EXHIBIT 10.65 TRADEMARK LICENSE AGREEMENTTrademark License Agreement |
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EXHIBIT 10.65
TRADEMARK LICENSE AGREEMENT
between
MRS. FIELDS FRANCHISING, LLC a Delaware limited liability company
and
Shadewell Grove IP, LLCa Delaware limited liability company
DATED: December 24, 2004
TABLE OF CONTENTS
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TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (the “Agreement”) is made and entered into this 24th day of December, 2004 by and between MRS. FIELDS FRANCHISING, LLC, a Delaware limited liability company (“ MFF ”), and Shadewell Grove IP, LLC, a Delaware limited liability company (“ Shadewell ”). MFF and Shadewell are sometimes collectively referred to herein as the “parties.”
WHEREAS, MFF is an affiliate and licensee of The Mrs. Fields’ Brand, Inc., the sole owner of certain trademarks, service marks, and trade names, which have become associated with high quality food products, and has the right under its license to sublicense such marks in the manner set forth herein;
WHEREAS , Shadewell desires to acquire a license from MFF to package, distribute and sell through designated distribution channels pre-packaged, ready-to-eat shelf stable brownies and ready-to-eat shelf stable dessert toppings and syrups, each utilizing the Mrs. Fields trademarks, service marks and trade names, and MFF desires to grant Shadewell such license upon and subject to the provisions of this Agreement;
NOW THEREFORE , in consideration of the covenants and agreements contained herein and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
(a) “Change of Control” shall mean (i) any merger or consolidation of Shadewell with or into another corporation or entity, in which the members of Shadewell immediately prior to the transaction collectively own less than 50% of the voting power of the surviving entity immediately after the transaction or (ii) the sale of all or substantially all of the interests in Shadewell to a third party.
(b) “Designated Distribution Channels” shall mean grocery stores, supermarkets, drug stores, convenience stores, club stores, mass merchandisers and other similar retail prepackaged, shelf-stable food and snack retail distribution channels.
(c) “Initial Term” shall have the meaning set forth in Section 16 hereof.
(d) “Licensed Names and Marks” shall mean those trademarks, trade names and service marks identified on Exhibit A hereto.
(e) “Minimum Amount” shall mean (i) prior to a Change of Control, $50,000 and (ii) after a Change of Control, $125,000, which amounts shall be reduced by the amount of Running Royalties paid to MFF during the applicable year.
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(f) “Minimum Net Sales” shall mean (i) prior to a Change of Control, Net Sales of at least $1,000,000 and (ii) after a Change of Control, Net Sales of at least $2,500,000.
(g) “Net Sales” shall mean gross sales minus cash discounts for early payments.
(h) “Protected Information” shall mean Mrs. Fields recipes, formulations, systems, programs, procedures, manuals, confidential reports and communications, marketing techniques and arrangements, purchasing information, pricing policies, quoting procedures, financial information, employee, customer, supplier and distributor data, all of the materials or information relating to the business or activities of MFF or its affiliates which were not otherwise known to Shadewell prior to the commencement of the negotiations leading to this Agreement, or generally known to others engaged in similar businesses or activities, and all modifications, improvements and enhancements which are derived from or relate to Shadewell’s access to or knowledge of any of the above enumerated materials or information (whether or not any of the above are reduced to writing or whether or not patentable or protectable by copyright) which Shadewell receives, receives access to, conceives or develops or has received, received access to, conceived or developed, in whole or in part, directly or indirectly, in connection with Shadewell’s license hereunder. Information which is independently developed by Shadewell, or which was already in the possession of Shadewell prior to the date of this Agreement and which was not obtained in connection with the transactions contemplated by this Agreement, or information which is or becomes publicly available without breach of (i) this Agreement, (ii) any other agreement or instrument to which Shadewell is a party or a beneficiary, or (iii) any duty owed to MFF by Shadewell, shall not be considered Protected Information hereunder.
(i) “Royalty Bearing Product(s)” shall mean the food products described on Exhibit B hereto using the Licensed Names and Marks.
(j) “Royalty Default Rate” shall mean the interest rate which is the lesser of (i) the annual rate from time to time publicly announced by Citibank, N.A. at its “base rate” or “prime rate” (or any successor rate) plus two percent (2%) or (ii) the highest applicable legal rate.
