EXHIBIT 10.1
Execution Copy
July 7, 2008
Weight Watchers International,
Inc.
and
Weight Watchers Danone China
Limited
INTELLECTUAL PROPERTY LICENSE
AGREEMENT
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS
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2
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ARTICLE II RIGHT TO USE THE LICENSED
IP
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7
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ARTICLE III INTELLECTUAL PROPERTY
RIGHTS
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10
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ARTICLE IV KNOWLEDGE TRANSFER; ADDITIONAL
SERVICES
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12
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ARTICLE V ROYALTIES, ACCOUNTING AND AUDIT
RIGHTS
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15
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ARTICLE VI QUALITY CONTROL
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17
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ARTICLE VII REPRESENTATIONS, WARRANTIES AND
COVENANTS
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22
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ARTICLE VIII ASSIGNMENT
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24
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ARTICLE IX CONFIDENTIALITY
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24
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ARTICLE X TERM AND TERMINATION
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25
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ARTICLE XI MISCELLANEOUS
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SCHEDULE A LLC MARKS
ANNEX 1 F & B LICENSE AGREEMENT
i
INTELLECTUAL PROPERTY
LICENSE
THIS INTELLECTUAL PROPERTY LICENSE
AGREEMENT (this “ Agreement” ), dated this 7th
day of July, 2008, is entered into by and between Weight Watchers
International, Inc., a company duly organized under the laws of
Virginia, (“ Licensor ”), and Weight Watchers
Danone China Limited, a company duly organized and existing under
the laws of Hong Kong (the “ Company ”, and
together with Licensor, each a “ Party ” and
collectively, the “ Parties ”).
RECITALS
WHEREAS, Licensor has expended
considerable time, effort and resources developing an international
network of businesses throughout the world devoted to weight
management (the “ Weight Watchers Business
”);
WHEREAS, Licensor owns valuable
intellectual property and know-how used in connection with the
marketing and operation of the Weight Watchers Business;
WHEREAS, Weight Watchers Asia
Holdings Ltd. (“ WTW ”) and DAP (as defined
herein) have entered into a Joint Venture Agreement on
February 5, 2008 (and, together with any and all amendments
thereto, the “ Joint Venture Agreement ”)
setting forth the terms and conditions of their investment in the
Company;
WHEREAS, the Company has been formed
by WTW and DAP as of March 7, 2008 for the purpose of
developing and operating the Approved Lines (as defined herein) in
the Territory (as defined herein);
WHEREAS, in connection with the
Joint Venture Agreement, Licensor has agreed to license the
Licensed IP (as defined herein) to the Company and to provide
certain know-how to the Company for use in connection with the
Approved Lines in accordance with the terms and conditions set
forth herein; and
WHEREAS, the Company wishes to
exploit the Licensed IP and certain know-how pursuant to the terms
and conditions set forth herein.
NOW THEREFORE, in consideration of
the mutual agreements and covenants set forth herein and other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the
Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions . In addition
to the terms defined elsewhere herein, as used in this Agreement,
the following terms have the meanings specified below when used in
this Agreement:
“ Affiliate ” of
a Person (the “ Subject Person ”) means any
other Person directly or indirectly Controlling, Controlled by, or
under common Control with, the Subject Person; provided ,
however , (i) the Company and its Subsidiaries shall
not be deemed Affiliates of Licensor or DAP (ii) Licensor and
DAP shall not be deemed Affiliates of each other, and
(iii) Artal and Artal’s Affiliates, other than Licensor
or subsidiaries of Licensor, shall not be deemed Affiliates of
Licensor.
