EXHIBIT 10.1
LICENSE AGREEMENT
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This LICENSE AGREEMENT (this "Agreement") is entered into as of the _____
day of March, 1997 between HFS Licensing, Inc., a Delaware corporation
("Licensor"), and Reunion Home Services, Inc., a Texas corporation ("Licensee").
PRELIMINARY STATEMENTS
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A. Licensor, pursuant to a Master License Agreement (the "Master
License") between Century 21 Real Estate Corporation ("Century 21") and
Licensor, has certain rights in the trademarks and service marks "CENTURY 21"
and "CENTURY 21 Home Improvements," and the design trademarks and service marks,
"CENTURY 21 and design" and "CENTURY 21 Home Improvements and design" depicted
on Exhibit A hereto, and the trade dress used in connection with or as part of
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the foregoing (the "Trade Dress") (all of the foregoing, individually and
collectively, the "Trademark"), including the right to grant the license set
forth herein.
B. Licensee is engaged in the business of marketing, selling, furnishing,
installing and servicing the home improvement products and services specified in
Exhibit B hereto.
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C. Licensee desires to obtain, and Licensor is willing to grant, a
license pursuant to which Licensee shall become a licensee of Licensor's right
to use the Trademark in connection with the marketing, selling, furnishing,
installation and servicing of the home improvement products and services
specified on Exhibit B hereto in the market area designated in Exhibit B hereto
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on the terms and conditions set forth herein; and
NOW THEREFORE, in consideration of the premises and mutual agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
STATEMENT OF AGREEMENT
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1. Definitions. As used herein, the term:
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1.1 "Affiliate" shall mean, with respect to an person, any other person,
entity, or organization directly or indirectly controlling, controlled by, or
under common control with, such person at any time during the period for which
the determination of affiliation with such person is being made.
1.2 "Century 21" shall have the meaning set forth in the Preliminary
Statements.
1.3 "Confidential Information" shall mean any non-public information,
technical data, or know-how which relates to the business, services, or products
of either party or a third party, including without limitation, any customer
lists, any information with respect to leads, pitch books, and training
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materials, salary information, research products, services, developments,
inventions, processes, techniques, designs, or distribution, marketing,
financial, merchandising and/or sales information.
1.4 "Contract Revenue" shall have the meaning set forth in Subsection 8.3.
1.5 "Contract(s)" shall mean all contracts of any nature entered into by
Licensee with its
customers relating to the provision or sale of Licensed Services.
1.6 "Earned Royalties" shall have the meaning set forth in Subsection 8.2.
1.7 "Licensed Services" shall mean the marketing, sale, furnishing,
installation and servicing of only the home improvement products and services
specifically designated on Exhibit B hereto for Residential Properties UNDER THE
TRADEMARK.
1.8 "License" shall mean the exclusive right to use the Trademark in
connection with the Licensed Services in the Territory during the Term.
1.9 "Licensee" shall have the meaning set forth in the Preliminary
Statement.
1.10 "Licensor" shall have the meaning set forth in the Preliminary
Statement.
1.11 "Master License" shall have the meaning set forth in the Preliminary
Statement.
1.12 "Prime Rate" shall mean the prime rate of interest in effect from
time to time at the Chase Manhattan Bank, New York, New York, or any successor
bank thereto.
1.13 "Quarter" shall mean the calendar quarter ending on March 31, June 30,
September 30, and December 31, as applicable.
1.14 "Receiving Party" shall have the meaning set forth in Subsection
17.2.
1.15 "Residential Properties" shall mean non-commercial properties that
are utilized solely for residential purposes, excluding (a) properties having
four or more connected and/or attached residential units, and (b) properties
which are part of a residential condominium unit and Licensee has entered or may
enter into a contract which is negotiated and paid for by the management of the
condominium.
1.16 "Royalties" shall mean with respect to any Year, the Earned Royalties
and Minimum Royalties (as required by Section 8.2) actually due to Licensor in
respect of such Year.
1.17 INTENTIONALLY OMITTED
1.18 "Term" shall mean the term of this Agreement, which shah commence as
of the date of
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this Agreement and shall expire on December 31, 2007, unless
earlier terminated or further extended pursuant to the terms of this Agreement
or extended in writing signed by Licensor and Licensee.
1.19 "Territory" shall mean the market area described on Exhibit B hereto,
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and such other market areas for which Licensor may grant Licensee a license to
use the Trademark for Licensed Services.
1.20 "Trade Dress" shall have the meaning set forth in the Preliminary
Statements.
1.21 "Trademark" shall have the meaning set forth in the Preliminary
Statements.
1.22 "Year" shall mean each twelve month period during the Term commencing
January 1 of each year and ending December 31 of the same calendar year, except
that the first year of the term shall be the period from the date of this
Agreement through December 31, 1997.
2. Grant of License.
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2.1 Subject to the terms and provisions hereof, Licensor hereby grants to
Licensee and Licensee hereby accepts the License during the Term.
2.2 Licensee shall operate in the Territory under either the trade name
"CENTURY 21 Home Improvements", or the trade name "CENTURY 21" combined with a
term "Cabinet Refacing" to describe the Licensed Services, together with a name
identifying Licensee's corporate name (e.g. "CENTURY 21 Cabinet
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Refacing/Reunion Home Services, Inc.") or such other trade names as shall have
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been approved in writing by Licensor. Licensee shall file assumed name
certificates or similar documents in connection with operating under such name
in such jurisdictions as such filings may be legally required and shall upon
request provide copies thereof to Licensor.
2.3 The License applies solely to the use of the Trademark in connection
with the Licensed Services in the Territory during the Term and (i) no use of
any other trademark of Licensor or Century 21 or any of their respective
Affiliates, and (ii) no use of the Trademark on any products or on services
other than the Licensed Services, is authorized or permitted. Licensor reserves
the right to use, and to grant to its Affiliates or any other licensee the right
to use, the Trademark (i) on or in connection with any and all products and
services or for any other purpose other than the specific Licensed Services
within the Territory, provided that licensees for any other licensed services
within the Territory shall use a tradename and a term describing the services
licensed which when combined with the ▇▇▇▇ "CENTURY 21 HOME IMPROVEMENTS" will
be readily distinguished from the names used by Licensee under Section 2.2, (ii)
outside the Territory with respect to the Licensed Services. There are no
implied agreements or covenants between the parties regarding the Territory.
