EXHIBIT 10.14
CARIBOU COFFEE COMPANY, INC.
MASTER LICENSE AGREEMENT FOR
BAHRAIN, EGYPT, IRAQ, JORDAN, KUWAIT, LEBANON,
OMAN, QATAR, SAUDI ARABIA, TURKEY,
UNITED ARAB EMIRATES, AND YEMEN
XX-XXXXX ENTERPRISES
NAME OF MASTER LICENSEE
_______________________,2004
DATE OF AGREEMENT
CARIBOU MLA XX XXXXX (2004)
TABLE OF CONTENTS
SECTION PAGE
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1. PREAMBLES........................................................... 1
2. DEFINITIONS......................................................... 1
3. DEVELOPMENT RIGHTS AND OBLIGATIONS.................................. 4
X. XXXXX...................................................... 4
B. TERRITORIAL RIGHTS OF MASTER LICENSEE...................... 4
C. RESERVATION OF RIGHTS...................................... 4
D. DEVELOPMENT OBLIGATIONS.................................... 5
E. PROTOTYPE COFFEEHOUSES..................................... 5
4. GUIDANCE AND ASSISTANCE............................................. 6
A. INITIAL TRAINING AND ANNUAL CONVENTION..................... 6
B. ANNUAL SITE VISIT.......................................... 6
C. CONTINUING GUIDANCE AND SUPPORT BY LICENSOR................ 6
5. GRANT, SUPPORT, AND SUPERVISION OF SUBLICENSEES..................... 7
A. FORM OF SUBLICENSE AGREEMENTS.............................. 7
B. SUBLICENSEE TRAINING AND SUPPORT........................... 8
C. MANUALS.................................................... 8
D. SYSTEM STANDARDS........................................... 9
E. SUBLICENSEE COMPLIANCE..................................... 9
6. OTHER OBLIGATIONS OF MASTER LICENSEE................................ 10
A. CHIEF EXECUTIVE OFFICER.................................... 10
B. OTHER MANAGEMENT PERSONNEL OF MASTER LICENSEE.............. 10
C. INSURANCE.................................................. 10
D. RECORDS AND REPORTS ....................................... 10
E. GOVERNMENTAL APPROVALS AND REGISTRATIONS OF THIS
AGREEMENT.................................................. 11
F. COMPLIANCE WITH LEGAL REQUIREMENTS/GOOD BUSINESS
PRACTICES.................................................. 12
7. INITIAL RENTAL PAYMENTS AND CONTINUING FEES......................... 13
A. INITIAL RENTAL PAYMENTS FOR RIGHTS TO TERRITORY............ 13
B. INITIAL RENTAL PAYMENTS FOR LICENSES AND SUBLICENSES....... 13
C. CONTINUING FEES............................................ 13
D. LATE FEES.................................................. 14
E. TAXES...................................................... 14
F. CURRENCY OF PAYMENT........................................ 15
G. EXCHANGE CONTROLS.......................................... 15
H. STAMP DUTIES............................................... 16
8. MARKETING........................................................... 16
CARIBOU MLA XX XXXXX (2004)
SECTION PAGE
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A. SUBLICENSEE ADVERTISING AND MARKETING..................... 16
B. WEBSITES.................................................. 16
9. CONFIDENTIAL INFORMATION........................................... 17
A. OBLIGATIONS OF MASTER LICENSEE............................ 17
B. OBLIGATIONS OF LICENSOR................................... 19
10. EXCLUSIVE RELATIONSHIP............................................. 19
11. INDEPENDENT CONTRACTORS/INDEMNIFICATION............................ 19
A. INDEPENDENT CONTRACTORS................................... 19
B. TAXES..................................................... 20
C. INDEMNIFICATION........................................... 20
12. MARKS.............................................................. 21
A. GOODWILL AND OWNERSHIP OF THE MARKS....................... 21
B. REGISTRATION OF THE MARKS IN THE DEVELOPMENT AREA......... 21
C. LIMITATIONS ON MASTER LICENSEE'S USE OF THE MARKS......... 21
D. NOTIFICATION OF INFRINGEMENT AND CLAIMS................... 22
E. DISCONTINUANCE OF USE OF MARKS............................ 22
F. DISCLAIMER OF WARRANTIES.................................. 23
13. TRANSFER .......................................................... 23
A. BY LICENSOR............................................... 23
B. BY MASTER LICENSEE........................................ 24
C. LICENSOR'S RIGHT OF FIRST REFUSAL......................... 25
D. DEATH OR DISABILITY OF AN OWNER........................... 26
14. TERMINATION OF AGREEMENT........................................... 27
A. BY MASTER LICENSEE........................................ 27
B. BY LICENSOR............................................... 27
C. TERMINATION OF DEVELOPMENT RIGHTS......................... 28
15. RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION ............. 28
X. XXXXX..................................................... 28
B. SUBLICENSE AGREEMENTS..................................... 29
C. NO COMPENSATION........................................... 29
D. GOVERNMENT FILINGS........................................ 29
E. CONTINUING OBLIGATIONS.................................... 29
16. ENFORCEMENT........................................................ 30
A. INFORMAL DISPUTE RESOLUTION............................... 30
B. ARBITRATION........................... ................... 30
C. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS......... 31
D. WAIVER OF OBLIGATIONS..................................... 32
E. FORCE MAJEURE............................................. 32
F. NO OFFSETS; CUMULATIVE RIGHTS............................. 33
G. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL................. 33
CARIBOU MLA XX XXXXX (2004)
ii
SECTION PAGE
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H. LIMITATION OF CLAIMS................................. 33
I. COSTS AND LEGAL FEES................................. 33
J. GOVERNING LAW/CONSENT TO JURISDICTION ............... 33
K. BINDING EFFECT............. ......................... 34
L. CONSTRUCTION......................................... 34
M. GOVERNING LANGUAGE................................... 35
17. NOTICES, REPORTS, AND PAYMENTS................................ 35
18. COMPLIANCE WITH ANTI-TERRORISM LAWS........................... 35
19. MASTER LICENSEE FORMATION AND AUTHORIZATION .................. 36
20. DUE DILIGENCE AND ASSUMPTION OF RISK ......................... 36
EXHIBITS AND ATTACHMENTS
EXHIBIT A - DEVELOPMENT QUOTA
EXHIBIT B - OWNERS
EXHIBIT C - MARKS
EXHIBIT D - INTERNATIONAL LICENSE AGREEMENT
CARIBOU MLA XX XXXXX (2004)
iii
CARIBOU COFFEE COMPANY. INC.