“ Approved Lines
” means (i) the operation of Classes; (ii) the
manufacture and in-Class sale of products, including the Food and
Beverage Products (the “ Class Products ”)
branded with one or more of the trademarks, trade names, logos,
symbols, insignia, trade dress or other source identifiers owned by
or licensed to Licensor (collectively, the “ Marks
”); (iii) the production, publication and distribution
of a print magazine branded with one or more of the Marks;
(iv) the offering to individuals via the Electronic Medium of
(a) the Class Products or (b) electronic weight reduction
or weight maintenance subscription products similar to those
offered by Licensor outside the Territory (the items referred to in
clauses (ii) through (iv) of this definition shall be
referred to together as the “ Licensed Products
”); and (v) any extensions, alterations, modifications
or expansions of the foregoing approved pursuant to
Section 2.3(b) .
“ Business Day ”
means any day other than a Saturday, Sunday or other day on which
commercial banks in the PRC, Hong Kong or the U.S. are required or
authorized by law or executive order to be closed.
“ Classes ” means
the presentations of the Licensed Techniques, through a structured
program defined by Licensor, in live, in-person classes held at
physical locations.
“ Commercial Launch
Date ” means the date that is six (6) months from
the Soft Launch Date.
“ Confidential
Information ” means (i) the User Data, Standards,
Licensed IP and all Modifications and Company Improvements;
(ii) all information disclosed by a Party (the “
Disclosing Party ”) or its Representatives to the
other Party (the “ Receiving Party ”) or any of
Representatives, including all information concerning the
Disclosing Party’s, or any of its Affiliates’,
businesses, finances, designs, advertising, marketing, sales, plans
for future developments and internal processes or systems whether
furnished before or after the date hereof and whether furnished in
oral, written, visual, machine readable or any other form, and
regardless of the manner in which it is furnished (including by fax
and any other form of electronic delivery); and (iii) any
document or material prepared by the Receiving Party or its
Representatives based on any confidential
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information described in sub-paragraphs
(i) and (ii) of this definition and all copies, extracts,
reproductions, summaries or analyses of any such information
(whether created by the Receiving Party, its Representatives or any
other Person), including all digital and electronic copies.
Confidential Information shall not include information that:
(a) is already known to the Receiving Party without
restriction on use or disclosure prior to receipt of such
information from the Disclosing Party or its Representatives;
(b) is or becomes part of the public domain other than by
breach of this Agreement, or other wrongful act, by the Receiving
Party or its Representatives (and in the case of the Company, its
Subsidiaries); (c) is developed by the Receiving Party (and in
the case of the Company, a Subsidiary) independently of and without
reference to any Confidential Information; or (d) is received
by the Receiving Party (and in the case of the Company, its
Subsidiary) from a third party who is not under any obligation to
maintain the confidentiality of such information. The Receiving
Party shall have the obligation of demonstrating that such an
exception to the definition of Confidential Information
exists.
“ Control ” with
respect to any Person, means (i) holding, whether individually
or in concert with one or more other Persons, directly or
indirectly, any fraction of the capital of such Person giving the
holder the majority of the voting rights of such Person;
(ii) holding alone the majority of the voting rights of such
Person (including pursuant to the provisions of a
shareholders’, investors’ or other equity
holders’ agreement, undertaking or arrangement);
(iii) being able, whether individually or in concert with one
or more other Persons, to effectively determine decisions taken at
any such Person’s shareholders’ or other equity
holders’ meetings (or pursuant to any written consent or
other action in lieu thereof); or (iv) being a shareholder or
other equity holder of such Person and having, whether individually
or in concert with one or more other Persons, the power to appoint
a majority of the members of the board of directors, management,
supervisory or administrative body of such Person. The terms
“ Controls ”, “ Controlled ”
and “ Controlling ” shall have corresponding
meanings.
“ Customer ”
means a Member, Subscriber or other purchaser of Company products
or services.
“ Effective Date
” means March 7, 2008.
“ Electronic Medium
” means the Internet and any other related or similar form of
interactive and connected electronic delivery or digital
transmission that now exist or may hereafter be
developed.
“ Food and Beverage
Products ” means food and beverage products using the LLC
Marks manufactured by the Company or by a third party manufacturer
on behalf of the Company.
“ DAP ” means
Danone Dairy Asia, a company incorporated under the laws of
France.