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2.4 Unless otherwise approved by Licensor, all references to the
Trademark, in Contracts, advertisements, or promotional materials, shall
prominently display a statement to the effect that the Licensed Services are
sold, furnished and performed by Licensee, using Licensee's full legal name, an
independently owned contractor. In no event shall Licensee, or any of its
employees, agents, representatives or subcontractors identify Licensee, orally
or in writing as a subsidiary, division or Affiliate of Century 21, Licensor or
any of their Affiliates.
2.5 Licensee shall actively conduct the business of selling and providing
Licensed Services under the Trademark in all of the Territory. If Licensee
determines that any portion of the Territory representing the entirety of a
county or SCF code is not economically viable for Licensee, the Licensee may
surrender that portion of the Territory by written notice to Licensor,
identifying the SCF Codes being surrendered, which shall be effective upon
Licensor's receipt of the notice. Required Revenue and Minimum Royalties shall
not be affected by the reduction in the Territory. Licensee remains responsible
for Earned Royalties accrued, indemnity under Section 15, and Earned Royalties
to be earned on Contracts in effect in the surrendered portion of the Territory
at the time of surrender.
2.6 Licensee shall not carry on any business similar to the sale or
provision of Licensed Services within the Territory except pursuant to this
Agreement.
3. Representations and Warranties.
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3.1 Licensor represents and warrants that it has full right, power, and
authority to enter into this Agreement and to perform its obligations hereunder,
and to consummate all of the transactions contemplated herein and that it has a
valid and enforceable right to license the Trademark and that the Trademark is
valid and enforceable. Licensor represents and warrants that Century 21 or its
affiliate CTM Holdings Corp. owns all right, title and interest in and to the
Trademark subject to the Master License, and all other franchises and licenses
granted by Century 21 and its subfranchisees. Licensor additionally represents
and warrants that the use of the Trademark by Licensee in the Territory strictly
in accordance with the provisions of this Agreement shall not infringe any
trademark, trade name, service ▇▇▇▇, copyright or any other proprietary right of
any third party. Licensor represents and warrants that it has not entered into
any agreement or commitment inconsistent with or in conflict with the rights
granted to License hereunder. Licensee agrees and acknowledges that other than
those representations explicitly contained in this Agreement, no
representations, warranties, or guarantees of any kind have been made to
Licensee, either by Licensor, Century 21 or any of their respective Affiliates,
or by anyone acting on behalf of Licensor, Century 21 or their respective
Affiliates.
3.2 Licensee represents and warrants that it has the full right, power,
and authority to enter into this Agreement, to perform all of its obligations
hereunder, and to consummate the transactions contemplated herein, and that to
the best of its knowledge, as a result of entering into this Agreement,
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or sold in violation of any statute, ordinance or administrative order, rule, or
regulation.
3.3 Licensor and Licensee each represent and warrant that (i) this
Agreement constitutes a valid and legally binding obligation of it (subject to
creditors' rights, bankruptcy, moratorium and laws of similar effect, and
general principles of equity), (ii) the execution and delivery by it of this
Agreement and the performance by it of its obligations hereunder have been duly
authorized by all requisite corporate action on the part of it, and (iii) no
other corporate proceedings on the part of it or consents are required in
connection with the execution, delivery, and performance by it of this
Agreement.
4. Quality Standards.
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4.1 Licensee acknowledges that the Trademark has established extremely
valuable goodwill and is well recognized among consumers, and that it is of
great importance to each party that in the sale and provision of the Licensed
Services the high standards and reputation that Century 21 and the owner of the
Trademark have established be maintained. Accordingly, all Licensed Services
provided by Licensee hereunder and the products sold or installed in connection
therewith shall be of first class installation and of high quality as is
consistent with the respective price of such Licensed Services and said
products. All Licensed Services and the products sold or installed in
connection therewith shall be commercially acceptable for the purposes for which
they are sold.
4.2 Licensee may use the Trademark only pursuant to the specifications and
designs for the Trademark approved in writing by Licensor or provided in writing
by Licensor and only in the manner approved by Licensor with respect to the
Licensed Services. For any Trademark that is federally registered, appropriate
notice of registration in accordance with the applicable laws or regulations of
the applicable jurisdiction shall accompany uses of such trademarks (a small "R"
within a circle in the United States) as necessary to obtain the maximum
protection for trademarks under the applicable trademark law.
4.3 Licensee shall submit to Licensor for Licensor's review and prior
written approval samples of each initial use of all materials of any nature
bearing the Trademark. The foregoing notwithstanding, following approval by
Licensor of the initial use, no additional approval will be required with
respect to any minor alterations in the format, layout, or color (excluding any
such changes to the Trademark) of approved materials or any changes in media
sources, provided that any such new media sources are substantially identical in
all material respects to those previously approved by Licensor and will not have
an adverse effect on the Trademarks, and provided that in all other respects
such materials are substantially identical to the sample previously approved by
Licensor. Licensor agrees that all materials bearing the Trademark which
previously have been approved for use by American Remodeling, Inc. may be used
by Licensee so long as Licensee's legal name has been substituted for the name
of such entity.
4.4 Licensor shall promptly approve or disapprove all submitted samples
within five (5) business days of receipt of such sample and shall not
unreasonably withhold its approval. Licensee
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shall seek approval as early as reasonably possible prior to production or use
of each respective item bearing the Trademark. Unless Licensee receives from
Licensor written approval or disapproval (together with specific reasons for any
such disapproval) at the end of such twenty (20) day business day period, such
samples shall be deemed approved by Licensor.
