rights to the Proprietary Marks; provided, however, that Licensee's
reasonable out of pocket costs, if any, incurred in providing such requested
assistance shall be reimbursed by Friday's.
5. APPROVALS AND QUALITY
A. QUALITY AND STANDARDS. In order to maintain the reputation of Friday's
and its Proprietary Marks, Licensee agrees to comply with written quality
standards and specifications provided to Friday's by Licensee upon final
approval of the Product prior to manufacturing as agreed to in writing by the
parties in connection with the approval of a specific Product) in connection
with the manufacture of the Products, and to comply with the Friday's Style
Guide in creating promotional and packaging material used in connection with the
Products and not to make use of the Proprietary Marks without the prior written
approval of Friday's. In order to facilitate the approval process, Licensee
shall comply in all respects with the procedures set forth in this Section.
B. APPROVAL OF PRODUCTS AND PACKAGING. Licensee shall furnish to Friday's,
free of cost, for its written approval as to quality and style, at least the
number of samples specified below of each of the Products to be manufactured,
distributed, sold or otherwise used under this Agreement, together with their
packaging, hangtags, and wrapping material in each of the following successive
stages: (i) at least one (1) sample of rough sketches/layout concepts or
description of flavor or food (including, without limitation, details of the
materials to be used, application of artwork and rough product dimensions); (ii)
at least one (1) sample of all finished artwork or final proofs; (iii) at least
one (1) sample of all prototypes or strike-offs; (iv) at least twenty-four (24)
samples of finished products, including all packaging materials from the initial
production run; and (v) two (2) samples from weekly reproduction runs (provided
that Licensee shall provide such additional samples from clauses (iv) and (v) as
Friday's may request from time to time). Friday's shall be entitled to keep all
samples from each successive stage submitted by Licensee pursuant to this
Section. No Products or other material utilizing the Proprietary Marks shall be
manufactured (except to the extent required to produce production samples),
sold, distributed, promoted or otherwise used in any manner whatsoever by the
Licensee without the prior written approval of Friday's of such Products and
materials at each successive stage. Without limiting the foregoing, Licensee
acknowledges that at each stage of the aforesaid approval process, Friday's
shall have the right to modify or disapprove any aspect of the samples delivered
to Friday's that fails to comply with the written guidelines or specifications
referred to Section 5(A), notwithstanding the prior approval of Friday's of
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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related samples at any earlier stage of the approval process, and the
disapproval by Friday's of any samples at any stage of the approval process
shall not result in any liability on the part of Friday's as a result of such
disapproval. If Friday's fails to approve in writing any product submission
within forty five (45) days after receipt of Licensee's submission, such failure
shall be deemed to constitute approval of the submission.
C. APPROVAL OF ADVERTISING AND PROMOTIONAL PROGRAMS AND MATERIALS. Licensee
may, subject to the prior written approval of Friday's, use textual and/or
pictorial matter pertaining to the Proprietary Marks on product labels and on
such promotional, display, point of purchase ("POP") and advertising material as
may, in Licensee's reasonable judgment, promote the sale of the Products to be
manufactured, distributed, sold or otherwise used under this Agreement. All
materials described in the preceding sentence must be submitted to Friday's for
its prior written approval at the following stages, as appropriate to the medium
used: (i) rough concepts; (ii) layout, story board and/or script; and (iii)
finished materials. No such material shall be used in any manner whatsoever by
Licensee in connection with the Products without the prior written approval of
Friday's of such material at each successive stage. If Friday's fails to approve
in writing any submission within forty-five (45) days after receipt of
Licensee's submission, such failure shall be deemed to constitute approval of
the submission. Licensee shall provide three (3) copies of each advertisement or
other promotional materials used by Licensee.
D. EFFECT OF FAILURE TO OBTAIN APPROVAL BY FRIDAY'S. Any Products or
promotional materials used in connection therewith not approved in writing by
Friday's shall be deemed to be unlicensed and Licensee shall have no right to
manufacture, sell, distribute or promote any such Products or promotional
materials. If Friday's requires any changes or modifications to be made to any
material submitted to Friday's for its written approval in order to ensure
compliance with the specifications or standards of quality of Friday's, Licensee
agrees promptly to make such changes or modifications. If any unapproved
Products or promotional materials are manufactured, distributed, sold, promoted
or otherwise used, Friday's shall consult with Licensee to determine whether a
Recall of the Product is appropriate under the circumstances.
E. MODIFICATIONS; CHANGES. Any modification of a Product or promotional
material must be submitted to Friday's for written approval prior to its
manufacture, sale, distribution or promotion, as if it were a new Product or new
promotional material, and will be subject, among other things, to all of the
requirements of Section 4.B. Approval of a Product or promotional material which
uses particular artwork does not imply approval of such artwork for use with a
different Product or promotional material. Furthermore, approval of any Product
or promotional material, including, but not limited to, the non-licensed
components thereof, in a particular color, does not constitute or imply approval
of such Product or promotional material in any other color or combination of
colors.
F. CONSISTENCY OF PRODUCT QUALITY. Products and promotional materials must
conform in all respects to the final production samples or finished materials
approved by Friday's. At any time (and from time to time) during the Term, upon
receipt of a written request from Friday's, Licensee agrees to provide promptly
to Friday's a reasonable number of samples of the Products and of the
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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promotional and packaging materials relating to the Products, at no cost to
Friday's, for quality control inspection. The value of all samples furnished to
Friday's shall not be included in Gross Sales. If, in the reasonable judgment of
Friday's, the quality of a Product originally approved by Friday's has
materially deteriorated in later production runs, or if a Product has otherwise
been materially altered, Friday's shall consult with Licensee to determine
whether a Recall of the Product is appropriate under the circumstances.
G. OWNERSHIP AND USE OF ARTWORK AND DESIGNS. Friday's shall own all
copyrights, trademarks and other proprietary rights in any and all artwork or
designs authorized for use hereunder by Friday's that incorporates or otherwise
includes the Proprietary Marks. Licensee further agrees and acknowledges that
any and all artwork or designs authorized for use hereunder by Friday's in
connection with the Products or which otherwise features or includes the
Proprietary Marks are works made for hire within the meaning of the United
States Copyright Act and shall be owned in their entirety exclusively by
Friday's. Friday's reserves for itself or its designees all rights to use any
and all artwork or designs created, utilized and/or approved hereunder, without
limitation. Friday's agrees, however, that it will not authorize the use of any
artwork or designs created by Licensee pursuant to this Agreement on any product
in the same "licensed product category" as the product for which the artwork or
design was created by Licensee, without the prior written consent of Licensee,
during the period of time the product for which the artwork or design was
created by Licensee is being sold at retail. To the extent any artwork or design
created by Licensee or any other person or entity and used with the Proprietary
Marks is not deemed to be a work made for hire, Licensee hereby assigns to
Friday's all copyrights, trademarks and other proprietary rights in such artwork
or design. Licensee agrees to execute, or cause to be executed by any of its
employees who participate in the creating of any such artwork or designs, any
additional documents proposed by Friday's to effectuate and confirm the sole and
exclusive ownership by Friday's of all copyrights, trademarks and other
proprietary rights in and to such artwork and designs. Furthermore, if any third
party makes or has made any contribution to the creation of artwork or designs
authorized for use hereunder, Licensee agrees to obtain from such party a full
assignment of rights so that the foregoing assignment by Licensee shall vest
full rights in Friday's. Notwithstanding the foregoing, Licensee warrants and
represents that all contributions to the creation of artwork or designs shall be
undertaken as works made for hire for Licensee on behalf of Friday's.
