Exhibit 10.8
REVISED LICENSE AGREEMENT
THIS REVISED LICENSE AGREEMENT (this "Agreement") is made and entered
into the 1st day of January, 1999 by and among Atlas International Food and
Equipment Company, Inc., a corporation organized and operated under the laws of
the State of North Dakota with its principal offices at 0000 Xxxxxxxxx Xxxxx,
Xxxxx, Xxxxx Xxxxxx (hereinafter referred to as "LICENSOR"); Mexican Foods,
Inc., a corporation organized and operated under the laws of the State of North
Dakota with its principal offices at 0000 Xxxxxxxxx Xxxxx, Xxxxx, Xxxxx Xxxxxx
(hereinafter referred to as "Mexican Foods"); Sparta Foods, Inc., a corporation
organized and operated under the laws of the State of Minnesota with its
principal offices at 0000 Xxxxx Xxxxxx XX, Xxx Xxxxxxxx, Xxxxxxxxx (hereinafter
referred to as "LICENSEE"); and La Canasta of Minnesota, Inc., a wholly owned
subsidiary of LICENSEE and a corporation organized and operated under the laws
of the State of Minnesota with its principal offices at 0000 Xxxxx Xxxxxx XX,
Xxx Xxxxxxxx, Xxxxxxxxx (hereinafter referred to as "La Canasta").
WHEREAS, LICENSOR is the owner of the federally registered trademark
"La Xxxxxxx Paradiso(R)" for use with the manufacture and sale of tortilla
shells and chips; the federally registered trademark "Paradiso(R)" for use with
the manufacture and sale of salsa, tortilla chips, flour tortillas, corn
tortillas and wheat tortillas; and the federally registered service xxxx
"Paradiso(R)" for use in connection with the operation of Mexican-style
restaurants, such federally registered trademarks and service marks being
registered only in the United States; and
WHEREAS, LICENSEE is manufacturing and selling certain food products
under the trademark "La Xxxxxxx Paradiso(R)" and the tradename "Paradiso"
pursuant to the terms of that certain License Agreement between La Canasta and
Mexican Foods dated October 28, 1993 (the "Prior License Agreement"); and
WHEREAS, LICENSOR and LICENSEE desire to terminate the Prior License
Agreement and enter into a revised license agreement;
IT IS THEREFORE AGREED:
1. The Prior License Agreement is hereby terminated in all respects and
is superceded by this Revised License Agreement. LICENSOR hereby grants to
LICENSEE, except as hereinafter provided, the exclusive right and license in the
United States of America, and non-exclusive worldwide right, to use the
trademarks "La Xxxxxxx Paradiso(R)" and "Paradiso(R)" and the tradename
"Paradiso" (which trademarks and tradenames are collectively referred to as the
"Trademarks") in connection with the manufacture and/or sale of tortillas (corn
and flour) and fried chips, and in connection with the manufacture and/or sale
of burritos, dips, salsa and other "Mexican Foods" (which for the purposes of
this Agreement shall mean foods associated with the Mexican culture), all for
retail distribution (which such tortillas, fried chips, burritos, dips, salsa,
and other Mexican Foods manufactured and/or sold under the Trademarks are
hereinafter collectively referred to as the "Products").
Notwithstanding the exclusive license granted hereunder, LICENSOR may
use or license the Trademarks in connection with (a) the manufacture and sale of
Mexican Foods (except packaged tortillas and chips) by LICENSOR or by any
affiliate of LICENSOR to or between restaurants now or in the future owned,
operated or franchised by LICENSOR or by any affiliate of LICENSOR, or from such
restaurants to retail customers; (b) the manufacture and sale of salsa and dip
under the brandnames "La Xxxxxxx Paradiso(R)" or "Paradiso(R)" in North Dakota
and in the counties of Clay, Becker, Wilkin, Otter Tail, Xxxxx, Xxxxxxx and Xxxx
in the State of Minnesota; and (c) all other purposes except as specifically
granted to LICENSEE in this Agreement.
2. As full consideration for the right and license granted to LICENSEE
hereunder, LICENSEE shall pay to LICENSOR a royalty based upon LICENSEE's "Gross
Sales," which for the purposes of this Agreement shall mean the gross amount
received by LICENSEE in a calendar year from all sales of the Products
calculated on an accrual basis of accounting, less any allowances for cash
discounts and other trade and quantity discounts, credits under warranty,
credits for returns, sales, use and excise taxes, insurance, and freight and
other transportation costs. The amount of the royalty due shall be calculated as
follows: three percent (3%) on the first five million dollars ($5,000,000) of
Gross Sales and two and one-half percent (2.5%) on the amount of Gross Sales
between five million one dollars ($5,000,001) and ten million dollars
($10,000,000) and two percent (2%) on the amount of Gross Sales over ten million
dollars ($10,000,000) (The royalty percentages shall be applied incrementally to
the corresponding range of Gross Sales. For example, if LICENSEE's Gross Sales
were $12,000,000, the royalty paid would be $315,000, calculated as follows:
($5,000,000 x .03) + ($5,000,000 x .025) + $2,000,000 x .02) = $315,000.).