4.5 Licensee shall, upon prior written request, permit Licensor to visit
Licensee's offices, work sites, or other places of business at any reasonable
time, for inspection by Licensor's representatives of files, documents,
products, and other materials relating to the Licensor's Licensed Services and
products sold or installed in connection therewith at which time Licensor may
take samples of such products and samples or copies of documents and other
materials relating to the Licensed Services and such products, so long as taking
such samples does not unreasonably interfere with Licensee's ability to complete
jobs which are in progress. The provisions of Section 17 shall apply to all
Confidential Information obtained through or derived from such inspections.
4.6 Licensee shall prepare and maintain periodic (at least quarterly)
summary reports of all customer complaints to any third party or Government
agency regarding the Licensed Services and products sold or installed in
connection therewith during the Term, and upon request will promptly submit each
such summary to Licensor following the end of each Quarter. In the event that,
in the reasonable opinion of Licensor, there is a material increase in the level
of registered customer complaints as a percentage of total jobs undertaken,
Licensee, upon notification from Licensor, shall promptly meet with Licensor to
discuss steps necessary to reduce the number and severity of such customer
complaints. Licensee shall promptly thereafter undertake and shall diligently
pursue remedial efforts necessary to reduce the level of customer complaints to
a level satisfactory to Licensor.
4.7 Licensee represents and warrants that the Licensed Services and
products sold or installed in connection therewith shall be furnished in a
workmanlike manner and that all products, labor and materials shall be of high
quality. Licensee further represents and warrants that each completed
application or installation performed hereunder shall be of high quality and
that all applied or installed products and their application or installation
shall remain in good condition and be free from defects in materials and
workmanship for a period of at least one year from the date application or
installation is completed. Licensee shall provide a written warranty to such
effect to all of its customers for Licensed Services and products sold or
installed in connection therewith conforming to applicable law.
4.8 Licensee agrees to maintain and adhere to a general policy of customer
satisfaction satisfactory to Licensor and shall use its best efforts to adjust
complaints of customers and resolve controversies with customers with respect to
the sale or provision of the Licensed Services and products sold or installed in
connection therewith. In the event Licensee receives any notice that any
application or installation or product is defective, Licensee shall promptly
investigate such complaint and shall promptly repair or replace any defective
application or installation at no additional cost pursuant to the terms of the
written warranty. In the event any adjustment remains unsatisfactory to the
customer, Licensee agrees that it will use its best efforts to satisfy the
reasonable complaints to such customer.
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4.9 All Contracts must be in writing and signed by the customer. Such
contracts shall be retained by Licensee for a period of not less than two years
from the date of Licensee's receipt of full payment on the Contract. Each
Contract will identify Licensee as the vendor of the subject matter of the
Contract and that Licensee is a licensee and not a subsidiary, division or
Affiliate of Century 21, Licensor or HFS.
5. Trademark Ownership and Protection.
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5.1 Licensee acknowledges that to the best of Licensee's knowledge,
Licensor owns the exclusive right to use the Trademark, the Trade Dress, and the
goodwill associated therewith in connection with the Licensed Services in the
Territory. Licensee further acknowledges the exclusive rights held by Licensor
to use the Trademark and the goodwill associated therewith. Licensee further
acknowledges Licensors exclusive right to use the Trade Dress and its colors and
designs in connection with the Licensed Services. All use of the Trademark and
Trade Dress pursuant to this Agreement and goodwill generated thereby shall
inure to the benefit of Licensor and shall not vest in Licensee any right to
register any ▇▇▇▇ or right or presumptive right to continue such use. For the
purposes of trademark registration, sales by Licensee of Licensed Services under
the Trademark shall be deemed to have been made for the benefit of Licensor and
their respective Affiliates. Licensor will take reasonable steps to protect the
good will associated with the name and ▇▇▇▇ "CENTURY 21 Home Improvements."
5.2 Nothing contained in this Agreement shall be construed as an
assignment or grant to Licensee of any right, title, or interest in or to the
Trademark, or any of Licensors or any of its Affiliates' or other trademarks, it
being understood that all rights relating thereto are reserved by such Licensor
affiliated parties, except for the License hereunder to use the Trademark to the
extent specifically provided herein and subject to the restrictions provided
herein.
5.3 Licensee shall not, during the Term of this Agreement or thereafter,
(a) challenge Licensor's or any of its Affiliates' title or rights in and to the
Trademark in any Jurisdiction or challenge the validity of this License or of
the Trademark, or (b) contest the fact that Licensee's rights under this
Agreement are solely those of a licensee and shall cease upon expiration or
earlier termination of this Agreement. Licensee shall not file or prosecute any
trademark or service ▇▇▇▇ application or applications to register the Trademark.
The provisions of this Section 5.3 shall survive the expiration or termination
of this Agreement.
5.4 Licensor shall maintain all existing registrations of the Trademark in
full force and effect and shall use commercially reasonable efforts to secure
appropriate national registrations of the Trademark, at Licensor's expense, in
all jurisdictions within the Territory as reasonably requested by Licensee.
Licensee shall cooperate fully and in good faith with Licensor for the purpose
of maintaining registrations and prosecuting applications for the Trademark and
otherwise securing and preserving
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Licensors rights in and to the Trademark.
6. Licensee's Employees.
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Licensee shall have no authority to employ persons on behalf of Licensor or
any of its Affiliates and no employees of Licensee shall be deemed to be
employees or agents of Licensor or any of its Affiliates. Licensee shall have
the sole and exclusive right and responsibility to hire, train, transfer,
suspend, layoff, recall, promote, assign, discipline, adjust grievances, and
discharge said employees, and shall comply with all laws and regulations
applicable to employment and labor relations. Licensee shall identify itself as
the employer of its employees and contractors and take no action or fail to take
action when appropriate that would leave employers or contractors with the
impression that they are the employees or contractors of Licensor, Century 21 or
HFS.
7. Licenses and Permits.
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7.1 Licensee, at its expense, shall obtain all permits and licenses which
may be required under any applicable Federal, State or local law, ordinance,
rule or regulation by virtue of any acts performed by Licensee in the
performance of this Agreement. Licensee shall in the conduct of said business
and in the performance of this Agreement, comply fully with all applicable
Federal, State and local laws, ordinances, rules, and regulations.