H. PREPARATION OF ARTWORK BY FRIDAY'S. Licensee may, from time to time,
request the assistance of Friday's in the preparation of certain artwork to be
used in connection with the Products. In the event Friday's agrees to provide
such assistance, Friday's will provide Licensee with an estimate of the cost of
artwork to be created by Friday's (or by third parties under contract to
Friday's) for use in the development of the Products and/or any related
promotional or packaging materials at the then prevailing commercial art rates
available to Friday's. Upon Licensee's written approval of the estimate,
Friday's will prepare the artwork (or cause the artwork to be prepared) and will
provide to Licensee an invoice upon the completion of the artwork. Licensee
shall pay to Friday's the amount of the invoice within thirty (30) days of
receiving the invoice. If in the opinion of Friday's, it is necessary to modify
artwork initially prepared by Licensee and submitted for approval, Friday's
shall so notify Licensee. Licensee will either modify the artwork to the
satisfaction of Friday's or agree to pay Friday's for making the required
modifications.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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I. CONFORMANCE WITH STANDARDS; COMPLIANCE WITH LAWS. Licensee represents,
warrants and covenants that the Products shall at all times (i) conform in all
material respects with the written standards of quality of Friday's provided to
Licensee with respect to design, styling, packaging, labeling and sales
promotion, as appropriate for high quality products of such type; (ii) conform
to the statements made on the container and/or label of each such Product; (iii)
be of uniform quality and fit for the purposes for which each such Product is
intended; and (iv) be produced, packaged, labeled, distributed, promoted and
advertised in compliance with all applicable laws, rules and regulations.
J. REGISTRATION OF ARTWORK. In the event any presentation of the
Proprietary Marks or design or artwork requires, in the reasonable judgment of
Friday's, that Friday's apply to register such presentation in any jurisdiction
in the Territory, Friday's shall bear the cost and expenses for each such
application.
K. APPROVAL STANDARDS. Whenever the approval of Friday's is required under
this Agreement (unless otherwise expressly provided), such approval may not be
unreasonably withheld or delayed.
L. DAMAGED OR DEFECTIVE PRODUCTS. Licensee shall not knowingly sell,
give-away or deliver to any person, firm, corporation or entity (except as
expressly provided herein or with the prior written approval of Friday's) any
materials displaying the Proprietary Marks that contain any damaged or defective
Products. If any damaged or defective Products and/or any other materials
displaying the Proprietary Marks are distributed by Licensee other than as
authorized pursuant to the terms hereof, Friday's shall consult with Licensee to
determine whether a Recall of the Product is appropriate under the
circumstances.
M. LICENSEE MARKS. Upon first obtaining the consent of Friday's, Licensee
may use any proprietary mark owned by licensee ("Licensee Mark") in conjunction
with the Proprietary Marks; PROVIDED, HOWEVER, that the Proprietary Marks must
be displayed in a more prominent manner than the Licensee Marks. Nothing in this
Section is intended to give Licensee the right to register additional Licensee
Marks for the purposes of circumventing the provisions of Section 5.G and
Section 15 of this Agreement. Licensee Marks shall not be subject to Section
5(G) of this Agreement.
6. MARKETING
A. RESPONSIBILITY. Subject to the terms, conditions and limitations set
forth herein, Licensee shall be solely responsible for marketing and promotional
activities with respect to the Products in the Territory.
B. MINIMUM EXPENDITURES. During the term of this Agreement, Licensee shall
spend on consumer marketing and promotion of the Products an annual amount equal
to not less than [*] of the Gross Sales for the previous 12 month period, or for
the initial 12 month period, [*] of the Gross Sales for that period.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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C. MARKETING AND DISTRIBUTION PROGRAM.
1. Licensee shall provide to Friday's a written description of
Licensee's planned marketing and distribution program covering the entire
Term prior to marketing any of the Products. Such written description shall
include a distribution list, identifying the types of entities to which
Licensee will distribute the Products, as well as a description of the
planned Products, advertising, marketing dates and promotions. Licensee
shall not proceed with the implementation of the initial program or any
substantial modification of its marketing and distribution program,
including substantial changes in its distribution network, without
obtaining the prior written approval of Friday's. If Friday's fails to
approve any program or modification within forty-five (45) days of a
written description of such program or modification, such failure shall be
deemed to constitute approval of the proposed program or modification. Upon
request from Friday's at any time, Licensee shall provide a list of its
current customers and distributors for the Products.
2. No Products may be used as Premiums, without prior written approval
of Friday's. A detailed description of any such planned use of the
Products, including, but not limited to, information about the quantity of
merchandise involved and the purpose of the program, must be provided to
Friday's. Notwithstanding the foregoing, Friday's shall be deemed to
approve in advance the practice of providing up to [*] of each Product per
store as "free fill," (where applicable) and no Earned Royalties shall be
due on such Premiums. If Licensee fails to obtain prior written approval of
Friday's of such use of the Products, Friday's shall have the option to
require Licensee to pay full Earned Royalties on all Products used as
Premiums.
D. MARKETING DATE; DISTRIBUTION. Licensee shall use its best efforts to
commence distribution of each category of Products through its Distribution
Channels no later than thirty (30) days following the Marketing Date.
Specifically, Licensee shall launch a minimum of three (3) products within one
(1) year of the Effective Date. Beginning on the Marketing Date, and continuing
throughout the remainder of the Term, Licensee shall diligently and continuously
market and distribute the Products utilizing the Proprietary Marks. Licensee
shall at all times maintain the ability to supply, within a commercially
reasonable time, the reasonably foreseeable demand for the Products. Licensee's
failure to perform, as provided in this Section 6(D), shall not be deemed an
Event of Default but shall instead give rise to Friday's early termination
rights under Section 17(B)(3); provided, however, that if a reasonable
extrapolation of Gross Sales to date suggests that Licensee shall achieve the
Minimum Sales targets, and current selling activities are substantially
consistent with Licensee's past activities, Friday's may not invoke this Section
6(D) to request an early termination.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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7. REPORTS, ROYALTIES, PAYMENTS, STATEMENTS
A. PURPOSE. Licensee acknowledges and agrees that the Royalty Fee reflects,
in part, certain expenses incurred or to be incurred by Friday's in providing
services hereunder and the continued right to use the Proprietary Marks on the
Products during the Term.
B. MONTHLY SALES REPORT. Licensee shall provide Friday's on a monthly basis
a sales report for the prior month by Product SKU.
C. INTENTIONALLY OMITTED
D. ROYALTY FEE. Within thirty (30) days following each March 31, June 30,
September 30 and December 31 of the Term, Licensee shall pay to Friday's the
Earned Royalties due from sales of the Products during the preceding quarter,
except as set forth below. Friday's acknowledges that Licensee currently sells
approximately $10 million per year of Tato Skins(R) brand snack chips as
"Vending Products" within the Territory ("Vending Products" are defined as
products which are both sold to vending distributors and are 1.75 ounces or less
in stated weight). Licensee shall have the option in its sole and absolute
discretion, exercisable upon written notice to Friday's and compliance with
Section 5 hereof, to cancel its separate distribution of Tato Skins(R) brand
snack chips as Vending Products in favor of packaging and distributing
substantially similar Products as Vending Products under the Proprietary Marks.