(k) “ Royalty Waiver” shall have the meaning set forth in Section 5 hereof.
(l) “Running Royalty” or “Running Royalties” shall mean the royalty or royalties from time to time payable pursuant to Section 5.
(m) “Territory” shall mean United States, Mexico and Canada.
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2. GRANT OF LICENSE
(a) Grant. Subject to the terms and conditions of this Agreement, MFF hereby grants to Shadewell, and Shadewell hereby accepts the grant by MFF of, the exclusive right and license to use the Licensed Names and Marks to market Royalty Bearing Products through Designated Distribution Channels throughout the Territory. Except as stated in Section 3, MFF shall not compete with Shadewell in the (i) use of any trademark, service mark or tradename in marketing Royalty Bearing Products in Designated Distribution Channels in the Territory or (ii) license any third party to use the same in marketing any Royalty Bearing Products in Designated Distribution Channels in the Territory.
(b) First Right of Offer - Products. If at any time during the Initial Term and Option Periods MFF determines to offer a license for the sale of a Brownie Product or a Topping Product marketed through the Designated Distribution Channels for countries outside the Territory to a third party manufacturer, licensee or marketing company, prior to offering the applicable product marketed through the Designated Distribution Channels to a non-related party by any means, MFF shall notify Shadewell and provide Shadewell a sixty (60) day period of time thereafter during which MFF shall negotiate exclusively in good faith with Shadewell for the license to sell the applicable products through the Designated Distribution Channels, for countries outside the Territory. The terms and conditions upon which MFF grants a license, if any, pursuant to this Section shall be as negotiated by MFF and Shadewell during such 60 day period; provided, that MFF is only free to reject Shadewell offer if an agreement cannot be reached as to the Licensing Fee and the Running Royalty and after such rejection, MFF can negotiate with any third party for the license to sell the applicable products marketed through the Designated Distribution Channels for countries outside the Territory and accept such third party offer only if it exceeds Shadewell’s best offer. Any agreement reached with Shadewell during such 60-day period shall be documented in a separate agreement or addendum to this Agreement and shall become effective only when signed by all parties.
MFF reserves all rights with respect to the Licensed Names and Marks not expressly licensed to Shadewell hereunder, and MFF may use or grant licenses to others to use the Licensed Names and Marks in any other manner or in connection with any goods or services, other than for sale of Royalty Bearing Products in Designated Distribution Channels in the Territory. Without limiting the foregoing, the license granted pursuant to this Agreement shall be exclusive to Shadewell except that MFF shall not be precluded from, and hereby expressly retains the right to: (i) own, operate, and grant or license others the right to own and operate Mrs. Fields Cookies stores which sell cookie, bakery and/or ice cream products (whether or not such products are Royalty Bearing Products) under the Licensed Names and Marks at locations within the Territory on such terms and conditions, as MFF, in its sole discretion, deems appropriate, (ii) offer for sale and sell, and license others to offer for sale and sell, any products or services under the Licensed Names and Marks which are not Royalty Bearing Products, and (iii) offer for sale and sell, and license others to offer for sale and sell, any products or services under the Licensed Names and Marks, whether or not such products are Royalty Bearing
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Products, through all channels of distribution other than Designated Distribution Channels, including without limitation, all e-commerce-based retail or wholesale, television, mail order and catalog channels. Notwithstanding the foregoing, in the event that MFF decides to offer Topping Products through television, MFF shall purchase from Shadewell all Topping Products to be sold through television, such Topping Products to be purchased at a “most favored nations” price. “Most favored nations” price for the purpose of this agreement will be the lowest net price received by Shadewell from any customer for the specific store keeping unit (“sku”) of the applicable Topping Product during the 30 day period immediately preceding the order from MFF, less an offset for the amount of the running royalty otherwise due from Shadewell to MFF which will instead be credited against the purchase price charged by Shadewell to MFF.
This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their successors or assigns; provided, that the rights of the parties under this Agreement may only be assigned (i) upon written consent by MFF or (ii) without consent to a parent corporation which owns at least fifty-one percent (51%) of such assigning party, a fifty-one percent (51%) owned subsidiary corporation of such party, a fifty-one percent (51%) owned subsidiary of a parent of such party if such parent owns at least fifty-one percent (51%) of such party, or to such other business organization which shall acquire substantially all of the assets and business of the parties, a parent, or a subsidiary. Shadewell shall not have the right to grant sublicenses under this Agreement. Any assignment, franchise, sublicense, or transfer, not expressly permitted by this Section 4, is prohibited and will be deemed to be null and void.
