EXHIBIT 10.3
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this "Agreement") is made and entered
into as of February 10th, 2005, by and between Gloria Jean's Gourmet Coffees
Corp., an Illinois corporation ("Licensor"), and Gloria Jean's Gourmet Coffees
Franchising Corp., an Illinois corporation ("GJGCFC"), on the one hand, and
Gloria Jean's Coffees Holdings Pty. Ltd., a corporation organized under the laws
of Australia ("Licensee"), Gloria Jean's Coffees International Pty. Ltd., a
corporation organized under the laws of Australia ("GJCI"), Jireh International
Pty. Ltd., a corporation organized under the laws of Australia ("Jireh"), and
Jireh Group Pty. Ltd., a corporation organized under the laws of Australia
("Jireh Group," and together with GJCI and Jireh, the "Jireh Parties").
WHEREAS, the parties hereto have entered into that certain Asset
Purchase Agreement, dated December 5, 2004 (the "Asset Purchase Agreement"),
pursuant to which Licensee has agreed to purchase certain assets of Licensor, to
assume certain liabilities of Licensor, and to license the use of the Marks (as
defined below) from Licensor;
WHEREAS, Licensor is the owner of the Australian trademark applications
(collectively, the "Australian Marks") identified on Exhibit A attached hereto;
WHEREAS, Licensor is the owner of the United States trademarks and
trademark applications (collectively, the "Guam Marks") identified on Exhibit B
attached hereto;
WHEREAS, the Australian Marks and the Guam Marks are collectively
referred to herein as the "Marks;"
WHEREAS, Licensee seeks to acquire the right to use the Marks in the
field of gourmet coffees and related products and services (the "Field") and the
goodwill associated with the Marks; and
WHEREAS, this Agreement is being entered into pursuant to Article V of
the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Licenses.
(a) Licensor hereby grants to Licensee the exclusive license
to use the Guam Marks in Guam in connection with Licensee's sale of products and
services to be used or consumed in Guam (and not for export to the United
States) in the Field (the "Guam License"). In consideration for the Guam
License, Licensee and the Jireh Parties shall be jointly and severally
responsible for the payment of license fees to Licensor in the amounts and on
the dates reflected on Schedule 1(a) attached hereto (the "Guam License Fee
Payments"). The Guam License granted herein includes the right of Licensee to
grant sublicenses to use the Guam Marks in Guam in accordance with the terms and
conditions of this Agreement and the Brand Management Agreement (as defined in
the Asset Purchase Agreement).
(b) Licensor hereby grants to Licensee the exclusive license
to use the Australian Marks in Australia in connection with the granting of
franchise rights and the Licensee's sale of products and services in the Field
(the "Australian License"). In consideration for the Australian License,
Licensee and the Jireh Parties shall be jointly and severally responsible for
the payment of license fees to Licensor in the amounts and on the dates
reflected on Schedule 1(b) attached hereto (the "Australian License Fee
Payments"). The Australian License granted herein includes the right of Licensee
to grant sublicenses to use the Australian Marks in Australia in accordance with
the terms and conditions of this Agreement and the Brand Management Agreement.
2. Security for Payments. As security for the payment of the Guam
License Fee Payments and the Australian License Fee Payments (collectively, the
"License Payments"), and for the payments due under the Consulting Agreement and
the Roasting License Agreement (each, as defined in the Asset Purchase
Agreement, and, together with this Agreement, referred to herein as the
"Post-Closing Payment Agreements"), Licensee and the Jireh Parties shall provide
the following for the benefit of Licensor:
(a) Concurrent with the execution of this Agreement, Licensee
and the Jireh Parties shall obtain and deliver to Licensor two irrevocable
documentary letters of credit (each, a "Letter of Credit") from National
Australia Bank Ltd. (the "Bank") in favor of Licensor, each in the amount of
US$500,000 and expiring no earlier than August 30, 2005 and February 28, 2006,
respectively, and otherwise on the terms and substantially in the form of
Exhibit C attached hereto. Notwithstanding the fact that, pursuant to Schedule
1(a) and Schedule 1(b) attached hereto, the License Payments due to Licensor
under this Agreement are due on January 31 of each year hereafter (with January
31, 2011 being the date of the last payment), the parties acknowledge that it is
the intent of the parties that Licensor will receive US$500,000 of the amount
due approximately six (6) months prior to the date it is due under this
Agreement via a documentary letter of credit issued by the Bank. Furthermore,
notwithstanding the fact that the payment of the License Payments is currently
contemplated to be made to Licensor using the Letter of Credit mechanism,
Licensee's obligation to make the License Payments on January 31 each year
(until January 31, 2011) is an absolute obligation, regardless of whether there
are Letters of Credit in place to make such payments.
