EXHIBIT 10.10
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LICENSE AGREEMENT
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This Agreement ("this Agreement") is made as of 1 July 2004 between:
(i) Masterfoods USA, a division of Mars, Incorporated, a Delaware
corporation with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
("Masterfoods USA"), and (ii) Bravo! Foods International Corp., a Florida
corporation with offices at ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Licensee").
WHEREAS, Masterfoods USA and/or Masterfoods USA Affiliates
manufacture and sell the products set forth in Schedule I attached hereto
(the "Masterfoods Products"); and Masterfoods USA is authorized to enter
into this Agreement with respect to the trademarks, symbols and designs
associated with the Masterfoods Products set forth in Schedule II attached
hereto (the "Masterfoods Marks"); and
WHEREAS, Masterfoods USA and Licensee wish to enter into certain
arrangements relating to Licensee's use of the Masterfoods Marks upon and
in connection with the sale and distribution of the products described in
Schedule III attached hereto (the "Licensed Products");
NOW, THEREFORE, in consideration of the premises and of the mutual
promises and covenants contained in this Agreement, Masterfoods USA and
Licensee hereby agree as set forth below. Capitalized terms used in this
Agreement and not otherwise defined herein have the meaning given such
terms in Article 1 below.
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms have the meanings set
forth below:
"Allowable Discounts" means, with respect to any Licensed Products,
volume and other discounts (excluding cash discounts, early payment
discounts, new store allowances, coop advertising allowances and stocking
allowances) actually given with respect to the Licensed Products in the
ordinary course of business provided that (i) such discounts are based
solely on the sale of such Licensed Products by Licensee, (ii) such
discounts have been appropriately documented and (iii) the aggregate amount
of such discounts does not exceed two percent (2%) of the Standard Gross
Sales Price of the Licensed Products in question, less Allowable Returns.
"Allowable Returns" means, with respect to any Licensed Products:
(a) returns of damaged Licensed Products actually credited and
transportation charges allowed with respect to such returns, and (b)
markdown allowances in lieu of returns of damaged Licensed Products
actually credited and separately stated on an invoice issued within six (6)
months after sale of the Licensed Products or, if earlier, the expiration
or termination date of the License Agreement; provided that (i) all such
returns and allowances (including, but not limited to, the destruction of
Licensed Products subject to markdown allowances) have been appropriately
documented and (ii) the aggregate amount of such returns and allowances
does not exceed two percent (2%) of the Standard Gross Sales Price of the
Licensed Products in question, less Allowable Discounts.
"Advance" means a nonrefundable Royalty advance with respect to each
Contract Year in the following amounts:
Amount
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Contract Year U.S. Canada Mexico Total Due Date
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1 a. (ending 12/31/05) $ 25,000 $n/a $n/a $ 25,000 Upon Execution
1b. (ending 12/31/05) $ 25,000 $n/a $n/a $ 25,000 12//31/04
2. (ending 12/31/06) $150,000 $n/a $n/a $150,000 01/01/06
3. (ending 12/31/07) $300,000 $n/a $n/a $300,000 01/01/07
"Business Day" means any day other than a Saturday, Sunday or public
holiday observed by Licensee and/or Masterfoods USA.
"Competitive Products" means chocolate and nonchocolate confectionery
products (including mints, gum and granola bars, but excluding Moon Pie
Brand), energy bars, ice cream, ice milk, frozen yogurt, ices, frozen
novelties, pet products and accessories, rice, pasta, sauces, salad
dressings, main meals, and side dishes.
"Contract Year" means, (a) initially, the period starting on the
Effective Date and ending on the next following December 31 and (b)
thereafter, the period starting on January 1 of each calendar year during
the term of this Agreement and ending on December 31 of such year or, if
earlier, the Expiration Date.
"Damaged Products" means any Licensed Products (a) whose packaging or
contents are damaged or adulterated by fire, water, spoilage or otherwise;
(b) which are out of date or beyond its shelf-life; (c) which deviate from
the final production samples approved by Masterfoods USA hereunder; or (d)
which Licensee or Masterfoods USA reasonably believes in a condition
inappropriate for sale or distribution to consumers.
"Earned Amounts" means the sum of all unpaid Royalties, all Advances,
and all Marketing Fees payable under this Agreement.
"Effective Date" means 1 July 2004.
"Expiration Date" means 31 December 2007.
"Finished Goods" means Licensed Products in their finished state that are
immediately available for sale. Finished Goods do not include work in
process or raw materials.
"Force Majeure Event" means, with respect to either party, any cause
beyond its reasonable control (including, but not limited to acts of God or
terrorism, fire, strike, flood, riot, war, delay of transportation or
inability to obtain necessary raw materials through normal commercial
channels).
"Guarantee" means the following amount(s) with respect to each
Contract Year:
Amount
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Contract Year U.S. Canada Mexico Total Due Date
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1. (ending 12/31/05) $ 375,000 $n/a $n/a $ 375,000 01/31/06
2. (ending 12/31/06) $1,000,000 $n/a $n/a $1,000,000 01/31/07
3. (ending 12/31/07) $1,500,000 $n/a $n/a $1,500,000 01/31/08
"Guaranteed Amounts" means the sum of all unpaid Guarantees and
Minimum Marketing Fees payable under this Agreement.
"Improvements" has the meaning given in Paragraph 4.12 of this
Agreement.
"Indemnifying Party" has the meaning given in Paragraph 8.2.3 of this
Agreement.
"Licensed Products" has the meaning given in the preamble to this
Agreement.
"Licensed Products Forecast" means a good faith written projection,
on an annual basis and updated quarterly, of Licensed Product sales volume,
Total Net Sales Value, and aggregate Royalties, in the form of Exhibit E
attached to this Agreement.
"Licensed Trade Channels" means the following trade channels:
Grocery, Schools, foodservice, vending, bodega, convenience, club
stores, medical instituions, Gift, Specialty, Drug Stores,
Mid-Tier and Mass Market, Vending Machines, Theme Parks, and Movie
Theaters.
"Licensee" has the meaning given in the preamble to this Agreement.
"Marketing Fee" means, with respect to any Contract Year, an amount
equal to zero percent (0%) of the Total Net Sales Value of Licensed
Products sold or distributed by Licensee during such Contract Year.
"Masterfoods Marks" has the meaning given in the preamble to this
Agreement.
"Masterfoods Parties" means Masterfoods USA, a division of Mars,
Incorporated, a Delaware corporation, and/or legal entities in which Mars,
Incorporated has direct or indirect ownership.
"Masterfoods Products" has the meaning given in the preamble to this
Agreement.
"Masterfoods USA" means Masterfoods USA, a division of Mars,
Incorporated, a Delaware corporation.
"Masterfoods USA Affiliate" means legal entities in which Mars,
Incorporated has direct or indirect ownership.
"Masterfoods USA Affiliated Buyers" means M&M'S(R) World retail
store(s), Masterfoods USA, and/or any other Masterfoods USA affiliate.
"Mexican Short Form Agreement" has the meaning given in Paragraph 6.7
of this Agreement.
"Minimum Marketing Fee" means a fee in the following amount with
respect to each Contract Year:
Amount
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Contract Year U.S. Canada Mexico Total Due Date
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1. (ending 12/31/05) $n/a $n/a $n/a $n/a 01/31/__
2. (ending 12/31/06) $n/a $n/a $n/a $n/a 01/31/__
3. (ending 12/31/07) $n/a $n/a $n/a $n/a 01/31/__
"Notifying Party" has the meaning given in Paragraph 8.2.3 of this
Agreement.
"Product(s) Recipe" means the recipes and specifications for the
Licensed Products, as approved by Masterfoods USA.
"Proprietary Information" means, with respect to either party, any
and all information in written, oral representational or physical form
(including in particular, but not limited to, trade secrets, product
formulae, financial data, marketing plans, know-how, customer and supplier
lists and similar information) belonging to such party which can be shown
is not at the relevant time (a) generally known to the public through no
act or omission in violation of this Agreement, (b) furnished without
restriction to the receiving party by a third party having the lawful right
to do so or (c) known to the receiving party prior to disclosure hereunder
(as established by written documentation thereof).
"QA Guidelines" means the Masterfoods USA Quality Assurance and
Product Specifications Guidelines, as in effect from time to time.
"Remaining Goods" has the meaning given in Paragraph 10.4.2 of this
Agreement.
