Exhibit 10.1
LICENSE AGREEMENT
LICENSE AGREEMENT (this "Agreement") as of November 21, 2005 (the
"Effective Date") by and between DREESEN'S ENTERPRISES, INC., a New York
corporation ("Licensor"), and NEWTOWN LANE MARKETING, INCORPORATED, a Delaware
corporation.
A. Licensor has the exclusive rights to manufacture, market, package and
promote doughnuts under the Licensed Mark (as that term is hereinafter defined)
with respect to the Licensed Product (as that term is hereinafter defined).
B. Licensor entered into a Master License Agreement (the "Master License")
with Donut Licensing Company, LLC ("DLC") pursuant to which DLC acquired the
exclusive right to manufacture, market, package and promote doughnuts under the
Licensed Mark with respect to the Licensed Product (as that term is hereinafter
defined) in the states of Pennsylvania and Florida, and provided DLC enters into
a certain number of sublicenses within the initial term of its agreement, the
territory covered by the Master License will include the entire United States,
exclusive of Suffolk County, New York.
C. Licensee desires to obtain a license to market and promote the Licensed
Product using the Licensed Mark (as that term is hereinafter defined) and to
grant sublicenses for the manufacture, sale, marketing and promotion of the
Licensed Product using the Licensed Mark, within the Exclusive Territory (as
hereinafter defined), and a non-exclusive sublicense to grant sublicenses for
the manufacture, sale, marketing and promotion of the Licensed Product using the
Licensed Mark, within the Non-exclusive Territory (as hereinafter defined,
collectively with the Exclusive Territory, the "Territory"), and Licensor is
willing to grant such rights and licenses to Licensee, all on the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the mutual promises set
forth below and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Licensor and Licensee agree as
follows:
1. Definitions. The following definitions shall be applicable throughout
this Agreement:
1.1 The term "Licensed Mark" means the trademark "DREESEN'S FAMOUS
DONUTS(R)", in the type style and type face set forth on Exhibit "A" hereto,
unaccompanied by any additional word, mark or symbol except as otherwise
specifically approved in writing by Licensor, in its sole discretion.
1.2 The term "Licensed Product" means doughnuts manufactured,
packaged, promoted and sold under the Licensed Mark made from certain
ingredients and the secret original recipe created and developed by Rudolph S.
DeSanti.
1.3 The term "Exclusive Territory" means all of the states and
territories within the United States except for Florida, Pennsylvania and
Suffolk County, New York.
1.4 The term "Non-exclusive Territory" means the states of Florida
and Pennsylvania.
1.5 The term "Territory" means all of the states and territories
within the United States except for Suffolk County, New York.
1.6 The term "Initial Term" means the period of approximately two
years commencing on the Effective Date and ending on December 31, 2007, unless
sooner terminated as provided herein. "Term" means the Initial Term and any
renewal or continuation thereof.
1.7 The term "Start-up Kit" means a grouping of products consisting
of the donut making machine known as the "Donut Robot," initial promotional
materials and an initial supply of the Product Ingredients, as more fully
described on Exhibit "B".
1.8 The term "New Customers" means all sublicensees of Licensee
which purchase Start-up Kits from Licensee during the term of this Agreement,
but shall not include any of the customers identified on Exhibit "C", or any
sublicensees who purchase Start-up Kits directly from Licensor.
2. Granted Rights and Reservation.
2.1 License Grant. Subject to the terms and provisions of this
Agreement, Licensor hereby grants to Licensee, and Licensee hereby accepts:
(i) a non-exclusive right and license, during the Term of this
Agreement, within the Territory, to market and promote the Licensed
Product, to use the Licensed Mark in connection therewith, and with
respect to advertising and promotion materials relating thereto
(ii) the sole and exclusive right and license in the Exclusive
Territory and a non-exclusive right and license in the Non-Exclusive
Territory, to grant non-exclusive, restricted sublicenses to third
parties ("Sublicensees"), to manufacture, market, package, promote
and make retail sales of the Licensed Product utilizing the Licensed
Mark to consumers provided: (i) the sale of the Licensed Product by
each Sublicensee shall be limited solely to a specified retail
location, (ii) such retail location does not use the Licensed Mark
to identify the retail location or form part of such Sublicensee's
business or entity name, (iii) such retail location must offer other
products and services for sale to consumers, (iv) the sale of the
Licensed Product must constitute less than fifty (50%) percent of
all products and services offered for sale at such retail location
by such Sublicensee, (v) the term of each sublicense shall be for no
more than 5 years and (vi) each sublicense shall provide that upon
termination of this Agreement the sublicense shall become a direct
agreement between the Sublicensee and Licensor except that Licensor
shall not be liable for any obligation of Licensee thereunder.
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2.2 Licensor's Reserved Rights. Excluded from the license granted
herein are any and all rights granted by Licensor to DLC pursuant to the Master
License or pursuant to the terms of certain license agreements between Licensor
and the parties identified on Exhibit "C", annexed hereto, and the rights
retained by Licensor and DLC to market, package and promote the Licensed Product
and to use the Licensed Mark on or in connection with the Licensed Product, and
advertising and promotion relating thereto, and to grant sublicenses within the
Non-exclusive Territory. All rights other than those expressly granted by this
Agreement are reserved by Licensor for its own use and benefit subject to the
limitations expressly stated in this Agreement. The foregoing shall not be
deemed to prohibit Licensee from exercising the rights granted in Section 2.1.
It is understood and agreed that the sale of the Licensed Product in
Suffolk County, New York, was reserved by Licensor and not subject to the
provisions of this Agreement.
3. Term and Renewal.
3.1 Initial Term. The Initial Term of this Agreement, and of the
license granted in it, will commence on the Effective Date of this Agreement and
will continue for the Initial Term.