(ii) Licensee shall use commercially reasonable
efforts to renew each Letter of Credit as soon as practicable after it is fully
drawn upon to effect the intent of the parties as described above until such
time as all amounts due pursuant to the Post-Closing Payment Agreements have
been paid in full.
(b) Licensee and GJCI hereby grant to Licensor and GJGCFC a
security interest in the Acquired Assets, which security interest shall be
subject and subordinate only to the lien of the Bank in the Acquired Assets.
Concurrent with the execution of this Agreement, Licensee and the Jireh Parties
shall execute and deliver to Licensor and GJGCFC: (i) a Deed of Charge in the
form of Exhibit D attached hereto to evidence the security interest granted
thereby; and (ii) a Guarantee and Indemnity Deed in the form of Exhibit E
attached hereto.
(c) Licensee and the Jireh Parties authorize Licensor and
GJGCFC to file a Form UCC-1 with the Secretary of State of the State of
California with respect to the Acquired
Assets, and agree to file the Australian counterpart to such form in Australia
promptly after the execution and delivery of the Deed of Charge.
3. Quality Control. Licensee agrees that its use of the Marks will be
consistent with the quality currently associated with Licensor's products and
services, that Licensee will cooperate with Licensor in addressing any material
quality concerns reasonably raised by Licensor, and that, in addition to the
terms and conditions contained herein, the Brand Management Agreement shall also
govern the Licensee's use of the Marks.
4. Infringement By Third Parties. Licensee shall have the obligation to
enforce the Australian Marks against potential infringing third parties and
shall be responsible for all expenses and costs related to the protection and
enforcement of the Australian Marks. Licensor shall have the obligation to
enforce the Guam Marks against potential infringing third parties; provided that
Licensee shall be responsible for all expenses and costs related to the
protection and enforcement of the Guam Marks with respect to Guam. Licensee
agrees to notify Licensor, and Licensor agrees to notify Licensee, of any
potential acts of infringement of the Marks by third parties as promptly as such
may come to the attention of Licensee or Licensor, as the case may be.
5. Term. Unless terminated earlier by Licensor in accordance with
Section 6(b) hereof, this Agreement shall commence on the date hereof and shall
continue until the Marks are transferred to Licensee in accordance with the
terms of Section 1.8 of the Brand Management Agreement of even date herewith.
Notwithstanding the foregoing or Section 1.8 of the Brand Management to the
contrary, upon the payment by Licensee to Licensor of the Final Australian
License Fee Payment (as defined in Schedule 1(b) attached hereto) on or prior to
January 31, 2010, Licensor shall transfer, convey and assign the Australian
Marks to Licensee.
6. Termination.
(a) The obligation of the Licensee and the Jireh Parties to
pay Licensor all of the License Payments is an absolute, irrevocable commitment
on the part of Licensee and the Jireh Parties. Without limiting the foregoing,
no cancellation or termination of this Agreement, breach of this Agreement by
Licensor, or action or inaction on the part of Licensor (regardless of whether
such actions or inactions are intentional, negligent or otherwise), shall
relieve Licensee or the Jireh Parties from their obligation to pay the License
Payments to Licensor. Furthermore, this Agreement may not be terminated by
Licensee or the Jireh Parties, or any of them; provided, however, that if
Licensor breaches this Agreement, and such breach is not remedied within fifteen
(15) days of Licensor receiving notice of such breach, Licensee may seek damages
for such breach; provided further that, while any such action may be pending,
Licensee and the Jireh Parties shall continue to make all payments due Licensor
hereunder.
(b) This Agreement may be terminated by Licensor in the event
that: (i) Licensee or the Jireh Parties breach this Agreement and such breach is
not remedied by Licensee or the Jireh Parties within fifteen (15) days of
Licensee or the Jireh Parties receiving notice of such breach; or (ii) Licensee
or any of its Affiliates (as defined in the Asset Purchase Agreement) breach the
Consulting Agreement, the Brand Management Agreement, the Roasting License
Agreement or any financing agreement with the Bank that pertains to the
transactions contemplated by this Agreement or the transactions contemplated by
the Asset Purchase
Agreement and such breach is not cured within the time period set forth in the
applicable document, if any.
