Transitional Issues. (a) On the Effective Date, (i) all existing licenses by Weight Watchers to parties including Heinz or its Affiliates granting rights to manufacture, market, distribute or sell food products under the Food Trademarks (the "Direct Food Trademark Licenses"), including but not limited to those identified in Schedule ______ hereto, shall be assigned by Weight Watchers to Heinz, and Heinz shall assume the obligations of Weight Watchers with respect thereto pursuant to an assignment and assumption agreement in form and substance reasonably satisfactory to Heinz and Weight Watchers, and (ii) Heinz shall retain all existing sublicenses by Heinz or any Heinz Affiliates to third parties granting rights to manufacture, market, distribute or sell food products under the Food Trademarks (the "Heinz Sublicenses"), including but not limited to those identified in Schedule ______ hereto. All subsequent use of the Food Trademarks pursuant to this provision will otherwise be subject to the terms of the Heinz License. Heinz and its Affiliates, as the case may be, may, in their discretion, assign any of the Direct Food Trademark Licenses or the Heinz Sublicenses to any Heinz Affiliate. (b) Heinz shall be entitled to payment in full of all royalties and other amounts payable under the Direct Food Trademark Licenses and the Heinz Sublicenses (or agreements related thereto) for a period of five years from the Effective Date (whether or not such agreements cover Heinz Licensed Products and whether or not such agreements have been transitioned to Weight Watchers). During such five-year period, the ownership of the Direct Food Trademark Licenses and Heinz Sublicenses covering Weight Watchers Licensed Products will be transitioned to Weight Watchers by Heinz or its Affiliates assigning such agreements to Weight Watchers at the end of the five (5) year period or by enabling Weight Watchers to renew such agreements as they expire or become eligible for renewal, whichever is sooner. Heinz shall give Weight Watchers ninety (90) days' notice of the expiration or renewal date of all Direct Food Trademark Licenses and Heinz Sublicenses covering Weight Watchers Licensed Products expiring or having a renewal date during the five year period, and Weight Watchers shall have the option to determine, to the extent permissible under the terms of the agreement with the third party, to renew or not to renew such agreement with regard to Weight Watchers Licensed Products. If any Direct Food Trademark Licenses or Heinz Sublicenses covers both Heinz Licensed Products and Weight Watchers Licensed Products (as of the date of renewal or assignment pursuant to the two immediately preceding sentences), the parties will use their reasonable best efforts to reach agreement with the licensees or sublicensees to separate the products into separate license/sublicense agreements with Weight Watchers (for Weight Watchers Licensed Products) and Heinz and its Affiliates (for Heinz Licensed Products). (c) If Heinz desires to terminate any Direct Food Trademark License or Heinz Sublicense covering Weight Watchers Licensed Products, it will first consult with Weight Watchers, which shall advise, within twenty-one (21) days from the date of notice, whether it desires for Heinz to assign such license or sublicense to Weight Watchers. To the extent that Weight Watchers assumes or renews any of the Direct Food Trademark Licenses or Heinz Sublicenses, Heinz shall assign or license at Heinz' discretion, such intellectual property rights as may be necessary for Weight Watchers to continue to perform under any such agreement with regard to Weight Watchers Licensed Products. (d) In the event that any Direct Food Trademark License or Heinz Sublicense is assigned to Weight Watchers or renewed by or on behalf of Weight Watchers during the five-year transition period, the royalties or other payments received by Weight Watchers from any such license/sublicense will be paid over to Heinz upon receipt without demand until the expiration of the five-year transition period. As between Heinz and Weight Watchers, Heinz shall assume all administrative costs relating to such licenses/sublicenses. In the event that any Direct Food Trademark License or Heinz Sublicense covering Weight Watchers Licensed Products is not assigned to Weight Watchers and has not expired at the end of the five-year transition period, the royalties or other payments received by Heinz from any such license/sublicense will be paid over to Weight Watchers upon receipt without demand thereafter, and Heinz shall assign or license (at Heinz' discretion) such intellectual property rights as may be necessary to perform Licensor's obligations thereunder. As between Heinz and Weight Watchers, Weight Watchers shall assume all administrative costs relating to such licenses/sublicenses. (e) During the five-year transition period, Heinz will pay to Weight Watchers annually