Should Licensee exercise this conversion option, Licensee shall not be required
for the term of this Agreement to pay Earned Royalties on and may deduct from
the calculation of Gross Sales the sale of such Vending Products under the
Proprietary Marks to the extent that Gross Sales of such Vending Products in a
calendar quarter do not exceed the gross sales of the Tato Skins(R) brand
Vending Products for the last corresponding seasonal quarter (i.e., 1st, 2nd,
3rd or 4th quarter) preceding the date of Licensee's written notice to Friday's
under this subsection. By way of examples: (1) if Licensee's written notice is
provided on June 30, 2000, Gross Sales of such Vending Products under the
Proprietary Marks for the 3rd calendar quarter of 2000 equals $3,000,000, and
quarterly gross sales of Tato Skins(R) brand Vending Products was $2,500,000 for
the 3rd calendar quarter of 1999 (the corresponding quarter prior to Licensee's
delivery of written notice under this Section), then Licensee would only pay
Royalty Fees based on Gross Sales equal to the difference -- $500,000
($3,000,000 - $2,500,000); and (2) assuming same facts as in (1) above, and that
Gross Sales of the Vending Products under the Proprietary Marks for the 4th
calendar quarter of 2000 equals $2,000,000, and quarterly gross sales of Tato
Skins(R) brand Vending Products was $2,100,000 for the 4th calendar quarter of
1999 (the corresponding quarter prior to Licensee's delivery of written notice
under this Section), then Licensee would not pay any Royalty Fees based on the
4th quarter 2000 sales of the Vending Products.
E. ROYALTY STATEMENT. The royalty statement shall include therein the
product style number, SKU, product description, the unit price, class of
distribution (mass market, grocery store, specialty, etc.), royalty rate, and
total Royalty Fee due, and shall be signed by a duly authorized officer of
Licensee and certified as accurate. Such statement shall show, by customer in
the Territory, the total gross invoiced price of Products distributed or sold
during the previous quarter, the amount of any discounts, allowances,
non-payments (or amounts received with respect to previous non-payment amounts),
credits and returns which are deducted therefrom and the computation of the
amount of the Earned Royalties payable thereunder in respect of such Gross Sales
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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for such period. Such royalty statements shall be furnished to Friday's whether
or not any Products have been sold during the period to which such statement
relates.
F. EARNED ROYALTY UPON TERMINATION. In the event of termination of this
Agreement, within three (3) months after such termination, a statement
indicating Gross Sales, customer payments and Earned Royalty earned during the
period from the last regular statement until the date of termination. Fifteen
(15) days after such final statement, Licensee shall pay to Friday's the amount
of any Earned Royalty accrued during this period.
G. MANNER OF PAYMENT. All Payments shall be made in United States dollars
by delivery of payment to Friday's at the address specified by Friday's from
time to time. Payments shall be made: (i) as described elsewhere in Section 7 in
the case of the Royalty Fee; or (ii) not more than thirty (30) days after date
of invoice. Delinquent Payments shall bear interest from the due date until
deposited at twelve percent (12%) per annum or the maximum rate permitted by
law, whichever is less.
H. Intentionally Omitted
8. BOOKS, RECORDS AND USE OF FACILITIES
A. BOOKS AND RECORDS. Licensee shall keep, maintain, and preserve, during
the Term and for at least two (2) years thereafter, complete and accurate books
of accounts and records covering all transactions relating to the license hereby
granted, and Licensee's manufacture, distribution, sale, promotion and marketing
of the Products, including, but not limited to, accounts and records of the
computation of Gross Sales in accordance with generally accepted accounting
principles (consistent with the definition of "Gross Sales" set forth in Section
1) and sales by Product, by retailer, by region and by style and/or
presentation.
B. EXAMINATION AND AUDIT. Friday's and/or its duly authorized
representatives shall have the right, during regular business hours, for the
Term of this Agreement and for one (1) year thereafter, to examine such books of
accounts and records and all other documents and materials in the possession or
under the control of Licensee with respect to the subject matter and the terms
of this Agreement, and Friday's shall have free and full access thereto and the
right to make extracts therefrom and to make photocopies thereof; PROVIDED,
HOWEVER, that such access shall be limited to no more than one examination
during any given calendar year, shall be taken upon no less than 30 days written
notice to Licensee at a time convenient to Licensee, and shall not unduly
disrupt Licensee's normal business activities. In the event of any underpayment
or overpayment of Royalty Fee, such amount shall be paid or refunded, as
appropriate, within thirty (30) days after such amount has been determined and
agreed to by the parties; provided that Licensee shall pay interest on any
underpayment from the date such underpayment was originally due until paid in
full, at the rate of twelve percent (12%) per annum or the maximum rate
permitted by law, whichever is less. If any audit discloses an underpayment of
Royalty Fees for the period subject to audit of five percent (5%) or more,
Licensee shall reimburse Friday's (in addition to payment of such Royalty Fees)
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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for the actual and reasonable costs and expenses incurred in connection with
such audit, including, without limitation, the actual and reasonable costs of
travel and wage expenses of the auditors.
C. INSPECTION OF LICENSEE'S FACILITIES. Friday's and/or its duly authorized
representative shall have, during normal business hours, the right of reasonable
access to Licensee's or its agent's production facilities, personnel, art
facilities and stock patterns for use in design of the Products, at no charge to
Friday's.
D. INSPECTION OF MANUFACTURING FACILITIES. Friday's and/or its duly
authorized representatives shall have the right, during normal business hours,
for the duration of the Term of this Agreement, to inspect all facilities
utilized by Licensee in connection with its manufacture or distribution of the
Products pursuant to this Agreement and to examine the Products in process, in
manufacture, in distribution and when offered for sale.
9. SALES BY LICENSEE AFTER TERMINATION OR EXPIRATION OF AGREEMENT
A. SALES AFTER TERMINATION OR EXPIRATION. Upon any termination or the
expiration of this Agreement, all of the rights of Licensee hereunder shall
terminate, except that Licensee shall be entitled, for an additional period of
two (2) months pursuant to the terms and conditions hereof, to sell, under the
Proprietary Marks, but on a non-exclusive basis, reasonable volumes (including
raw materials and work in process) of the Products (such volume shall not be
materially different from historic sales and inventory levels) on hand on the
date of termination or expiration, subject to payment of Earned Royalties on
sales during such additional period. Except as provided in the first sentence of
this Section 9.A., upon any termination or the expiration of this Agreement,
Licensee shall immediately discontinue all use of the Proprietary Marks and
shall no longer have the right to use the Proprietary Marks or any variation or
simulation thereof.
B. RETURN OF PROMOTIONAL MATERIALS AND PRODUCTS. Upon any termination or
the expiration of this (a) Agreement, and (b) the passage of the two (2) month
period specified in Section 8.A., all unused labels, artwork, packaging,
advertising, promotional materials and all other materials bearing the
Proprietary Marks and the unsold Products shall be destroyed by Licensee, and in
each case certified by Licensee to Friday's as destroyed.
C. No Sales After termination Due to Certain Defaults. Notwithstanding the
provisions of Section 9.A., in the event of a termination hereof by reason of
Licensee's default with respect to Licensee's (i) use or presentation of the
Proprietary Marks, or (ii) production of Products which do not meet the
standards of Friday's, all rights of Licensee hereunder shall immediately
terminate and Licensee shall have no right to sell any remaining inventory
(including raw materials or work in process), all of which shall be delivered to
a location designated by Friday's, at Licensee's expense.
D. ROYALTY FEE OBLIGATION. Friday's right to enforce and collect any
Royalty Fee or other amounts accrued but not paid shall not be waived, abridged
or limited by any termination of this Agreement.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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10. REPRESENTATIONS OF FRIDAY'S
Friday's hereby represents and warrants that:
A. Friday's is a corporation duly organized and validly existing under the
laws of the State of New York.