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“ Licensed Business
” means the business of operating the Approved Lines in the
Territory, including the advertising and promotion of the Approved
Lines in the Territory.
“ Licensed IP ”
means the Licensed Marks, Licensed Materials and Licensed
Techniques.
“ Licensed Marks
” means (i) the trademark and service mark “
Weight Watchers ” and (ii) such other trademarks,
service marks, names, logos, symbols, insignia, trade dress and
other source identifiers owned by or licensed to Licensor in the
Territory and used in the Approved Lines, including all brands and
trade names used by the Company in connection with the Licensed
Business pursuant to Section 3.1 , which are reasonably
requested in writing by the Company to be licensed
hereunder.
“ Licensed Materials
” means those textual, visual or audiovisual materials or
other works and materials, whether or not subject to copyright
protection, owned by Licensor and used in connection with the
Approved Lines, as designated from time to time by Licensor. For
the avoidance of doubt, the Licensed Materials shall not include
any software, source code or other technology.
“ Licensed Techniques
” means those methods, techniques, programs, procedures,
trade secrets, know-how, patents and unpatented inventions owned by
Licensor as may be used by Licensor or its other franchisees in
connection with the Approved Lines, including Licensor’s
weight loss or weight control plans, which are reasonably requested
in writing by the Company to be licensed hereunder. For the
avoidance of doubt, the Licensed Techniques shall not include any
software or source code.
“ LLC Classes ”
means International Trademark Classes 1, 5, 29, 30, 31, 32 and 33
(or comparable classes).
“ LLC Marks ”
means those trademarks within the LLC Classes owned by WW Foods,
LLC identified on Schedule A.
“ Member ” means
an individual who has registered for, joined or otherwise attend
Classes offered by the Company or its Affiliates.
“ Modifications ”
means any and all modifications, developments or improvements made
by Licensor or one of its Affiliates to the
Licensed IP.
“ Person ” means
any individual, firm, corporation, joint venture, enterprise,
partnership, trust, unincorporated association, limited liability
company, government (or agency or political subdivision thereof),
or other entity of any kind.
“ PRC ” or
“ China ” means the People’s Republic of
China.
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“ Soft Launch Date
” means the date that is twelve months from the date of the
Joint Venture Agreement.
“ Subscriber ”
means an individual who has signed up to use products or tools on
the Web Site.
“ Subsidiary ”
means any Person wholly owned by the Company.
“ Territory ”
means the PRC. For the purposes of this Agreement, Taiwan and the
special administrative regions of Hong Kong and Macau shall not be
considered part of the Territory.
“ Transfer ”
means, whether voluntarily or involuntarily, to give, sell, issue,
assign, pledge, encumber, hypothecate, grant a security interest in
or otherwise dispose or convey, whether in one transaction or a
series of related transactions. The terms “Transferee,”
“Transferor,” “Transferred” and other forms
of the word “Transfer” shall have the correlative
meanings.
“ U.S .” or
“ United States ” means the
United States of America.
“ Web Site and Technology
Services ” means any and all services related to
(i) the development and maintenance of a web site or other
successor technology that may exist in the future for delivering
information, products, tools or services via the Electronic Medium
(each such site, a “ Web Site ”),
(ii) providing any technology services related to the
Electronic Medium (such as eCRM, database maintenance and web
hosting services), or (iii) developing or providing any other
consumer-facing or retail point-of-sale systems, technologies or
applications (such as the CHAMP networked software application or
any similar application that may be used by the Company or its
Subsidiaries to store Customer transaction data and provide
receipts).