3.2 Renewal Term. Licensee shall have the option to renew the Term
of this Agreement for two (2) successive Renewal Terms of two (2) years each,
consisting of the First Renewal Term and the Second Renewal Term. Licensee's
option to renew this Agreement for each Renewal Term shall be exercisable only
by notice to Licensor given not later than three (3) months prior to the
conclusion of the then current Term. Such exercise shall be effective only if
Licensee is in compliance with all the material terms and conditions of this
Agreement at the time the option is exercised and upon the commencement of such
renewal term and, provided Licensee has valid and existing sublicenses equal to
or exceeding the following respective amounts:
Current Term Cumulative Number of Sublicenses
------------ --------------------------------
Initial Term 100
First Renewal Term 100
*Exclusive of any existing licensees of the Licensor or DLC who
become sublicensees of the Licensee.
4. Licensed Product/Licensee's Obligations/Licensor's Obligations.
4.1 Proprietary Mixture. Licensee acknowledges that the ingredients
of the Licensed Product, the recipe for the doughnut mixture and the process of
manufacture of the Licensed Product constitute Master Licensor's valuable
proprietary confidential information and trade secrets. Licensee agrees to
safeguard and not disclose and agrees to cause its Sublicensees to safeguard and
no disclose such proprietary confidential information.
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4.2 Product Ingredients. Licensee shall manufacture and shall
require all Sublicensees to manufacture the Licensed Product using the following
ingredients (the "Product Ingredients"):
(i) Dreesen's Famous Donut proprietary original recipe
mixture (the "Mix");
(ii) Dreesen's brand shortening ("Shortening"); and
(iii) Dreesen's brand of doughnut sugar for coating the
doughnuts ("Sugar").
4.3 Start-up Kit Purchases.
4.3.1 Except as otherwise provided, all Start-up Kits to be
used in connection with the manufacture and sale of the Licensed Product
by Licensee and its Sublicensees shall be purchased by the Licensee from
Licensor or such party as Licensor may designate. The initial price for
the purchase of a Start-up Kit is set forth on Exhibit "B" annexed hereto.
Prices for the Start-up Kits may be increased by Licensor, at any time, on
no less than thirty (30) days prior notice to Licensee to reflect
increases in the prices paid by Licensor for the components of the
Start-up Kits. Prices do not include transportation and insurance costs or
any federal, state or local sales, use or excise or other taxes which are
to be paid by Licensee unless a Licensee provides Licensor with a valid
resale certificate. The parties agree, on or about the first anniversary
of the Effective Date of this Agreement, to review the situation with
respect to Licensee's performance hereunder to determine whether it is
appropriate to increase the amount paid to Licensor for the Start-up Kit.
4.3.2 Notwithstanding the provisions of Section 2.1(ii),
Licensee agrees that Licensor may make direct sales of Start-up Kits to
prospective sublicensees. In the case of such sales, such prospective
sublicensees shall sign a sublicense agreement with Licensee and the
obligations of the Licensor under this Agreement shall otherwise be
applicable except that payment for the Start-up Kit shall be made directly
to Licensor and Licensor shall pay to Licensee the sum of $1,000 for each
such sublicense procured by Licensor.
4.3.3 Licensee shall provide Licensor with an ongoing three
month forward looking rolling forecast with respect to Licensee's
requirements of Start-up Kits. Licensee will provide such forecast based
on commercially reasonable efforts but such forecast shall not obligate
Licensee to pre-purchase, place orders or assume the cost for such
forecasted Product Ingredients.
4.3.4 Payment for Start-up Kits shall be due and payable upon
submission of a purchase order to Licensor. Unless otherwise approved by
Licensor in advance, payment for Product Ingredients shall be due and
payable upon delivery. All amounts past due shall incur interest at the
rate of 1.5% per month or at the highest rate permitted by law, whichever
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is less. Each shipment of Product Ingredient shall be considered a
separate and independent transaction. All shipments and deliveries covered
by a purchaser order shall at all times be subject to the credit approval
of Licensor.
4.4 Product Ingredient Purchases.
4.4.1 Licensor shall directly sell to all Sublicensees such Product
Ingredients as they may request for the manufacture of Licensed Product
during and after the Term of this Agreement. Licensor shall pay to
Licensee $2.50 for each box (30 lbs.) of Mix sold to New Customers after
the Effective Date and for all reorders of each box of Mix by New
Customers. If boxes are sold in sizes other than 30 lbs. the amount paid
to Licensee will be adjusted appropriately so that Licensee is paid in
respect of each box sold the greater of $2.50 or such portion of
Licensor's gross margin on the sale of each box as $2.50 represents of the
gross margin on a 30 lb. box. The payments by Licensor to Licensee on
sales of Product Ingredients and other products provided for in this
Section shall terminate upon expiration or termination of this Agreement.
4.5 Licensed Product Materials.
4.5.1 All advertising and the use of promotional materials, cartons,
containers, wrapping material, display material or other materials
(collectively referred to as "Materials") and bearing the Licensed Mark
shall be subject to the prior written approval of Licensor, not to be
unreasonably withheld or delayed.
4.5.2 Fifty (50%) percent of the net profit derived from sales of
promotional materials by Licensee shall be paid to Licensor. Licensee may
sell such items to Sublicensees and third parties.
4.6 Equipment. The Licensed Product shall be produced solely
utilizing a machine known as the "Donut Robot." The "Donut Robot" machine shall
be purchased or leased by each Sublicensee from Licensor. Licensor makes no
representations or warranties with respect to the availability, use or operation
of the "Donut Robot." The use of any other equipment in connection with the
manufacture of the Licensed Product shall be subject to the prior written
approval of Licensor, which approval shall be within the sole discretion of
Licensor. Licensor reserves the right to designate another donut making machine
in place of the "Donut Robot."
4.7 Quality Standards. The Licensed Product may not be sold under
any trademark or trade name other than the Licensed Mark, except that the
Licensed Product's packaging may identify the Licensee or Sublicensee, as the
case may be, as the source of such merchandise. Licensee shall be responsible
for ensuring that the Licensed Product produced by Licensee and its Sublicensees
and any actions undertaken by it and its Sublicensees satisfy all of the
requirements of this Agreement. Licensee assumes all responsibility for any
actions taken by Sublicensees relating to the use of the Licensed Mark and the
manufacture, sale or distribution of the Licensed Product.