B. Friday's has the corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Friday's and the consummation of the
transactions contemplated hereby have been duly authorized. This Agreement
constitutes a valid and binding obligation of Friday's and no other act,
approval or proceedings on the part of Friday's or any other person or entity is
required to authorize the execution and delivery of this Agreement by Friday's
or the consummation of the transactions contemplated hereby.
C. TGIFM owns the registrations of, or has applied or will apply to
register; the Proprietary Marks identified in Exhibit "A".
D. Friday's has the full right, power and authority to grant the rights,
licenses and privileges hereby granted to Licensee. This Agreement and the
execution and delivery of this Agreement by Friday's do not, and the
consummation of the transactions contemplated hereby will not, violate any
provisions of or constitute a default (whether with notice or with the passage
of time or both) or require any consent under (i) Friday's Articles of
Incorporation or By-laws, (ii) any law or regulation to which Friday's or any of
its subsidiaries is subject, or (iii) any provision of any indenture, mortgage,
lien, lease, agreement, instrument, order, arbitration award, judgment or decree
to which Friday's or any of its subsidiaries is a party or by which Friday's or
any of its subsidiaries or any of their respective assets or properties is
bound.
E. Friday's has not heretofore granted to any other party any right,
license or privilege with respect to the Proprietary Marks which is in conflict
with the rights granted to Licensee herein and, subject to the terms and
conditions hereof, will not do so during the Term of this Agreement.
11. REPRESENTATIONS OF LICENSEE
Licensee hereby represents and warrants that:
A. Licensee is a corporation duly organized, validly existing and in good
standing under the laws of Delaware.
B. Licensee has the corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Licensee and the consummation of the
transactions contemplated hereby have been duly authorized. This Agreement
constitutes a valid and binding obligation of Licensee and no other act,
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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approval or proceedings on the part of Licensee or any other person or entity is
required to authorize the execution and delivery of this Agreement by Licensee
or the consummation of the transactions contemplated hereby.
C. This Agreement and the execution and delivery of this Agreement by
Licensee do not, and the consummation of the transactions contemplated hereby
will not, violate any provisions of or constitute a default (whether with notice
or with the passage of time or both) or require any consent under (i) Licensee's
Articles of Incorporation or By-laws, (ii) any law or regulation to which
Licensee or any of its subsidiaries is subject, or (iii) any provision of any
indenture, mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree to which Licensee or any of its subsidiaries is a
party or by which Licensee or any of its subsidiaries or any of their respective
assets or properties is bound.
D. As between Licensee and Friday's, Friday's is the owner of the trade,
service or other marks and names (including the Proprietary Marks) used on or
for said Products, except for Licensee Marks which shall remain owned by
Licensee.
E. Intentionally Omitted
12. INDEMNIFICATION
A. INDEMNIFICATION BY FRIDAY'S. Friday's does hereby indemnify Licensee
against and agree to save, defend and hold Licensee harmless of and from all
Trademark Damages incurred in connection with a Trademark Action; PROVIDED,
HOWEVER, that, as express conditions precedent to such indemnity, Licensee shall
(i) promptly advise Friday's of such Trademark Action; and (ii) fully cooperate
with Friday's and its representatives in the defense or settlement of the
Trademark Action; provided, however, that Licensee's reasonable out of pocket
costs, if any, incurred in providing such cooperation shall be reimbursed by
Friday's. Friday's shall have the right (to the exclusion of Licensee) to (a)
select such counsel and other representatives to represent Friday's and Licensee
in connection with the Trademark Action (provided that Licensee may elect, at
its expense, to participate in the defense of the Trademark Action through
counsel of its own choosing); (b) make all decisions, judgments and elections in
connection with the Trademark Action; and (c) settle or compromise the Trademark
Action in its sole DISCRETION, provided such settlement does not materially
impair Licensee's rights or benefits under this Agreement.
B. INDEMNIFICATION BY LICENSEE. Licensee does hereby indemnify Friday's
against and agree to save and hold Friday's harmless of and from any and all
claims, demands, causes of action, liabilities, damages, costs and expenses
(including reasonable counsel and attorneys' fees and expenses) which may be
asserted by third parties against Friday's, or which Friday's may sustain or
incur in any action or claim against Friday's by third parties, for or by reason
of any breach of the terms of this Agreement or acts or omissions sounding in
tort (including negligence, defective product liability or intentional torts)
committed by Licensee or any of its representatives, agents or employees in
connection with Licensee's performance under this Agreement; provided, however,
that, as express conditions precedent to such indemnity, Friday's shall (i)
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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promptly advise Licensee of such Action; and (ii) fully cooperate with Licensee
and its representatives in the defense or settlement of the Action; provided,
however, that Friday's reasonable out of pocket costs, if any, incurred in
providing such cooperation shall be reimbursed by Licensee. Licensee shall have
the right (to the exclusion of Friday's) to (a) select such counsel and other
representatives to represent Licensee in connection with the Action (provided
that Friday's may elect, at its expense, to participate in the defense of the
Action through counsel of its own choosing); (b) make all decisions, judgments
and elections in connection with the Action; and (c) settle or compromise the
Action in its sole discretion, provided such settlement does not materially
impair Friday's rights or benefits under this Agreement. Licensee's liability
under this Section 12(B) shall be capped at the greater of: (i) the minimum
umbrella liability insurance coverage amount set forth in Section 13; or (ii)
Licensee' actual minimum umbrella liability insurance coverage at the time of
the relevant claim.
13. INSURANCE
A. INSURANCE. Licensee agrees to carry product liability insurance with
limits of liability of not less than $1,000,000.00 per person and $2,000,000.00
per accident, plus an initial $10,000,000.00 in umbrella liability coverage [*],
and Friday's shall be named therein as an additional insured party as its
interest may appear.
B. CERTIFICATE OF INSURANCE. Prior to the Effective Date of this Agreement,
certificates issued by Licensee's insurance company evidencing the insurance
required above shall be provided to Friday's. Such certificate shall set forth,
minimally, the amount of insurance, the additional insured endorsement, the
policy number, the date of expiration, and an endorsement that Friday's shall
receive thirty (30) days written notice prior to termination, reduction or
material modification of the coverage. The certificates shall bear an inked
signature. Facsimile or photocopied certificates will not be acceptable.
Certificates shall be furnished to Friday's upon renewal of insurance. In the
event Licensee has not provided its certificate of insurance as required herein,
Friday's shall have the right to procure such coverage and charge the expense
incurred to Licensee and/or terminate this Agreement.
14. CONFIDENTIAL INFORMATION
A. CONFIDENTIAL INFORMATION. From time to time one party hereto may
disclose or furnish to the other party hereto certain Confidential Information.
Friday's and Licensee specifically acknowledge and agree that, except as
specifically authorized in this Agreement or otherwise authorized in writing by
the disclosing party, (i) neither of the parties shall have any rights
whatsoever in and to the Confidential Information so disclosed or furnished by
the other, (ii) at all times the Confidential Information shall be regarded as
and treated in a strictly confidential manner, and (iii) so long as such
Confidential Information is not publicly known, neither party shall disclose, or
divulge, or permit any of its agents, employees, or representatives to use for
their own account, or otherwise disclose or divulge, any of such Confidential
Information to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever, except as may be required by law. In the event
of a material breach by either party of the provisions of this Section, and the
failure of the party in breach to cure the breach within the time allowed, then
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
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in addition to any other right or remedy available to it, the aggrieved party
shall be entitled to terminate this Agreement and/or obtain injunctive relief
against the breaching party. Notwithstanding the foregoing, Licensee's
Confidential Information shall not include any proposed presentation of the
Proprietary Marks (or any other mark suggested by Licensee to be used hereunder)
suggested or furnished by Licensee and all such presentations shall be the sole
and exclusive property of Friday's.