7.2 Licensee, at its expense, shall pay and discharge all license fees,
business, use, sales, gross receipts, income, property or other similar or
different taxes or assessments which may be charged or levied upon Licensee by
reason of anything performed under this Agreement.
8. Royalties.
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8.1 As compensation for the License granted hereunder for the use of the
Trademark in connection with the sale and provision of Licensed Services and the
sale or installation of products in connection therewith in the Territory,
Licensee shall pay to Licensor earned royalties ("Earned Royalties") computed by
Multiplying Contract Revenue (defined in 8.3 below) by the percentage shown
below for the applicable Year as follows:
April 1, 1997 through December 31, 1997 2%
January 1, 1998 through December 31, 1998 2%
January 1, 1999 through December 31, 1999 2%
January 1, 2000 through December 31, 2000 2%
January 1, 2001 through December 31, 2001 3%
January 1, 2002 through December 31, 2002 4%
January 1, 2003 through December 31, 2003 5%
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January 1, 2004 through December 31, 2004 6%
January 1, 2005 through December 31, 2005 6%
January 1, 2006 through December 31, 2006 6%
January 1, 2007 through December 31, 2007 6%
8.2 Notwithstanding the provisions of Section 8.1 to the contrary,
commencing with the Year 1998 the aggregate Earned Royalties paid to Licensor in
respect of Licensee's Contract Revenue for each Year of Term shall be at least
the Minimum Royalty payable to Licensor applicable to such Year, as hereinafter
provided. To the extent that the Earned Royalties paid to Licensor in respect
of such Year are less than the Minimum Royalty applicable to such year, Licensee
shall pay to Licensor, not later than January 31 of the Year following such
applicable Year, the amount by which such aggregate Earned Royalties paid in
respect of such applicable Year are less than the Minimum Royalty applicable for
such Year. The Minimum Royalty applicable to the first Year of the Term shall
be equal to Earned Royalties on the Required Revenue defined below and for each
Year thereafter shall be an amount equal to the greater of (i) seventy-five
percent (75%) of the previous Year's Earned Royalties or (ii) Earned Royalties
on the Required Revenue defined below.
8.3 The term "Contract Revenue" shall mean all revenues which arise
directly from the sale of Licensed Services and all products sold or installed
in connection therewith pursuant to this Agreement (reflected by the sales
contract amount plus or minus any Contract change orders), less (a) refunds,
credits and allowances to customers; (b) financing discounts incurred in
connection with the sale of Contracts; (c) sales to employees of Licensee and
its Affiliates; (d) sales, use, excise and other similar taxes; and (e) fees
associated with building permits and other similar fees and expenses. Earned
Royalties shall accrue on all Contracts completed during the applicable month.
Completion shall be deemed to have occurred when Licensee becomes entitled to
receive cash payment substantially in full in connection with a Contract (i.e.,
when Licensee is entitled to receive substantially all sums that Licensee
reasonably can expect to collect on such Contract), from the customer or from a
third party financing source, as the case may be, or receives written customer
acceptance with respect to any project financed by Licensee. Advance deposits,
down payments and other amounts paid in respect of Contracts before completion
shall be deemed paid in the month in which the Contract is completed or the
deposit is forfeited by the customer.
8.4 All Earned Royalties shall be paid on a monthly basis prior to the
tenth day of the month following the end of the month in which accrued. Within
45 days after the end of each Year, Licensee shall prepare and furnish to
Licensor a reconciliation of all amounts paid with respect to Earned Royalties
attributable to the preceding Year.
8.5 If the payment of any Earned Royalties is unpaid as of the due date
for any reason, interest shall accrue on the unpaid principal amount of such
installment from and after the date the Earned Royalties become due at the lower
of (i) the highest rate permitted by applicable law, or (ii) two percent per
annum above the Prime Rate.
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8.6 Licensor shall have the right to terminate this Agreement upon not
less than 90 days prior written notice to Licensee in the event that during the
preceding Year Licensee had less than the Required Revenue applicable to such
Year, which notice must be given within 90 days following the end of such Year.
The Required Revenue shall mean aggregate accrued Contract Revenue (net of
reasonable reserves for warranty service calculated in accordance with generally
accepted accounting principles consistently applied), of $20,000,000 Required
Revenue for the Year ending on the December 31 following the date this Agreement
is signed shall be the amount specified in the preceding sentence prorated for
the actual number of days between the date of this Agreement and such Year end.
8.7 The Earned Royalties payable under this Section 8 shall be subject to
adjustment based on actual Contract Revenues accrued during the Year 2002.
During the Year 2002 and each subsequent Year, Licensee shall pay Earned
Royalties based on the percentage rate for such Year set forth in Section 8.1.
Prior to January 31st of the following Year, beginning in January 2003, Year,
the Adjusted Royalty Rate applicable to the prior Year, shall be adjusted as
follows:
Beginning with Year 2002:
. If reported Aggregate Contract Revenues for the Year are more than
110% and not more than 120% of actual Contract Revenue of the
preceding Year (beginning with 2001), the Adjusted Royalty Rate
applicable to the year shall be 4.50%.
. If reported Aggregate Contract Revenues for the Year are more than
120% of actual Contract Revenues for the preceding Year, the Adjusted
Royalty Rate applicable to the Year shall be 4.00%.
Licensor will perform the reconciliation of reporting Contract Revenues within
30 days after receipt of Licensee's reports for all 12 months of the Year in
issue. Licensor will prepare a reconciliation report, calculate Aggregate
Reported Contract Revenues and any refund of the excess of Earned Royalties paid
over the Earned Royalties calculated at the Adjusted Royalty Rate. Licensor
will credit Licensee's account with the amount of the refund, and provide a copy
of its reconciliation report.
9. Referrals.
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Licensor will not object to any lawful referral payment program
initiated by Licensee or in which Licensee participates in cooperation with
other licensees of the Trademarks in the territory or elsewhere.