3. LICENSEE shall keep complete and accurate accounting and sales
records for the Products and shall render a statement in writing to LICENSOR
within thirty (30) days after the end of each calendar quarter during the term
of this Agreement, and shall, concurrently with the rendering of such statement,
pay to LICENSOR the amount of the royalties accrued during the corresponding
calendar quarter. If LICENSEE fails to make any royalty payment when due, then
the amount of the unpaid royalty payment shall bear simple interest at one
percent (1%) per month until paid. LICENSEE shall reimburse LICENSOR for all
costs of collection (including court costs and reasonable attorneys' fees)
incurred by LICENSOR in collecting or attempting to collect past due royalties
from LICENSEE.
LICENSOR shall have the right, at its own expense (except as set forth
below), and at all reasonable times during normal working hours, to audit the
books and records of LICENSEE to verify the royalty statements and royalties due
LICENSOR pursuant to this Agreement, provided, however, that such audit shall
extend back no more than the earlier of 1) two years from the date the audit was
started or 2) the Effective Date of this Agreement. If such an audit by LICENSOR
reveals an underpayment between the royalty amount due to LICENSOR and the
royalty amount actually paid to LICENSOR by LICENSEE, upon receipt of
documentation of such underpayment the LICENSEE shall immediately pay to
LICENSOR the deficiency, and accrued interest thereon as provided for herein. If
an audit by LICENSOR reveals that royalties due to LICENSOR were underpaid by
five percent (5%) or more in any calendar quarter, then LICENSEE shall, in
addition to the deficiency and accrued interest, pay LICENSOR all costs and
expenses (including travel, lodging and employee salaries) incurred by LICENSOR
in conducting the audit of LICENSEE's books and records.
4. LICENSEE shall attain and maintain high standards of quality in the
production, packaging and handling of the Products, including by conforming to
specified formulations approved by LICENSOR in writing, using quality
ingredients, operating sanitary production facilities, and maintaining a quality
control program. LICENSOR shall have the right, at its own expense and at all
reasonable times during normal working hours, to inspect and test the Products
and LICENSEE's manufacturing facilities and processes to ensure that the
Products and processes meet the reasonable quality standards of LICENSOR. If
LICENSEE shall contract for a third party to manufacture the Products, LICENSOR
shall have the right to inspect, at reasonable times during normal working
hours, the third party's facilities used to manufacture such Products. LICENSOR
acknowledges that LICENSEE's production, packaging and handling of the Products
to date have conformed to LICENSOR's standards and agrees that so long as
LICENSEE's production, packaging and handling of the Products (or the
production, packaging or handling of a third party contractor under LICENSEE's
direction) meets or exceeds LICENSEE's practices to date, LICENSOR shall have no
right to object to the quality of LICENSEE's production, packaging or handling
of the Products.
5. LICENSOR represents and warrants to LICENSEE that, notwithstanding
any implication to the contrary in Mexican Foods' 1 August 1996 agreement with
Sun Garden regarding the xxxx XXXXXXXX: (a) it is the owner of the Trademarks;
(b) it has the right to grant this license to LICENSEE; and (c) any use of the
Trademarks by LICENSEE within the scope of this license would not infringe any
rights of any third party. LICENSOR shall, to the extent allowed by law, file
any renewal applications for the Trademarks necessary to continue the existing
federal trademark registrations of the Trademarks. LICENSEE's obligation to pay
royalties under this Agreement shall automatically terminate upon LICENSOR's
failure to renew the existing federal registrations for any of the Trademarks
which is actively in use at the time such renewal becomes due.
By 1 January 2000, LICENSOR shall file, and shall thereafter diligently
prosecute, applications with the United States Trademark Office to federally
register as word marks PARADISO and LA XXXXXXX PARADISO, each for use in
connection with at least tortillas, tortilla chips and salsa. LICENSOR shall at
all times keep LICENSEE apprised of the status of such applications, including
promptly providing LICENSEE copies of all correspondence filed with or received
from the United States Trademark Office regarding such applications.