1.2 The following terms have the
meanings specified in the indicated Sections:
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Section
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Additional Services
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4.3(a)
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Alternative Means
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6.1
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Alternative Means of Modification
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6.3
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Approved Lines
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2.3(b)
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Approved Use
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3.6
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Agreement
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Preamble
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Arbitrators
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11.6(b)
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Class Products
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1.1
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Company
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Preamble
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Company’s Local Counsel
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6.1
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Company Materials
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6.4(a)
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Company Improvements
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2.6
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Counsel Modified Standards
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6.3
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5
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Disclosing Party
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1.1
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F&B License Agreement
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6.7
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Force Majeure Event
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11.4
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Joint Venture Agreement
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Recitals
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Licensed Products
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1.1
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Licensor
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Preamble
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Licensor Termination Trigger
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10.2(c)
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Marks
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1.1
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Milestones
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3.4
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MPT
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3.4
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Operating Manual
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6.2
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Parties
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Preamble
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Party
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Preamble
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PRC Withholding Rate
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5.1
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Receiving Party
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1.1
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Representatives
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9.1
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Resolution Representative
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11.6(a)
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Revenues
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5.1
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Royalty
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5.1
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Rules
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11.6(b)
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Standards
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6.1
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Subject Person
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1.1
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Sublicense Royalties
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5.1
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Term
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10.1
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User Data
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3.6
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Web Site
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1.1
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WTW
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Recitals
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Weight Watchers Business
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Recitals
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1.3 Interpretation . All
headings herein are inserted only for convenience and ease of
reference and are not to be considered in the construction or
interpretation of any provision of this Agreement.
(a) Unless a clear contrary
intention appears: (i) the singular number includes the plural
number and vice versa; (ii) reference to any Person includes
such Person’s successors and assigns but, if applicable, only
if such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement, document or instrument means
such agreement, document or instrument as amended or modified and
in effect from time to time in accordance with the terms thereof;
(v) reference to any law, rule or regulation means such law,
rule or regulation as amended, modified, codified, replaced or
reenacted, in whole or in part, and in effect from time to time,
including all rules and regulations promulgated thereunder, and
reference to any section or other provision of any law, rule or
regulation means that provision of such law, rule or regulation
from time to time in effect and constituting the
substantive
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amendment, modification,
codification, replacement or reenactment of such section or other
provision; (vi) “hereunder,” “hereof,”
“hereto,” and words of similar import shall be deemed
references to this Agreement as a whole and not to any particular
article, section or other provision hereof; (vii) numbered or
lettered articles, sections and subsections herein contained refer
to articles, sections and subsections of this Agreement;
(viii) “including” (and with correlative meaning
“include”) means including without limiting the
generality of any description preceding such term;
(ix) references to documents, instruments or agreements shall
be deemed to refer as well to all addenda, exhibits, schedules or
amendments thereto; (x) any term in any Schedule or Exhibit
hereto shall have the meaning ascribed to such term in this
Agreement, unless otherwise defined therein; (xi) reference to
dollars or $ shall be deemed to refer to U.S. Dollars; and
(xii) reference to a year or to a quarter means the fiscal
year or fiscal quarter of the Company, respectively, and reference
to a month means a calendar month.
(b) It is the intention of the
Parties that every covenant, term, and provision of this Agreement
shall be construed simply according to its fair meaning and not
strictly for or against any party (notwithstanding any rule of law
requiring an agreement to be strictly construed against the
drafting party), it being understood that the Parties to this
Agreement are sophisticated and have had adequate opportunity and
means to retain counsel to represent their interests and to
otherwise negotiate the provisions of this Agreement.
ARTICLE II
RIGHT TO USE THE LICENSED
IP
2.1 License . Subject to the
terms and conditions set forth herein, Licensor hereby grants to
the Company, and the Company hereby accepts, a non-transferable,
limited right and license for the duration of the Term to
(a) use the Licensed IP (including any Modifications)
solely for the operation of the Licensed Business in the Territory
and (b) use the Licensed Marks in connection with the trade
name of the Company or any Subsidiary.