7. Acceleration of Payments. Upon the occurrence of any event referred
to in Section 6(b)(i) or (ii) above, in addition to, on not in limitation of,
the other remedies that Licensor may have, Licensor shall have the option to
cause Licensee and the Jireh Parties to immediately pay Licensor a sum certain
amount equal to $3,050,000 (which amount is the sum of the Australian License
Fee Payments listed on Schedule 1(b) plus the Guam License Fee Payments listed
on Schedule 1(a), and which Licensee and the Jireh Parties agree are guaranteed
payments hereunder) plus any late fees or additional amounts then payable by
Licensee to Licensor at the date that Licensor requires Licensee to pay such
amount minus (ii) the amount of any License Fees already paid by Licensee to
Licensor. In addition, the amount of any late payments under this Agreement
shall accrue interest at a simple rate per annum equal to the lesser of 9% or
the maximum rate permitted by applicable law.
8. Ownership. Licensee acknowledges that Licensor is the sole owner of
the Marks and of the goodwill associated therewith, and that Licensee hereby
acquires no right, title interest or claim of ownership in or to the Marks
except the licenses granted herein. Licensee agrees not to contest Licensor's
ownership of the Marks and not to take any action to lessen or dilute the
uniqueness of the Marks in any manner. Licensee expressly acknowledges the value
and uniqueness of the Marks. All use of the Marks by Licensee shall inure to the
benefit of Licensor.
9. Further Assurances. Each party hereto shall execute such additional
documents and instruments and take such further action as reasonably may be
required or desirable to carry out the provisions hereof.
10. Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
Licensor and Licensee.
11. Waiver of Compliance; Consents. Any failure of Licensor on the one
hand, or Licensee on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived by Licensor or Licensee,
respectively, only by a written instrument signed by an officer of the party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing.
12. Notices. All notices and other communications hereunder must be in
writing and will be deemed given when delivered by hand, by commercial courier
or overnight delivery service or by facsimile to the parties at the following
addresses (or at such other address that a party may specify by like notice):
If to Licensor, to:
Gloria Jean's Gourmet Coffees Corp.
28 Executive Park, Suite 200
Irvine, California 92614
Attn: Chief Executive Officer
Facsimile: (949) 260-1610
With a copy to:
Gibson, Dunn & Crutcher LLP
4 Park Plaza
Irvine, California 92614
Attn: John M. Williams
Facsimile: (949) 475-4673
If to Licensee or
the Jireh Parties, to:
Gloria Jean's Coffees Holdings Pty. Ltd.
11 Hoyle Avenue
Castle Hill, NSW 2154
Australia
Attn: Nabi Saleh
Facsimile: +61 2 9894 2210
With a copy to:
Foley & Lardner LLP
2029 Century Park East, Suite 3500
Los Angeles, California 90067
Attn: Richard W. Lasater II
Facsimile: (310) 557-8475
13. Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by any of the parties
hereto without the prior written consent of the other parties, nor is this
Agreement intended to confer upon any other person except the parties hereto any
rights or remedies hereunder. Notwithstanding the foregoing, Licensor shall have
the right to assign the receipt of the License Fees without the consent of
Licensee or the Jireh Parties, or any of them.
14. Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of California, without regard
to conflicts of laws doctrines.
15. Fees, Costs and Expenses. Except as otherwise expressly provided in
this Agreement, all legal, accounting and other fees, costs and expenses
incurred in connection with this Agreement will be paid by the party incurring
such fees, costs and expenses. If any party to this Agreement brings any action,
suit, counterclaim, appeal, arbitration, mediation or other proceeding, in
equity or at law (an "Action"), to enforce this Agreement or to declare rights
under this Agreement, in addition to any damages and costs which the prevailing
party or parties otherwise would be entitled, the losing party or parties in any
such Action shall pay to the prevailing party or parties reasonable attorneys'
fees and costs incurred in connection with such Action and/or enforcing any
judgment, order, ruling or award (collectively, a "Decision") granted
by a court, arbitrator or mediator, all of which must be paid whether or not
such Action is prosecuted to a Decision. "Prevailing party" means, without
limitation, any party who agrees to dismiss an action on the other party's
payment of the sum allegedly due or performance of the covenants allegedly
breached, or who obtains substantially the relief sought by it. If there are
multiple claims, the prevailing party is to be determined with respect to each
claim separately. The prevailing party is the party that has obtained the
greater relief in connection with any particular claim, although, with respect
to any claim, it may be determined by the court, arbitrator or mediator that
there is no prevailing party.