MASTER LICENSE AGREEMENT
FOR CERTAIN MIDDLE EAST COUNTRIES
THIS MASTER LICENSE AGREEMENT is made and entered into as of
the_________________________________day of____________________________, 2004
(THE "EFFECTIVE DATE") (regardless of the dates of the parties' signatures) by
and between CARIBOU COFFEE COMPANY, INC., a Minnesota corporation with its
principal business address at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000 X.X.X. ("LICENSOR"), XX-XXXXX ENTERPRISES,
a______________________________________________[TYPE OF ENTITY] organized under
the laws of_________________________________, whose mailing address is X.X. Xxx
000, XXXXX 00000-XXXXXX ("MASTER LICENSEE"), and the Owners (defined below) of
MASTER LICENSEE whose names appear on the signature page of this Agreement.
1. PREAMBLES.
LICENSOR has developed (and continues to develop and modify) a system for
the operation of coffeehouses under the "CARIBOU COFFEE(R)" name selling
coffees, teas, baked goods, sandwiches, and other beverage and food products for
on-premises and off-premises consumption ("CARIBOU COFFEE COFFEEHOUSES" OR
"COFFEEHOUSES"). MASTER LICENSEE wishes to obtain the right to use and
sublicense the System and the Marks in the Development Area (defined below) and
has applied to LICENSOR for a master license for the Development Area. LICENSOR
has approved MASTER LICENSEE's application in reliance upon all representations
made by MASTER LICENSEE.
2. DEFINITIONS.
The terms listed below have the meanings indicated. Other terms are
defined elsewhere in this Agreement and have the meanings indicated there.
"AFFILIATE" - any person or business entity that directly or indirectly
owns or controls, is owned or controlled by, or is under common ownership or
control with another person or business entity. For purposes of this definition,
the term "control" shall mean the possession, directly or indirectly, of a
Controlling Interest (defined below) or the power to direct or cause the
direction of a person's or business entity's management and policies.
"AGREEMENT TERM" - the period commencing on the Effective Date and ending
when the final License Agreement (defined below), Sublicense Agreement (defined
below), or successor license or sublicense agreement executed pursuant to this
Agreement has expired or terminated, unless this Agreement is terminated sooner
in accordance with its provisions.
"COMPETITIVE BUSINESS" - an enterprise or business that: (a) prepares,
offers, sells, roasts, and/or distributes specialty coffee products, teas,
smoothies, or baked goods (whether at wholesale or retail); or (b) grants or has
granted franchises, licenses, or similar rights, or establishes or has
established partnerships or joint ventures, for the development and/or operation
of the type of business described in subparagraph (a) above. "Competitive
Business"
CARIBOU MLA XX XXXXX (2004)
does not include a CARIBOU COFFEE Coffeehouse operated under a License Agreement
with LICENSOR or a Sublicense Agreement between MASTER LICENSEE and a
Sublicensee.
"CONTROLLING INTEREST" - in a partnership, corporation, limited liability
company, or similar form of business entity, the percent of voting shares or
other voting rights that results from dividing one hundred percent (100%) of the
ownership interests by the number of Owners. In the case of a proposed transfer
of an Ownership Interest (defined below) in MASTER LICENSEE, the determination
of whether a "Controlling Interest" is involved must be made both immediately
before and immediately after the proposed transfer to see if a "Controlling
Interest" will be transferred (because of the number of Owners before the
proposed transfer) or will be deemed to have been transferred (because of the
number of Owners after the proposed transfer). In a trust, the trustee shall be
deemed to hold one hundred percent (100%) of the trust's voting interests, and
each beneficiary of a trust shall be deemed to hold his proportionate share of
the trust's voting interests or, if those interests are indeterminate, one
hundred percent (100%) of the trust's voting interests.
"DEVELOPMENT AREA" - the geographic area encompassing the countries of
Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia,
Turkey, United Arab Emirates, and Yemen, as the borders of those countries exist
as of the Effective Date.
"DEVELOPMENT PERIOD" - each time period defined as a Development Period on
Exhibit A to this Agreement.
"DEVELOPMENT QUOTA" - the minimum number of Coffeehouses listed on Exhibit
A that must be open and operating in the Development Area as of the end of each
Development Period.
"DEVELOPMENT TERM" - the period during which MASTER LICENSEE is authorized
to establish Coffeehouses directly or through Affiliates under License
Agreements and to grant Sublicenses under Sublicense Agreements, which period
will commence on the Effective Date and expire, unless sooner terminated
according to this Agreement's terms, eight (8) years from the Effective Date.
"DOLLARS" and "$" - the legal currency of the United States of America.
"GROSS SALES" - the total of all revenue and receipts derived from the
operation of a Coffeehouse, including, but not limited to, all amounts received
at or away from the Coffeehouse's site, or through or by means of the business
the Coffeehouse conducts, whether in cash or by check, credit card, debit card,
or other credit transactions, but (1) excluding the net amount of any sales tax,
VAT, or similar tax or assessment levied by a taxing authority upon the sale of
goods or services, provided that the taxes or assessments are paid to the
appropriate governmental authority, and (2) reduced by the amount of any
documented refunds, credits, discounts, and charge-backs the Coffeehouse in good
faith gives to customers.
"LEGAL REQUIREMENTS" - applicable laws, ordinances, regulations, rules,
administrative orders, decrees, and policies of any government or governmental
agency, department, or similar organization.
CARIBOU MLA XX XXXXX (2004)
2
"LICENSE AGREEMENT" - a license agreement (including all related exhibits,
ancillary documents, and guarantees) signed directly between MASTER LICENSEE and
LICENSOR, or between an Affiliate of MASTER LICENSEE and LICENSOR, for the
operation of a Coffeehouse in the Development Area. LICENSOR and MASTER LICENSEE
agree that MASTER LICENSEE or an Affiliate of MASTER LICENSEE will directly own
and operate under License Agreements all Coffeehouses in the Development Area
where direct ownership of such Coffeehouses by MASTER LICENSEE or its Affiliates
is permitted. LICENSOR's current form of International License Agreement is
attached to this Agreement as Exhibit D. LICENSOR reserves the right throughout
the Agreement Term to modify this form of International License Agreement as it
deems best, for any reason (business or legal), except that LICENSOR may not
change the rental payments and fees due to LICENSOR under Section 7 of this
Agreement.
"MARKS" - the trademark and service xxxx "CARIBOU COFFEE," related
commercial symbols, and other trademarks, service marks, and symbols that
LICENSOR periodically authorizes for use by Coffeehouses operating in the
Development Area. Exhibit C contains information regarding registration of
certain Marks in the Development Area. All Marks are owned by Arabica Funding,
Inc. and licensed exclusively to LICENSOR. For purposes of this Agreement,
references to "LICENSOR" in connection with the ownership of the Marks shall be
deemed to include Arabica Funding, Inc.