B. LIMITED DISCLOSURE. A party (the "receiving party") may disclose
Confidential Information of the other party (the "disclosing party") only to
those of receiving party's employees who strictly need to know such information
to enable the receiving party to implement and enjoy its full rights and
licenses under this Agreement, but only to the extent reasonable under the
circumstances and only in accordance with and upon conditions designed to ensure
the confidentiality of such information. Each party will adopt and implement all
reasonable procedures prescribed from time to time by the other party to prevent
unauthorized use, disclosure of or access to the Confidential Information.
C. IMPROPER DISCLOSURE. Each receiving party agrees to promptly notify the
disclosing party when it becomes aware of any use or disclosure (whether through
negligence or otherwise) of any Confidential Information of the disclosing party
and to notify disclosing party of the action receiving party intends to take to
prevent or stop such use or disclosure. A receiving party shall have the
obligation to take timely and vigorous legal and other appropriate action at its
expense against any and all persons who either wrongfully use or wrongfully
disclose any portion of the Confidential Information, existing on the date
hereof or later originated, which was divulged to receiving party under this
Agreement and misappropriated from receiving party, and the disclosing party
agrees to reasonably cooperate with the receiving party in the taking of such
action. In the event that the disclosing party is not reasonably satisfied that
the receiving party's actions will adequately protect and preserve the secret
and confidential nature of the disclosing party's Confidential Information, then
the disclosing party shall at the receiving party's expense have the right to
take reasonable action and the receiving party shall at its own expense provide
all necessary assistance to the disclosing party.
D. RETURN OF CONFIDENTIAL INFORMATION. In the event of the expiration or
any termination of this Agreement, each receiving party agrees, for itself and
its employees, agents, directors and other representatives, at the disclosing
party's request, to immediately deliver to the disclosing party all written and
other tangible originals and copies of the Confidential Information of the
disclosing party, and to not retain any copies thereof.
E. DURATION. Notwithstanding anything to the contrary contained in this
Agreement, the enforceability of the provisions of this Section shall commence
on the Effective Date and shall survive the expiration or any termination of
this Agreement or any license granted hereunder. The provisions of this Section
shall be in addition to, and not in lieu of, any and all common law, statutory
or other rights of confidentiality to which Friday's and Licensee may be
entitled.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
19
<PAGE>
15. REMEDIES
EQUITABLE REMEDIES. It is expressly agreed that each party would suffer
irreparable harm from a material breach by the other of any of its covenants
contained in this Agreement, and that remedies other than injunctive relief
cannot fully compensate or adequately protect a party for such a violation.
Therefore, without limiting the rights of a party to pursue all other legal and
equitable remedies available for violation of this Agreement, in the event of
actual or threatened breach by a party of any of the provisions of this
Agreement, the breaching party consents that the non-breaching party shall be
entitled to injunctive or other relief in order to enforce or prevent any such
violation or continuing violation thereof each party acknowledges and agrees
that the provisions of this Section are reasonable and necessary and
commensurate with the need to protect the other party against irreparable harm
and to protect its legitimate and proprietary business interests and property.
16. ASSIGNMENT
A. ASSIGNMENT BY LICENSEE (ACQUISITION/MERGER). Upon prior sixty (60) day
written notice to Friday's, Licensee may assign or transfer to any corporation
which is or becomes a wholly owned subsidiary or parent of Licensee, or which
survives a merger in which Licensee participates, or to any corporation or other
person or business entity which acquires all or substantially all of the assets
of Licensee; PROVIDED, HOWEVER, that the party to whom such assignment is made
agrees to comply in full with the obligations of Licensee hereunder, and in
particular the Minimum Sales, the insurance provisions set forth in Section 13
and the marketing minimum expenditures set forth in Section 6.B. of this
Agreement. [*].
B. AGREEMENTS TO ASSIST IN MANUFACTURING, SALE AND DISTRIBUTION. Upon prior
sixty (60) day written notice to Friday's, Licensee and Subsidiary may enter
into agreements with agents to assist in the manufacturing, sale and
distribution of the Products in the Territory. Licensee shall impose upon all
such third parties quality controls and all other obligations regarding the
manufacture, sale and distribution of the Products imposed upon Licensee
pursuant to this Agreement. Licensee shall be liable for the breach by any such
third party of the terms hereof or the improper or unauthorized use of the
Proprietary Marks or Confidential Information by any such third party as if such
breach or unauthorized use was committed by Licensee. If Friday's learns of a
breach or unauthorized use by any such party, it shall provide prompt written
notice to Licensee to enable Licensee to cure and minimize any damages caused by
such breach or unauthorized use.
C. OTHER ASSIGNMENTS BY LICENSEE VOID. Any mortgage, pledge, hypothecation,
encumbrance or other assignment, transfer or sub-contract of this Agreement to
any third party or assignee by Licensee shall be void.
D. ASSIGNMENT BY FRIDAY'S. Friday's may assign this Agreement, or any of
its rights or obligations herein, to any person or entity without Licensee's
consent; PROVIDED, HOWEVER, that any such assignment shall not affect Licensee's
rights hereunder.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
20
<PAGE>
17. DEFAULT AND TERMINATION
A. DEFAULT. The following shall constitute events of default under this
Agreement:
(1) If Licensee violates any of its obligations under this Agreement,
including, without limitation, the failure to timely make any payment due
or submit any royalty statement when due as required hereunder, and such
failure continues for a period of ten (10) Business Days after delivery of
written notice of such failure by Friday's;
(2) If Licensee is unable to pay its obligations when due, makes any
assignment for the benefit of creditors, files a voluntary petition in
bankruptcy, is the subject of an involuntary bankruptcy petition (which
remains undismissed for 60 days), is adjudicated bankrupt or insolvent or
have any receiver, liquidator, or trustee in bankruptcy or insolvency
appointed for its business or property;
(3) In the event that a party commits a material breach of any
provision of this Agreement which is not cured within thirty (30) days
after receipt of written notice of such breach from the non-breaching
party.
B. TERMINATION.
1. A non-defaulting party may terminate this Agreement upon the
occurrence of an event of default under this Agreement.
2. In addition, Friday's may terminate this Agreement upon 60 days
prior notice if Licensee shall fail to achieve a Minimum Sales target;
provided, however, that: (i) such failure shall not be deemed a breach of
this Agreement by Licensee but merely a condition subsequent giving rise to
the foregoing early termination rights; [*].
3. In addition, Friday's may terminate this Agreement upon notice if
(1) Licensee does not commence in good faith to manufacture, distribute or
sell each category of Product and utilize each of the Proprietary Marks in
connection therewith through its Distribution Channels in the Territory on
or before the Marketing Date (except to the event such delay or failure is
caused by Friday's failure to grant prompt requested approvals as required
under this Agreement), and such failure continues for a period of thirty
(30) days after delivery of written notice of such failure by Friday's, or
if (2) Licensee fails to comply with Section 6(D) or otherwise fails to
sell a reasonable assortment of the Products utilizing each of the
Proprietary Marks through its Distribution Channels in the Territory, and
such failure continues for a period of thirty (30) days after delivery of
written notice of such failure by Friday's; provided, however, in each case
that if a reasonable extrapolation of Gross Sales to date suggests that
Licensee shall achieve the Minimum Sales targets, and current selling
activities are substantially consistent with past activities, Friday's
shall not invoke this paragraph to terminate the Agreement; and provided
further, that Licensee's failure to perform, as provided in this Section
17(B)(3) or Section 6(D), shall not be deemed a breach of this Agreement by
Licensee but merely a condition subsequent giving rise to the foregoing
early termination rights.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
21
<PAGE>
4. In addition, Licensee may terminate this Agreement upon notice if
Friday's shall, in a commercially unreasonable manner, either (1) fail to
grant the requested approvals for at least two Products by the Marketing
Date, or (2) deny requested approvals of marketing or distribution plans,
in each case to the material prejudice of Licensee, and such failure
continues for a period of forty five (45) days after delivery of written
notice of such failure by Friday's; provided, however, that Friday's
failure to perform, as provided in this Section 17(B)(4), shall not be
deemed a breach of this Agreement by Friday's but merely a condition
subsequent giving rise to the foregoing early termination rights.