10. Accounting.
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10.1 Licensee shall at all times keep an accurate account of all operations
within the scope of this Agreement. All Royalty payments made pursuant to
Section 8 shall be accompanied by a statement setting forth a full accounting of
the calculation of Earned Royalties for such month including all aggregate gross
revenue payable for the Licensed Services and related products, and all
exclusions included in the calculation of Royalties. Such statements shall be
in sufficient detail to be audited from the books of Licensee. Each statement
furnished by Licensee shall be certified as true and correct by the chief
financial officer of Licensee.
10.2 Licensor and its duly authorized representatives, on reasonable
notice, shall have the right for the duration of the Term and for two years
thereafter, to verify the accuracy of the amount of Royalties due, and during
the Term and for the two years thereafter, during regular business hours after
reasonable notice of not more than 5 business days, to examine the books of
account and records and all of the documents, materials and inventory in the
possession or under the control of Licensee and its successors with respect to
the subject matter of this Agreement. All such books of account, records, and
documents shall be maintained and kept available by Licensee for at least five
years. Licensor shall have free and full access thereto in the manner set forth
above and shall have the right to make copies and/or extracts therefrom. If as
a result of any examination of Licensee's books and records, it is shown that
Licensee's actual payments to Licensor hereunder were less than the amount which
should have been paid to Licensor, Licensee shall within three business days pay
to Licensor the amount of any underpayment with interest at the Prime Rate plus
two percent from the date on which each payment was due. In addition if it is
shown that Licensee's actual payments for the appropriate period were less than
the amounts that should have been paid by an amount equal to five percent (5%)
or more of the amount which should have been paid for such period, Licensee
shall within three business days reimburse Licensor for the reasonable cost of
such examination.
11. Infringement.
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11.1 Licensee shall cooperate with Licensor, Century 21, and their
respective Affiliates, to actively enforce against third parties the exclusive
rights furnished to Licensee hereunder, and the parties shall promptly notify
each other in writing of any unauthorized uses which may be infringements by
third parties of the Trademark which may come to the attention of the parties.
Licensor and Century 21 shall each have the right to determine whether or not to
take any action(s) it deems appropriate in its sole discretion against any third
party with respect to any unauthorized use, engagement, or dilution of the
Trademark, and Licensee shall reasonably cooperate with Licensor and Century 21
in connection with any such actions. Without limitation, if Licensor or Century
21 so desires Licensor or Century 21 may bring any claims or suits in Licensor's
or Century 21's own name or in the name of Licensee or join Licensee as a
nominal party thereto so long as Licensor or Century 21 pays the costs and
expenses thereof.
11.2 If Licensor fails to enforce against third parties the exclusive
rights granted to Licensee hereunder, Licensee may (but shall not be obligated
to) take all reasonable and
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appropriate action(s) against third parties with respect to any unauthorized
use, infringement, or dilution of the Trademark, and Licensor shall reasonably
cooperate with Licensee in connection with such action(s). Such actions by
Licensee shall be at Licensee's expense and all recoveries for such unauthorized
use, infringement or dilution of the Trademark shall belong to, and be property
of Licensee. Without limitation Licensee may bring any suits in Licensee's own
name, as Licensee of the Trademark.
12. Default.
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12.1 Licensor shall have the right to terminate this Agreement
immediately without affecting any other rights or remedies:
(i) immediately upon notice, if (a) any bankruptcy, or
insolvency proceedings should be commenced by Licensee or a substantial part of
the assets or property of Licensee passes into the hands of any receiver,
assignee, officer of the law or creditor or (b) any proceeding shall be
instituted by or against Licensee seeking to adjudicate it bankrupt or
insolvent, under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, and, in the case of any such proceeding instituted against it
(but not instituted by it), such proceeding shall remain undisclosed or unstayed
for sixty (60) days;
(ii) immediately upon notice, if Licensee admits its inability
to pay its debts as they become due;
(iii) immediately upon notice, if Licensee renounces, abandons
or materially reduces its operations under this Agreement;
(iv) if Licensee fails to make any Royalty payment or any other
payment of money due hereunder and fails to cure the same within five days of
receipt of written notice thereof from Licensor;
(v) if Licensee otherwise fails to comply with any other
material provision of this Agreement, including without limitation any provision
relating to quality control or compliance with applicable laws and fails to cure
such default within (a) the time period applicable thereto under the terms of
this Agreement, or (b) if no time period shall be provided, then within thirty
days of receipt of written notice from Licensor. In the event that any such
noncompliance (A) shall not be remediable within such thirty day period then,
provided that Licensee promptly commences and diligently pursues such remedial
steps as are necessary, Licensee shall have such additional time as is necessary
to effect such remedy, but in no event more than an additional 90 days, or (B)
shall be of a character which is not remediable, then such default shall not be
subject to cure by Licensee and Licensor shall have the right to terminate.
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12.2 Licensee shall have the right to terminate this Agreement upon written
notice to Licensor if Licensor has materially defaulted under this Agreement and
such default continues for a period of 90 days after Licensor receives written
notice of default.
13. Disposal of Stock Upon Termination or Expiration.
------------------------------------------------
13.1 Upon the effective date of expiration or earlier termination of
this Agreement by Licensor, Licensee shall immediately cease all use of, and
shall destroy, and effectively remove, the Trademark and all references thereto
from all remaining unsold or returned products and related advertising,
promotion, display and other materials bearing the Trademark or Trade Dress,
whether or not the use of such Trademark or Trade Dress is in compliance with
this Agreement.
14. Effect of Expiration or Termination.
-----------------------------------
14.1 It is understood and agreed that except for the License to use
the Trademark only as specifically provided for in this Agreement, Licensee
shall have no right, title, or interest in or to the Trademark. Upon and after
the expiration or earlier termination of this Agreement, all rights granted to
Licensee hereunder, together with any interest in and to the Trademark which
Licensee may acquire, shall forthwith and without further act or instrument be
assigned to and revert to Licensor. In addition, Licensee will execute any
instruments requested by Licensor which are reasonably necessary to accomplish
or confirm the foregoing. Any such assignment, transfer, or conveyance shall be
without consideration other than the mutual agreements contained herein.