"OWNERS" - all persons or entities holding a direct or indirect, disclosed
or undisclosed, legal or beneficial ownership, property, or voting right in a
business entity (including, without limitation, the right to receive all or part
of the profits or losses of the business entity). All Owners of MASTER LICENSEE
as of the Effective Date are listed on Exhibit B.
"RESTRICTED PERSONS" - (1) MASTER LICENSEE's Owners as of the Effective
Date; (2) persons who become MASTER LICENSEE's Owners during the Agreement Term;
(3) Affiliates of MASTER LICENSEE; (4) persons having a Controlling Interest in
any Affiliates of MASTER LICENSEE; (5) parents, spouses, and natural and adopted
children of any person in (1), (2), or (4) above; and (6) officers, directors,
and management personnel of MASTER LICENSEE and its Affiliates.
"SUBLICENSE" - the right under a Sublicense Agreement to develop and
operate a Coffeehouse at a specified location in the Development Area and to use
the Marks and the System in its operation.
"SUBLICENSE AGREEMENT" - the form of sublicense agreement (including all
related exhibits, ancillary documents, and guarantees) that LICENSOR approves
for MASTER LICENSEE's use in granting Sublicenses in the Development Area, as
periodically modified pursuant to Section 5.A. of this Agreement.
"SUBLICENSEE" - one or more person(s) that is/are party to a Sublicense
Agreement with MASTER LICENSEE for the development and operation of a
Coffeehouse in the Development Area pursuant to a Sublicense Agreement. An
Affiliate of MASTER LICENSEE may not be a Sublicensee because such Affiliate
must operate its Coffeehouse directly pursuant to a License Agreement.
CARIBOU MLA XX XXXXX (2004)
3
"SYSTEM" - the methods and techniques of operating a CARIBOU COFFEE
Coffeehouse under the Marks and distinctive systems, methods, procedures,
standards, and specifications, all of which LICENSOR may improve, further
develop, and otherwise modify from time to time.
"WEBSITE" - an interactive electronic document contained in a network of
computers linked by communications software, including, without limitation,
Internet and World Wide Web pages, or any similar or successor technology.
3. DEVELOPMENT RIGHTS AND OBLIGATIONS.
X. XXXXX.
Subject to this Agreement's terms and conditions, LICENSOR hereby grants
to MASTER LICENSEE the right to (1) develop and operate CARIBOU COFFEE
Coffeehouses in the Development Area during the Development Term under License
Agreements; (2) grant Sublicenses for the development and operation of CARIBOU
COFFEE Coffeehouses in the Development Area during the Development Term; and (3)
continue to function, for the remainder of the Agreement Term after the
Development Term is terminated or expires, as the sublicensor under then
existing Sublicense Agreements with Sublicensees. MASTER LICENSEE acknowledges
and agrees that it shall have no right to renew the rights under Sections
3.A.(1) and (2) upon expiration of the Development Term or the rights under
Section 3.A.(3) upon expiration of the Agreement Term. MASTER LICENSEE agrees
that, during the Agreement Term, it will at all times faithfully, honestly, and
diligently perform its obligations under this Agreement and under all License
Agreements and Sublicense Agreements to which it is a party, and will
continuously exert its best efforts to promote and enhance the development and
operation of CARIBOU COFFEE Coffeehouses in the Development Area.
B. TERRITORIAL RIGHTS OF MASTER LICENSEE.
If MASTER LICENSEE is in substantial compliance with this Agreement, then
during the Development Term, neither LICENSOR nor any of its Affiliates will
(except as provided in Section 3.C. below) operate, or authorize others to
operate, a Coffeehouse operating under the Marks and the System the physical
premises of which are located in the Development Area. After the Development
Term is terminated or expires, and even if the Agreement Term has not yet
terminated or expired, LICENSOR and its Affiliates will have the unrestricted
right to own, establish, and operate, and authorize others to own, establish,
and operate, Coffeehouses operating under the Marks and the System the physical
premises of which are located in the Development Area, but not within a one (1)
mile radius of any Coffeehouse in the Development Area in operation or under
construction as of the date on which the Development Term is terminated or
expires. (With respect to such Coffeehouses, the restriction on LICENSOR shall
apply only during the remaining portion of the Agreement Term and shall not
prohibit LICENSOR's exercise of the rights reserved under Section 3.C.(3)
below.)
C. RESERVATION OF RIGHTS.
LICENSOR (on behalf of itself, its Affiliates, and its designees) reserves
all rights not expressly granted to MASTER LICENSEE under this Agreement.
Without limiting the
CARIBOU MLA XX XXXXX (2004)
4
generality of the foregoing, LICENSOR (on behalf of itself, its Affiliates, and
its designees) reserves the right, on such terms and conditions as LICENSOR
deems appropriate, itself or through authorized third parties (including
LICENSOR's Affiliates), to: (1) establish, and allow others to establish,
businesses and distribution channels (including, but not limited to, the
Internet, wholesale businesses, and catalogs), wherever located or operating
(including inside and outside the Development Area) and regardless of the nature
or location of the customers with whom such other businesses and distribution
channels do business (including independent coffee retailers, department stores,
food marts, restaurants, and grocery stores), that operate under the Marks or
any other trademarks or service marks; that are the same as or different from
CARIBOU COFFEE Coffeehouses; and that sell products and/or services that are
identical or similar to, and/or competitive with, those that CARIBOU COFFEE
Coffeehouses customarily sell (subject only to MASTER LICENSEE's rights in
Section 3.B.); (2) own, establish, and operate, and authorize others to own,
establish, and operate, Coffeehouses operating under the Marks and the System
the physical premises of which are located outside the Development Area; and (3)
own, establish, and operate, and authorize others to own, establish, and
operate, Coffeehouses the physical premises of which are located in the
Development Area if MASTER LICENSEE (or its Affiliates) does not have access to,
or is unable to receive the right to occupy, particular sites but LICENSOR (or
its Affiliates or other approved third parties) do have access to, or are able
to receive the right to occupy, such sites (including, but not limited to,
United States military bases located in the Development Area).
D. DEVELOPMENT OBLIGATIONS.
MASTER LICENSEE agrees to comply with the Development Quota for each
Development Period. The determination of whether MASTER LICENSEE has satisfied
its Development Quota shall be made based on the number of Coffeehouses open and
operating at the end of each Development Period. If a Coffeehouse was open and
operating at some point during the last six (6) months of a Development Period,
but is then permanently closed for any reason due to no fault of MASTER LICENSEE
or any of its Affiliates, that Coffeehouse shall be counted as open and
operating at the end of that Development Period (but not afterward); otherwise,
a Coffeehouse must be open and operating at the end of the Development Period in
compliance with the applicable License Agreement or Sublicense Agreement in
order to be counted toward the satisfaction of the Development Quota for that
Development Period.