If notice is received by either party charging that sale of any
Product(s) infringes any trademark right of any third party in the United States
of America, the party receiving such notice will promptly notify the other party
to this Agreement. If either party knows or has reason to believe that any third
party is using any Trademark or any xxxx confusingly similar thereto in
connection with the manufacture or sale of Mexican Foods in the United States of
America, the party possessing such knowledge or belief shall promptly notify the
other party to this Agreement. If, within one hundred eighty (180) days after
first obtaining such knowledge or belief concerning infringement, LICENSOR fails
to provide LICENSEE with written documentation showing that it has stopped such
third party's activities or initiated judicial proceedings against the third
party, LICENSEE's obligation to pay any royalties which would otherwise be due
LICENSOR under this Agreement will be abated, no such royalties shall accrue for
any sales made and LICENSOR shall have no right to terminate this Agreement
under Section 6(b) for failure to pay any Minimum Annual Royalty, for the term
during which such infringement continues.
6. The license granted under this Agreement shall be from the date
hereof and shall terminate on December 31, 2014, subject to LICENSOR's right to
terminate this Agreement upon giving LICENSEE written notice of termination and
the opportunity and right to cure within thirty (30) days from receipt of
written notice of termination:
(a) If LICENSEE fails to make any payment of royalties to LICENSOR
as herein provided;
(b) If LICENSEE fails to pay a Minimum Annual Royalty to the
LICENSOR, provided that if the royalties calculated under
Section 2 are less than the Minimum Annual Royalty for any
given year, LICENSEE shall have the right, but not the
obligation, to pay the difference between the royalties due
under Section 2 and such Minimum Annual Royalty. The Minimum
Annual Royalties under this Agreement, calculated on the
accrual basis of accounting, are as detailed in the following
schedule:
Calendar Year Ended Minimum Annual Royalty
2000 through 2003 $ 30,000
2004 through 2008 $ 60,000
2009 through 2013 $ 90,000
2014 $150,000;
(c) If one or more of the Products are of such quality as to
disparage the Trademarks;
(d) If LICENSEE's use of the Trademarks is not consistent with at
least one of LICENSOR's federal registrations of the
Trademarks, provided that LICENSOR acknowledges that
LICENSEE's current packaging employs a variant of the stylized
marks of US Trademark Registration No.s 1,621,485 and
1,557,377 (the "Existing Registrations") and that LICENSEE
shall have until 1 December 1999 to exhaust all current
inventory of packaging, promotional literature and the like
before it shall be obligated to begin using either of the
stylized marks listed in the Existing Registrations.
(e) If LICENSEE violates any material provision, term or condition
of this Agreement.
Notwithstanding the above, LICENSOR may immediately terminate this
Agreement, effective upon written notice to LICENSEE, without providing LICENSEE
any opportunity to cure, if: (a) LICENSEE files a petition in bankruptcy; (b)
LICENSEE is adjudicated a bankrupt; (c) a petition in bankruptcy is filed
against LICENSEE; (d) LICENSEE becomes insolvent or makes an assignment for the
benefit of any of its creditors or an arrangement pursuant to any bankruptcy
law; or (e) a receiver is appointed for LICENSEE or its business; or (f)
LICENSEE discontinues operating its business.
Upon the termination of this Agreement for any reason, LICENSEE shall
immediately discontinue use of the Trademarks on all of its advertising and
other materials and shall cease producing any additional Product, but LICENSEE
shall be allowed to sell off any inventory of Product so long as the Agreement
is not terminated under paragraph (c) above. Termination of this Agreement shall
not relieve LICENSEE of its obligation to pay any royalties due hereunder.
7. Any notice given pursuant to the terms of this Agreement shall be
addressed to the parties hereto at the addresses referred to in the first
paragraph of this Agreement and shall be effectively delivered one (1) business
day after placement with a reputable overnight delivery service for next morning
delivery or four (4) business days after placement with the U.S. mail for
delivery by registered or certified mail, return receipt requested, postage
prepaid.
8. LICENSEE may not assign any of its rights and interests created by
this Agreement to any individual or entity without the written consent of
LICENSOR, which will not be unreasonably withheld. LICENSOR may assign its
rights and interests under this Agreement to any third party upon written notice
to LICENSEE.
9. All rights in and to the Trademarks other than those specifically
granted to LICENSEE under this Agreement are reserved to LICENSOR for its own
use and benefit. LICENSEE does not acquire by virtue of anything in this
Agreement any ownership or rights of any kind in any of the Trademarks, which
shall always be the exclusive property of LICENSOR. LICENSEE's use of the
Trademarks under this Agreement will inure exclusively to the benefit of
LICENSOR. LICENSEE shall use the Trademarks only in the manner specified by this
Agreement.