"Remaining Inventory" has the meaning given in Paragraph 10.3 of this
Agreement.
"Royalties" has the meaning given in Paragraph 3.1 of this Agreement.
"Sell-off Period" means the ninety (90) day period immediately
following (a) the Expiration Date or (b) termination of this Agreement by
Masterfoods USA pursuant to Paragraph 10.2(e) of this Agreement.
"Standard Gross Sales Price" means the greater of (a) the highest
gross selling price for the Licensed Products for each volume-discounted
freight tier reflected on Licensee's standard (before deductions of any
kind) United States (or if the Territory includes Canada and/or Mexico,
Canadian and/or Mexican, as the case may be) price list(s) to retailers
immediately prior to the time of sale (which for the purposed of this
definition shall not be deemed to be less than the highest price charged by
Licensee for the Licensed Product at any time during the immediately
preceding six (6) month period) and (b) Licensee's actual gross sales
price, in each case, charged for the Licensed Products by Licensee.
Standard Gross Sales Price shall not include any deductions or net out any
amounts, credits or allowances whatsoever (examples of which include, but
are not limited to: (i) cash, early payment or other discounts, (ii) taxes,
duties or other governmental fees or charges, (iii) insurance,
transportation or other costs or expenses and (iv) allowances or discounts
related to defective goods (even if in lieu of
returns), markdowns, bad debts, cash discounts or early payment discounts).
Licensee will deliver to Masterfoods USA the current price list for each
Licensed Product and any change in such list.
"Taxes" has the meaning given in Paragraph 3.7 of this Agreement.
"Territory" means The United States and its Territories and
Possessions, and U.S. Military installations worldwide.
"Third Party Claim" has the meaning given in Paragraph 8.2.3 of this
Agreement.
"Third Party Manufacturer" means any third party expressly approved
by Masterfoods USA in writing as a manufacturer of any Licensed Product.
"Third Party Manufacturer Agreement" means any agreement between
Licensee and a Third Party Manufacturer entered into in accordance with
Paragraph 4.1 of this Agreement.
"Total Net Sales Value" means Licensee's Standard Gross Sales Price
to customers or distributors (other than Masterfoods USA Affiliated Buyers
with respect to Licensed Products sold to Masterfoods USA Affiliated
Buyers, less only (a) charges for transportation of such Licensed Products
separately stated on the applicable invoice, (b) sales taxes relating to
sale of such Licensed Products separately stated on the applicable invoice,
(c) Allowable Returns, and (d) Allowable Discounts.
ARTICLE 2. GRANT OF LICENSE
2.1. Scope. Subject to the terms and conditions set forth in this
Agreement, Masterfoods USA grants to Licensee a limited, nonexclusive,
nontransferable license to use the Masterfoods Marks solely upon and in
connection with the distribution and sale of the Licensed Products in
Licensed Trade Channels in the Territory. No license is granted under this
Agreement for any use other than that specified, or for any use in
connection with products other than the Licensed Products. This license
does not include the right to grant sublicenses.
2.2. Territory. Except for sales of Licensed Products FOB a
location outside the Territory solely for resale within Licensed Trade
Channels in the Territory, the license granted in this Agreement extends
only to Licensed Trade Channels in the Territory. Licensee agrees that it
will not make or authorize any direct or indirect use of the Masterfoods
Marks in any other trade channels or territory, and that it will not
knowingly, or knowingly permit others to, sell any Licensed Product to
parties who intend or are likely to resell or otherwise distribute them
outside Licensed Trade Channels in the Territory.
2.3. Noncompetition. During the term of this Agreement, Licensee
will not produce, market or distribute in the Territory any product which
bears or contains the name or trademarks of any third party (or division
thereof) which produces, markets or distributes nationally branded
Competitive Products.
2.4. Right of First Refusal.
In the event Masterfoods USA determines that it wishes to license the
Masterfoods Marks for use in connection with the distribution and sale of
(a) milk beverage products (other than the Licensed Products) within the
Territory:
2.4.1. Masterfoods USA will give Licensee written notice of
such determination, including, but not limited to, a reasonably
detailed description of the products to be licensed, the territory
and the proposed arrangements relating thereto. Within fifteen
(15) days after receipt of any such notice, Licensee will notify
Masterfoods USA in writing whether or not it wishes to distribute
and/or sell the proposed milk beverage products in the proposed
territory.
2.4.2. In the event (i) Licensee notifies Masterfoods USA
that it does not wish to distribute and/or sell the proposed milk
beverage products in the proposed territory, or (ii) Licensee
fails to timely respond to Masterfoods USA's notice, Masterfoods
USA may provide a license to distribute and/or sell the proposed
milk beverage products in the proposed territory to such party and
upon such terms and conditions as Masterfoods USA may deem
appropriate.
2.4.3. In the event Licensee timely notifies Masterfoods
USA that it wishes to distribute and/or sell the proposed milk
beverage products in the proposed territory, Masterfoods USA and
Licensee will promptly enter into good faith negotiations
concerning arrangements with respect thereto. In the event
Masterfoods USA and Licensee fail to execute a definitive
amendment to this Agreement with respect to such arrangements
within sixty (60) days after Masterfoods USA's receipt of
Licensee's response to Masterfoods USA's initial notice under
Subparagraph 2.4.1 above, Masterfoods USA may thereafter provide a
license to distribute and/or sell the proposed milk beverage
products in the proposed territory to any third party, provided
that any such third party arrangements entered into within thirty
(30) days after expiration of Masterfoods USA's exclusive sixty
(60) day negotiation period with Licensee will not be more
favorable to the third party than the arrangements last offered to
Licensee.
ARTICLE 3. ROYALTIES
3.1. Royalties. Licensee will pay to Masterfoods USA royalties (for
the benefit of the Masterfoods Parties) in an amount equal to a percentage
of the Total Net Sales Value of Licensed Products sold, distributed or
shipped by Licensee ("Royalties") as follows:
Type of Sale % of Net Sales Value
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Or, at any time during
the contract term when
annualized gross sales
Contract Contract Contract reach $90 million for a
Year 1 Year 2 Year 3 minimum period of 6 months.
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To Retailer in Territory: 5% 5.5% 6% 7%
To Distributor in Territory: n/a n/a n/a n/a
To Retailer F.O.B. outside Territory: n/a n/a n/a n/a
To Distributor F.O.B. outside Territory: n/a n/a n/a n/a
provided that no Royalties will be payable hereunder with respect to sales
of the Licensed Products to any Masterfoods USA Affiliated Buyer in
accordance with Paragraph 4.9 below.
3.1.1. Except as expressly provided otherwise in this
Agreement, if Licensee sells or provides any Licensed Products to
any third party (including, but not limited to, any direct or
indirect subsidiary or affiliate of Licensee or any charitable
organization), without charge or at a price less than Licensee's
Standard Gross Sales Price (including, but not limited to, sales
taking place in contemplation of termination or expiration of this
Agreement) Royalties thereon will be computed on the basis of
Licensee's Standard Gross Sales Price. No additional Royalties
will be due with respect to subsequent sales or transfers of the
Licensed Products in question.
3.1.2. No set off or deduction will be made from Royalties
for uncollectible accounts, taxes, fees, commissions or
assessments; costs incurred in the production, sales,
distribution, advertisement or exploitation of the Licensed
Products; or other expenses of any kind which may be incurred or
paid by Licensee in connection with Royalties due to Masterfoods
USA hereunder.
3.1.3. All Royalties will be paid in United States Dollars.
Any Total Net Sales Value or Standard Gross Sales Price amount
expressed or invoiced in another currency will be converted, prior
to computing the Royalties due with respect to such amount, from
such other currency into United States Dollars at the conversion
rate actually received by Licensee, or, in the absence of any
actual conversion, at a conversion rate which is the mean between
Citibank N.A.'s buying and selling rate for the other currency at
its principal offices in New York, New York on the last day of the
quarter for which the Royalties are being determined.
3.1.4. All Royalties due Masterfoods USA hereunder will
accrue upon the sale of the Licensed Products, regardless of the
time of collection by Licensee. For purposes of this Agreement, a
Licensed Product will be considered "sold" upon the date when such
Licensed Product is billed, invoiced, shipped or paid for,
whichever event occurs first.