E. PROTOTYPE COFFEEHOUSES.
MASTER LICENSEE and/or its Affiliates must establish and operate in
compliance with License Agreements at least five (5) CARIBOU COFFEE Coffeehouses
in Kuwait and/or the United Arab Emirates before MASTER LICENSEE may begin
granting Sublicenses. One of these Coffeehouses, which shall be in Dubai,
U.A.E., shall serve throughout the Agreement Term as the training center for all
training programs that MASTER LICENSEE conducts for Sublicensees under
Sublicense Agreements and for its (and its Affiliates') employees who operate
Coffeehouses.
CARIBOU MLA XX XXXXX (2004)
5
4. GUIDANCE AND ASSISTANCE.
A. INITIAL TRAINING AND ANNUAL CONVENTION.
LICENSOR will furnish, at its principal office in the United States and at
no charge to MASTER LICENSEE, an initial training program on the operation of a
Coffeehouse to MASTER LICENSEE's Chief Executive Officer (described in Section
6.A. below) and any other key employees of MASTER LICENSEE whom MASTER LICENSEE
wishes to have attend such training. MASTER LICENSEE's Chief Executive Officer
and employees must complete the initial training program to LICENSOR's
satisfaction. LICENSOR also may, at its option, periodically conduct conferences
and conventions for master licensees and operators of Coffeehouses. MASTER
LICENSEE's Chief Executive Officer agrees to attend at least one (1) conference
or convention each year during the Agreement Term (if held by LICENSOR). MASTER
LICENSEE must pay all travel and living expenses and compensation of its
personnel who attend these training programs, conferences, and conventions.
B. ANNUAL SITE VISIT.
During each Development Period throughout the Development Term, LICENSOR
shall make one (1) of its representatives available in the Development Area for
at least eight (8) weeks (which need not be consecutive) to consult with MASTER
LICENSEE regarding the development, marketing, operation, and sublicensing of
Coffeehouses and, at LICENSOR's option, to inspect Coffeehouses that LICENSOR
selects on the condition that (1) MASTER LICENSEE is then in substantial
compliance with all of its obligations under this Agreement, and (2) LICENSOR's
representative is accompanied on inspections by a representative of MASTER
LICENSEE acceptable to LICENSOR. LICENSOR will pay all of the costs and expenses
of its own representative.
C. CONTINUING GUIDANCE AND SUPPORT BY LICENSOR.
During the Agreement Term, LICENSOR shall provide ongoing advice and
guidance to MASTER LICENSEE via e-mail and telephone consultations concerning
the development, marketing, operation and sublicensing of Coffeehouses. As part
of this assistance, LICENSOR will furnish to MASTER LICENSEE written (and, if
reasonably available to LICENSOR, electronic) copies of advertising and
marketing materials that LICENSOR develops for Coffeehouses in the United States
(provided that LICENSOR reasonably determines that the materials would be useful
for Coffeehouses operating in the Development Area) and information relating to
systems developed and implemented in, and/or products and services offered by,
Coffeehouses in the United States. If MASTER LICENSEE desires assistance from
LICENSOR in addition to the assistance described above, and LICENSOR agrees to
provide such assistance, MASTER LICENSEE shall reimburse LICENSOR's related
costs and expenses, including wages of LICENSOR's personnel and LICENSOR's
expenses for travel to and from the Development Area.
MASTER LICENSEE shall purchase from LICENSOR for resale to Sublicensees,
and for its (and its Affiliates') own Coffeehouses, all trade secret,
proprietary, and other products to be used at and/or sold from Coffeehouses in
compliance with LICENSOR's System Standards
CARIBOU MLA XX XXXXX (2004)
6
for which LICENSOR is the exclusive source because of the proprietary nature or
other special characteristics of such products. MASTER LICENSEE shall comply
with LICENSOR's payment and shipping terms and procedures with respect to all
such products. MASTER LICENSEE may not obtain substitute products from other
sources, sell such unauthorized products to Sublicensees, nor use such
unauthorized products at Coffeehouses. MASTER LICENSEE shall ensure that
Sublicensees do not use any unauthorized products. MASTER LICENSEE may use and
resell trade secret, proprietary, and similar products only in connection with
the business it conducts under this Agreement.
5. GRANT, SUPPORT, AND SUPERVISION OF SUBLICENSEES.
A. FORM OF SUBLICENSE AGREEMENTS.
MASTER LICENSEE shall prepare a form of Sublicense Agreement in the
English language to use in the Development Area. MASTER LICENSEE shall submit
that form to LICENSOR for review and approval before it may be used. The form of
Sublicense Agreement may contain provisions that are reasonably necessary to
comply with Legal Requirements and for the commercial success of Coffeehouses to
be operated in the Development Area. LICENSOR will consider MASTER LICENSEE's
proposed form of Sublicense Agreement in good faith and reject only those
provisions that LICENSOR believes will be harmful to or inconsistent with the
System or the successful operation of Coffeehouses. The Sublicense Agreement
must contain all provisions and concepts required by this Agreement, including a
provision in which the Sublicensee agrees in advance that, upon notice from
LICENSOR following termination of this Agreement, the Sublicense Agreement and
all related rights and obligations shall be automatically assigned to LICENSOR
(or its designee) and each Sublicensee will sign all documents required to
effect such assignment and assumption. MASTER LICENSEE may use the License
Agreement as a base document from which to prepare the form of Sublicense
Agreement. LICENSOR will provide its comments on the proposed form of Sublicense
Agreement within thirty (30) days after receiving it. LICENSOR must review and
approve any modified form of Sublicense Agreement before MASTER LICENSEE may use
it (for example, if MASTER LICENSEE makes changes to comply with Legal
Requirements in one or more countries in the Development Area).
MASTER LICENSEE acknowledges and agrees that LICENSOR periodically may
require MASTER LICENSEE to modify the Sublicense Agreement. MASTER LICENSEE
shall not permit any person or entity to develop or operate a CARIBOU COFFEE
Coffeehouse in the Development Area other than pursuant to a signed Sublicense
Agreement in the form approved by LICENSOR, unless the Coffeehouse is operated
by MASTER LICENSEE or its Affiliate pursuant to a License Agreement, and shall
not make any material changes to the Sublicense Agreement form without
LICENSOR's prior written consent. MASTER LICENSEE may prepare a translation of
the Sublicense Agreement, at its sole cost, to the extent necessary to comply
with any Legal Requirement or customs or business practices in the Development
Area. MASTER LICENSEE shall submit a copy of any translated Sublicense Agreement
to LICENSOR for its approval before delivering the Sublicense Agreement to
prospective Sublicensees. LICENSOR may require that translations be certified by
a licensed translator. In any event, if any dispute or question of
interpretation concerning the Sublicense Agreement
CARIBOU MLA XX XXXXX (2004)
7
arises, the provisions of the English language version will control and govern
its construction and interpretation.