a sum of $1.2 million as a custodial fee to hold certain of the Weight Watchers Retained Trademarks for the benefit of the LLC, as identified in Schedule ___________ hereto. Such annual payment shall be payable in quarterly installments of $300,000 payable in arrears. Such trademarks shall consist of the Associated Food Trademarks, the Non-Recognition Food Trademarks, the Non Transferable Food Applications, and those portions of the Multiclass Trademarks in Food Classes (the "Custodial Trademarks"). All use of, and expenses relating to, such Custodial Trademarks shall be governed by the provisions of this Agreement, the LLC Agreement and the terms of the license agreement between Heinz and Weight Watchers attached as Schedule________ hereto. Heinz and Weight Watchers shall take all reasonable steps necessary to transfer all such Custodial Trademarks to the LLC at an appropriate time and in an appropriate manner, consistent with the intent of this Agreement and the purpose of the LLC when permissible to do so under local law. (f) Notwithstanding any other provision of this Agreement, the LLC Agreement, or any license between or among Heinz, Weight Watchers and the LLC, Weight Watchers shall have the right to continue to sell through particular channels of distribution in the Weight Watchers Business conducted in any country all food and beverage products and comparable products sold in such channels of distribution in that country within the preceding year (whether or not such products are Weight Watchers Licensed Products) and to retain all proceeds therefrom. (g) Heinz shall change or cause to be changed the name of any Affiliate using the Weight Watchers name or any derivative thereof that is not Weight Watchers or one of the Companies as defined in the Principal Agreement to a name not using the Weight Watchers name, or any derivative thereof.
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Transitional Issues. (a) On the Effective Date, (i) all existing licenses by Weight Watchers to parties including Heinz or its Affiliates granting rights to manufacture, market, distribute or sell food products under the Food Trademarks (the "“Direct Food Trademark Licenses"”), including but not limited to those identified in Schedule ______ G hereto, shall be assigned by Weight Watchers to Heinz, and Heinz shall assume the obligations of Weight Watchers with respect thereto pursuant to an assignment and assumption agreement in form and substance reasonably satisfactory to Heinz and Weight Watchers, and (ii) Heinz shall retain all existing sublicenses by Heinz or any Heinz Affiliates to third parties granting rights to manufacture, market, distribute or sell food products under the Food Trademarks (the "“Heinz Sublicenses"”), including but not limited to those identified in Schedule ______ H hereto. All subsequent use of the Food Trademarks pursuant to this provision will otherwise be subject to the terms of the Heinz License. Heinz and its Affiliates, as the case may be, may, in their discretion, assign any of the Direct Food Trademark Licenses or the Heinz Sublicenses to any Heinz Affiliate.
(b) Heinz shall be entitled to payment in full of all royalties and other amounts payable under the Direct Food Trademark Licenses and the Heinz Sublicenses (or agreements related thereto) for a period of five years from the Effective Date (whether or not such agreements cover Heinz Licensed Products and whether or not such agreements have been transitioned to Weight Watchers). During such five-year period, the ownership of the Direct Food Trademark Licenses and Heinz Sublicenses covering Weight Watchers Licensed Products will be transitioned to Weight Watchers by Heinz or its Affiliates assigning such agreements to Weight Watchers at the end of the five (5) year period or by enabling Weight Watchers to renew such agreements as they expire or become eligible for renewal, whichever is sooner. Heinz shall give Weight Watchers ninety (90) days' ’ notice of the expiration or renewal date of all Direct Food Trademark Licenses and Heinz Sublicenses covering Weight Watchers Licensed Products expiring or having a renewal date during the five year period, and Weight Watchers shall have the option to determine, to the extent permissible under the terms of the agreement with the third party, to renew or not to renew such agreement with regard to Weight Watchers Licensed Products. If any Direct Food Trademark Licenses or Heinz Sublicenses covers both Heinz Licensed Products and Weight Watchers Licensed Products (as of the date of renewal or assignment pursuant to the two immediately preceding sentences), the parties will use their reasonable best efforts to reach agreement with the licensees or sublicensees to separate the products into separate license/sublicense agreements with Weight Watchers (for Weight Watchers Licensed Products) and Heinz and its Affiliates (for Heinz Licensed Products).