C. TERMINATION DUE TO BANKRUPTCY. In the event this Agreement is terminated
by Friday's pursuant to this Section 17.A.2, neither Licensee nor its receivers,
representatives, trustees, agents, administrators, successors and/or assignees
shall have any right to exploit or in any way use the Proprietary Marks in
connection with the advertising, promotion or sale of the Products, or
otherwise.
D. TERMINATION OF RIGHTS. Immediately upon termination of the Agreement
pursuant to this Section, all rights of the parties hereunder shall immediately
terminate, except for any post-termination rights (if any) described in Section
8.
E. TERMINATION DUE TO NEGATIVE IMPACT ON FRIDAY'S BRAND OR RESTAURANT
SALES. In the event this Agreement and Licensee's performance hereunder
negatively impacts the Friday's brand and/or restaurant sales, as reasonably
demonstrated and/or quantified to Licensee by Friday's, Friday's may terminate
this Agreement upon thirty (30) days' written notice to Licensee. A termination
under this Section 17.E. shall not be deemed an event of default under this
Agreement.
F. TERMINATION DUE TO NEGATIVE IMPACT ON LICENSEE'S BRANDS OR OTHER PRODUCT
SALES. In the event this Agreement and Licensor's performance hereunder
negatively impacts the Licensee's own brands and/or other product sales, as
reasonably demonstrated and/or quantified to Friday's by Licensee, Licensee may
terminate this Agreement upon thirty (30) days' written notice to Friday's. A
termination under this Section 17.F. shall not be deemed an event of default
under this Agreement.
18. FORCE MAJEURE
No party shall be liable for any delay or failure of performance caused
principally by reason of Acts of God, civil commotion, riot, strike, moratorium,
war, revolution or any other cause beyond its control. Nothing herein shall
excuse any delay in the payment of any amounts (including payment of any Royalty
Fees) due hereunder.
19. BROKERS
Friday's, or Friday's Representative as the case may be, and Licensee each
represents and warrants to the other that it has not employed or dealt with any
broker or finder in connection with this Agreement or the transactions
contemplated hereby, and each agrees to indemnify and hold the other harmless
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
22
<PAGE>
from any and all liabilities (including, without limitation, reasonable
attorneys' fees and disbursements paid or incurred in connection with any such
liabilities), brokerage commissions or finder's fees in connection with this
Agreement or the transactions contemplated hereby.
20. DISPUTE RESOLUTION
A. GOOD FAITH NEGOTIATION/SENIOR REPRESENTATIVES. IN THE EVENT OF ANY
DISPUTE OR DIFFERENCE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH
THEREOF, THE PARTIES HERETO SHALL USE THEIR BEST EFFORTS TO SETTLE SUCH DISPUTES
OR DIFFERENCES IN GOOD FAITH NEGOTIATIONS, KEEPING IN MIND THEIR MUTUAL
INTERESTS, IN ORDER TO REACH A JUST AND EQUITABLE RESOLUTION OF THE DISPUTE OR
DIFFERENCE SATISFACTORY TO BOTH PARTIES. EITHER PARTY MAY MAKE A WRITTEN REQUEST
TO THE OTHER BY SENDING NOTICE THEREOF FOR A MEETING OF SENIOR REPRESENTATIVES
(I.E. OFFICERS WHOSE POSITIONS ARE AT THE LEVEL OF VICE-PRESIDENT OR ABOVE) TO
RESOLVE THE PARTIES' DIFFERENCES. SUCH MEETING SHALL TAKE PLACE WITHIN FIFTEEN
(15) DAYS OF RECEIPT OF SUCH NOTICE AT A TIME AND LOCATION ACCEPTABLE TO BOTH
PARTIES.
B. CONCILIATION/MEDIATION. IF WITHIN THIRTY (30) DAYS AFTER A MEETING OF
THE SENIOR REPRESENTATIVES, THE PARTIES HAVE NOT SUCCEEDED IN NEGOTIATING A
RESOLUTION OF THE DISPUTE OR DIFFERENCE, THE PARTIES SHALL JOINTLY APPOINT A
MUTUALLY ACCEPTABLE NEUTRAL PERSON NOT AFFILIATED WITH EITHER OF THE PARTIES
(THE "NEUTRAL"), SEEKING ASSISTANCE IN SUCH REGARD FROM THE INTERNATIONAL
CHAMBER OF COMMERCE IF THE PARTIES ARE UNABLE TO AGREE UPON SUCH APPOINTMENT
WITHIN FORTY (40) DAYS AFTER THE MEETING OF THE SENIOR REPRESENTATIVES. THE FEES
OF THE NEUTRAL SHALL BE SHARED EQUALLY BY THE PARTIES.
C. ARBITRATION. ALL DISPUTES LEFT UNRESOLVED AFTER CONSULTATION/MEDIATION
ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE FINALLY SETTLED UNDER THE
RULES OF ARBITRATION OF THE AMERICAN ARBITRATION ASSOCIATION BY ONE ARBITRATOR
WITH INDUSTRY EXPERIENCE APPOINTED IN ACCORDANCE WITH THE SAID RULES. THE LAWS
OF THE STATE OF TEXAS WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES SHALL
GOVERN THE CONSTRUCTION AND INTERPRETATION OF THIS AGREEMENT.
1. EITHER PARTY MAY REQUEST FROM THE ARBITRATOR INJUNCTIVE RELIEF TO
MAINTAIN THE STATUS QUO UNTIL SUCH TIME AS THE ARBITRATION AWARD IS
RENDERED OR THE DISPUTE IS OTHERWISE RESOLVED. THE ARBITRATOR SHALL NOT
HAVE AUTHORITY TO AWARD PUNITIVE DAMAGES.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
23
<PAGE>
2. EACH PARTY SHALL BEAR ITS OWN COSTS AND ATTORNEYS' FEES, AND THE
PARTIES SHALL SHARE EQUALLY THE FEES AND EXPENSES OF THE ARBITRATOR. THE
ARBITRATOR'S DECISION AND AWARD SHALL BE FINAL AND BINDING, AND JUDGMENT
UPON THE AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION THEREOF.
3. IF ANY PARTY FILES A JUDICIAL OR ADMINISTRATIVE ACTION ASSERTING
CLAIMS SUBJECT TO ARBITRATION, AS PRESCRIBED HEREIN, AND THE OTHER PARTY
SUCCESSFULLY STAYS SUCH ACTION AND/OR COMPELS ARBITRATION OF SAID CLAIMS,
THE PARTY FILING SAID ACTION SHALL PAY THE OTHER PARTY'S COSTS AND EXPENSES
INCURRED IN SEEKING SUCH STAY AND/OR COMPELLING ARBITRATION, INCLUDING
REASONABLE ATTORNEYS' FEES.