5. LICENSE FEE AND ROYALTIES
(a) Initial Licensing Fees. Shadewell shall not be required to pay an initial license fee in connection with this Agreement.
(b) Running Royalties . Throughout the term (including Option Periods) of this Agreement, the Running Royalty shall be 5% of Net Sales of Royalty Bearing Products for the remainder of the term; provided, there shall be no Running Royalty during the period commencing on the date of this Agreement and ending one year after the first date that any Royalty Bearing Products are shipped by Shadewell to customers (the “Royalty Waiver”).
(c) Payments . Shadewell shall remit Running Royalties to MFF within 60 days following the end of each calendar quarter covered by the Agreement. Absent error in the calculation of any amounts due hereunder, all Running Royalties shall be non refundable. All fees, royalties, and amounts payable hereunder shall be paid to MFF in U.S. currency in immediately available funds at such address or to such account as shall be designated in writing by MFF.
(d) Interest on Late Payments . Shadewell shall pay interest on all overdue
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amounts hereunder from the due date of such amounts until paid at the Royalty Default Rate.
6. NATIONAL LAUNCH AND SUPPORT
(a) Prior to the end of calendar year 2006, Shadewell agrees to launch the marketing and sale of each of the categories of Royalty Bearing Products (Brownie Products or Topping Products) in at least one of the Distribution Channels throughout the United States.
(b) During each of the calendar years 2007, 2008 and 2009, Shadewell agrees to continue to provide material marketing and sales support for the sale of each of the categories of Royalty Bearing Products throughout the United States consistent with past practices.
(c) In the event of a breach of the obligations set forth in 6(a) or 6(b) above, MFF shall have the right, at their election, to terminate the license granted herein with respect to that category of Royalty Bearing Product that has failed to meet the above requirements. The remedy set forth in this Section 6(c) shall be the sole and exclusive remedy available to MFF in the event of a breach of Section 6(a) or 6(b) above.
7. INTENTIONALLY OMITTED
8. SHADEWELL REPORTS
(a) Periodic Reports . On or before 60 days following the end of each calendar quarter covered by this Agreement, Shadewell shall deliver to MFF a written statement prepared, signed, and certified to be true and correct by Shadewell’s senior financial officer, or their designee, setting forth the amount of Royalty Bearing Products sold, including sufficient information and detail to confirm the calculations, which report shall be accompanied by payment in full of the amount of Running Royalties then due.
(b) Annual Reports . Within ninety (90) days following the end of each calendar year of this Agreement, beginning with the first such year in which Shadewell has sales of Royalty Bearing Products, Shadewell shall deliver to MFF a written statement setting forth the amount of Royalty Bearing Products sold and the calculations, including sufficient information and detail to confirm the calculations, used to determine such amounts, which calculations shall be signed and certified as true and correct by an independent certified public accounting firm chosen by Shadewell and acceptable to MFF, which acceptance shall not be withheld unreasonably. If this statement discloses that the amount of Running Royalties paid during any period to which the report relates was less
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than the amount required to be paid or that any other amount is due MFF, Shadewell immediately shall pay such amounts, together with accrued interest at the Royalty Default Rate in cash or other immediately available funds. MFF shall have the right to examine and audit the books and records of Shadewell to verify the amount of Royalty Bearing Products sold.
9. DEVELOPMENT OF ROYALTY BEARING PRODUCTS
Shadewell hereby covenants, agrees, warrants and represents that:
(a) Product Marketing . All Royalty Bearing Products shall be marketed and sold as “premium” products consistent with MFF’s then existing image. Shadewell accepts full responsibility for and agrees to pay all costs it incurs associated with all advertising and promotion, packaging design, graphics, and packaging materials for Royalty Bearing Products.