Licensee will refrain from further use of the Trademark or any further reference
to the Trademark, direct or indirect, or any other trademark, trade name, or
logo that is confusingly similar to the Trademark. It is expressly understood
that under no circumstances shall Licensee be entitled, directly or indirectly,
to any form of compensation or indemnity from Licensor or its Affiliates, as a
consequence of the expiration or earlier termination of this Agreement, whether
as a result of the passage of time, or as the result of any other cause of
termination referred to in this Agreement. Without limiting the generality of
the foregoing, by its execution of the present Agreement, Licensee hereby waives
any claim which it has or which it may have in the future against Licensor,
Century 21 or any of their Affiliates, arising from any alleged goodwill created
by Licensee for the benefit of any or all of the said parties or from the
alleged creation or increase of a market for Licensed Services, or products sold
or installed in connection therewith.
14.2 Licensee acknowledges and admits that there would be no adequate
remedy at law for its failure to cease using the Trademark in connection with
the marketing, sale or furnishing of Licensed Services or the sale or
installation of any products in connection therewith at the expiration or
earlier termination of the License, and Licensee agrees that in the event of
such failure, Licensor shall be entitled to equitable relief by the way of
temporary, preliminary, and permanent injunction and such other and further
relief as any court with Jurisdiction may deem just and proper.
14.3 Licensee agrees that it shall continue to assume any and all
obligations under the terminated or expired Agreement arising out of the
operation thereunder prior to the expiration or
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earlier termination thereof which continues after such expiration or termination
date.
15. Indemnity.
---------
15.1 Licensee agrees that it will protect, defend, hold harmless and
indemnify Licensor, Century 21, their respective Affiliates, successors,
assigns, directors, officers and employees, and their respective heirs and
representatives from and against any and all claims, demands, actions,
liabilities, damages, losses, fines, penalties, costs and expenses (including
all reasonable attorneys' fees and expenses) of any kind whatsoever (including
without limitation of the foregoing, those relating to actual or alleged death
of or injury to person and damage to property), actually or allegedly, directly
or indirectly, arising or resulting from or in connection with:
(i) Licensee's breach of any representation, warranty, or
obligation under this Agreement;
(ii) Licensee's carrying on its business, whether or not in
connection with the use of the Trademark, including, but not limited to, all
allegations that the products, materials, or services provided by, prepared by,
or distributed by or through Licensee constitute:
(a) libel, slander, or defamation;
(b) trademark infringement or dilution, other than in
connection with the Trademark as used by Licensee hereunder substantially in
accordance with the terms hereof, unfair competition or infringement of any
statutory copyright, common law right, title or slogan;
(c) piracy, plagiarism, the misappropriation of another's
ideas, or unfair competition; and/or
(d) invasion of rights of privacy or rights of publicity;
(iii) any actual or alleged defect in such products or
materials, whether latent or patent, including actual or alleged improper
construction or design of such products or materials or the failure of such
products or material to comply with specifications or with any express or
implied warranties of Licensee;
(iv) Licensee's assembly or installation or application of
products or materials covered by this Agreement;
(v) all purchases, contracts, debts, or obligations made by
Licensee, including the breach of any Contract;
(vi) any third party financing utilized by Licensee in
connection with this
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Agreement;
(vii) the omission or commission of any act, lawful or unlawful,
by Licensee or of any of Licensee's agents or employees, whether or not such act
is within the scope of employment of such agents or employees; or
(viii) the failure or alleged failure of Licensee to comply with
any applicable law, statute, ordinance, governmental administrative order, rule,
or regulation.
The provisions of this Section 15.1 shall survive expiration or
termination of this Agreement.
15.2 Licensor agrees that it will protect, defend, hold harmless and
indemnify Licensee and its successors, assigns, directors, officers and
employees and their respective heirs and representatives from and against any
and all claims, demands, actions, liabilities, damages, losses, fines,
penalties, costs and expenses (including all reasonable attorney's fees and
expenses) of any kind whatsoever, actually or allegedly, directly or indirectly,
arising or resulting from or in connection with any action, demand or claim
based on an allegation that Licensee's use of the Trademark in connection with
the Licensed Services hereunder infringes a copyright, trademark, trade name,
service ▇▇▇▇, or any other proprietary right. Licensee agrees to give Licensor
prompt notice of, and (at Licensor's expense) cooperate with Licensor in the
defense against, any such claim, demand or action. In connection therewith,
Licensee will give Licensor the full opportunity to control the response thereto
and the defense thereof, including without limitation any agreement relating to
the settlement thereof; provided that Licensee will have the right to
participate in such response and defense and negotiations to the extent Licensee
might be otherwise adversely affected thereby.
16. Insurance.
---------
Licensee shall carry commercial general liability insurance covering
products and completed operations providing adequate protection with limits of
liability in the minimum amount of $500,000 per occurrence and $500,000 per
person for any claims relating to the Licensed Services and all products sold or
installed in connection therewith, or Licensee's operation of its business.
Licensor, CTM Holding Corp. and Century 21 shall be named therein as additional
insureds. The maximum deductible with respect to such insurance shall be
$100,000. Licensee shall, promptly after the signing, of this Agreement,
deliver to Licensor a certificate of such insurance from the insurance carrier,
setting forth the scope of coverage and the limits of liability.
17. Confidentiality: Non-Disclosure.
-------------------------------
17.1 Licensor and Licensee, and their respective Affiliates,
employees, agents, consultants, attorneys, accountants, financial advisors, and
bankers, shall hold in confidence and not use or disclose
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to any third party, except as permitted by this Agreement, any Confidential
Information of the other party. Licensor and Licensee each acknowledges that the
confidentiality of the terms of this Agreement may not be able to be maintained
if, and to the extent that, HFS Incorporated may be required to file a copy of
this Agreement as an exhibit to various reports filed with the Securities and
Exchange Commission and the New York Stock Exchange, Inc. and may be required to
summarize this Agreement in the text of its Annual Reports on Form 10-K and in
Notes to its Financial Statements.