3.2. Advance and Guarantee. Licensee will pay an Advance to
Masterfoods USA with respect to each Contract Year on or before the
beginning of such Contract Year. If the aggregate amount of the Advance
for any Contract Year plus the aggregate amount of Royalties received by
Masterfoods USA with respect to such Contract Year is less than the
Guarantee for such Contract Year, Licensee will also pay to Masterfoods USA
within thirty (30) days after the close of such Contract Year an amount
equal to the shortfall. The Advance for each Contract Year will be
credited against Royalties otherwise payable under Paragraph 3.1 above with
respect to the same Contract Year. In no event will any Advance or
Guarantee for a given Contract Year and country be applied to the Royalties
due with respect to a prior or subsequent Contract Year or with respect to
another country within the Territory.
3.3. Marketing Fee. Licensee will pay a Marketing Fee to
Masterfoods USA with respect to each Contract Year. If the aggregate
amount of the Marketing Fee received by Masterfoods USA with respect to any
Contract Year is less than the Minimum Marketing Fee for such Contract
Year, Licensee will also pay to Masterfoods USA within thirty (30) days
after the close of such Contract Year an amount equal to the shortfall.
The Marketing Fee will not be applied to any Royalty, Advance, or Guarantee
payable hereunder. In no event will any Minimum Marketing Fee for a given
Contract Year be applied to the Marketing Fee due with respect to a prior
or subsequent Contract Year.
3.4. Royalty and Fee Payments. Within thirty (30) days after each
calendar quarter, Licensee will pay Masterfoods USA all Royalties and the
Marketing Fee owed with respect to such calendar quarter. Each such
Royalty payment and Marketing Fee payment will be paid by separate checks
payable to Masterfoods USA, accompanied by a reasonably detailed
description of the calculation of the amount of the accompanying payment.
Each Royalty payment will also be accompanied by the written statement
described in Paragraph 3.5 below. All such payments and statements will be
sent to Revenue Account Manager, Service and Finance Department,
Masterfoods USA, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other
address as Masterfoods USA may specify in writing.
3.5. Periodic Statements. Within thirty (30) days after the end of
each calendar quarter, Licensee will furnish to Masterfoods USA, a complete
and accurate written statement in the form of Exhibit B attached hereto,
certified by Licensee's authorized financial officer, showing (a) the total
number of Licensed Products (and the volume and sales of each Licensed
Product) sold and distributed by Licensee during the calendar quarter, on a
country-by-country basis, and (b) Licensee's inventory of Finished Goods by
SKU as of the end of the Calendar Quarter, such statement to be furnished
to Masterfoods USA whether or not any Licensed Products were sold or
distributed during such calendar quarter. Within thirty (30) days after
the expiration or termination of this
Agreement, Licensee will furnish to Masterfoods USA an analogous final
statement with respect to all Licensed Products sold or distributed during
the term of this Agreement.
3.6. Records. Licensee will keep at a location within the
continental United States, [or if conducting business in Canada and/or
Mexico and to the extent required by law, at its registered office in
Canada and/or Mexico, as the case may be,] reasonably detailed, complete
and accurate books of account and records covering all transactions
relating to the Licensed Products. Upon at least five (5) Business Days
prior notice to Licensee, Masterfoods USA and/or its authorized
representatives will have the right, during regular business hours, to
examine and copy such books of account and records and all other documents
and material in the possession or under the control of Licensee insofar as
they relate to the Licensed Products, in order to determine the accuracy of
the periodic statements delivered or which should have been delivered by
Licensee to Masterfoods USA pursuant to Paragraph 3.5 above. In the event
such examination indicates any under- or overpayment of Royalties and/or
Marketing Fees, an appropriate credit or refund will be promptly issued.
If any such examination reveals an underpayment of Royalties and/or
Marketing Fee, of more than five percent (5%) of the amount paid by
Licensee, or if such examination is in connection with Licensee's failure
to deliver any periodic statement or pay any amounts due hereunder, then
Licensee will bear all costs and expenses incurred by Masterfoods USA in
connection with the examination and collection of any such unpaid amounts
(including, without limitation, all reasonable attorney's fees and
expenses). The full amount of any underpayment of Royalties and/or
Marketing Fees, and related costs and expenses will be due and payable upon
demand by Masterfoods USA. All books of account and records of Licensee
relating to the Licensed Products will be kept available for inspection by
or on behalf of Masterfoods USA for at least four (4) years after the
expiration or termination of this Agreement. Upon Masterfoods USA's
request, Licensee will also provide Masterfoods USA with such financial
information regarding Licensee as may be necessary to establish, to
Masterfoods USA's reasonable satisfaction, Licensee's creditworthiness.
3.7. Transfer Taxes. All amounts due under this Agreement are net
of any applicable taxes, duties, fees or governmental charges, including
without limitation, transfer tax, sales tax, use tax, consumption tax,
value-added tax, excise tax, import tax, export tax, and custom duties
(collectively "Taxes"). Accordingly, Licensee will be solely responsible
for the payment of all Taxes, together with any related liabilities
(including interest and penalties), imposed upon it by law or any
governmental authority for which Licensee is primarily liable. If
Masterfoods USA is required by law or compelled by any governmental
authority to collect, remit, or pay any Taxes, or any related liabilities
(including interest and penalties) for which Licensee is primarily liable,
Licensee will indemnify and hold Masterfoods USA harmless for all such
Taxes, related liabilities (including interest and penalties), and costs
(including reasonable attorney's and expenses). To the extent that any
amount due under this Agreement is exempt from any applicable Taxes,
Licensee will provide and make available to Masterfoods USA any resale
certificate, information regarding out-of-state, out-of-province, or out-
of-country sales or use of any Licensed Products
and the Masterfoods Marks, and other exemption certificate or information
reasonably requested by Masterfoods USA.
3.8. Withholdings. All payments due under this Agreement will be
net of any withholdings or deductions which may be imposed by law,
regulation, international agreement, or governmental authority. If at any
time any applicable law, regulation, international agreement, or
governmental authority requires Licensee to make any such deduction or
withholding from any such payment, the sum due from Licensee with respect
to such payment will be increased to the extent necessary to ensure that,
after the making of such deduction or withholdings, Masterfoods USA
receives a net sum equal to the sum which it would have received had no
deduction or withholding been required. Licensee will provide to
Masterfoods USA, within the time prescribed by law, an official tax receipt
or other acceptable evidence of the payment of such withholdings or
deductions, and provide all reasonable assistance (including, but not
limited to, annual reconciliations) necessary for Masterfoods USA to
receive foreign tax credits with respect to any such withholdings or
deductions.
ARTICLE 4. PRODUCTION, APPROVAL AND SALE OF LICENSED PRODUCTS
4.1. Production of Licensed Products; Third Party Manufacturers.
The Licensed Products will be produced only in such quantities as are
reasonably required to meet customer demand therefor. In accordance with
Masterfoods USA's policies to protect the Masterfoods Parties' goodwill in
the Masterfoods Marks by controlling the quality of the Licensed Products,
the Licensed Products will be produced, assembled and/or co-packed solely
by Licensee and/or a Third Party Manufacturer and only at facilities
approved in writing by Masterfoods USA prior to production of any Licensed
Product at such facilities. Licensee will enter into a manufacturing
agreement with each Third Party Manufacturer substantially in the form of
Exhibit C attached hereto, an original, fully executed counterpart of which
will be delivered to Masterfoods USA upon its request. Within ten (10)
Business Days after the Effective Date of this Agreement, Licensee will
provide Masterfoods USA with a complete, accurate list of Third Party
Manufacturers (if any), including the name and address of, and the Licensed
Products produced by, each Third Party Manufacturer. Such list will be
promptly updated and delivered to Masterfoods USA by Licensee upon the
addition or deletion of any Third Party Manufacturer.
4.2. Approval of Licensed Products. No Licensed Product will be
advertised, released, marketed or distributed without Masterfoods USA's
prior written approval of the concept, composition, recipe for, quality,
style and appearance of the Licensed Product (including packaging, labeling
and shipping materials) and all advertising and promotion materials and
plans relating thereto.