B. SUBLICENSEE TRAINING AND SUPPORT.
MASTER LICENSEE shall develop and submit to LICENSOR for approval a
detailed plan for the training program that MASTER LICENSEE intends to provide
to Sublicensees and their employees under Sublicense Agreements and to its (and
its Affiliates') own employees under License Agreements. To assist MASTER
LICENSEE in developing this plan, LICENSOR shall give MASTER LICENSEE detailed
information regarding the initial training program that LICENSOR currently
provides to CARIBOU COFFEE Coffeehouse licensees and employees in the United
States. MASTER LICENSEE shall make all changes to its plan that LICENSOR
reasonably requests and provide initial training to Sublicensees and CARIBOU
COFFEE Coffeehouse employees at the Coffeehouse specified in Section 3.E. above
in accordance with the plan and applicable Sublicense Agreements and License
Agreements. MASTER LICENSEE may not grant any Sublicenses until LICENSOR has
approved this initial training plan. MASTER LICENSEE must submit to LICENSOR for
approval any proposed changes to the approved training plan before their
implementation.
MASTER LICENSEE agrees diligently and continuously to provide support and
assistance to Sublicensees as required under Sublicense Agreements. MASTER
LICENSEE shall not transfer, delegate, or subcontract these services and
assistance. MASTER LICENSEE agrees to use its best efforts to recruit, train,
and control the performance of Sublicensees to meet LICENSOR's standards. MASTER
LICENSEE shall not offer a Sublicense to any prospective Sublicensee who
reasonably could be expected to injure the reputation and goodwill associated
with the Marks. LICENSOR has the right to approve all proposed Sublicensees, and
MASTER LICENSEE agrees to send LICENSOR such information regarding proposed
Sublicensees that LICENSOR requests, and to comply with such approval procedures
that LICENSOR specifies, to determine whether proposed Sublicensees are suitable
for CARIBOU COFFEE Coffeehouses. MASTER LICENSEE may not grant a Sublicense to
any Sublicensee whom LICENSOR has not approved or has disapproved.
C. MANUALS.
LICENSOR shall provide to MASTER LICENSEE for use during the Agreement
Term a written (and, if reasonably available to LICENSOR, an electronic) copy of
the manuals and forms that LICENSOR generally uses and/or furnishes to licensees
operating in the United States that describe various aspects of operating
Coffeehouses (COLLECTIVELY, THE "MANUALS"). MASTER LICENSEE shall submit to
LICENSOR for review and approval any proposed changes to the Manuals and/or
System that MASTER LICENSEE believes are necessary to comply with Legal
Requirements or for the commercial success of Coffeehouses operated in the
Development Area. LICENSOR shall consider such proposed changes in good faith,
reject only those changes that LICENSOR believes will be harmful to or
inconsistent with the System or the successful operation of Coffeehouses, and
promptly notify MASTER LICENSEE in writing whether it accepts or rejects the
proposed changes. MASTER LICENSEE shall provide a copy of the Manuals (as
modified with LICENSOR's approval) to all Sublicensees pursuant to Sublicense
Agreements. If required by LICENSOR, any Legal Requirement, or for the
CARIBOU MLA XX XXXXX (2004)
8
commercial success of Coffeehouses operated in the Development Area, MASTER
LICENSEE, at its own expense, shall translate the Manuals into the language(s)
used in the Development Area. MASTER LICENSEE shall submit a copy of any
translation to LICENSOR for its approval before delivering the Manuals to
Sublicensees. LICENSOR may require that translations be certified by a licensed
translator. LICENSOR has the right to receive from MASTER LICENSEE, at no cost
to LICENSOR, electronic and "hard" copies of the translated Manuals. The
Manuals; all copyrights in the Manuals, in any translations of this Agreement,
and in the design (exterior and interior) of and the graphics, menu boards, and
related items used in Coffeehouses; and all other intellectual property rights
relating to the Manuals and this Agreement shall be LICENSOR's property. Except
for providing one (1) copy of the Manuals to each Sublicensee, MASTER LICENSEE
shall not copy the Manuals or disclose any part of the Manuals to any person
other than its employees who need to know their contents. MASTER LICENSEE shall
cause each Sublicensee to acknowledge in writing that the Manuals are LICENSOR's
property.
D. SYSTEM STANDARDS.
MASTER LICENSEE acknowledges and agrees that strict compliance by MASTER
LICENSEE, its Affiliates, and all Sublicensees with the mandatory
specifications, standards, and operating procedures that LICENSOR periodically
prescribes for sublicensing, developing, and operating CARIBOU COFFEE
Coffeehouses, including Sharia rules and principles relating to Coffeehouses
(THE "SYSTEM STANDARDS"), is essential to preserve the goodwill of the Marks,
the System, and all Coffeehouses. LICENSOR shall consider in good faith any
proposed changes to System Standards that MASTER LICENSEE periodically suggests
as necessary to comply with Legal Requirements or for the commercial success of
Coffeehouses operating in the Development Area, reject only those changes that
LICENSOR believes will be harmful to or inconsistent with the System or the
successful operation of Coffeehouses, and promptly notify MASTER LICENSEE
whether it accepts or rejects the proposed changes. Throughout the Agreement
Term, MASTER LICENSEE and its Affiliates shall comply with, and cause
Sublicensees to develop, maintain, and operate Coffeehouses in compliance with,
each and every System Standard, as LICENSOR periodically modifies and
supplements them in its discretion. LICENSOR may delete, change, modify, and
supplement System Standards and other information contained in the Manuals, and
create and add new System Standards and information, from time to time as it
deems necessary for maintaining, developing, and enhancing the System. LICENSOR
shall advise MASTER LICENSEE in writing of new or revised System Standards
within a reasonable time period before their implementation so that MASTER
LICENSEE, its Affiliates, and Sublicensees can comply with them. MASTER LICENSEE
shall promptly communicate to Sublicensees all changes to System Standards.
E. SUBLICENSEE COMPLIANCE.
MASTER LICENSEE agrees diligently and continuously to monitor and enforce
strictly each Sublicensee's compliance with its Sublicense Agreement and System
Standards and to furnish assistance to Sublicensees to correct perceived
deficiencies in operation. MASTER LICENSEE shall inspect each Coffeehouse
operating in the Development Area at least twice per calendar year to determine
the Sublicensee's compliance with the Sublicense Agreement and System Standards
and send LICENSOR copies of all inspection reports. MASTER LICENSEE
CARIBOU MLA XX XXXXX (2004)
9
shall consult with LICENSOR before terminating a Sublicense Agreement and, upon
any termination, strictly enforce all post-termination obligations under the
Sublicense Agreement.