21. RELATIONSHIP OF PARTIES/INDEPENDENT OPERATION
A. LICENSE ONLY/NO OBLIGATION TO PURCHASE. Each party hereto acknowledges
that this Agreement is a contract designed to permit the use by Licensee of the
Proprietary Marks for the purpose of manufacturing, marketing, distributing and
selling the Products to the Distribution Channels. The parties expressly
acknowledge that there is no agreement or understanding with respect to the sale
to or use by Friday's of any product manufactured and sold by Licensee and that
this Agreement is not intended to, nor will it, induce the purchase by Friday's
of Licensee's products or exclude the purchase by Friday's of products produced
by any other supplier of such products.
B. NO LIABILITY FOR ACTS OF OTHER PARTY. Licensee shall not employ the name
of Friday's or use any of the Proprietary Marks in signing any contract,
application for any license permit, or in any manner that may result in
liability of Friday's for any indebtedness or obligation of Licensee, nor will
Licensee use such Proprietary Marks in any way not expressly authorized herein.
Except as expressly authorized in writing, neither Friday's nor Licensee shall
make any express or implied agreements, warranties, guarantees or
representations, or incur any debt in the name of or on behalf of the other, or
represent that their relationship is other than that of licensor and licensee,
as set forth in this Agreement, and neither Friday's nor Licensee shall be
obligated by or have any liability under any agreements or representations made
by the other that are not expressly authorized by such party in writing, nor
shall Friday's be obligated for any damages to any person or property directly
or indirectly arising out of the business authorized by or conducted pursuant to
this Agreement.
C. TAXES. Friday's shall have no liability for any sales, use, service,
occupation, excise, income, property or VAT taxes, whether levied upon Licensee
or Licensee's property, or upon Friday's in connection with the sales made or
business conducted by Licensee (except any taxes Friday's is required by law to
collect from Licensee with respect to purchases from Friday's). Payment of all
such taxes shall be the responsibility of Licensee.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
24
<PAGE>
D. INDEPENDENT CONTRACTORS. The parties hereto are independent contractors.
Nothing herein contained shall be construed to constitute the parties hereto as
partners or as joint venturers, or either as agent of the other.
22. PROPRIETARY MARKS
A. USE. Friday's shall provide to Licensee, at no charge, a copy of
Friday's Style Guide. Licensee shall use the Proprietary Marks in accordance
with Friday's Style Guide and shall observe any additional written directions
given by Friday's as to color and size of the representations of the Proprietary
Marks and the manner and disposition thereof on the Products. Upon termination
of this Agreement, Licensee shall return the Friday's Style Guide to Friday's.
B. IDENTIFICATION OF OWNERSHIP. Licensee shall ensure that, where it is
practical to do so, the use of the Proprietary Marks shall be accompanied by a
statement indicating that the Proprietary Marks are the property of Friday's.
C. REGISTRATION; PROTECTION OF PROPRIETARY MARKS. Notwithstanding any other
provision hereof, Licensee agrees that prior to utilizing the Proprietary Marks
in any way, Licensee shall (i) in cooperation with Friday's and at Friday's
expense, take all steps reasonably necessary, including, without limitation, the
effecting of any required filings or registrations with any required or
appropriate governmental authorities, to protect the Proprietary Marks to the
fullest extent possible under the laws of the jurisdiction in the Territory in
which the Proprietary Marks are to be used, and (ii) implement such operational
procedures with respect to display and utilization of the Proprietary Marks, in
packaging, advertising and otherwise, as are reasonable to protect the
Proprietary Marks to the fullest extent possible under the laws of the
jurisdiction in the Territory in which the Proprietary Marks are to be used. For
purposes hereof, the words "to protect the Proprietary Marks to the fullest
extent possible," or words of similar import, shall include, without limitation,
such actions as will (a) prevent any other party from claiming any right to
utilize such name, and (b) prevent the Proprietary Marks from falling into the
"public domain."
D. NO REPRESENTATIONS. Licensee acknowledges that except as set forth in
Section 10, Friday's has made no representations regarding the validity, use or
status of the Proprietary Marks, Confidential Information or Products in any
jurisdiction within the Territory, including specifically, without limitation,
whether or not such use would infringe upon any rights of any nature of any
other party under any law, registration, regulation, or common or general law
applicable within such jurisdiction.
23. PURCHASE OPTION
Friday's or Friday's franchisees shall have the option (but not obligation)
to purchase from Licensee for use by Friday's in the exercise of any rights
reserved or otherwise retained by Friday's pursuant to this Agreement, any and
all Products on which or in connection with which the Proprietary Marks are used
in reasonable quantities from available stock at the best price given by
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
25
<PAGE>
Licensee to any of Licensee's customers, minus ten percent (10%); PROVIDED,
HOWEVER, if such Products are being purchased by Friday's or Friday's
franchisees as Premiums or for non-resale, promotional uses, the purchase price
shall be the lower of (i) the price indicated above, or (ii) Licensee's cost of
manufacture plus twenty percent (20%). Sales to Friday's or Friday's franchisees
shall not be included in Gross Sales. Section 21(C) shall not apply to any such
purchases by Friday's; Friday's and its franchisees shall be responsible for all
sales, use and similar taxes applicable to such purchases.
24. GOVERNING LAW; JURISDICTION
THIS AGREEMENT AND THE LEGAL RELATIONSHIP BETWEEN THE PARTIES HERETO SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
25. MISCELLANEOUS
A. DESCRIPTIVE HEADINGS AND REFERENCES. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement. All references herein to the masculine, neuter
or singular shall be construed to include masculine, feminine, neuter or plural.
B. COUNTERPARTS AND BINDING EFFECT. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by one or more parties
hereto; not all parties need execute the same counterpart of this Agreement; all
of such executed counterparts shall together constitute one and the same
Agreement; and each such executed counterpart shall be, and shall be deemed to
be, an original instrument.
C. NOTICES. All notices, consents, requests, instructions, approvals and
other communications (collectively "Notice") required or allowed hereby or
provided for herein must be made in writing and sent by (i) United States Mail,
by registered or certified mail, return receipt requested, (ii) a reputable
overnight delivery service, or (iii) hand delivery or = courier, to the
addressee of such Notice, at the applicable address(es) indicated below, or to
such other address as any party hereto may, from time to time, designate in a
written Notice to other parties, delivered in a like manner.
Friday's: TGI Friday's Inc.
Attn: General Counsel
7540 LBJ Freeway, Suite 100
Dallas, Texas 75251 USA
Fax: (972) 450-5636
Licensee: Poore Brothers, Inc.
Attention: Eric Kufel
3500 S. La Cometa Drive
Goodyear, AZ 85338
Fax: 1-623-925-2363
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
26
<PAGE>
Notice given as set forth in clause (i) above shall be deemed delivered three
Business Days after deposit in the United States Mail, and notices sent as set
forth in clauses (ii) and (iii) above shall be deemed delivered as of the
Business Day following transmission. A party giving Notice hereunder by one of
the methods described above may also elect to give Notice by telecopier or other
means and Notice by such means shall be deemed given as of the date of actual
delivery to the address of the recipient, as reflected in any records that shall
show the fact of and time of delivery with reasonable detail and accuracy.
D. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties and the respective
heirs, personal representatives, successors or permitted assignees of the
parties hereto.
E. THIRD-PARTY BENEFICIARIES. Nothing in this Agreement shall entitle any
person, other than the parties to this Agreement and their respective successors
and permitted assignees, to any claim, cause of action, remedy or right of any
kind under this Agreement.
F. MODIFICATION OF AGREEMENT. This Agreement may not be changed,
discharged, modified, terminated or renewed, except by a written instrument
signed by Friday's and Licensee.
G. NON-WAIVER. No waiver by either party, whether express or implied, of
any provision in this Agreement, or of any breach or default, shall constitute a
continuing waiver of such provision or of any other provisions of this
Agreement.