4.2.1. Licensee will comply with all Masterfoods USA
approval procedures and related requirements (including but not
limited to any sensory requirements and/or testing requirements
which Masterfoods USA deems appropriate) with respect to the
Licensed Products, including,
without limitation, the submission of at least three (3) concept
samples, three (3) prototype/final concept samples, three (3)
preproduction (tooled) samples and six (6) production samples for
each Licensed Product (including packaging, labeling and shipping
materials). Each such submission will be accompanied by an
appropriately completed Masterfoods Licensed Product Submission Form
in the form of Exhibit D attached hereto. Masterfoods USA will
notify Licensee in writing of its approval or disapproval within
thirty (30) days after its receipt of each such sample. Any
submission not approved by Masterfoods USA within such thirty (30)
days will be deemed disapproved.
4.2.2. Upon Masterfoods USA's final written approval of
representative production samples of a Licensed Product, Licensee
will have the right to produce, distribute and sell such approved
Licensed Product as long as the Licensed Product does not deviate
from the final production samples approved by Masterfoods USA. At no
cost to Masterfoods USA, at least once every six (6) months during
the term of this Agreement and promptly upon Masterfoods USA's
request from time to time, Licensee will furnish to Masterfoods USA
at least six (6) additional representative production samples of the
approved Licensed Product (including packaging, labeling and shipping
materials) in order to enable Masterfoods USA to ascertain whether
Licensee is in compliance with the provisions of this Paragraph 4.2.
4.2.3. Licensee will not alter or change any Licensed
Product (including packaging, labeling and shipping materials)
after final approval thereof by Masterfoods USA unless Licensee
first complies with the provisions of this Paragraph 4.2 with
respect to the altered or changed item.
4.2.4. In the event Licensee sells or distributes any
Licensed Product which does not conform to the production samples
of such Licensed Product finally approved by Masterfoods USA
hereunder, at Masterfoods USA's request, Licensee will immediately
recall and destroy all nonconforming units of such Licensed
Products and provide Masterfoods USA with written certification
that such recall and destruction has been completed. Should
Licensee fail to do so, Masterfoods USA may conduct such recall
and destruction. Licensee will bear all costs and expenses
incurred in connection with the recall and destruction of any
Licensed Products pursuant to this Paragraph 4.2.4.
4.3. Inspection of Premises. Masterfoods USA and/or its authorized
representatives will have the right (but not the obligation) at all
reasonable times to inspect all premises at which the Licensed Products are
produced, assembled, packaged, handled or stored in order to ascertain
whether Licensee is in compliance with the provisions of this Agreement.
Except as circumstances warrant otherwise, Masterfoods USA and/or its
authorized representatives will give Licensee at least three (3) Business
Days prior notice of any such inspection. Any such inspection will be
subject to such security and sanitation control procedures as Licensee may
reasonably request. Upon Masterfoods USA's request, but no more frequently
than once each Contract Year so long as
Licensee is not in default under this Agreement, Licensee will obtain and
deliver to Masterfoods USA, at Licensee's expense, an audit of each Third
Party Manufacturer's premises (including workers dormitories, if
applicable) conducted by a qualified independent third party reasonably
acceptable to Masterfoods USA for the purpose of demonstrating compliance
with the Third Party Manufacturer Agreement and all applicable industry,
safety and health standards and regulations. Masterfoods USA will have the
right to request and/or conduct additional independent audits of Third
Party Manufacturers at its own expense as often as it deems necessary.
4.4. Damaged Products. Licensee will not sell or distribute any
Damaged Products and will use its reasonable best efforts to prevent the
sale or distribution of Damaged Products by customers to consumers or
others. Licensee will cause all relevant insurance policies maintained
pursuant to Paragraph 8.1 below (a) to provide that the insurer will not
sell or otherwise dispose of any Damaged Products in the insurer's
possession or under its control without Masterfoods USA's prior written
approval and (b) to authorize Masterfoods USA, at its option, to purchase
any Damaged Products in the insurer's possession or under its control, at
Licensee's cost therefor.
4.5. Product Recalls. In the event either party considers the
recall of any Licensed Product potentially desirable or legally required,
such party will immediately notify the other party and both parties will
discuss in good faith the basis for considering such recall and will use
their reasonable best efforts to accomplish such recall, if any, in a
commercially reasonable manner. The costs of any such recall will be borne
as mutually agreed upon in writing by the parties or, in the absence of
such agreement, by the party conducting the recall, subject to the
indemnification provisions of Paragraph 8.2 below.
4.6. Testing.
4.6.1. Licensee will cause the Licensed Products (and/or
their packaging and shipping materials) to be regularly tested by
a qualified independent third party in accordance with the QA
Guidelines. Licensee will promptly furnish Masterfoods USA with a
complete and accurate written report of the results of all such
testing.
4.6.2. At any time during the term of this Agreement, upon
Masterfoods USA's request, Licensee will cause the Licensed
Products (and/or their packaging and shipping materials) to be
tested by a qualified independent third party for the purpose of
confirming compliance with the requirements of this Agreement and
all applicable industry, safety and health standards and
regulations. Licensee will promptly furnish Masterfoods USA with
a complete and accurate written report of the results of all such
testing.
4.7. First Shipment. Licensee will give Masterfoods USA prompt
written notice of the first commercial shipment of each Licensed Product.
4.8. Sale of Licensed Products. Licensee will sell the Licensed
Products at such price as Licensee may determine and will be solely
responsible for the
collection and remittance of any applicable sales or like taxes in
connection with the sale thereof. The Licensed Products will be sold and
distributed to customers only in the manner in which other articles of the
same type are customarily merchandised. In no event will the Licensed
Products (a) be used or sold as premiums or giveaways, or knowingly be sold
or distributed to any third party for publicity or promotional tie-in
purposes, (b) be sold at less than seventy-five percent (75%) of Licensee's
Standard Gross Sales Price in job lots, closeouts, remainder sales or
otherwise, (c) be bartered, (d) be disassembled and/or sold in parts, (e)
be sold to repackagers, (f) be sold directly to consumers, or (g) be
donated or otherwise transferred to a charitable organization or cause,
unless Masterfoods USA approves the charitable organization or cause and
the quantity of donated or transferred Licensed Products, and Royalties are
paid to Masterfoods USA with respect to the donated or transferred Licensed
Products, provided that Licensee may distribute samples of the Licensed
Products, for purposes of marketing the Licensed Products in such
reasonable quantities as may be mutually agreed upon in writing by Licensee
and Masterfoods USA. No Royalties will be payable hereunder with respect
to such samples.
4.9. Purchase of Licensed Products. Licensee will solicit
Masterfoods USA Affiliated Buyers as initial customers for the Licensed
Products, and if requested by a Masterfoods USA Affiliated Buyer, Licensee
will sell a reasonable quantity of the Licensed Products to such
Masterfoods USA Affiliated Buyer at the most favorable price for such
Licensed Products offered by Licensee to any third party during the same
calendar quarter (excluding any Royalty amounts Licensee would otherwise be
required to pay) and upon such other terms and conditions as may be
mutually agreed upon by Licensee and such Masterfoods USA Affiliated Buyer.
All orders placed by a Masterfoods USA Affiliated Buyer will be shipped as
soon as practicable, but in any event as part of the first shipment of
Licensed Products following the placement of such order unless otherwise
directed by such Masterfoods USA Affiliated Buyer. Masterfoods USA
Affiliated Buyers may use any such Licensed Products for any lawful
purpose. No Royalties will be payable hereunder with respect to Licensed
Products sold by Licensee under this Paragraph 4.9.
4.10. Licensed Products Forecasts. On or prior to the Effective
Date, Licensee will deliver to Masterfoods USA a Licensed Products Forecast
with respect to the first Contract Year. No later than August 1 prior to
the beginning of each other Contract Year, Licensee will deliver to
Masterfoods USA the Licensed Products Forecast for such Contract Year and
will update such Licensed Products Forecast on each January 15, April 15,
July 15 and October 15 for the remaining portion of such Contract Year.
The Licensed Products Forecast and updates will not be binding on Licensee,
but will represent Licensee's good faith estimate of its then anticipated
sales of Licensed Products for the period(s) in question.
4.11. QA Guidelines. Masterfoods USA will provide Licensee with a
copy of the current edition of Masterfoods USA's QA Guidelines and any
revisions or updates thereto. Licensee will comply with all provisions and
requirements set forth the QA Guidelines as in effect at the time in
question.
4.12. Products Recipes, Flavors and Improvements. All Products
Recipes, Flavors and Improvements will be owned by Masterfoods USA and
will be treated as Proprietary Information belonging to Masterfoods USA.