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4.8 Commercially Reasonable Efforts. Licensee, from and after the
execution of this Agreement, shall diligently proceed with and use commercially,
reasonable efforts (i) to proceed with the manufacture, sale and marketing of
the Licensed Product, (ii) to identify and enter into sublicense agreements with
third parties for the manufacture and sale of the Licensed Product by such third
party sublicensees, (iii) to create a demand for the Licensed Product and to
increase and expand its business in the manufacture, sale and marketing of the
Licensed Product in the Territory.
4.9 Support. Licensor will provide New Customers and Licensee such
marketing, customer and technical support as is reasonably required from time to
time. Such support shall include shipment of Start-up Kits and Product
Ingredients, assisting Licensee in the preparation of instructional materials
relating to set-up and operation of the Donut Robot machine and manufacture of
doughnuts and reasonable ongoing technical and sales support.
4.10 Inquiries. Any inquiries received by Licensor or their
representatives or agents regarding the sale of any of Licensed Product shall be
forwarded to Licensee.
4.11 Audit Procedures.
4.11.1 Within fifteen (15) days after each calendar month, Licensee
shall furnish or cause to be furnished to Licensor and Licensor shall furnish or
cause to be furnished to Licensee, a written report covering such month showing,
in the case of Licensee, the sales of Materials and the amount due Licensor in
respect of the same in accordance with Subsection 4.5.2 (and the calculation of
such amounts), and, in the case of Licensor, showing the amount of Product
Ingredients other items and Start-up Kits sold by Licensor, Master Licensor, and
the amount due Licensee in respect of the same in accordance with Subsections
4.3.2 and 4.4.1 (and the calculation of such amounts) and, in each case,
withholding taxes, if any, required by law to be deducted in respect of such
amounts. The report shall be accompanied by the payment of all monies due at
that time.
4.11.2 Each party shall have the right, at its own expense, for the
period during which payments are due such party pursuant hereto and for one (1)
year thereafter, to have an independent accountant to whom the other party has
no reasonable objection examine the relevant books and records of account of the
other party during normal business hours and no more than once during each
calendar year, to verify the accuracy of the reports called for by this Section
and to determine whether appropriate payment has been made by hereunder. If the
report of either party's (the "Examiner") independent accountant shows an
underpayment of amounts due, the other party (the "Payer") shall promptly remit
the amount of such underpayment.
4.12 Regulatory Matters; Compliance with Laws. Licensee shall be
responsible for obtaining all necessary governmental approvals, registrations,
consents, licenses and permits in connection with the rights and licenses
granted to Licensee in this Agreement (collectively, "Approvals"), and complying
with any all applicable statutory, administrative or regulatory requirements
(collectively, "Laws") relating thereto.
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5. Quality Assurance Procedures.
5.1 Product Quality Standard and Review.
5.1.1 Licensee agrees to manufacture, and to cause its Sublicensees
to manufacture, the Licensed Product in accordance with the requirements
of this Agreement. The Licensed Product shall consist of first quality,
unadulterated food products, and will, in all material respects, conform
to the standards established by Licensor.
5.1.2 Any approval for a particular Product Ingredient once given
may be withdrawn if it appears that such Product Ingredient does not
conform to Licensor's standards as then in effect or in any other manner
does not comply with this Agreement.
5.1.3 If, at any time, Licensor shall make any changes to the
Licensed Product, the particular ingredients constituting the Licensed
Product, or the recipe for the Mix which shall require the withdrawal of
approval of any ingredient previous1y approved by Licensor, Licensor shall
notify Licensee that such approval has been withdrawn and the reasons
therefor. Licensor shall give Licensee at least thirty (30) days notice of
withdrawal, except if such withdrawal of approval is for health, legal or
ethical reasons, in which event withdrawal of approval shall be effective
upon the delivery of such notice. If such withdrawal of approval is for
any reason other than health, legal or ethical reasons, Licensee and its
Sublicensees can continue using existing Product Ingredients until such
inventory is exhausted.
5.2 Inspections. Licensor, or its designees, shall have the right
(but not the obligation) at all reasonable times during normal business hours to
inspect the operations of Licensee and its Sublicensees, with the view to
assuring that the manufacture of the Licensed Product meet the quality standards
set forth herein and that the Licensed Product is being sold in conformity with
the provisions of this Agreement.
6. Ownership and Use of Trademark.
6.1 Trademark Ownership. All use of the Licensed Mark pursuant to
this Agreement by Licensee and its Sublicensees will inure to the benefit of
Licensor. All rights in the Licensed Mark other than those specifically granted
in this Agreement are reserved to Licensor for its own use and benefit. Licensee
recognizes the great value of the Licensed Mark to Licensor, and during the Term
of this Agreement or thereafter, Licensee will not attack Licensor's title in
and to the Licensed Mark or DLC's rights under the Master License in any
jurisdiction or attack the validity of this license.
6.2 Trademark Registrations. Licensor may, in its sole discretion
and sole cost and expense, file applications for registration of the Licensed
Mark for the Licensed Product, or amend existing registrations to cover such
Licensed Product. Licensee will execute and deliver, and will cause its
Sublicensees to execute and deliver, to Licensor, at any time whether during or
after the Term of this Agreement, without charge, such documents, and will take
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such other action, as Licensor may reasonably request to confirm or protect the
ownership rights of Licensor, to record this license, or to enter or terminate
Licensee as a registered user. Licensor shall also, at its sole cost and
expense, take all necessary actions to maintain trademark registrations of the
Licensed Mark in full force and effect during the Term. Licensee shall not
register or attempt to register the Licensed Mark in its own name or the name of
any third party in the United States or elsewhere; in the event that any such
registration issues, Licensee shall immediately assign or cause the assignment
of all of Licensee's or such third party's right, title and interest in and to
such registration to Licensor.