16. Construction. The captions and titles of the articles, sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement. This Agreement has been jointly
prepared by Licensor and Licensee and shall be construed without regard to any
presumption or other rule requiring the resolution of any ambiguity regarding
the interpretation or construction hereof against the party causing this
Agreement to be drafted.
17. Submission to Jurisdiction. All actions or proceedings arising in
connection with this Agreement shall be tried and litigated in the state or
federal courts located in the County of Orange, State of California. The
foregoing choice of venue is intended by the parties to be mandatory and not
permissive in nature, thereby precluding the possibility of litigation between
the parties with respect to or arising out of this Agreement or any Transaction
Document (as defined in the Asset Purchase Agreement) in any jurisdiction other
than that specified in this Section 17. Each party hereby waives any right it
may have to assert the doctrine of forum non conveniens or similar doctrine or
to object to venue with respect to any proceeding brought in accordance with
this Section 17, and stipulates that the state and federal courts located in the
County of Orange, State of California shall have in personam jurisdiction over
each of them for the purpose of litigating any such dispute, controversy or
proceeding. Each party hereby authorizes and accepts service of process
sufficient for personal jurisdiction in any action against it as contemplated by
this Section 17 by registered or certified mail, return receipt requested,
postage prepaid, to its address for the giving of notices as set forth in
Section 12. Nothing herein shall affect the right of any party to serve process
in any other manner permitted by law.
18. Taxes. Licensee and the Jireh Parties hereby agree to indemnify
Licensor and GJGCFC to the fullest extent from any withholding taxes that may be
imposed on the payments made by Licensee or the Jireh Parties hereunder.
19. Entire Agreement. This Agreement, including the exhibits attached
hereto and incorporated herein, embodies the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and the understandings between the
parties with respect to such subject matter. No discussions regarding or
exchange of drafts or comments in connection with the transactions contemplated
herein will constitute an agreement among the parties hereto.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one instrument. Signatures transmitted electronically
or by facsimile shall be deemed original signatures.
IN WITNESS WHEREOF, the parties hereto have executed this Trademark
License Agreement as of the date first written above.
Licensor:
GLORIA JEAN'S GOURMET COFFEES CORP.
By: /s/ Matthew C. McGuinness
-----------------------------------
Matthew C. McGuinness
President
GJGCFC:
GLORIA JEAN'S GOURMET COFFEES
FRANCHISING CORP.
By: /s/ Matthew C. McGuinness
-----------------------------------
Matthew C. McGuinness
President
Licensee:
GLORIA JEAN'S COFFEES HOLDINGS PTY. LTD.
By: /s/ Nabi Saleh
-----------------------------------
Nabi Saleh
Director
The Jireh Parties:
GLORIA JEAN'S COFFEES INTERNATIONAL PTY.
LTD.
By: /s/ Nabi Saleh
-----------------------------------
Nabi Saleh
Director
JIREH INTERNATIONAL PTY. LTD.
By: /s/ Nabi Saleh
-----------------------------------
Nabi Saleh
Director
JIREH GROUP PTY. LTD.
By: /s/ Nabi Saleh
-----------------------------------
Nabi Saleh
Director
SCHEDULE 1(A)
PAYMENT DATES GUAM LICENSE FEE PAYMENTS (US$)
------------- -------------------------------
January 31, 2006 $50,000
January 31, 2007 $50,000
January 31, 2008 $50,000
January 31, 2009 $50,000
January 13, 2010 $50,000
January 31, 2011 $50,000
SCHEDULE 1(B)
PAYMENT DATES AUSTRALIAN LICENSE FEE PAYMENTS (US$)
- ------------- -------------------------------------
January 31, 2006 $350,000
January 31, 2007 $350,000
January 31, 2008 $350,000
January 31, 2009 $350,000
January 31, 2010 $1,350,000 (the "Final Australian License Fee Payment")
Exhibit A: Australian Marks
Exhibit B: Guam Marks
Exhibit C: Letter of Credit
Exhibit D: Deed of Charge
Exhibit E: Guarantee and Indemnity Deed