Licensee will purchase all Flavors from Givaudan Flavors, Inc. ("Givaudan")
for such price and upon such other terms and conditions as may be
reasonably agreed upon by Licensee and Givaudan. Licensee will promptly
furnish to Masterfoods USA, in such form as may be mutually agreed upon, a
reasonably detailed description of each Product Recipe and/or Improvement.
Licensee will not use any Product Recipe or Flavors for any purpose (other
than production of Licensed Products hereunder) without Masterfoods USA's
express prior written approval of such use. Any copyright or patent
applications relating to the Products Recipes will be filed by Masterfoods
USA and will identify Masterfoods USA as the owner. Licensee will (and will
cause its employees to) cooperate fully with the filing of any such
copyright and/or patent application. Masterfoods USA will pay all costs
and expenses relating to any such copyright or patent application.
Masterfoods USA understands and acknowledges that (a) Licensee currently
produces and may hereafter produce numerous milk products in addition to
the Licensed Products, (b) such additional milk products may have recipes
similar to the Products Recipes and (c) Masterfoods USA will have no rights
to or interests in any such recipes hereunder.
ARTICLE 5. ADVERTISING AND PROMOTION
5.1. Advertising and Promotional Materials. Licensee will submit
all advertising, marketing and promotional materials relating to the
Licensed Products (including, but not limited to, merchandise catalogs, all
phases of advertising materials, and all media plans), to Masterfoods USA
for written approval before release for use or publication. Masterfoods
USA will notify Licensee in writing of its approval or disapproval of any
such materials as soon as practicable. Masterfoods USA's failure to
approve such materials within thirty (30) days after receipt will
constitute disapproval.
5.2. Customer Complaints. All packaging for the Licensed Products
will display an address and/or toll free telephone number for customer
questions/complaints, which number and service will be maintained by, and
at the sole cost and expense of, Licensee. Licensee will promptly and
appropriately respond to all customer, consumer or other complaints
relating to the Licensed Products (including, but not limited to, Licensed
Product quality, safety and packaging; customer and consumer satisfaction;
customer service; and form, content and channels of advertising and
promotion). Within ten (10) days after Licensee's receipt of any such
complaint, Licensee will furnish Masterfoods USA with a copy of the
complaint and Licensee's response thereto, provided that in the event the
complaint raises any significant safety, quality or other issue with
respect to a Licensed Product, Licensee will immediately notify Masterfoods
USA by telephone, will furnish Masterfoods USA with a copy of the complaint
within twenty-four (24) hours after Licensee's receipt of the complaint,
and will promptly consult with Masterfoods USA with respect to the
appropriate response to such complaint.
5.3. Marketing and Distribution. Licensee will market and
distribute the Licensed Products in accordance with the following schedule:
Activity Performance Date (on or before)
-------- -------------------------------
Initial preview of Licensed Products to potential customers 1 August 2004
Initial receipt of Licensed Product orders 1 August 2004
Initial shipment of Licensed Products to customers 1 September 2004
If Licensee fails to begin regular commercial shipment of any Licensed
Product on or before 31 March 2005, Masterfoods USA may permanently
withdraw such Licensed Product from the list of approved Licensed Products
described on Schedule III attached hereto by written notice thereof to
Licensee. Any such removal of a Licensed Product will not affect
Licensee's obligation to pay the full amount of the Guarantee in accordance
with Paragraph 3.2 above.
5.4. Inventory. Licensee will at all times maintain a Finished
Goods inventory of the Licensed Products sufficient to promptly meet
reasonably foreseeable demand for the Licensed Products within Licensed
Trade Channels in the Territory.
5.5. Masterfoods USA Marketing and Sales Materials. At Masterfoods
USA election, reference to the Licensed Products or Licensee may be
included in any marketing or sales materials produced or distributed by
Masterfoods USA, in such manner and form as Masterfoods USA may deem
appropriate.
ARTICLE 6. MASTERFOODS MARKS
6.1. Ownership of Masterfoods Marks. Licensee recognizes the great
value of the goodwill associated with the Masterfoods Marks and
acknowledges that, as between Masterfoods USA and Licensee, the Masterfoods
Marks and all rights therein and goodwill relating thereto belong
exclusively to the Masterfoods Parties. Licensee also recognizes the
validity of and the Masterfoods Parties' ownership of the Masterfoods Marks
and agrees that it has not and will not during the term of this Agreement
or thereafter, anywhere in the world, either itself or with others, (a)
attack the title or any rights of the Masterfoods Parties in and to the
Masterfoods Marks, or do anything either by an act of omission or
commission which might impair, jeopardize, violate or infringe any of the
Masterfoods Marks; (b) claim adversely to the Masterfoods Parties or anyone
claiming through the Masterfoods Parties any right, title or interest in or
to the Masterfoods Marks; (c) misuse or harm or bring into disrepute the
Masterfoods Marks; or (d) register or apply for registration of any of the
Masterfoods Marks or any ▇▇▇▇ which is, in Masterfoods USA's reasonable
opinion, the same as or confusingly similar to any of the Masterfoods
Marks. Licensee acknowledges that all rights in any trademarks included
in, based on or derived from the Licensed Products (excluding any
trademarks owned by Licensee as of the date hereof, which will remain
Licensee's property), including goodwill therein, are reserved to the
Masterfoods Parties. Licensee will not acquire any further rights of any
nature in the trademarks or goodwill therein as a result of Licensee's use
thereof and all use of the Masterfoods Marks by Licensee will inure to the
benefit of the Masterfoods Parties.
6.2. Protection of Masterfoods Marks. Licensee agrees to cooperate
fully and in good faith with Masterfoods USA for the purpose of securing
and preserving the Masterfoods Parties' rights in and to the Masterfoods
Marks. In the event Masterfoods USA decides to file, at Masterfoods USA's
expense, with the United States Patent and Trademark Office (or any
analogous foreign authority) such applications to register the Masterfoods
Marks as Masterfoods USA may deem necessary to cover the Licensed Products,
Licensee will cooperate with Masterfoods USA to obtain such registrations.
At Masterfoods USA's request, Licensee will promptly supply to Masterfoods
USA, without charge, the number of samples of each Licensed Product
(including labeling and packaging) and any other material produced by or on
behalf of Licensee necessary for Masterfoods USA to prepare such
registration applications. All such trademark applications and any
registrations issued thereon will constitute part of the Masterfoods Marks
and all use thereof by Licensee will inure to the benefit of the
Masterfoods Parties.
6.3. Defense of Third Party Actions. Masterfoods USA agrees to, and
will have the exclusive right to, assume the defense of any third-party
action challenging Licensee's right to use the Masterfoods Marks pursuant
to this Agreement. In the event of any such third-party claim, Masterfoods
USA will have the right to immediately terminate this Agreement and be
relieved of any future obligations under this Agreement by purchasing from
Licensee, at Licensee's direct cost, its then existing inventory of
Licensed Products.
6.4. Application of Masterfoods Marks. Licensee will cause each
Licensed Product to be marked so as to indicate Masterfoods USA's trademark
rights in the same manner as the samples approved by Masterfoods USA
pursuant to Article 4 hereof. Any Licensed Product, tag, label, packaging,
advertising or promotional material, or other item bearing the Masterfoods
Marks will also display the notices and legends described on Exhibit A
attached hereto and/or such other notice(s) as Masterfoods USA may require
from time to time to preserve the Masterfoods Parties' rights with respect
to the Masterfoods Marks.
6.5. Infringement Actions. Masterfoods USA will have the sole right
to determine whether to institute litigation or prosecute any claims or
suits for violations of the Masterfoods Parties' rights in the Masterfoods
Marks in its own name, in the name of a Masterfoods USA Affiliate or, with
Licensee's consent (such consent not to be unreasonably withheld, delayed
or conditioned), in the name of Licensee or to join Licensee as a party
thereto. Any recovery which may be obtained in any such action will be
owned by the Masterfoods Parties. Masterfoods USA agrees to bear the
reasonable legal expenses and costs incurred by Licensee with Masterfoods
USA's express prior written consent as a result of Licensee's participation
in such action, excluding the costs and
expenses of Licensee's employees and legal counsel. Licensee will notify
Masterfoods USA in writing of any actual or alleged infringements of the
Masterfoods Marks or imitations of the Licensed Products which may come to
Licensee's attention promptly (but in any event within five (5) Business
Days) after Licensee acquires knowledge thereof. Licensee will not
institute any suit or take any action on account of any such infringement
or imitation but will cooperate fully with Masterfoods USA in addressing
such matter.