10. All of the Products bearing a federally registered Trademark shall
reflect the fact that such xxxx is federally registered.
11. The formulations which have been provided by LICENSOR to LICENSEE
for burritos, dips, salsas and sauces, and all additional formulations for any
Mexican Foods which may in the future be provided by LICENSOR to LICENSEE, are
and will always be the sole and exclusive property of LICENSOR. The formulations
for any Products sold by LICENSEE during the term of this Agreement shall and
will always be the sole and exclusive property of LICENSOR. LICENSEE agrees to
hold all such formulations confidential, shall not disclose any such
formulations to any third party without first apprising the third party of the
obligation to hold such formulations confidential, and shall, upon the
termination or expiration of this Agreement, immediately cease the use of all
such formulations. LICENSOR acknowledges, however, that LICENSEE is entitled to
sell the Products and to include on the packaging such information regarding the
formulation of the Products as LICENSEE deems advisable in light of relevant
federal, state and local laws, regulations, rules and orders.
12. LICENSEE shall be solely responsible for compliance with the
requirements of all federal, state and local laws, regulations, rules and orders
relating to: (a) the operation of LICENSEE's business; (b) health and
sanitation; (c) environmental compliance; and (d) packaging and labeling.
13. LICENSEE agrees to indemnify, defend and hold harmless LICENSOR
from and against any and all loss, damage (except incidental and consequential
damages), expenses (including court costs, reasonable attorneys' fee, interest
expenses and amounts paid in compromise or settlement), suits, actions, claims,
penalties, liabilities or obligations related to, caused by, arising from or on
account of LICENSEE's manufacture and sale of the Products. It is understood,
however, that such obligation to indemnify, defend and hold harmless LICENSOR
shall not apply to any cause of action based on a claim that LICENSEE's use of
any Trademark infringes the rights of a third party.
LICENSOR agrees to indemnify, defend and hold harmless LICENSEE from
and against any and all loss, damage (except incidental and consequential
damages), expenses (including court costs, reasonable attorneys' fees, interest
expenses and amounts paid in compromise or settlement), suits, actions, claims,
penalties, liabilities or obligations related to, caused by, arising from or on
account of LICENSOR's use of the Trademarks.
14. LICENSEE shall purchase and maintain in full force and effect, at
its sole cost and expense, general liability insurance coverage of at least the
greater of (a) two million dollars ($2,000,000) or (b) the coverage set forth in
LICENSEE's liability insurance policy in effect on the date of this Agreement.
Such policy shall insure LICENSEE, LICENSOR and their respective officers,
directors, agents and employees from and against all loss, liability and claims
whatsoever resulting from or in connection with the operation of LICENSEE's
business and the manufacture, sale and distribution of the Products by LICENSEE,
except that such policy need not extend to insure any loss, liability or claims
related to trademark infringement. LICENSEE shall purchase and maintain, at its
sole cost and expense, all other insurance required by state or federal law. All
insurance policies procured by LICENSEE pursuant to this Article shall name
LICENSOR as an additional insured. Upon the execution of this Agreement,
LICENSEE shall provide LICENSOR with certificates of insurance evidencing the
insurance required hereunder.
15. This Agreement amends and supersedes all prior agreements and
understandings between the parties, both written and oral, including the License
Agreement, concerning the subject matter described herein.
16. None of the terms of this Agreement may be waived or modified by
either party except by a written agreement signed by an officer of both parties
to this Agreement. The failure of either party to enforce, or the delay on the
part of any party in enforcing, any of its rights under this Agreement shall not
be deemed a waiver or a modification, and either party may, within the time
period provided by applicable law, commence appropriate legal proceedings to
enforce any or all such rights.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of North Dakota. All litigation, court actions and
other legal proceedings arising under, as a result of, or in connection with
this Agreement will and must be venued exclusively in Fargo, North Dakota in a
court of competent jurisdiction. LICENSEE and LICENSOR hereby submit to personal
jurisdiction in North Dakota for all such litigation, actions and proceedings,
and waive any rights they may have to contest personal jurisdiction or venue in
North Dakota and any claims that such jurisdiction or venue is invalid.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
ATLAS INTERNATIONAL FOOD AND
EQUIPMENT COMPANY, INC. MEXICAN FOODS, INC.
By: /s/ Fredoon Anvary By: /s/ Fredoon Anvary
Fredoon Anvary, President Fredoon Anvary, President
SPARTA FOODS, INC. LA CANASTA OF MINNESOTA, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, President Xxxx X. Xxxxxx, President