2.2 Sublicense . The Company
may not sublicense any of the rights granted herein or authorize
any person to act as its agent in connection with its obligations
herein without the prior written consent of Licensor, which consent
shall not be unreasonably withheld; provided ,
however , the Company may, without Licensor’s consent,
sublicense its rights hereunder to its Subsidiaries or independent
contractors engaged by the Company or its Subsidiaries in lieu of
employees solely to present the Company’s or its
Subsidiaries’ Classes and in such case, the right to
sublicense shall be limited to the extent required for such
independent contractors to present the Company’s or its
Subsidiaries’ Classes (provided that the form of any
agreement to be used with such independent contractors shall be
subject to Licensor’s approval, which approval shall be
obtained consistent with the terms and conditions set forth in
Section 6.5(b)) . The Company shall be liable for any
breach of the terms
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hereof by any Subsidiary or independent
contractor to whom a sublicense is granted pursuant to this
Section 2.2 , and such Subsidiary shall in addition be
directly liable to Licensor. No sublicensee hereunder, other than a
Subsidiary with the prior written consent of Licensor, which
consent shall not be unreasonably withheld, shall have the right to
further sublicense any rights granted herein.
2.3 Exclusivity .
(a) For the duration of the Term,
Licensor (i) shall not, and shall not authorize any other
Person to, engage in the Approved Lines within the Territory,
including licensing the Licensed IP to any Person, other than the
Company, for use in the Approved Lines in the Territory,
(ii) shall not, and shall not authorize any other person to,
conduct any of the Approved Lines outside of the Territory so as to
target residents of the Territory, and (iii) shall use
reasonable efforts not to, and ensure that its licensees and
franchisees conducting the Approved Lines outside of the Territory
do not, target residents of the Territory.
(b) For the duration of the Term,
the Company and its Subsidiaries shall not conduct any business
other than that of the Approved Lines and shall ensure that only
the Licensed Techniques, and no other technique or method, are
presented in Classes or otherwise utilized by the Company in the
operation of the Licensed Business. Any alteration, modification or
expansion of a pre-existing Approved Line or business extension by
the Company beyond the Approved Lines shall require
Licensor’s prior written approval, which approval shall be
obtained consistent with the terms and conditions set forth in
Section 6.5(b) , and in the case of a proposed
alteration, modification or expansion of a pre-existing Approved
Line, such approval shall not be unreasonably withheld;
provided , however , Licensor may, in its sole
discretion, grant or withhold its approval of any business
extension or the offering of an Approved Line through a new medium.
Upon approval by Licensor in accordance with the terms hereof, such
business extension, alteration, modification or expansion shall
constitute part of the “ Approved Lines ”
for purposes of this Agreement.
2.4 Territory . The Company
and its Subsidiaries shall operate the Licensed Business solely in
the Territory and shall not conduct the Approved Lines in a manner
that would target Persons resident outside the
Territory.
2.5 Licensor Modifications .
Licensor and its Affiliates shall have the right to add to and
otherwise modify the Licensed Techniques or the Licensed Marks,
from time to time, including changes deemed necessary by Licensor
or its Affiliates to reflect changes in the content of or manner of
presenting Classes, Licensed Products, standards of quality, or the
manner of operation of the Approved Lines. Licensor shall disclose
all Modifications to the Company and such Modifications shall
constitute “Licensed IP” for all purposes of this
Agreement.
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2.6 Company Improvements .
The Company, its Subsidiaries, or third parties operating on the
Company’s or its Subsidiaries’ behalf, may, subject to
Licensor’s approval, which approval shall be obtained
consistent with the terms and conditions set forth in
Section 6.5(b) , make modifications or translations to
adapt the Licensed IP for use in the Licensed Business, create
intellectual property derived from the Licensed IP, or develop
ideas, concepts, methods, techniques, products and services
relating to the development and operation of the Licensed Business
(collectively, “ Company Improvements ”). All
Company Improvements shall constitute
“Licensed IP” for purposes of this Agreement and
shall be exclusively owned by Licensor. The Company and its
Subsidiaries shall, and hereby do irrevocably, assign all rights in
and to the Company Improvements to Licensor.