6.6. Masterfoods Property. Licensee acknowledges that all products,
product designs, design patents, mechanicals, trademarks, copyrights,
seasonal and theme images, background settings, artwork and any other
materials made available by or on behalf of the Masterfoods Parties to
Licensee in connection with the production of the Licensed Products will at
all times remain the exclusive property of Masterfoods USA.
[6.7. Recordation of Mexican Short Form. Prior to the conduct of
business under this Agreement in Mexico, this Agreement or an executed copy
of an abbreviated version thereof substantially in the form of Exhibit G
attached hereto (the "Mexican Short Form Agreement"), will be recorded by
Licensee with the Mexican Industrial Property Institute pursuant to the
Mexican Industrial Property Law. Notwithstanding the foregoing, in the
event of a conflict between terms and conditions of this Agreement and the
Mexican Short Form Agreement, the terms and conditions of this Agreement
will govern.]
ARTICLE 7. REPRESENTATIONS AND WARRANTIES
7.1. Masterfoods USA Representations and Warranties. Masterfoods
USA hereby represents and warrants to Licensee as follows:
7.1.1. This Agreement is Masterfoods USA's valid and binding
obligation enforceable in accordance with its terms. Masterfoods USA
has the unencumbered right to enter into this Agreement and to
fulfill its duties thereunder. It is not and will not become party
to any agreement in conflict therewith.
7.1.2. Masterfoods USA has the right to use and permit the use
of the Masterfoods Marks and has the right to grant Licensee the
license described herein.
7.2. Licensee Representations and Warranties. Licensee hereby
represents and warrants to Masterfoods USA as follows:
7.2.1. This Agreement is Licensee's valid and binding
obligation enforceable in accordance with its terms. Licensee has
the unencumbered right to enter into this Agreement and to fulfill
its duties thereunder. It is not and will not become party to any
agreement in conflict therewith.
7.2.2. The Licensed Products and all advertising, promotional
and sales materials relating to the Licensed Products produced by or
on behalf of Licensee will not infringe any intellectual property or
other right of any
third party, provided that no representation or warranty is made with
respect to Masterfoods Marks used in accordance
with this Agreement.
7.2.3. All Licensed Products will be manufactured, packaged,
labeled, distributed and sold in compliance with all applicable laws
and regulations, including, but not limited to, local, state, federal
and foreign laws and regulations relating to labor and employment,
safety and environmental matters. Without limiting the foregoing, at
each facility at which the Licensed Products are manufactured, stored
or handled (a) no child, slave or prison labor will be used; (b) all
hazardous or flammable materials will be properly and safely handled
stored and disposed of; (c) adequate fire fighting equipment will be
available; (d) all safety equipment will be properly maintained; (e)
adequate clear fire escapes will be available and no fire exit will
be locked or blocked while the facility is occupied; (f) all
machinery will have proper guards and other appropriate safety
features; and (g) all employees will be provided with necessary and
appropriate safety equipment and clothing.
7.2.4. All Licensed Products will be merchantable, of good
commercial quality and fit for use and/or consumption by children and
adults.
ARTICLE 8. INSURANCE AND INDEMNIFICATION
8.1. Insurance. Licensee will, at its own expense, obtain and
maintain throughout the term of this Agreement insurance, issued by
reputable insurers having an AM Best rating of not less than A-, in such
form and amounts as are customary in the case of entities of established
reputation engaged in the same or similar businesses and similarly
situated, provided that such insurance will in any event include the
coverages described on Exhibit F attached hereto. Each such insurance
policy will be endorsed (i) to specifically name Masterfoods USA as an
additional insured (as its interest may appear); (ii) to provide that the
policy cannot be changed, modified or canceled without at least thirty (30)
days' prior written notice to Masterfoods USA; and (iii) to include a
waiver of subrogation. All such insurance will be primary to any other
which may be available to Masterfoods USA. Licensee will promptly furnish
to Masterfoods USA upon execution of this Agreement, after each renewal of
each Licensee policy and upon Masterfoods USA's request from time to time,
a Certificate of Insurance evidencing compliance with the provisions of
this Paragraph 8.1.
8.2. Indemnification.
8.2.1. Masterfoods USA Indemnity. Subject to Subparagraphs
8.2.3 and 11.9 below, Masterfoods USA will at all times during the
term of this Agreement and thereafter defend, indemnify and hold
Licensee and its officers, directors, agents, employees and permitted
assigns, harmless from and against any and all claims, suits,
damages, liabilities, costs and expenses (whether based on tort,
breach of contract, patent infringement, product liability or
otherwise), including, but not limited to court costs and reasonable
attorneys fees, arising out of or based on (a) the breach of any
representation, warranty or obligation of Masterfoods
USA under this Agreement; (b) any act, omission or negligence of
Masterfoods USA with respect to the performance of its obligations to
third parties arising in connection with the activities contemplated
under this Agreement; (c) any use of the Masterfoods Marks in
accordance with this Agreement; or (d) any materials provided to
Licensee by Masterfoods USA expressly for use in connection with the
Licensed Products as contemplated by this Agreement and so used by
Licensee. Any immunity or exclusivity of any labor, workers
compensation or similar statute applicable to Masterfoods USA will
not in any way limit or preclude Masterfoods USA's obligation to
provide indemnification hereunder. This indemnity will not be
limited in any manner whatsoever by any insurance coverage maintained
by Masterfoods USA.
8.2.2. Licensee Indemnity. Subject to Subparagraphs 8.2.3 and
11.9 below, Licensee will at all times during the term of this
Agreement and thereafter defend, indemnify and hold the Masterfoods
Parties and their respective officers, directors, agents, employees
and permitted assigns, harmless from and against any and all claims,
suits, damages, liabilities, costs and expenses (whether based on
tort, breach of contract, patent infringement, product liability or
otherwise), including, but not limited to court costs and reasonable
attorneys fees, arising out of or based on (a) the breach of any
representation, warranty or obligation of Licensee under this
Agreement; (b) any defect or alleged defect in the Licensed Products;
(c) any act, omission or negligence of Licensee with respect to the
performance of its obligations to third parties arising in connection
with the activities contemplated under this Agreement; or (d) any
subcontract or agreement with any Third Party Manufacturer and any
act or failure to act of any party to such subcontract or agreement.
Any immunity or exclusivity of any labor, workers compensation or
similar statute applicable to Licensee will not in any way limit or
preclude Licensee's obligation to provide indemnification hereunder.
This indemnity will not be limited in any manner whatsoever by
insurance required hereunder or other insurance coverage maintained
by Licensee.
8.2.3. Third Party Claims. Either party (the "Notifying
Party") will notify the other party (the "Indemnifying Party") of the
existence of any third party claim, demand or other action giving
rise to a claim for indemnification hereunder (a "Third Party Claim")
within ten (10) Business Days of the date upon which the Notifying
Party first becomes aware of the same and will give the Indemnifying
Party a reasonable opportunity to defend the same at its own expense
and with its own counsel, provided that the Notifying Party will at
all times have the right to participate in such defense at its own
expense. If, within a reasonable time after receipt of notice of a
Third Party Claim the Indemnifying Party fails to undertake to so
defend, the Notifying Party will have the right, but not the
obligation, to defend and to compromise or settle (exercising
reasonable business judgment) the Third Party Claim for the account
and at the risk and expense of the Indemnifying Party. The party
defending a Third Party Claim will timely provide to the other party,
such
information relating to the defense and/or settlement of the Third
Party Claim as the other party may reasonably request from time to
time.
8.2.4. Assistance With Claims. Subject to Subparagraphs 8.2.1
through 8.2.3 above, each party will, at the request and expense of
the other, furnish such information and/or reasonable assistance as
may be required to enable the other party to defend itself against
third party claims threatened or filed in connection with any
activities conducted under this Agreement.