6.3 Trademark Display and Marking. Licensee will display the
Licensed Mark only in such form and manner as are specifically approved in
writing by Licensor. Licensee will cause to appear on all Licensed Product, or
on their containers, labels, tags and the like, and on all advertising,
promotional and display materials, and on all stationery and transaction
documents displaying the Licensed Mark, such legends, markings and notices as
may be legally required in the territory of manufacture or sale or as Licensor
may reasonably request.
6.4 Prohibited Trademark Uses.Licensee will not use the Licensed
Mark (i) as part of a trademark combining the Licensed Mark with another mark,
(ii) as a corporate name, trade name or any other designation to identify
Licensee or any subsidiary or affiliate, or (iii) in any manner other than as a
trademark.
6.5 Enforcement Against Infringers. In the event that Licensee
becomes aware of any activities or events which it suspects may constitute an
infringement by one or more third parties of the rights granted to Licensee
under this Agreement with respect to the Licensed Mark, Licensee shall promptly
give notice to Licensor of such infringement. Licensor shall then have the
right, in its sole discretion and at its expense, to take such actions as it may
deem necessary and appropriate to protect and defend the rights granted in this
Agreement, including, but not limited to, the institution of appropriate legal
proceedings. If requested by Licensor, Licensee will join with Licensor in such
actions or proceedings at Licensor's expense. Licensor shall be entitled to
retain all monetary recoveries resulting from such actions or proceedings or
their settlement. In the event that Licensor fails to take any action against an
infringer after notice thereof from Licensee then Licensee may do so at
Licensee's expense, and the monetary recoveries resulting from such actions or
proceedings shall be retained by Licensee.
6.6 Future Grants. For so long as this Agreement is in effect,
Licensor shall not grant to any third party the right to grant sublicenses as
provided in Section 2.1(ii) hereof.
7. Representations and Warranties.
7.1 Representations and Warranties by Licensor. Licensor hereby
makes the following representations and warranties for the benefit of Licensee:
7.1.1 Ownership of Licensed Assets. Licensor is the sole, true and
lawful owner of the Licensed Mark. The Master License is in full force and
effect.
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7.1.2 No Third Party Rights. Except for Licensee, Licensor, DLC and
the sublicensees identified on Exhibit "C", no person has any rights to
use any of the Licensed Mark as a trademark.
7.1.3 Licensor's Condition. Licensor is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of New York, and is duly qualified and is in good standing in each
jurisdiction in which the nature of its business requires it to be so
qualified.
7.1.4 Licensor's Authority. Licensor has the power and authority to
own its property and assets, to conduct its business as it is now being
conducted, and, subject to the consent of DLC as to the provisions of this
Agreement that conflict with those in the Master License, to execute and
deliver this Agreement and to perform the transactions contemplated
hereby.
7.1.5 Effect of this Agreement. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby:
(a) have been duly authorized by all necessary corporate action on the
part of Licensor; (b) subject to the consent of Master Licensor as to the
provisions of this Agreement that exceed or conflict with those in the
Master License, do not contravene or cause Licensor to be in default under
its charter or by-laws, any contractual restriction contained in any
indenture, loan or credit agreement, lease, mortgage, security agreement,
bond, note or other agreement or instrument binding on or affecting
Licensor or its property or assets or any law, rule, regulation, order,
writ, judgment, award, injunction or decree applicable to, binding on or
affecting Licensor or its property or assets; and (c) do not result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of Licensor, except as
expressly contained herein or pursuant to the documents attached as
Exhibits hereto.
7.1.6 No Other Consents Required. No consent of or other action by,
and no notice to or filing with, any governmental agency or other party is
required for the execution, delivery and performance by Licensor of this
Agreement.
7.1.7 Enforceability of this Agreement. This Agreement has been duly
executed and delivered on behalf of Licensor and is the legal, valid and
binding obligation of Licensor enforceable against Licensor in accordance
with its terms.
7.2 Representations and Warranties by Licensee. Licensee hereby
makes the following representations and warranties for the benefit of Licensor:
7.2.1 Licensee's Condition. Licensee is a corporation duly organized
and validly existing under the laws of the State of Delaware, and is duly
qualified and is in good standing in each jurisdiction in which the nature
of its business requires it to be so qualified.
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7.2.2 Licensee's Authority. Licensee has the power and authority to
own its properties and assets, to conduct its business as it is now being
conducted and to execute and deliver this Agreement to perform the
transactions contemplated hereby.
7.2.3 Effect of this Agreement. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby:
(a) have been duly authorized by all necessary action on the party of
Licensee; (b) do not contravene or cause Licensee to be in default under
its articles of organization or operating agreement, any contractual
restriction contained in any indenture, loan or credit agreement, lease,
mortgage, security agreement, bond, note or other agreement or instrument
binding on or affecting Licensee or its property or assets or any law,
rule, regulation, order, writ, judgment, award, injunction or decree
applicable to, binding on or affecting Licensee or its property or assets;
and (c) do not result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties or assets
of Licensee, except as expressly contained herein or pursuant to the
documents attached as Exhibits hereto.
7.2.4 No Other Consents Required. No consent of or other action by,
and no notice to or filing with, any governmental agency or other party is
required for the execution, delivery and performance by Licensee of this
Agreement.
7.2.5 Enforceability of this Agreement. This Agreement has been duly
executed and delivered on behalf of Licensee and is the legal, valid and
binding obligation of Licensee enforceable against Licensee in accordance
with its terms.