6. OTHER OBLIGATIONS OF MASTER LICENSEE.
A. CHIEF EXECUTIVE OFFICER.
Concurrently with signing this Agreement, MASTER LICENSEE shall designate
an individual, who shall be a managing partner, member, shareholder, or key
officer of MASTER LICENSEE and subject to LICENSOR's approval, to act as Chief
Executive Officer. The Chief Executive Officer shall exert his full-time efforts
to developing, operating, and sublicensing CARIBOU COFFEE Coffeehouses. If the
Chief Executive Officer's relationship with MASTER LICENSEE terminates, MASTER
LICENSEE shall promptly designate a replacement Chief Executive Officer who
shall satisfactorily complete LICENSOR's initial training program. The Chief
Executive Officer shall speak, read, and write the English language fluently.
B. OTHER MANAGEMENT PERSONNEL OF MASTER LICENSEE.
MASTER LICENSEE agrees to hire, properly train, and maintain the number
and level of management personnel required to manage and supervise the
development and operation of Coffeehouses and the grant of Sublicenses in the
Development Area in accordance with this Agreement. MASTER LICENSEE shall inform
LICENSOR of the identities of all management personnel, who shall speak, read,
and write the English language fluently.
C. INSURANCE.
MASTER LICENSEE agrees to maintain the insurance necessary to comply with
all Legal Requirements, including general liability insurance against claims for
bodily and personal injury, death, and property damage caused by or occurring in
connection with the conduct of MASTER LICENSEE's business under this Agreement.
MASTER LICENSEE must maintain this insurance under one or more policies
containing the minimum liability and types of coverages that are reasonable and
appropriate in the Development Area. Each insurance policy shall name LICENSOR
and its Affiliates as additional insureds, contain a waiver of all subrogation
rights against LICENSOR, its Affiliates, and their successors and assigns, and
provide for thirty (30) days' prior written notice to LICENSOR of any policy's
material modification, cancellation, or expiration. MASTER LICENSEE shall send
LICENSOR annually a copy of the certificates of insurance or other evidence
LICENSOR requests to demonstrate that required insurance coverage is in force.
LICENSOR has no obligation to prescribe types or amounts of insurance coverage
for MASTER LICENSEE and shall have no liability to MASTER LICENSEE for not doing
so or if the types or amounts of insurance coverage obtained by MASTER LICENSEE
are insufficient. The insurance coverage obtained by MASTER LICENSEE shall
comply with Sharia rules and principles to the extent such coverage is
available.
D. RECORDS AND REPORTS.
MASTER LICENSEE agrees to maintain and preserve at its principal office
full, complete, and accurate records and reports relating to the development,
operation, and
CARIBOU MLA XX XXXXX (2004)
10
sublicensing of Coffeehouses and MASTER LICENSEE's performance of its
obligations under this Agreement, including, but not limited to, information
regarding Sublicensee applications, site reports, inspection and supervisory
reports for Coffeehouses and Sublicense Agreement compliance, copies of leases
and Sublicense Agreements for each Coffeehouse, records reflecting the financial
condition and performance of MASTER LICENSEE and Sublicensees, and any other
records and reports that LICENSOR periodically prescribes. MASTER LICENSEE shall
(at LICENSOR's request) maintain these records and reports on forms that
LICENSOR periodically designates. LICENSOR and/or its representatives shall have
the right without notice to MASTER LICENSEE to inspect, audit, and make copies
of such records and reports. MASTER LICENSEE shall fully cooperate with
LICENSOR. LICENSOR shall have the right at any time during normal business hours
to inspect the premises of MASTER LICENSEE's offices and any Coffeehouse to
assess a Sublicensee's compliance with its Sublicense Agreement and/or MASTER
LICENSEE's compliance with this Agreement.
MASTER LICENSEE shall deliver to LICENSOR in the electronic and/or written
format LICENSOR periodically prescribes:
(1) by the last day of each calendar month, a report of the Gross
Sales of each Coffeehouse then open and operating in the Development Area
as of the end of the previous calendar month;
(2) within thirty (30) days after the end of each quarter of MASTER
LICENSEE's financial year, a report of the number of Coffeehouses opened,
closed, and under development in the Development Area during the
immediately preceding quarter, along with a short description of the
status of any Coffeehouse then under development;
(3) at least sixty (60) days before the end of each Development
Period, (a) a business and development plan for the succeeding Development
Period, including plans for grants of Sublicenses, development of
Coffeehouses, and capital and operating budgets for MASTER LICENSEE, and
(b) a detailed marketing plan and budget describing proposed marketing
activities and expenditures for marketing programs in the Development Area
for the succeeding Development Period (the "Marketing Plan"); and
(4) such other data, reports, information, financial statements, and
supporting records relating to Sublicenses and Coffeehouses that LICENSOR
periodically prescribes.
MASTER LICENSEE shall verify in writing that each report and financial statement
is correct to the best of its knowledge. MASTER LICENSEE shall immediately
report to LICENSOR any events or developments that might materially and
adversely impact MASTER LICENSEE's performance under this Agreement or the
goodwill associated with the Marks and Coffeehouses.
E. GOVERNMENTAL APPROVALS AND REGISTRATIONS OF THIS AGREEMENT.
LICENSOR and MASTER LICENSEE agree to sign any and all appropriate
instruments and documents, and otherwise cooperate with each other, to obtain
all governmental approvals
CARIBOU MLA XX XXXXX (2004)
11
necessary in LICENSOR's reasonable opinion to comply with Legal Requirements
with respect to this Agreement, including MASTER LICENSEE's assistance in
securing visas for LICENSOR's personnel. LICENSOR shall have the right to
submit, or to require MASTER LICENSEE to submit, this Agreement, License
Agreements, and/or Sublicense Agreements to any governmental entity (each an
"Agency") for registration and/or approval. If any Agency requires any
amendments to this Agreement, License Agreements, and/or Sublicense Agreements,
LICENSOR and MASTER LICENSEE shall negotiate in good faith to determine the
amendments necessary to render this Agreement, the License Agreements, and/or
the Sublicense Agreements acceptable to the Agency. However, neither party shall
be required to agree to any amendment of the rental payments and fees payable
under this Agreement, License Agreements, or Sublicense Agreements. If LICENSOR
and MASTER LICENSEE agree to any amendments, LICENSOR will deliver to MASTER
LICENSEE for execution an addendum to this Agreement, License Agreements, and/or
Sublicense Agreements (or other appropriate documents) to reflect the
amendments. LICENSOR may terminate this Agreement, effective upon delivery of
written notice to MASTER LICENSEE, if: (1) LICENSOR reasonably determines that
the effect of any amendment will be materially adverse to its interests; or (2)
any applicable Agency has not registered or approved this Agreement, License
Agreements, and/or Sublicense Agreements within one hundred eighty (180) days
after they have been submitted to the Agency for approval or registration. No
rental payments and fees paid under this Agreement shall be refunded.