17.2 Nothing herein shall prevent either party or any of its Affiliates,
employees, agents, consultants, attorneys, accountants, advisors, or bankers
(the "Receiving Party") from using, disclosing or authorizing the disclosure of
any Confidential Information it receives:
(a) that becomes publicly available without default hereunder by the
Receiving Party;
(b) that is lawfully received by the Receiving Party from a source
not, to the knowledge of the Receiving Party, under any obligation to the
disclosing party regarding disclosure of such information;
(c) that the Receiving Party reasonably believes it is required by
law to disclose, provided that the Receiving Party consults with the other party
prior to making such disclosure;
(d) to its attorneys, accountants, financial and investment advisors,
bankers, or lending institutions, and other advisors and consultants of a
similar nature, provided that such persons have an obligation to, or otherwise
agree to, keep such Confidential Information confidential.
17.3 Except as expressly provided herein, Licensee will not issue any
publicity or press release regarding its contractual relations with Licensor
hereunder or regarding Licensee's activities hereunder without obtaining
Licensor's prior written approval and consent to such release. Licensor shall
reasonably cooperate with Licensee regarding any publicity or press releases
regarding Licensee.
17.4 Any customer lists or prospective names provided to Licensee by
Licensor or Century 21 ("Century 21 Lists") shall be the property of Licensor or
Century 21, as applicable, and Licensee shall not use the same other than for
purposes of selling Licensed Services under the Trademark in the Territory
solely by means of direct mail program. Licensee agrees that it will not resell
or use for telemarketing purposes (other than the marketing Licensed Services in
accordance with this Agreement) any customer lists or prospective names obtained
from any Century 21 List. Neither Licensor nor Century 21 has any obligation to
provide any Century 21 Lists to Licensee.
18. Dispute Resolution.
------------------
18.1 Licensor and Licensee agree to negotiate in good faith in an effort to
resolve any dispute related to this Agreement. If any such dispute has not been
resolved within 10 days by negotiation,
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either party may resort to litigation. If the need for mediation arises,
mediation services shall be conducted in ▇▇▇▇▇▇ County, New Jersey.
18.2 In the event of litigation, each of the parties hereby consents to the
service of process by registered or certified mail at its address set forth
below and agrees that its submission to jurisdiction and its consent to service
of process by mail is made for the express benefit of the other party.
18.3 Notwithstanding anything to the contrary in this Section 18, the
parties expressly agree that either may seek provisional relief, including but
not limited to temporary restraining orders and preliminary injunctions, in
addition to the remedy of mediation set forth herein. Any such action for
provisional relief shall not constitute a waiver of the right or obligation to
mediate. Each party agrees that it shall bring any such action for provisional
relief, or any other litigation to enforce rights or obligations under this
Agreement, in (i) a federal court located in the State of Texas (if such action
or litigation is instituted by Licensor) or in the State of New Jersey (if such
action or litigation is instituted by Licensee) (ii) a state court located in
Dallas County, Texas (if such action or litigation is instituted by Licensor) or
in ▇▇▇▇▇▇ County, New Jersey (if such action or litigation is instituted by
Licensee), provided that either party may file a claim under the indemnification
provisions of this Agreement in any court in which a case giving rise to
indemnification is pending. Each party hereby submits to the jurisdiction of
each such court for any such relief, in accordance with the service provisions
set forth in Subsection 18.2 hereof.
18.4 Licensor and Licensee acknowledge and agree that the deceptive Trade
Practices-Consumer Protection Act, Section 17.41 et seq. Texas Business and
Commerce Code, does not apply to this Agreement because (a) the Agreement
involves a total consideration of more than $100,000; (b) Licensor and Licensee
have been represented by independent legal counsel in the negotiations involving
this Agreement; and (c) this Agreement does not involve Licensor's or Licensee's
residence.
19. Acknowledgments. The parties acknowledge that:
---------------
19.1 This Agreement is intended as a trademark sublicense only.
19.2 Licensee is only a licensee of the "CENTURY 21 " ▇▇▇▇ for use with the
description
"Home Improvements" or such other description as shall have been required or
approved in writing by Licensor.
19.3 Licensor and Century 21 are not in the business of developing,
operating, offering, selling, managing or warranting any aspect of the home
improvement business.
19.4 Neither Century 21 nor Licensor exerts or asserts any control over
Licensee or its operations, or the sale or provision of any Licensed Service, or
has prescribed any system or program of quality assurance, quality control,
product or service specifications, product or service standards or
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product or service design.
19.5 Licensee is not dependent on this Agreement or any services or
assistance provided by Century 21, Licensor or any of their Affiliates to
operate and maintain its business, or to provide the Licensed Services.
19.6 The parties have bargained at arms' length in this transaction.
19.7 Licensee is not required to make any additional investment under this
Agreement. Licensee's investment in any assets will not relate to Licensee's
obligations under this Agreement.
19.8 Licensee will rely on its own marketing plan and system of operations
developed prior to the execution and delivery of this Agreement. Licensor has
had no part in either prescribing or suggesting the marketing plan and system of
Licensee.
19.9 The parties acknowledge that neither Century 21, Licensor nor any of
their Affiliates will furnish to Licensee any assistance in the acquisition,
development, design, planning, selection of materials or methods used in the
Licensed Services, or any other aspect of Licensee's business nor will any such
party furnish a method of operation on which Licensee will be dependent with
respect to its business organization, management, marketing plan, promotional
activities or business affairs. Neither Century 21, Licensor nor any of their
Affiliates will provide any telemarketing service.
19.10 Licensee shall determine, in its sole discretion, the site or
location of each office and facility used to provide Licensed Services in the
Territory, its design and appearance, hours of operation, personnel policies and
practices, promotional activities, personnel training, customer requirements,
methods of accounting, construction methods and general operation methods,
subject only to the trademark-related standards and customer satisfaction
obligations set forth in this Agreement.
20. Miscellaneous.
-------------
20.1 All notices, requests, consents, and other communications hereunder
shall be in writing and shall be deemed to have been properly given or sent (i)
on the date when such notice, request, consent, or communication is personally
delivered or (ii) five days after the same was sent, if sent by certified or
registered mail or (iii) two days after the same was sent, if sent by overnight
courier delivery or confirmed telecopier transmission, as follows:
(a) if to Licensor, addressed as follows:
HFS Licensing, Inc.
c/o HFS Incorporated
▇ ▇▇▇▇▇▇ ▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Executive Vice President and General Counsel
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
(b) if to Licensee, addressed as follows:
Reunion Home Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Anyone entitled to notice hereunder may change the address to which notices
or other communications are to be sent to it by notice given in the manner
contemplated hereby.