8. Confidentiality.
8.1 All information, whether written, oral or in any other form or
medium, provided and/or revealed to Licensee pursuant to this Agreement and/or
otherwise relating to Licensor's and Master Licensor's business and affairs
(collectively "Confidential Information") will be treated as confidential by
Licensee and will not be used or disclosed to any person by Licensee, its
mangers, officers, agents and employees, without the prior written consent of
Licensor. All Confidential Information will be maintained by Licensee in
confidence. Licensee will not disclose Confidential Information, or permit
Confidential Information to be disclosed, to any person, except to the
employees, agents or representatives of Licensee or to its Sublicensees, who
need to know the Confidential Information, who are informed of the confidential
nature of the Confidential Information and who agree to be bound to maintain its
confidentiality. The obligation not to disclose Confidential Information will
not apply to information that (i) is or becomes generally available to the
public other than as a result of disclosure by Licensee or any of its
Sublicensees, (ii) was readily available to Licensee on a non-confidential basis
prior to disclosure, (iii) was in the Licensee's lawful possession as evidenced
by records kept in the ordinary course of business or by proof of actual
possession prior to Licensor's disclosure of such information to Licensee, (iv)
becomes available to Licensee on a non-confidential basis from a source other
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than Licensor which source is not known by Licensee or by any legal, fiduciary
or ethical constraints on disclosure, or (v) is required to be disclosed
pursuant to order or decree of any judicial, administrative or other proper
authority having jurisdiction over Licensee, in which case Licensee will give
the Licensor notice prior to making disclosure, and if so requested to do so,
will use all reasonable efforts to obtain an appropriate protective order or
similar protection before making the disclosure.
9. Indemnification / Insurance.
9.1 Indemnification by Licensee. Licensee shall indemnify, defend
and hold harmless Licensor and its officers, employees, representatives and
agents, and its successors and assigns (collectively, the "Licensor Indemnified
Parties"), from and against any and all costs, expenses, losses, damages and
liabilities (including reasonable attorneys' fees and expenses) ("Damages")
suffered by any of the Licensor Indemnified Parties resulting from, arising out
of, relating to or incurred with respect to:
9.1.1 any breach by the Licensee of this Agreement (including in
respect of any representation or warranty of Licensee as of the Effective
Date); and
9.1.2 any suit, investigation, claim or demand by a third party
against any Licensor Indemnified Party resulting from, arising out of,
relating to or incurred with respect to the business, operations, conduct,
acts or omissions of Licensee or Sublicensees, including (i) the use of
the Licensed Mark, (ii) any failure by any such Person to comply with any
applicable Law, (iii) acts or omissions constituting fraud, tortious
conduct, unfair trade practices, negligence or willful misconduct, or
resulting in damage or destruction of property, injury, death, loss or
other damages of any kind and (iv) any agreement by or among Licensee and
its Sublicensees or any other Person relating in any way to the Licensed
Mark, including any termination thereof or breach thereof, except with
respect to all of the foregoing for those Damages for which Licensor has
an obligation to indemnify a Licensee Indemnified Party pursuant to the
terms of Section 9.2.
9.2 Indemnification by Licensor. Licensor shall indemnify, defend
and hold harmless Licensee and its officers, employees, representatives and
agents thereof, and Licensee's successors and assigns (collectively, the
"Licensee Indemnified Parties"), from and against any and all Damages suffered
by any of the Licensee Indemnified Parties resulting from, arising out of,
relating to or incurred with respect to:
9.2.1 any breach by Licensor of this Agreement (including in respect
of any representation or warranty of Licensor as of the Effective Date);
9.2.2 any claim whether in tort, contract or otherwise, by DLC that
the execution and delivery of this Agreement, or the grant of the rights
provided for herein in any way infringes upon or interferes with the
rights granted to it in the Master License.
9.2.2 any third-party claim against any Licensee Indemnified Party
that the use of the Licensed Mark pursuant to this Agreement violates or
infringes the trademark, copyright, right of publicity or privacy or other
intellectual property rights of such third-party except to the extent
resulting from, arising out of, relating to or incurred with respect to
(i) any use of the Licensed Mark by any Person in breach of this Agreement
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or by any Sublicensee, (ii) any combination the Licensed Mark with any
other mark or (iii) the provision of any product or service other than the
Licensed Product under the Licensed Mark.
9.3 Notification. If any demand, claim or suit is asserted or
instituted with respect to which a party may be entitled to indemnification
under the foregoing provisions, such party will give prompt notice thereof to
the party who may be liable for indemnification, including full details to the
extent known. The indemnified party will be entitled at its own expense to
participate in the defense of such asserted demand, claim or suit.
9.4 Insurance. Licensee shall maintain at its own expense in full
force and effect at all times during which the License Product is being sold by
Licensee and any of its Sublicensees, with recognized and responsible insurance
carriers licensed to do business in the Territory, products liability insurance
coverage with limits of liability of up to Two Million Dollars ($2,000,000.00)
per accident or occurrence with respect to the manufacture, sale, marketing and
promotion of the Licensed Product. Liability coverage under such insurance
policy shall include but shall not be limited to claims resulting from accidents
or occurrences arising out of any alleged defect in the Licensed Product. Such
insurance shall be in such form and of such duration as shall insure against all
accidents or occurrences occurring at all times during which the Licensed
Product is being sold by Licensee, regardless of when claim may be made. Such
insurance shall be for the benefit of and shall name as an additional insured
Licensor, and its officers, directors and employees and shall provide at least
thirty (30) days' prior written notice to Licensor of the cancellation or
modification thereof. Contemporaneous with the execution and delivery of this
Agreement, Licensee shall provide Licensor with a certificate of insurance from
the insurance carrier setting forth the scope of coverage and limits of
liability consistent with the requirements of this Section 9.4. Licensee's
maintenance of the insurance coverage as provided herein shall not limit, excuse
or replace any of Licensee's obligations under the provisions of Section 8.1
hereof, which shall remain absolute.
10. Termination and Remedies upon Breach.
10.1 Termination. Licensor, at its option and in its sole
discretion, may immediately terminate this Agreement, upon or at any time after
the occurrence of any of the following events ("Events of Default"):
10.1.1 If Licensee fails to make any payment when due, Licensor may
give Licensee written notice specifying the default. If the payment
obligation is undisputed and Licensee does not cure the default within
thirty (30) days after the giving of Licensor's notice, then except as
otherwise provided in this Agreement, Licensor may terminate this
Agreement, effective immediately, by giving a written notice of
termination to Licensee at any time before the default has been cured. An
underpayment of an amount due pursuant to Subsection 4.5.2 shall not be
grounds for termination of this Agreement if the underpayment is made up
within the period provided in Section 4.10.