2.7 Assignments . In
furtherance of the obligations of the Company and its Subsidiaries
to assign Company Improvements to Licensor in accordance with
Section 2.6 , the Company and its Subsidiaries shall
each obtain, with all of their respective employees,
subcontractors, consultants and other parties making modifications
or translations to adapt the Licensed IP for use in the
Licensed Business, enforceable contracts, in form and substance
reasonably acceptable to Licensor containing provisions whereby all
intellectual property, including any and all inventions and
improvements conceived and developed by such employees,
subcontractors, consultants or other parties shall be transferred
and assigned to, and owned in full by the Company and its
Subsidiaries.
2.8 Reservation of Rights .
Licensor hereby retains, and reserves all rights not expressly
licensed to the Company herein, including the rights to use the
Licensed IP for any purpose within the Territory other than to
engage in the Approved Lines. Notwithstanding the above, Licensor
shall not use the Licensed IP in the Territory in a manner that
fundamentally damages the image of Licensor and the Company, it
being understood and agreed that in no event shall any use of the
Licensed IP in the Territory be deemed to fundamentally damage
the image of Licensor or the Company if Licensor uses the
Licensed IP in a manner substantially similar to any use
Licensor has previously made or is currently making of the
Licensed IP anywhere in the world or in connection with any
substantially similar business in which Licensor has been
previously or is currently engaged anywhere in the world. For
illustrative purposes only, the following uses of the
Licensed IP would be considered fundamentally damaging to the
image of Licensor and the Company, and Licensor will not engage in
the following uses of the Licensed IP: in connection with
firearms, tobacco products or pornography.
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ARTICLE III
INTELLECTUAL PROPERTY
RIGHTS
3.1 Trade Names . Licensor
and the Company shall mutually agree upon the trade name(s) to be
used by the Company (and any Affiliates and Subsidiaries) and the
brands under which the Licensed Business shall be conducted in the
Territory. Such trade names and brands shall be owned by Licensor
and included in the Licensed Marks licensed under this
Agreement.
3.2 Ownership of Licensed IP
. All uses of the Licensed IP, including all goodwill associated
with any use of any of the Licensed Marks or other trademarks or
trade names included in the Licensed IP, shall inure
exclusively to Licensor. The Company and its Subsidiaries shall,
and hereby do, irrevocably assign to Licensor any and all rights
that they may acquire in the Licensed IP including any goodwill
associated therewith by virtue of the Company’s or its
Subsidiaries’ use thereof pursuant to this Agreement. The
Company hereby acknowledges and agrees that Licensor or its
Affiliates own and control all worldwide rights, title and interest
in and to the Licensed IP and all Modifications and Company
Improvements, which shall remain the sole property of Licensor or
its Affiliates throughout the Term and thereafter, subject only to
the Company’s limited right to use the Licensed IP (including
Modifications and Company Improvements) as set forth herein and,
except for the exclusive rights granted in
Section 2.3(a) , nothing contained herein shall limit
the right and ability of Licensor, its Affiliates, licensees and
franchisees to exploit, license, distribute, sell or otherwise use
the Licensed IP.
3.3 No Challenge . The
Company and its Subsidiaries shall not, during the Term or
thereafter, directly or indirectly, challenge or assist any Person
in challenging the validity of the Licensed IP as it may exist
anywhere in the world or Licensor’s or its Affiliates’
right, title and interest in and to any of the Licensed IP as it
may exist anywhere in the world.