ARTICLE 9. PROPRIETARY INFORMATION
9.1. Proprietary Information. From time to time, either party may
disclose or make available to the other party, Proprietary Information in
connection with the transactions contemplated hereunder. Each party agrees
that during the term of this Agreement and thereafter (a) it will use
Proprietary Information provided by the other party solely for the
purpose(s) for which it was disclosed hereunder and (b) it will not
disclose Proprietary Information provided by the other party to any third
party (other than its employees and/or professional advisors on a need-to-
know basis who are bound by obligations of nondisclosure and limited use at
least as stringent as those contained herein). The parties agree that
except as necessary to perform their respective obligations hereunder or
otherwise expressly required by law, they will not publicly announce or
otherwise disclose any of the terms and conditions of this Agreement. In
the event either party is requested or ordered by a court of competent
jurisdiction to disclose Proprietary Information provided by the other
party, such party will give the other party immediate notice of such
request or order and, at the other party's request and expense, resist such
request or order to the fullest extent permitted by law. Each party will
promptly (i) return to the other upon request any or all Proprietary
Information provided by the other then in its possession or under its
control and (ii) erase or otherwise destroy all computer entries containing
any Proprietary Information provided by the other then in its possession or
under its control and provide the other party with a written certification
of such erasure or destruction. Each party further agrees to promptly
return or destroy at the other party's request any documents, files,
copies, summaries, digests, analysis, compilations, forecasts, studies or
any other information prepared by it, fixed in any manner or form, used,
derived from or based on the Proprietary Information provided by the other
party. Each party acknowledges that all Proprietary Information provided
by the other party disclosed, obtained or received under this Agreement,
will be and remain the sole and exclusive property of the other party
and/or Masterfoods USA Affiliates. The provisions of this Paragraph 9.1
will survive the expiration or any termination of this Agreement.
9.2. Notice of Certain Events. Licensee will promptly notify
Masterfoods USA upon becoming aware of any of the following events:
unauthorized disclosure of any Proprietary Information of the Masterfoods
Parties; any alleged infringement of third-party proprietary or other
rights in connection with actions taken hereunder; liability claims
relating to the Licensed Products and any other event that may reasonably
be expected to have a material adverse
effect upon the development, production, sale, distribution or reputation
of any Licensed Product or the Masterfoods Marks.
ARTICLE 10. TERM AND TERMINATION
10.1. Term. This Agreement will take effect on 1 July 2004 and
expire on 31 December 2007, subject to earlier termination pursuant
Paragraph 10.2 below.
10.2. Termination. Without prejudice to any other right or remedy
available to the parties, this Agreement may be terminated:
(a) by either party at any time (i) upon written notice of
termination to the other if the other commits a material breach of
this Agreement, which breach (if capable of being cured) has
continued uncured for at least thirty (30) days (ten (10) days with
respect to breach of payment obligations or any breach with respect
to the Masterfoods Marks) after written notice of such breach from
the terminating party; or
(b) automatically, without notice of termination or any other
action on the part of either party if either party makes any
assignment for the benefit of creditors or files (or has filed
against it) a petition in bankruptcy, or is adjudged bankrupt, or
becomes insolvent, or is placed in the hands of a receiver, or if the
equivalent of any such proceedings or acts occurs, though known by
another name or term;
(c) by Masterfoods USA at any time upon written notice of
termination to Licensee (i) in the event of a change of control of
Licensee or a sale of all, or substantially all, of its assets, (ii)
in the event that Licensee is in default under any other agreement to
which Masterfoods USA or any Masterfoods USA Affiliate is also a
party, (iii) in the event that sales of Licensed Products during any
Contract Year are less than fifty percent (50%) of the projected
sales of Licensed Products for such period set forth on Schedule IV
attached hereto, or (iv) in the event Licensee acquires a controlling
interest in, or substantially all the assets of, any third party (or
division thereof), which produces, markets or distributes one or more
products which Masterfoods USA reasonably deems to compete with any
product of the Masterfoods Parties;
(d) by either party upon written notice of termination to the
other party in the event the existence of a Force Majeure Event
prevents the other party from performing any of its obligations
hereunder for more than sixty (60) days; or
(e) by either party, with or without cause, upon at least
sixty (60) days prior written notice of termination to the other
party.
10.3. Post-Termination/Expiration Sell-off. Following the
Expiration Date or in the event this Agreement is terminated by Masterfoods
USA pursuant to Paragraph 10.2(e) without cause, Licensee may continue to
sell its inventory of Finished Goods in existence at Licensee's
warehouse(s) or domestic point(s) of
distribution as of the Expiration Date or such date of termination, as the
case may be (the "Remaining Inventory") for the Sell-off Period provided
that, in each such case:
(a) all relevant provisions of this Agreement will continue
to apply during the Sell-off Period;
(b) the aggregate amount of Remaining Inventory of any
Licensed Product sold during the Sell-off Period does not exceed
fifty percent (50%) of the aggregate amount of such Licensed Product
sold by Licensee during the same period in the immediately preceding
Contract Year (or, if the termination occurs in the first Contract
Year, during the immediately preceding calendar quarter); and
(c) no Royalties generated by the sale of any Licensed
Products during the Sell-off Period will be applied toward the
satisfaction of the Guarantee pursuant to Paragraph 3.2 above unless
this Agreement has been terminated by Masterfoods USA without cause
pursuant to Paragraph 10.2(e) hereof.
In no event will this Paragraph 10.3 apply to any Licensed Product
manufactured or acquired by Licensee or delivered to Licensee's
warehouse(s) or domestic point(s) of distribution after the date of
termination or the Expiration Date, as the case may be. At least sixty
(60) days prior to the Expiration Date and within fifteen (15) days after
the start of the Sell-off Period, Licensee will furnish to Masterfoods USA
a written description (including quantity and location) of the Remaining
Inventory, including, without limitation, all packaging materials, tags,
labels, and advertising and other promotional materials. Masterfoods USA
will have the right to conduct its own physical inventory of the Remaining
Inventory wherever maintained, upon reasonable prior notice to Licensee and
during normal business hours. If any such Masterfoods USA physical
inventory is prohibited or limited by Licensee for any reason, Masterfoods
USA may, in its sole discretion, immediately terminate all sell-off rights
granted to Licensee hereunder by written notice to Licensee.
10.4. Effect of Expiration or Termination.
10.4.1. Payments. Expiration or termination of this
Agreement will not affect the obligation of either party to perform
obligations incurred hereunder prior to such termination or
expiration including, but not limited to, Licensee's obligations to
pay all Earned Amounts due hereunder and all Guaranteed Amounts;
provided, however, so long as no default or breach by Licensee has
occurred hereunder,
(a) if Licensee terminates this Agreement pursuant to
Paragraph 10.2(e), Licensee's obligations to pay all Earned
Amounts and all Guaranteed Amounts will be limited to all such
Earned Amounts and all Guaranteed Amounts that would otherwise
be due during the twelve (12) month period following the date
of such termination (or shorter period ending on the Expiration
Date); and
(b) if Masterfoods USA terminates this Agreement
pursuant to Paragraph 10.2(e) or Licensee terminates this
Agreement pursuant to Paragraph 10.2(a) or 10.2(b), Licensee's
obligations to pay all Earned Amounts and Guaranteed Amounts
will be limited to all Earned Amounts and all Guaranteed
Amounts applicable to the period ending on the termination
date. In addition, in the event that Masterfoods USA
terminates this Agreement pursuant to Paragraph 10.2(e),
Masterfoods USA will purchase from Licensee, at Licensee's cost
therefor and upon other commercially reasonable terms and
conditions, Licensee's then existing inventory of Licensed
Products ingredients, packaging and work-in-process to the
extent Licensee can not reasonably use such items for other
existing business purposes.
10.4.2. Other Obligations. Upon expiration or termination of
this Agreement for any reason, except as otherwise expressly provided
herein:
(a) Licensee will immediately discontinue making any
representations regarding its status as a licensee under this
Agreement; will immediately cease conducting any activities
with respect to the production, sale, distribution, promotion
or advertising of the Licensed Products; will immediately cease
all use of the Masterfoods Marks; and will not use the
Masterfoods Marks thereafter;
(b) within thirty (30) days of the date of expiration
or termination, Licensee will turn over to Masterfoods USA any
molds, plates, models, preprints, matrices and other materials
used solely to produce the Licensed Products; and
(c) within thirty (30) days of the date of termination
or expiration of the Sell-Off Period, if any, Licensee will
destroy any and all goods bearing the Masterfoods Marks,
Flavors, and all tooling, tooling aids, artwork and advertising
and other promotional materials used or produced in connection
with the Licensed Products then in Licensee's possession or
under its control (the "Remaining Goods") and furnish
Masterfoods USA with written certification of such destruction
(or removal), provided that Licensee will delay such
destruction (or removal) for such period, if any, as
Masterfoods USA may reasonably request, during which period
Masterfoods USA and Licensee will discuss in good faith
alternate arrangements for disposition of the Remaining Goods
upon such terms and conditions as may be mutually agreed upon
in writing by Masterfoods USA and Licensee.