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10.1.2 If Licensor believes that Licensee has committed a
substantial breach of any material representation, warranty or covenant
under this Agreement, other than a nonpayment default, then Licensor shall
give Licensee written notice specifying the alleged breach in reasonable
detail. Licensee will have sixty (60) days from the giving of Licensor's
notice to cure the breach, or if it cannot be cured within that period,
Licensee will be obligated to commence steps to cure the breach within
that period and to proceed diligently to cure it thereafter. If Licensee
fails or refuses to take the required steps to cure the breach, or if
Licensee disputes Licensor's allegation of breach, the parties will
promptly commence good faith negotiations to resolve the dispute. If these
negotiations fail, the provisions of Section 10.2 below will apply.
10.1.3 If Licensee files a petition in bankruptcy, is adjudicated a
bankrupt or files a petition or otherwise seeks relief under or pursuant
to any bankruptcy, insolvency or reorganization statute or proceeding, or
if a petition in bankruptcy is filed against it or it becomes insolvent or
makes an assignment for the benefit of its creditors or a custodian,
receiver or trustee is appointed for it or a substantial portion of its
business or assets.
10.1.4 If there is a transfer or issuance of ownership interests of
Licensee and as a result thereof any entity which competes with Licensor
in the production and distribution of donuts, including but not limited
to, Dunkin Donuts and Crispy Creme, owns or controls a majority of the
outstanding stock of Licensee.
10.2 Arbitration. Upon the demand of either party, the parties will
submit to binding arbitration pursuant to this section any unresolved
dispute under Section 10.1.2 above, or any other dispute concerning the
construction, interpretation or effect of this Agreement or any clause
contained in it. The arbitration will take place exclusively in New York,
New York in accordance with the rules and regulations of the American
Arbitration Association then in effect, subject however, to the following
provisions: (a) the dispute will be submitted to three (3) arbitrators, of
which one (1) will be appointed by Licensor and one (1) will be appointed
by Licensee, and the third by the former two; and (b) all periods of time
provided for in the American Arbitration Awards rules of less than thirty
(30) days will be deemed extended to thirty (30) days. Any Arbitration
Award will be final and conclusive and binding upon the parties without
the right to Appellate review. Any Arbitration Award will not include the
termination of this Agreement.
10.3 Effect of Termination. Upon the expiration or earlier
termination of this Agreement:
10.3.1 The right of Licensee to manufacture, market, package and
promote the Licensed Product and to use the Licensed Mark on or in
connection with the Licensed Product shall immediately terminate.
10.3.2 The right of Licensee to grant sublicenses shall immediately
terminate; provided, however, the termination of the rights granted to
Licensee pursuant to this Agreement will not terminate any Sublicenses
granted by Licensee and Licensor shall be deemed to be substituted for
Licensee as a sublicensor on all such Sublicenses; provided further,
however, Licensor shall not be deemed to have assumed any obligation or
claim by any Sublicensee against Licensee existing as of the date of
termination of the licenses granted to Licensee pursuant to this
Agreement.
-13-
10.3.3 Licensee shall immediately deliver to Licensor a complete and
accurate list of (i) all Sublicenses together with copies of same, and
(ii) of Licensee's inventory of Product Ingredients. Licensee shall have
the right to fulfill all orders from Sublicensees for Product Ingredients
received by Licensee as of the date of termination but only to the extent
of inventory available as of such date. Licensor shall purchase the
remaining inventory of Product Ingredients at its cost, which sum shall
first be applied to any obligation due from Licensee to Licensor, and the
balance shall be paid to Licensee within ten (10) days of receipt and
inspection of such remaining inventory.
10.4 Surviving Obligations. The expiration or termination of this
Agreement will not release Licensee from any previously accrued obligation and
Licensee will remain bound by the provisions of this Agreement which by their
terms impose upon Licensee obligations extending beyond the date of expiration
or termination.
11. Miscellaneous
11.1 Assignment. Subject to the Licensee's right to grant
Sublicenses in accordance with the provisions of Section 2.1(ii) hereof, this
Agreement and the rights granted hereunder may not be assigned by Licensee
without the prior written consent of Licensor, in the Licensor's absolute
discretion.
11.2 Binding Effect and Survival of Rights. This Agreement will
benefit and bind the parties and their respective permitted successors and
assigns.
11.3 Notices. All notices, demands, requests and other
communications required or permitted to be given by any provision of this
Agreement will be in writing and sent by first class, regular, registered or
certified mail, commercial delivery service, overnight courier, telegraph,
telex, facsimile transmission, air or other courier, or hand delivery, to the
party to be notified addressed as follows:
If to Licensor: Dreesen's Enterprises, Inc.
33 Newton Lane
East Hampton, New York 11937
Attention: Rudolph S. DeSanti
With Required Copy to: Cowan, Liebowitz & Latman, P.C.
1133 Avenue of the Americas
New York, New York 10036
Attention: Jeremy Nussbaum, Esq.
-14-
If to Licensee: Newton Lane Marketing Incorporated
c/o Eaton & Van Winkle
3 Park Avenue, 16th Floor
New York, New York 10016
Attention: Vincent J. McGill, Esq.
With Required Copy to: Eaton & Van Winkle, LLP
3 Park Avenue, 16th Floor
New York, NY 10016
Attention: Vincent J. McGill, Esq.
Any such notice, demand, request or communication will be deemed to
have been given and received for all purposes under this Agreement: (a) the day
it is deposited in any official depository or receptacle of the United States
Postal Service first class certified mail, return receipt requested, postage
prepaid; (b) on the date of transmission when delivered by facsimile
transmission, (provided receipt is confirmed and such notice is promptly
confirmed by notice given by some other means described herein); (c) on the next
business day after the same is deposited with a nationally recognized overnight
delivery service that guarantees overnight delivery; and (d) on the date of
actual delivery to such party by any other means; provided, however, if the day
such notice, demand, request or communication will be deemed to have been given
and received as aforesaid is not a business day, such notice, demand, request or
communication will be deemed to have been given and received on the next
business day.