F. COMPLIANCE WITH LEGAL REQUIREMENTS/GOOD BUSINESS PRACTICES.
MASTER LICENSEE shall obtain and maintain in force in its name all
required licenses, permits, and certificates relating to the business conducted
pursuant to this Agreement. MASTER LICENSEE at all times shall comply with Legal
Requirements. All advertising by MASTER LICENSEE shall be completely factual and
conform to high standards of ethical advertising. MASTER LICENSEE shall at all
times and in all dealings with LICENSOR, public officials, and other third
parties adhere to high standards of honesty, integrity, fair dealing, and
ethical conduct and not engage in any business or advertising practice that
might injure the business of LICENSOR or MASTER LICENSEE or the goodwill
associated with the Marks and Coffeehouses. MASTER LICENSEE shall notify
LICENSOR within three (3) days after it learns of the commencement of any
action, suit, or proceeding, or of the issuance of any order, writ, injunction,
award, or decree of any court, agency, or other governmental instrumentality,
that might adversely affect the operation or financial condition of MASTER
LICENSEE, a Sublicensee, or a Coffeehouse.
Notwithstanding anything to the contrary in this Agreement, MASTER
LICENSEE (at its own cost) shall be solely responsible and liable for complying
with all Legal Requirements that apply to its activities under this Agreement,
including, without limitation, all laws and regulations governing the offer and
sale of Sublicenses in the Development Area and the relationship between MASTER
LICENSEE and Sublicensees. MASTER LICENSEE shall submit to LICENSOR for prior
approval all disclosure documents and similar materials (and any renewals,
amendments, and updates of such materials) that MASTER LICENSEE intends to use
to offer and sell Sublicenses. MASTER LICENSEE may not use any materials that
LICENSOR has not approved or has disapproved.
CARIBOU MLA XX XXXXX (2004)
12
7. INITIAL RENTAL PAYMENTS AND CONTINUING FEES.
A. INITIAL RENTAL PAYMENTS FOR RIGHTS TO TERRITORY.
MASTER LICENSEE shall pay LICENSOR the following initial rental payments:
(1) Two Million Dollars ($2,000,000) in a lump sum upon signing this
Agreement as the rental payment for the territory rights to the
Development Area; and
(2) One Million Two Hundred Fifty Thousand Dollars ($1,250,000) in a
lump sum upon signing this Agreement as partial payment for the initial
rental payments due to LICENSOR for each CARIBOU COFFEE Coffeehouse
scheduled for development in the Development Area during the Development
Term.
These initial rental payments are for a rental term of two (2) days, are fully
earned by LICENSOR two (2) days after this Agreement is signed, and are
nonrefundable, even if MASTER LICENSEE fails to develop or sublicense CARIBOU
COFFEE Coffeehouses in the Development Area during the Development Term in
accordance with this Agreement. [The initial rental payments specified above
will be treated as upfront license fee payments for United States tax and
accounting purposes.]
B. INITIAL RENTAL PAYMENTS FOR LICENSES AND SUBLICENSES.
In addition to the initial rental payments specified in Section 7.A.
above, MASTER LICENSEE shall pay LICENSOR a Twenty Thousand Dollar ($20,000)
initial rental payment for each of the first one hundred (100) CARIBOU COFFEE
Coffeehouses in the Development Area for which a License Agreement or Sublicense
Agreement is signed and a Fifteen Thousand Dollar ($15,000) initial rental
payment for each additional CARIBOU COFFEE Coffeehouse in the Development Area
(after the first one hundred (100)) for which a License Agreement or Sublicense
Agreement is signed. Five Thousand Dollars ($5,000) of the initial rental
payment paid under Section 7.A.(2) above shall be applied as a credit against
each initial rental payment due for each CARIBOU COFFEE Coffeehouse in the
Development Area for which a License Agreement or Sublicense Agreement is
signed, meaning that MASTER LICENSEE'S actual required additional initial rental
payment for each such Coffeehouse shall be Fifteen Thousand Dollars ($15,000)
and Ten Thousand Dollars ($10,000), respectively. If MASTER LICENSEE or its
Affiliate signs a License Agreement for a Coffeehouse, the required payment is
due when it signs the License Agreement. However, if a Sublicense Agreement is
signed for a Coffeehouse, the required payment is due within fifteen (15) days
after the Sublicensee signs the Sublicense Agreement, whether or not the
Sublicensee makes any payment to MASTER LICENSEE. These rental payments are
nonrefundable and fully earned by LICENSOR upon payment. [The rental payments
specified above will be treated as license fee payments for United States tax
and accounting purposes.]
C. CONTINUING FEES.
MASTER LICENSEE shall pay LICENSOR during the Agreement Term the following
continuing fees:
CARIBOU MLA XX XXXXX (2004)
13
(1) If MASTER LICENSEE or its Affiliate operates a Coffeehouse
pursuant to a License Agreement, MASTER LICENSEE or its Affiliate shall
pay LICENSOR the five percent (5%) Royalty specified in the License
Agreement on or before its designated due date; and
(2) For all Coffeehouses operated under Sublicense Agreements,
MASTER LICENSEE shall pay LICENSOR on or before the last day of each
calendar month an amount equal to three percent (3%) of the Gross Sales of
all Coffeehouses operating in the Development Area during the previous
calendar month, whether or not MASTER LICENSEE actually collects any
royalty or other continuing fee from its Sublicensees.
LICENSOR may require MASTER LICENSEE to pay any amounts due under this Agreement
by international wire transfer in immediately available U.S. Dollars or by any
other reasonable means LICENSOR designates to ensure that required payments are
made by their due dates. MASTER LICENSEE agrees to comply with LICENSOR's
payment instructions (although LICENSOR shall not debit MASTER LICENSEE's bank
accounts automatically for any amounts due).
D. LATE FEES.
MASTER LICENSEE agrees to pay LICENSOR a late fee for each required
payment not made on or before its original due date. This late fee will equal
ten percent (10%) of the original amounts due but not paid on time. Any late fee
to be paid by MASTER LICENSEE pursuant to this Section 7.D. shall be donated to
charity by LICENSOR on behalf of MASTER LICENSEE. MASTER LICENSEE acknowledges
that this Section is not LICENSOR's agreement to accept any payments after they
are due or its commitment to extend credit to or otherwise finance MASTER
LICENSEE's business. MASTER LICENSEE acknowledges that its failure to pay
LICENSOR and its Affiliates all amounts when due is cause for termination of
this Agreement despite this Section's provisions.