10.4.3. Termination of Rights. Except as expressly set forth
in Paragraph 10.3 above, effective immediately upon expiration or
termination, all rights granted to Licensee hereunder will
automatically revert to the Masterfoods Parties.
10.4.4. Surviving Provisions. The provisions of Paragraph
10.3 and this Paragraph 10.4 and the inspection provisions contained
in Paragraph 3.6 hereof, the indemnity provisions contained in
Paragraph 8.2 hereof, the confidentiality and limited use obligations
contained in Article 9 hereof, and the representations and warranties
contained in Article 7 hereof each will survive the termination or
expiration of this Agreement.
ARTICLE 11. MISCELLANEOUS.
11.1. Notices. All notices and other communications hereunder must
be in writing and be delivered by personal service or sent by nationally
recognized overnight courier service, written telecommunication or
registered or other nationally recognized certified mail, postage prepaid,
in each case, addressed to the parties as follows (and as otherwise
provided in Paragraph 3.4 above), or to such other address as the addressee
party may direct by notice given as provided herein:
If to Masterfoods USA: Masterfoods USA
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: **********
Commercial Manager
(Telecopy: ***********)
with copies to: Mars, Incorporated
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ***********
(Telecopy: ***********)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq./
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(Telecopy: 617-428-6315)
If to Licensee: Bravo! Foods International Corp.
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, CEO
(Telecopy: 561-625-1413)
All such communications will be deemed effective on the earlier of (a)
actual receipt or (b) if sent by overnight courier service, on the Business
Day following the date delivered to the courier or (c) if sent by mail,
five (5) Business Days after deposit with the applicable national Postal
Service or (d) if sent by written telecommunication, on the sending date
(subject to confirmation of receipt in complete, legible form).
11.2. Force Majeure. Notwithstanding any other provision of this
Agreement, if either Masterfoods USA or Licensee is delayed in or prevented
from fulfilling any of its obligations under this Agreement by reason of
any Force Majeure Event, then that party will not be liable under this
Agreement for damages resulting from such delay or failure, provided that
all its other obligations under this Agreement will remain in full force
and effect, including but not limited to, the termination rights set forth
in Paragraph 10.2(d) above. Each party will promptly notify the other upon
the occurrence of any such Force Majeure Event and will use its reasonable
best efforts to minimize the delay or prevention resulting therefrom.
11.3. Governing Law. This Agreement will be governed by and
construed in accordance with the internal laws of the State of Delaware and
to the extent applicable, the laws of the United States of America,
applicable to contracts made and to be performed in such state and country.
The courts of and in the State of Delaware will have nonexclusive
jurisdiction over disputes arising under or in connection with this
Agreement.
11.4. Assignment. This Agreement will be binding upon the parties
hereto and their respective successors and permitted assigns. Except as
otherwise expressly provided herein, Licensee may not assign all or any
portion of its rights or obligations hereunder without the express prior
written consent of Masterfoods USA.
11.5. Relationship of Parties. This Agreement is not intended to
create, nor should it be construed as creating, any agency, joint venture,
partnership or similar relationship between the parties hereto. Each party
will act solely as an entity independent of the other party and will have
no right to act for or bind the other party in any way or to represent that
such party is in any way responsible for any acts or omissions of the other
party.
11.6. Amendment. Neither this Agreement nor any provision hereof
may be amended or waived except by a writing signed by the party against
which enforcement of the amendment or waiver is sought.
11.7. Waivers. Any waiver by either party of any rights arising
from a breach of any covenants or conditions of this Agreement must be in
writing and is not to be construed as a continuing waiver of other breaches
of the same or different nature or of other covenants or conditions of this
Agreement. The failure of either party to insist upon a strict performance
of this Agreement, or of any of its terms and conditions, will not be
deemed a waiver of any rights or remedies that such party may have.
11.8. Remedies. It is understood and agreed that all provisions of
this Agreement are fundamental and essential for the protection of the
Masterfoods Parties' legitimate business interests, and in the event of any
breach or threatened breach of the provisions of this Agreement by
Licensee, the Masterfoods Parties will suffer irreparable harm and its
remedies at law will be inadequate. Accordingly, in the event of a breach
or attempted breach of this Agreement by Licensee, Masterfoods USA will be
entitled, in addition to all other rights or remedies which may be
available to Masterfoods USA, to seek injunctive and other equitable
relief, without any showing of irreparable harm or damage. In the event
Masterfoods USA seeks such relief, it will not be
required to post a bond or provide other security. All remedies available
for breach of this Agreement are cumulative and may be exercised
concurrently or separately. The exercise of one remedy will not be deemed
an election of such remedy to the exclusion of other remedies.
11.9. Consequential Damages. In no event will either party be
liable to the other for any consequential, indirect, incidental, exemplary
or special damages of any kind unless such party has engaged in intentional
misconduct or gross negligence.
11.10. Interest. Any overdue amounts payable by Licensee to
Masterfoods USA under this Agreement will bear interest from due date until
date of payment at (i) the rate equal to the higher of (a) twelve percent
(12%) per annum or (b) two percent (2%) over the prime rate announced by
Citibank, N.A., at its head office in New York, New York as its "prime
rate" on the due date, or (ii), if lower, the highest rate permissible by
applicable law.
11.11. Headings. The headings of the articles, paragraphs and
subparagraphs of this Agreement have been added for the convenience of the
parties and are not to be deemed a part thereof.
11.12. Severability. In the event any provision of this Agreement,
in whole or in part, is invalid, unenforceable or in conflict with the
applicable laws or regulations of any jurisdiction, such provision will be
replaced, to the extent possible, with a provision which accomplishes the
original business purposes of the provision in a valid and enforceable
manner, and the remainder of this Agreement will remain unaffected and in
full force, provided, however, that if without such invalid provision the
fundamental mutual objectives of the parties cannot be achieved, then
either party may terminate this Agreement without penalty upon written
notice of termination to the other party.
11.13. Further Assurances. Each party agrees to execute and deliver
such further documents and assurances, if any, as may be reasonably
required from time to time to give effect to the provisions of this
Agreement.
11.14. Counterparts. This Agreement may be executed in any number
of counterparts, all of which together will constitute a single agreement.
In proving this Agreement, it will not be necessary to produce or account
for more than one counterpart signed by both parties.
11.15. Integration. This Agreement is the sole understanding and
agreement of the parties hereto with respect to the subject matter hereof
and supersedes all other such prior or contemporaneous oral and written
agreements and understandings.
11.16. Construction. The provisions of this Agreement have been
negotiated in good faith by the parties and their respective legal counsel.
Neither party is to be deemed the principal author of this Agreement.
Signed, sealed and delivered by a duly authorized representative of
Masterfoods USA and Licensee as of the date first written above.
MASTERFOODS USA, BRAVO! FOODS INTERNATIONAL CORP.
DIVISION OF MARS, INCORPORATED
By: By:
------------------------------- --------------------------------
Name: Name:
----------------------------- ------------------------------
(Please Print) (Please Print)
Title: Title:
---------------------------- -----------------------------
SCHEDULE I
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TO LICENSE AGREEMENT
BETWEEN MASTERFOODS USA AND
BRAVO! FOODS INTERNATIONAL CORP.
Masterfoods Products:
MILKY WAY(R) Brand
STARBURST(R) Brand
3 MUSKETEERS(R) Brand
SCHEDULE II
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TO LICENSE AGREEMENT
BETWEEN MASTERFOODS USA AND
BRAVO! FOODS INTERNATIONAL CORP.
Masterfoods Marks (U.S.):
Registration Schedule to be supplied:
- MILKY WAY(R) Brand
- STARBURST(R) Brand
- 3 MUSKETEERS(R) Brand
SCHEDULE III
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TO LICENSE AGREEMENT
BETWEEN MASTERFOODS USA AND
BRAVO! FOODS INTERNATIONAL CORP.
Description of Licensed Products:
MILKY WAY(R) Brand Flavored Milk Drink - single serving
STARBURST(R) Brand Flavored Milk Drink - single serving
3 MUSKETEERS(R) Brand Flavored Milk Drink - single serving