Any party to this Agreement may change such party's address for the
purpose of notice, demands, requests and communications required or permitted
under this Agreement by providing written notice of such change of address to
all of the parties by written notice as provided herein.
11.4 Equitable Relief Including Injunction. The parties acknowledge
that any breach of their respective obligations under this Agreement with
respect to proprietary rights or confidential information will cause immediate
irreparable injury for which there are inadequate remedies at law, and
therefore, notwithstanding the provisions of Section 10.2 hereof, the injured or
potentially injured party will be entitled to equitable relief, specifically
including an injunction, without having to post bond, prohibiting the breaching
or potential breaching party from any further breach or potential breach, in
addition to all other remedies provided by this Agreement or available at law.
11.5 Limitation of Remedies. Neither of the parties hereto shall be
liable to the other party for any indirect, special, incidental, consequential,
exemplary or punitive damages, or for lost profits, unrealized expectations or
other similar terms, claimed by such other party resulting from such first
party's breach of its obligations, agreements, representations or warranties
hereunder, provided that nothing in this Section 11.5 shall preclude any
recovery by a party entitled to indemnification pursuant to Article 9 for such
Damages payable to any third party as a result of a third party claim.
-15-
11.6 Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, LICENSOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
WITH RESPECT TO THE LICENSED MARK AND THE OTHER MATTERS CONTEMPLATED BY THIS
AGREEMENT, INCLUDING (I) ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, (II) ANY WARRANTY WITH RESPECT TO THE VALIDITY OR
ENFORCEABILITY OF, OR OF ANY NON-INFRINGEMENT RELATING TO, THE USE OF ANY
LICENSED MARK IN CONNECTION WITH ANY AUTHORIZED ANCILLARY SERVICE AND (III) ANY
WARRANTY ARISING THROUGH COURSE OF DEALING OR USAGE OF TRADE.
11.7 Incorporation. All exhibits and schedules attached hereto, or
to be attached hereto, and all other agreements and instruments referred to
herein are hereby incorporated by reference into this Agreement as fully as if
copied herein verbatim.
11.8 Further Assurances. The parties further agree that, upon
request, they will do such further acts and deeds and will execute, acknowledge,
deliver and record such other documents and instruments as may be reasonably
necessary from time to time to evidence, confirm or carry out the intent and
purpose of this Agreement.
11.9 Lawful Authority.If any party executing this Agreement is a
corporation or limited liability company, the individual executing on behalf of
the corporation or limited liability company hereby personally represents and
warrants to all other parties that he/she has been fully authorized to execute
and deliver this Agreement on behalf of (a) the corporation pursuant to a duly
adopted resolution of its Board of Directors, or by virtue of its bylaws; or (b)
the limited liability company pursuant to a duly adopted resolution of its
members or by virtue of its operating agreement.
11.10 Attorney's Fees. If any legal action or other proceeding
(including arbitration pursuant to this Agreement) is brought for the
enforcement of this Agreement, including the enforcement of the indemnification
provisions contained in Section 9, or because of any alleged dispute, breach,
default or misrepresentation in connection with any provisions of this Agreement
and such action is successful, the prevailing parties will be entitled to
recover reasonable attorney's fees, court costs and all reasonable expenses,
even if not taxable or assessable as court costs (including, without limitation,
all such fees, costs and expenses incident to appeal) incurred in that action or
proceeding in addition to any other relief to which such party may be entitled.
11.11 Waivers and Consents.
11.11.1 Each and every waiver of any covenant, representation,
warranty or other provision of this Agreement must be in
writing and signed by each party whose interests are
adversely affected by such waiver.
11.11.2 No waiver granted in any one instance will be construed as a
continuing waiver applicable in any other instance.
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11.11.3 No waiver by any party to this Agreement to or of any breach
or default by any other party to this Agreement in the
performance by such other party of its obligations hereunder
will be deemed or construed to be a waiver of any breach or
default of any other party of the same or any subsequent
obligations hereunder.
11.11.4 Failure on the part of any party to this Agreement to
complain of any act or failure to act of any party to this
Agreement or to declare such party in default, irrespective
of how long such failure continues, will not constitute a
waiver by the non-defaulting parties of their rights
hereunder.
11.11.5 Each and every consent by any party to this Agreement must
be in writing signed by the party to be bound thereby. No
consent will be deemed or construed to be a consent to any
action except as described in such writing.
11.12 Section Headings, Gender and "Person". The Section headings
contained in this Agreement are for reference purposes only and will not affect
the interpretation of this Agreement. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular, or plural, and any other gender, masculine, feminine
or neuter, as the context requires. Any reference to a "person" herein shall
include any individual, firm, corporation, partnership, trust, governmental
authority or body, association, unincorporated organization of any other entity.
11.13 Governing Law. This Agreement will be governed in all
respects, including validity, interpretation and effect by, and will be
enforceable in accordance with, the internal laws of the State of New York,
without regard to conflicts of laws principles.
11.14 Severability. If any provision of this Agreement is held to be
unlawful, invalid or unenforceable under present or future laws effective during
the term hereof, such provision will be fully severable, and this Agreement will
be construed and enforced without giving effect to such unlawful, invalid or
unenforceable provision. Furthermore, if any provision of this Agreement is
capable of two (2) constructions, one of which would render such provision void,
and the other which would render such provision valid, then the provision will
have the meaning which renders it valid.
11.15 Counterpart Execution. This Agreement may be executed in
multiple counterparts, each one of which will be deemed and original, but all of
which will be considered together as one and the same instrument. Further, in
making proof of this Agreement, it will not be necessary to produce or account
for more than one (1) such counterpart. Execution by party of a signature page
hereto will constitute due execution and will create a valid, binding obligation
of the party so signing, and it will not be necessary or required that the
signatures of all parties appear on a single signature page hereto.
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11.16 Amendments. Each and every modification and amendment of this
Agreement must be in writing and except as otherwise provided herein, signed by
all the parties hereto.