(c) If Heinz desires to terminate any Direct Food Trademark License or Heinz Sublicense covering Weight Watchers Licensed Products, it will first consult with Weight Watchers, which shall advise, within twenty-one (21) days from the date of notice, whether it desires for Heinz to assign such license or sublicense to Weight Watchers. To the extent that Weight Watchers assumes or renews any of the Direct Food Trademark Licenses or Heinz Sublicenses, Heinz shall assign or license at Heinz' ’ discretion, such intellectual property rights as may be necessary for Weight Watchers to continue to perform under any such agreement with regard to Weight Watchers Licensed Products.
(d) In the event that any Direct Food Trademark License or Heinz Sublicense is assigned to Weight Watchers or renewed by or on behalf of Weight Watchers during the five-year transition period, the royalties or other payments received by Weight Watchers from any such license/sublicense will be paid over to Heinz upon receipt without demand until the expiration of the five-year transition period. As between Heinz and Weight Watchers, Heinz shall assume all administrative costs relating to such licenses/sublicenses. In the event that any Direct Food Trademark License or Heinz Sublicense covering Weight Watchers Licensed Products is not assigned to Weight Watchers and has not expired at the end of the five-year transition period, the royalties or other payments received by Heinz from any such license/sublicense will be paid over to Weight Watchers upon receipt without demand thereafter, and Heinz shall assign or license (at Heinz' ’ discretion) such intellectual property rights as may be necessary to perform Licensor's ’s obligations thereunder. As between Heinz and Weight Watchers, Weight Watchers shall assume all administrative costs relating to such licenses/sublicenses.
(e) During the five-year transition period, Heinz will pay to Weight Watchers annually a sum of $1.2 million as a custodial fee to hold certain of the Weight Watchers Retained Trademarks for the benefit of the LLC, as identified in Schedule ___________ hereto. Such annual payment shall be payable in quarterly installments of $300,000 payable in arrears. Such trademarks shall consist of the Associated Food Trademarks, the Non-Recognition Food Trademarks, the Non Non-Transferable Food Applications, and those portions of the Multiclass Trademarks in Food Classes (the "“Custodial Trademarks"”). All use of, and expenses relating to, such Custodial Trademarks shall be governed by the provisions of this Agreement, the LLC Agreement and the terms of the license agreement between Heinz and Weight Watchers attached as Schedule________ heretoExhibit ▇. Heinz ▇▇▇▇▇ and Weight Watchers shall take all reasonable steps necessary to transfer all such Custodial Trademarks to the LLC at an appropriate time and in an appropriate manner, consistent with the intent of this Agreement and the purpose of the LLC when permissible to do so under local law.
(f) Notwithstanding any other provision of this Agreement, the LLC Agreement, or any license between or among Heinz, Weight Watchers and the LLC, Weight Watchers shall have the right to continue to sell through particular channels of distribution in the Weight Watchers Business conducted in any country all food and beverage products and comparable products sold in such channels of distribution in that country within the preceding year (whether or not such products are Weight Watchers Licensed Products) and to retain all proceeds therefrom.
(g) Heinz shall change or cause to be changed the name of any Affiliate using the Weight Watchers name or any derivative thereof that is not Weight Watchers or one of the Companies as defined in the Principal Agreement to a name not using the Weight Watchers name, name or any derivative thereof.
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Sources: Operating Agreement (Weight Watchers International Inc)