(b) Customer Complaints . Shadewell shall provide MFF a summary of all written consumer complaints received regarding the quality of the Royalty Bearing Products and shall maintain all written consumer complaints and a telephone log for all consumer complaints received by telephone for a period of one year. Shadewell will send a written report to MFF each month containing the comments received, names of complaining persons, with addresses and telephone numbers (if available). Comments will be organized and summarized by type of comment or complaint and by the geographical location of the complaint. Such information will also be available for inspection by MFF during normal working hours upon reasonable notice. Shadewell further agrees that it will respond to any written customer complaint within ten (10) days of receipt of such complaint by written response with either a refund of the customer’s money or a coupon for the same type of Royalty Bearing Product purchased, depending upon the complaining customer’s request. Shadewell further agrees that any complaints about MFF products which are not Royalty Bearing Products will be forwarded to MFF within five (5) days of receipt. MFF agrees that all customer complaints and comments received by it with respect to Royalty Bearing Products will be forwarded to Shadewell within five (5) days of receipt. Shadewell shall further provide MFF with copies of all responses to complaints, upon request.
10. ADVERTISING AND PROMOTION REQUIREMENTS
Shadewell shall market Royalty Bearing Products as premium products or as is otherwise consistent with MFF’s then existing image so that such marketing shall not reflect adversely upon Royalty Bearing Products, the good name of MFF, or the Licensed Names and Marks. MFF shall have a prior to use reasonable right of approval for all promotional, marketing and advertising materials and concepts for each promotional campaign Shadewell uses to market Royalty Bearing Products. In that regard, MFF shall have a reasonable right of approval, prior to
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the development of final television, radio or printed advertisements, the final “story boards” with respect to television advertising, the final “script” with respect to radio spots and the final “layouts” with respect to printed advertisements. MFF shall also have a reasonable right of approval with respect to the actors or actresses used in connection with any such advertising campaigns; provided, that Shadewell shall have the right to make minor variations in promotional, marketing and advertising materials used in connection with the approved promotional campaigns. All advertisements and advertising campaigns shall conform in all material respects to the approvals given by MFF. MFF shall have five (5) business days following the receipt of the proposed promotional, marketing or advertising materials to send Shadewell written notice of its disapproval which shall include an explanation of the basis for disapproval. If such written disapproval is not received by Shadewell within this five (5) business day period, the marketing, promotional or advertising material submitted to MFF shall be deemed approved. Any material modifications to any such materials previously approved by MFF shall be subject to approval pursuant to this Section 10. Once a promotional campaign has been approved by MFF, if no material changes are made to it by Shadewell, MFF shall not rescind its approval and Shadewell may proceed accordingly on the basis that it is approved.
11. LABELING
Whenever Shadewell uses the Licensed Names and Marks, Shadewell shall affix the appropriate trademark notice and agrees to use the registration symbol of “R” in connection with its use of the Licensed Names and Marks, or “TM” where the mark has not been registered federally, and in each instance where appropriate accompanied by the words “Reg. TM of MFF” or a reasonable facsimile thereof or such other reference as may be designated by MFF from time to time. Where a Licensed Name and Mark is used more than once on packaging, in copy or advertising or on the Royalty Bearing Products, the “R” or “TM” designation need only be used once either on the most prominent use of the Licensed Name and Mark, or if all uses are of equal prominence, then on the first use of the Licensed Name and Mark in or on each package, copy, advertisement, or product. Shadewell shall use the Licensed Names and Marks only as trademarks, service marks, or trade names and shall affix the notice as specified. Shadewell shall not have the right, unless previously agreed in writing by MFF, to use other trademarks, service marks, or trade names in marketing and promoting Royalty Bearing Products. MFF shall have the right to own and register any such other trademark, service mark, or trade name which is registerable, including a Licensed Name or Mark or “Fields” in any format, and such trademarks, service marks, and trade names owned or registered by MFF shall be included in the Licensed Names and Marks, and Shadewell shall cooperate with MFF by providing packaging, labeling, and documentation as may be required to obtain and maintain such registration.
12. USE OF LICENSED NAMES AND MARKS
(a) Restrictions On Use . Unless MFF consents in writing, which consent shall not be unreasonably withheld, Shadewell shall use the Licensed Names and Marks:
(i) only for the purposes of and pursuant to this Agreement,
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(ii) only in a manner consistent with the scope of the relevant registration of the Licensed Names and Marks or applications therefor in the Territory,
(iii) only in the manner permitted and prescribed by MFF as set forth herein,
(iv) only with respect to Royalty Bearing Products, and
(v) only to sell Royalty Bearing Products through Designated Distribution Channels.
(b) Recognition of Goodwill . Shadewell recognizes t |
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