3.4 Protection of Licensed IP
. Licensor shall exercise its reasonable efforts to protect the
Licensed IP by, whenever practicable, taking the necessary steps to
register and maintain the registration of, at its own expense, the
Licensed IP with the proper governmental authorities in the
Territory. The Company shall cooperate with Licensor in good faith
and shall, where practicable or as reasonably requested by
Licensor, take all reasonable actions in connection with the
filing, prosecution and maintenance of any registered rights or any
other type of protective measures, for the Licensed IP in the
Territory. Notwithstanding the foregoing, to the extent that local
ownership of any Licensed IP is required pursuant to applicable law
in the Territory, the Parties shall cooperate to effect, prosecute
and maintain such filings in a manner that satisfies such legal
requirements while maintaining Licensor’s ultimate ownership
and control over the Licensed IP and any applications or
registrations therefor in the Territory; provided that
Licensor shall reimburse the Company for all reasonable third-party
costs incurred by the Company in connection with such cooperation,
filings, prosecution and maintenance.
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3.5 Enforcement of Licensed
IP . The Company shall promptly notify Licensor in writing if
and when the Company or any of its Subsidiaries becomes aware that
any Person is infringing, misappropriating, has access to, or is
otherwise using the intellectual property of Licensor or any of its
Affiliates anywhere in the world without authorization from
Licensor or such Affiliate. Licensor shall, when reasonable,
institute administrative or legal proceedings to enjoin any action
which it regards as an infringement of the Licensed IP, or
take such other steps with respect to such infringement as it deems
necessary. For purposes of determining whether it is reasonable to
institute administrative or legal proceedings in accordance with
the provisions of this Section 3.5 , Licensor shall, in
its sole good faith discretion, consider the impact of any such
allegedly infringing action on the Licensed Business in the
Territory, including the impact on the ability of the Company to
reach any of the MPTs or Milestones (each as defined in the Joint
Venture Agreement). The Company shall, at its sole cost and
expense, cooperate with Licensor and provide Licensor with such
assistance and information as may be reasonably requested by
Licensor in respect of any such action; provided ,
however , that all reasonable third-party costs shall be
borne by Licensor. Any monetary recovery or settlement payable as a
result of any such action shall be the exclusive property of
Licensor; provided , however , that where the Company
has suffered losses as a result of such infringement, the Company
shall be entitled to a share of such recovery or settlement
calculated as follows: the portion of such recovery or settlement,
following deduction of all of Licensor’s reasonable third
party costs and expenses relating to such proceedings or
settlement, corresponding to the proportion of the Company’s
losses to the total losses experienced by the Company, Licensor and
any of Licensor’s Affiliates, licensees or franchisees. In
the event Licensor elects not to institute administrative or legal
proceedings to enjoin an alleged infringement in accordance with
this Section 3.5 , and the Company reasonably believes
such alleged infringement has a significant negative impact on the
Licensed Business in the Territory, the Company shall, upon
reasonable advance notice to Licensor, be entitled to institute
administrative or legal proceedings to enjoin such alleged
infringement and may, subject to Licensor’s approval, which
approval shall be obtained consistent with the terms and conditions
set forth in Section 6.5(b) , enter into settlements
with such infringing parties. The Company shall bear all costs and
expenses of such administrative or legal proceedings and shall be
entitled to retain all monetary recoveries or settlements obtained
as a result; provided , however , that all such
recoveries or settlements, after the deduction of all of the
Company’s actual third party costs associated with any such
proceeding and excluding any monetary recoveries or settlements
solely representing harm to the reputation of the Company or that
take into account the Royalty cost in the calculation of lost
profits, shall be treated as Revenues hereunder for purposes of
Section 5.1 .
3.6 User Data . Any personal
information and user data submitted by Customers or Web Site users
or otherwise collected by the Company or its Subsidiaries
(collectively, “ User Data ”) shall be jointly
owned by Licensor and the Company. For the duration of the Term,
Licensor shall have access to the User Data and the right to use
such User Data solely for its internal purposes (such as market
research) provided that it will not use the User Data to contact
Customers or Web
11
Site users directly) and the Company and its
Subsidiaries shall have the right to use such User Data in
connection with the Licensed Business conducted in accordance with
this Agreement, subject to Licensor’s approval, which
approval shall be obtained consistent with the terms and conditions
set forth in Section 6.5(b) ; provided ,
however , that upon the termination or expiration of this
Agreement, the Company and its Subsidiaries shall immediately
transfer and assign all such User Data to Licensor and Licensor
shall become the sole owner of all User Data, and the foregoing
restrictions shall cease to apply to Licensor’s use thereof.