H. COMPLETE AGREEMENT. This Agreement (including the attached Exhibits)
sets forth the complete agreement of the parties hereto and there exists no
other written or oral agreement as to the subject matter hereof.
I. SEVERABILITY. If any term, clause or provision of this Agreement should
be held or judged by a court or authority having jurisdiction over the parties
or over this Agreement to be illegal, invalid or unenforceable, such
unenforceable term, clause or provision shall not affect the validity of any
other terms, clauses or provisions of this Agreement.
J. INTENTIONALLY OMITTED.
K. WAIVER. No waiver of any of the provision of this Agreement shall be
valid unless in writing signed by the party against the waiver is sought to be
enforced. No waiver by either party of any breach of or failure to perform shall
be deemed a waiver as to any subsequent breach or failure of performance.
L. INTENTIONALLY OMITTED
M. COMPLY WITH LAWS OF TERRITORY. Each party agrees to comply with the laws
of the Territory.
N. ASSIGNMENTS AND SUB-LICENSES. Except as otherwise provided in Section
16, Licensee shall not assign, transfer or sub-license any of its rights under
this Agreement or delegate any of its obligations under this Agreement without
Friday's prior written approval. Any assignment, transfer, sub-license or
delegation made by Licensee without Friday's prior written approval shall be
void ab initio and constitute a material breach of this Agreement.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
27
<PAGE>
O. SURVIVAL. Licensee's obligations and agreements under Sections 3, 7.F.,
8, 9.A., 12 and 14, and Friday's obligations under Sections 12 and 14 shall
survive the termination or expiration of this Agreement.
P. RIGHTS CUMULATIVE. Except as expressly provided in this Agreement, and
to the extent permitted by law, any remedies described in this Agreement are
cumulative and not alternative to any other remedies available at law or in
equity.
Q. INTENTIONALLY OMITTED.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
FRIDAY'S: LICENSEE:
--------- ---------
TGI FRIDAY'S INC., Poore Brothers, Inc.
A New York corporation A Delaware corporation
By: By:
---------------------------------- -----------------------------
Name: Name:
-------------------------------- ---------------------------
Title: Title:
------------------------------- --------------------------
28
<PAGE>
EXHIBIT "A"
Any and all registrations or applications for the Proprietary Marks are
held in the name of TGI Friday's of Minnesota, Inc. ("TGIFM"), a wholly owned
subsidiary of Friday's.
UNITED STATES
PROPRIETARY MARKS
<CAPTION>
TRADEMARK CLASS STATUS REGISTRATION/APPLICATION #
--------- ----- ------ --------------------------
Friday's 30 (Note 1) Pending 75/417,743
T.G.I. Friday's 30 (Note 1) Pending 75/417,742
T.G.I. Friday's & Design 30 (Note 1) Pending 75/418,630
Friday's 29 (Note 2) Registered 2,294,718
T.G.I. Friday's 29 (Note 2) Registered 2,294,717
T.G.I. Friday's & Design 29 (Note 2) Registered 2,300,670
Friday's 42 (Restaurant & bar services) Registered 977,903
T.G.I. Friday's 42 (Restaurant & bar services) Registered 925,656
T.G.I. Friday's & Design 42 (Restaurant & bar services) Registered 1,902,042
NOTE 1. This application covers the following goods: Fresh and frozen appetizers
consisting of pasta, dumplings or tortillas containing cheese, vegetables, meat
and/or other fillings; sauces, excluding cranberry sauce and applesauce; ice
cream; condiments, seasonings, seasoning mixes, spices and marinades.
NOTE 2. This registration covers the following goods: Fresh and frozen
appetizers consisting primarily of vegetables, meat and/or cheese; dairy-based
dips; and soups.
We are preparing the applications for FRIDAY'S, T.G.I. FRIDAY'S and
T.G.I. FRIDAY'S & DESIGN for filing with the United States Patent and Trademark
Office. These applications will cover specific goods in "Class 30" that
specifically relate to the Products licensed in this Agreement.
Licensee and each Principal acknowledge that there can be no assurance that
TGIFM will succeed in obtaining or maintaining registrations of the Proprietary
Marks FRIDAY'S, T.G.I. FRIDAY'S, T.G.I. FRIDAY'S & DESIGN or any other
Proprietary Marks in the United States.
TGIFM shall pursue registrations in the United States of the Proprietary
Marks FRIDAY'S, T.G.I. FRIDAY'S, T.G.I. FRIDAY'S & DESIGN and any other
Proprietary Marks in the manner and to the extent determined by Friday's or
TGIFM in its sole discretion. The failure of Friday's or TGIFM to obtain
registration of any Proprietary Mark shall not be actionable by Franchisee or
any Principal. Nothing herein shall require that Friday's or TGIFM pay any
monies to any party to secure any such registration. Friday's or TGIFM may
abandon any applications or registrations for the Proprietary Marks at any time,
without notice to, or consent of, Licensee or any Principal.
Neither Friday's nor TGIFM shall incur any liability or obligations to
Licensee or any Principal by reason of (i) any of the foregoing or (ii) the
ownership of, or application for ownership of, the Proprietary Marks.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
29
<PAGE>
EXHIBIT "B"
SUBCONTRACTOR AGREEMENT
This Agreement is between _______________________ ("Licensee"), a Licensee
of TGI FRIDAY'S, INC., ("Friday's"), a New York corporation, and
_______________________("Subcontractor"), Licensee's independent contractor,
whose address is _________________________________, who is to manufacture or
produce products which will bear or otherwise incorporate the trademarks owned
by Friday's ("Proprietary Marks"). Hereinafter such licensed products shall be
referred to as "Products".
Subject to the terms and conditions of the License Agreement between
Licensee and Friday's ("License"), Subcontractor may produce Products for sale
and/or distribution only to Licensee. Any other use, production, distribution,
and/or sale of the Products may not be made unless with the express written
authorization from Friday's.
Subcontractor acknowledges that the Proprietary Marks are owned by Friday's
and agrees not to contest the validity or distinctiveness of any trademark or
assert ownership in any of the Proprietary Marks or anything confusingly
similar. Subcontractor recognizes the goodwill associated with the Proprietary
Marks and agrees that any use of such Proprietary Marks shall inure to the
benefit of Friday's. Subcontractor agrees that any materials or information it
receives relating to Friday's or the Proprietary Marks shall be deemed
confidential and shall be protected as such.
All Products manufactured or produced by Subcontractor for Licensee shall
be subject to all of the terms and conditions of the License.
Subcontractor shall maintain separate, accurate records of all transactions
arising out of the manufacture, distribution, and/or sale of the Products
("Records"). Such Records shall be made available for inspection and audit by
Friday's or its designee during normal business hours to verify Subcontractor's
records and to ensure that there have been no unauthorized uses of the
Proprietary Marks.
Subcontractor acknowledges and agrees that if it violates any term or
condition of this Agreement, its right to continue using any Proprietary Mark
shall cease immediately and permanently, that irreparable injury to Friday's
shall occur if Subcontractor's use continues, and that Friday's shall be
entitled to temporary, preliminary and permanent injunctive relief, plus an
award for damages, costs and reasonable attorneys' fees arising from any such
violation.
This Agreement shall automatically terminate upon termination of the
License Agreement unless sooner terminated by Licensee or Friday's upon written
notice to Subcontractor.
SUBCONTRACTOR: LICENSEE:
--------------------------- ------------------------------------
By: By:
---------------------------------- --------------------------------
Date: Date:
-------------------------------- ------------------------------
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO SEC RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
30