20.2 Licensee shall operate in the capacity of an independent contractor.
Nothing herein contained shall be construed to place the parties in the
relationship of partners or joint venturers or to constitute Licensee the agent
of Licensor or any of its Affiliates, and no party hereto shall have any power
to obligate or bind any other party hereto in any manner whatsoever, except as
otherwise provided for herein.
20.3 None of the terms hereof can be waived or modified except by an
express agreement in writing signed by the party to be charged. The failure of
any party hereto to enforce, or the delay by any party in enforcing, any of its
rights hereunder shall not be deemed a continuing waiver or a modification
thereof and any party may, within the time provided by applicable law, commence
appropriate legal proceedings to enforce any and all of such rights. All rights
and remedies provided for herein shall be cumulative and in addition to any
other rights or remedies such parties may have at law or in equity. Any party
hereto may employ any of the remedies available to it with respect to any of its
rights hereunder without prejudice to the use by it in the future of any other
remedy with respect to any of such rights. No person, firm, or corporation,
other than the parties hereto and Century 21 and its Affiliates shall be deemed
to have acquired any rights by reason of anything contained in this
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Agreement.
20.4 This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties hereto. Licensor may assign all
of its rights, duties, and obligations hereunder to any Affiliate of Licensor,
any entity having adequate rights with respect to the Trademark to grant this
License on the date of such assignment, or to an affiliate of any such entity.
The rights granted to Licensee hereunder are unique and personal in nature, and
neither this Agreement nor the License may be directly or indirectly assigned by
Licensee (including without limitation by operation of law or by transfer of a
controlling interest in, Licensee or any other change in control of Licensee)
without Licensor's prior written consent, which may be withheld in Licensor's
sole discretion. Any attempt by Licensee to transfer any of its rights or
obligations under this Agreement, whether by assignment, License or otherwise,
other than as explicitly permitted pursuant to this Agreement, shall constitute
an event of default of this Agreement, and shall be null and void.
20.5 Licensee shall comply in all material respects with all laws, rules,
regulations, and requirements of any governmental body which may be applicable
to the operations of Licensee contemplated hereby, including, without limitation
as they relate to the provision, sale, or promotion of Licensed Services or any
products sold or installed in connection therewith, notwithstanding the fact
that Licensor may have approved such item or conduct. Licensee shall advise
Licensor promptly upon obtaining knowledge that any Licensed Service or any such
product does not comply with any such law, rule, regulation or requirement.
Licensor shall comply in all material respects with all laws, rules,
regulations, and requirements applicable to its performance under this
Agreement.
20.6 This Agreement shall be construed in accordance with and governed by
the laws of the State of New Jersey, applicable to contracts made and to be
wholly performed therein without regard to its conflicts of law rules, and any
applicable laws of the United States.
20.7 The provisions hereof are severable, and if any provision shall be
held invalid or unenforceable in whole or in part in any jurisdiction then such
invalidity or unenforceability shall affect only such provision, or part thereof
in such jurisdiction and shall not in any manner affect such provision in any
other jurisdiction, or any other provision in this Agreement in any
jurisdiction. To the extent legally permissible, an arrangement which reflects
the original intent of the parties shall be substituted for such invalid or
unenforceable provision.
20.8 The Section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
20.9 This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral among the parties with
respect to the subject matter hereof.
20.10 This Agreement may be executed in one or more counterparts, each
of which shall be
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deemed an original but all of which together shall constitute one and the same
instrument.
20.11. If Licensee shall be delayed or hindered in or prevented from the
performance of any acts required hereunder by reason of strikes, lockouts, labor
disputes, inabilities to procure materials (other than as a result of the
financial condition of Licensee), riots, war, act of God or other reason of a
like nature not within the control of Licensee, the period of performance of any
such act shall be extended for a period equivalent to such delay, provided,
however, that: (a) none of the foregoing shall in any way excuse or delay
Licensee's obligations to pay Earned Royalties and to comply with the quality
standards hereunder; (b) Licensee shall use its best efforts to remove the cause
of such delay as promptly as possible; and (c) in no event shall any period of
performance be delayed by more than 90 days in any 12 consecutive month period
as a result of the foregoing events. Licensee shall promptly give Licensor
written notice of the occurrence of any of the foregoing events for which it
claims that it is entitled to delay performance of any of its obligations
hereunder.
21. Special Stipulation.
--------------------
21.1 If a license for Cabinet Refacing & Related Products Services (the
"Target Service") becomes available in the Target Territories (defined below),
Licensor will notify Licensee. The Target Territories are:
STATE ZIP CODES
----- ---------
1. Arizona 850,852,853
2. Georgia 300-303, 305-306
3. Connecticut 064-066, 068-069
4. Florida 330-334, 349
5. Maryland 206-219
6. New York 100-119
7. Texas 750-762
8. Virginia 220-229
9. Washington, DC 200-205
Licensor will grant no license for the Target Service in your Target Territory
unless and until Licensee has had the opportunity to respond to Licensor's
written notice and has not signed the Addendum within the time required below.
Licensor will prepare and send with such notice an Addendum to this Agreement
adding the Target Territory or Territories and adjusting the Required Revenue to
a mutually agreeable amount. Licensee must sign and return the addendum within
30 days after receipt of the Addendum. If Licensor does not receive the signed
Addendum within such 30 day period, Licensee's rights under this paragraph are
subject and subordinate to any license for the Target Service may grant
thereafter in the Target Territory.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused the same to be executed by a duly authorized officer as of the day and
year first above written.
LICENSOR: HFS Licensing, Inc.
By: [SIGNATURE ILLEGIBLE]^^
--------------------------
Title: EVP
LICENSEE: Reunion Home Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
Title: CEO
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