Once Licensor has approved a particular type of use of the User
Data by the Company and its Subsidiaries in connection with the
Licensed Business (an “ Approved Use ”), the
Company shall be entitled to use User Data for all uses
substantially similar to any Approved Use without obtaining further
approval from Licensor.
3.7 Assignment of Licensed
IP. Licensor shall reasonably notify the Company of any
assignment of the Licensed IP and any such assignment shall be
subject to the licenses set forth herein.
ARTICLE IV
KNOWLEDGE TRANSFER; ADDITIONAL
SERVICES
4.1 Knowledge Transfer
.
(a) In accordance with the terms of
the license granted herein, Licensor shall provide the Company with
representative information concerning the Licensed Techniques as
used in the U.S. and any other relevant jurisdictions agreed by the
Parties for the purposes of explaining to the Company the operation
of the Licensed Business, including: (i) copies of
representative program materials and related items used in Classes
in the U.S. and such other jurisdictions agreed to by the Parties,
as well as samples of manuals, instructional material and other
literature published by Licensor in the U.S. and any other relevant
jurisdictions agreed by the Parties, including, e.g., the Meeting
Procedures Manual and Program & Service Reference Manual,
and (ii) representative copies of recipes, meal plans and
exercise techniques developed or approved by Licensor for
introduction in Classes in the U.S. and such other jurisdictions
agreed by the Parties. Licensor shall continue to supply such
materials to the Company as and when they are revised by
Licensor.
(b) Upon the reasonable request of
the Company and at the Company’s sole cost and expense,
Licensor shall arrange for the Company’s staff to participate
in Licensor’s or its Affiliates’ regularly-scheduled
training sessions and for visits by the Company’s staff to
Classes outside the Territory.
(c) Upon the reasonable request of
the Company, Licensor shall advise the Company of all products and
services being offered for sale by Licensor in connection with the
Approved Lines in the U.S. and such other jurisdictions agreed by
the Parties, and provide any available printed marketing material
describing such products and services.
12
(d) Upon the reasonable request of
the Company, Licensor shall provide the Company with samples of
select advertising and promotional materials used by Licensor in
connection with the Approved Lines in the U.S. and such other
jurisdictions agreed by the Parties.
4.2 Consultations . Upon the
reasonable request of the Company, Licensor shall make reasonable
good faith efforts to consult and cooperate regularly (but not more
than once per month) with the Company for the purpose of sharing
information about market trends, advertising, marketing and
promotional activities and plans, the Company’s use of the
Licensed Techniques and Licensed Materials, and program innovation
plans in the U.S. or such other jurisdictions agreed by the
Parties; provided , however , that after three
(3) years from the Effective Date, Licensor’s obligation
to consult with the Company under this paragraph shall be limited
to not more than one consultation per quarter.
4.3 Additional Services
.
(a) Throughout the Term, and subject
to the terms and conditions of this Agreement, Licensor may, in its
discretion, provide such additional services as the Company may,
from time to time request pursuant to the procedures set forth
herein (“ Additional Services ”). Additional
Services may include the development or modification of the
Licensed Techniques, market research, marketing advice and
consulting, training, as well as any other services Licensor and
the Company may mutually agree upon. All modifications to the
Licensed IP and all materials provided by Licensor as a result
of the Additional Services or the Web Site and Technology Services
shall be considered “Licensed IP” and shall be
exclusively owned by Licensor and licensed to the Company solely to
engage in the Approved Lines pursuant to the terms of this
Agreement. Notwithstanding the foregoing, subject to
Sections 2.2 and 4.5 , the Company shall be free
to obtain such services from a third-party vendor or perform such
services itself.
(b) Notwithstanding the provisions
of Section 4.3(a) above, all work performed by Licensor
in con