11.17 Entire Agreement.This Agreement contains the entire agreement
between the parties regarding the subject matter hereof. Any prior agreements,
discussions or representations not expressly contained herein, and no party has
relied on any such prior agreements, discussions or representations as an
inducement to the execution hereof.
11.18 Relationship of the Parties.
11.18.1 The parties acknowledge that neither Licensee nor any
sublicensee has been asked by Licensor to pay a direct or indirect
franchise fee to Licensor. The parties further acknowledge that is not the
intent of the parties that Licensor enter into a franchise relationship
with Licensee or any of its sublicensees, and such rights as Licensor is
provided by this Agreement are for the purpose of maintaining the
integrity and value of the Licensed Mark, and such rights do not, and are
not intended to, permit Licensor to control the business operations of
Licensee or any of its sublicensees, notwithstanding that some
sublicensees may be franchisees of Licensee.
11.18.2 The parties further acknowledge and agree that this
Agreement does not create a fiduciary relationship between the parties,
and each party hereto shall be an independent contractor. The parties are
not partners, joint venturers, or agents or in a franchisor-franchisee
relationship and nothing in this Agreement is intended by the parties to
create, nor shall be construed to place them in, any such relationship.
[Signature on following page]
-18-
COUNTERPART SIGNATURE PAGE TO
LICENSE AGREEMENT
LICENSOR:
DREESEN'S ENTERPRISES, INC.
By: /s/ Rudolph S. DeSanti, Sr.
--------------------------------
Name: Rudolph S. DeSanti, Sr.
Title: President
LICENSEE:
NEWTON LANE MARKETING,
INCORPORATED
By: /s/ Richard M. Cohen
--------------------------------
Name: Richard M. Cohen
Title: Chief Executive Officer
-19-
Exhibit "A"
Licensed Mark
-20-
Exhibit "B"
Start-Up Kit
Item Quantity Amount due Licensor
- ---- -------- -------------------
"Donut Robot" Mark II Machine 1
Mix (30 lb. box) 4
Shortening (50 lb. box) 3
Sugar (30 lb. box)(Cinnamon) 1
Sugar (30 lb. box )(Powdered) 1
Shortening Reserve Tank 1
7-Quart Mixer 1
Sheet Pan (18-1/2 x 24) 2
Window Sign 1
Donut Apron 1
Donut Hat 1
Donut T-Shirt 1 -----------
$9,000
-21-
Exhibit "C"
Dreesen's Famous Donuts(R) Existing Licensees
- --------------------------------------------------------------------------------
Dreesen's Famous Donuts Scoop Du Jour
Corporate Office 35 Newtown Lane
33 Newtown Lane East Hampton, NY 11937
East Hampton, NY 11937
- --------------------------------------------------------------------------------
Bagel Buoy ABA International
Box 1197
Sag Harbor, NY 11963
- --------------------------------------------------------------------------------
Robert Berkley Carversville General Store
6208 Fleecydale Road
Carversville, PA 18913
- --------------------------------------------------------------------------------
Tiny Winy Donuts Heartland Brewery
65-24 162nd Street Empire State Building
Flushing, NY 11365 350 Fifth Avenue
New York, NY 10118
- --------------------------------------------------------------------------------
Baltizar The Hole Scoop
80 Spring Street 2777 Dixwell Avenue
New York, NY 10012 Hamden, CT 06518
- --------------------------------------------------------------------------------
Homer's Variety Volume Services America
64 Brunell Avenue d/b/a Certerplate Food Services
Lenox, MA 01240 Jacob Javits Center
655 West 34th Street
New York, NY 10001
- --------------------------------------------------------------------------------
LIC Restaurant Group The Milk Pail
4231 9th Street 757 Mecox Road
Long Island City, NY 11101 Water Mill, NY 11976
- --------------------------------------------------------------------------------
Ottomanelli's Port City Java (3 locations)
1549 York Avenue 10 South Main Street
New York, NY 10028 Greenville, SC 29601
- --------------------------------------------------------------------------------
Eric Reddin Ronnie's Deli
"Gonuts For Donuts" Box 160
Main Street
Montauk, NY 11954
- --------------------------------------------------------------------------------
Route 22 Restaurant The Sandwich Club
55 Old Route 22 Hazelwood Drive
Armonk, NY 10504 Westhampton, NY
- --------------------------------------------------------------------------------
-22-
- --------------------------------------------------------------------------------
The Tavern on the Green Woodside Farms
76th Street & Central Park West 70 Woodside Lane
New York, NY 1002_ Laurel, NY 119__
- --------------------------------------------------------------------------------
Tom Bailey's Market Sunset Beach Restaurant
132 Third Avenue Sunset Beach
Spring Lake, NJ 07762 Shelter Island, NY
- --------------------------------------------------------------------------------
"75" Main Metropolitan Food Service
Main Street The City College of the City of New York
Southampton, NY 11969 St. Nicholas Avenue
New York, NY
- --------------------------------------------------------------------------------
Metropolitan Food Service Centerplate Food Service
Long Island City, NY New York, NY
- --------------------------------------------------------------------------------
Dearie's Gourmet Garage
Newark Valley, NY New York, NY
- --------------------------------------------------------------------------------
Cortland College Damerons Market
2962 River Road W
Goochland, VA 23063
- --------------------------------------------------------------------------------
Bloominglade's Dock'N Donuts
Corporate Testing - Up to 20 Princeton Junction, NJ
locations
- --------------------------------------------------------------------------------
Suncoast Resort and Hotel Mariani's Garden Market
St. Petersburg, FL Greenwich, CT
- --------------------------------------------------------------------------------
American Brasserie United States Military Academy
92nd Street & Madison Avenue West Point, NY plus Fort Dix, NJ and two New
New York, NY England military locations
- --------------------------------------------------------------------------------
Kevin Rambold WCI - The Colony, Golf and Country Club
Manchester, VT Bonita Springs, FL and up to 17 other club
locations
- --------------------------------------------------------------------------------
-23-
Exhibit "D"
Initial Product Ingredient Price List and Compensation
Item Quantity Amount due Licensee
- ---- -------- -------------------
Mix 30 lb. Box $2.50
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