E. TAXES.
MASTER LICENSEE shall make all payments due to LICENSOR and its Affiliates
under this Agreement free and clear of any tax, deduction, offset, or
withholding of any kind. All taxes and penalties levied on such payments in the
Development Area shall be fully borne by MASTER LICENSEE. If MASTER LICENSEE or
any other person is required by law to make any deduction or withholding on
account of any tax, assessment, duty, or levy charged against any payments,
MASTER LICENSEE shall pay such tax, assessment, duty, or levy before the date on
which a penalty for nonpayment or late payment attaches. Payment of the tax,
levy, duty, or assessment is to be made (if the liability to pay is imposed on
MASTER LICENSEE) for MASTER LICENSEE's own account or (if the liability to pay
is imposed on LICENSOR) on behalf of and in the name of LICENSOR. Payments by
MASTER LICENSEE to LICENSOR or its Affiliates with respect to which the relevant
deduction, withholding, or payment (including any penalties) is required will be
increased to the extent necessary to ensure that, after the deduction,
withholding, or payment of such tax, levy, duty, or assessment is made, LICENSOR
or its Affiliates receive on the due date and retain (free from any liability
with respect to the deduction, withholding, or payment) a net sum equal to what
LICENSOR or its Affiliates would
CARIBOU MLA XX XXXXX (2004)
14
have received and retained had no such deduction, withholding, or payment been
required or made, provided, however, that MASTER LICENSEE shall not be obligated
to increase its payments to LICENSOR if the relevant deduction, withholding, or
payment is expressly required by law with respect to the types of payments due
under this Agreement from MASTER LICENSEE to LICENSOR and relates exclusively to
income taxes potentially due from and payable by LICENSOR to the taxing
authority of a country in the Development Area. MASTER LICENSEE shall
immediately send to LICENSOR certified receipts of the payment of any deduction,
withholding, or payment, whether on MASTER LICENSEE's or LICENSOR's account.
If MASTER LICENSEE fails to take the action required above, MASTER
LICENSEE will be responsible for, and shall indemnify and hold harmless LICENSOR
and its Affiliates against, any penalties, interest, or expenses incurred by or
assessed against LICENSOR or its Affiliates due to such failure. In appropriate
circumstances, LICENSOR may apply to a taxing authority for tax credits,
exemptions, or refunds that are available for any taxes that MASTER LICENSEE
deducts from payments due to LICENSOR, in which case MASTER LICENSEE agrees to
cooperate with LICENSOR fully to provide any information and records that
LICENSOR requests.
F. CURRENCY OF PAYMENT.
All payments by MASTER LICENSEE to LICENSOR under this Agreement shall be
made in U.S. Dollars or in a currency easily and readily convertible to U.S.
Dollars, unless LICENSOR specifies otherwise. All payments under this Agreement
to be calculated in the currency of the country where the Coffeehouse is located
and then converted into U.S. Dollars for payment to LICENSOR shall be converted
at the spot currency rate announced by the New York City Office of Citibank in
the United States (or any other United States bank or financial institution
LICENSOR reasonably designates). The rate used will be the rate that was in
effect as of 10:00 a.m. New York time on the business day before the date
payment is transmitted. All payments made under this Agreement shall be made in
full, net of any bank charges. MASTER LICENSEE shall make all payments to a bank
of LICENSOR's choice in the United States or elsewhere (including, if LICENSOR
so elects, in a bank located in the Development Area). MASTER LICENSEE will bear
all of the costs and expenses of (and obtain any required governmental
authorizations in connection with) obtaining U.S. Dollars and making required
payments.
G. EXCHANGE CONTROLS.
MASTER LICENSEE shall use its best efforts to obtain any consents or
authorizations that are necessary in order to permit timely payments in U.S.
Dollars of all amounts payable under this Agreement. If any legal restriction at
any time prevents MASTER LICENSEE from paying in U.S. Dollars, MASTER LICENSEE
shall notify LICENSOR immediately. While such restrictions are in effect,
LICENSOR may require payment in any currency it designates that is available to
MASTER LICENSEE. Alternatively, LICENSOR may require MASTER LICENSEE to deposit
all amounts due but unpaid as a result of such a restriction in any type of
account in any bank or institution LICENSOR designates in the country where the
Coffeehouses operate or elsewhere. The account used by LICENSOR shall be Sharia
compliant. LICENSOR
CARIBOU MLA XX XXXXX (2004)
15
shall be entitled to all profit earned on such deposits. LICENSOR may suspend
the performance of its obligations under this Agreement until payment is U.S.
dollars may be made.
H. STAMP DUTIES.
If there is any stamp duty or similar tax or duty that applies in any
country in the Development Area, MASTER LICENSEE shall submit a signed copy of
this Agreement to the appropriate governmental agency within the required time
period. MASTER LICENSEE agrees to pay all stamp duties and comparable duties and
taxes (including penalties for late payment) in connection with this Agreement.
8. MARKETING.
A. SUBLICENSEE ADVERTISING AND MARKETING.
If MASTER LICENSEE (at its option) establishes, maintains, and administers
one or more Sublicensee-funded marketing funds for Coffeehouses operating in the
Development Area (EACH A "MARKETING FUND"), MASTER LICENSEE shall require all
affected Sublicensees to contribute to the Marketing Fund according to the terms
of their Sublicense Agreements. Whether or not MASTER LICENSEE establishes a
Marketing Fund, MASTER LICENSEE shall (subject to LICENSOR's approval) adapt for
use in the Development Area any marketing materials that LICENSOR provides to
MASTER LICENSEE and give each Sublicensee reasonable quantities of these
materials without charge. MASTER LICENSEE shall direct and supervise the
creation and implementation of advertising, marketing, and promotional programs
for the Development Area according to the Marketing Plan, as modified pursuant
to LICENSOR's comments and any System Standards. LICENSOR shall own the
copyright and all other intellectual property rights with respect to any
advertising materials furnished to or prepared by MASTER LICENSEE. MASTER
LICENSEE and its Affiliates may not use, nor approve for use by Sublicensees,
any advertising, marketing, or promotional materials unless LICENSOR has
previously approved such materials, such approval not to be withheld
unreasonably. If such materials are produced in any language other than English,
MASTER LICENSEE must (at its own cost) send LICENSOR a copy of the materials
together with a complete and accurate English translation. LICENSOR may require
that MASTER LICENSEE change the content or format of materials based on
LICENSOR's decisions relating to quality control, proper use of the Marks,
tastefulness, and/or compliance with this Agreement.
B. WEBSITES.
(1) MASTER LICENSEE shall not, either alone or in conjunction with
others, develop, maintain, or establish a Website relating directly or
indirectly to the Marks or any CARIBOU COFFEE Coffeehouse without
LICENSOR's prior written approval. MASTER LICENSEE acknowledges that
LICENSOR may, at its option, prohibit MASTER LICENSEE's use of any such
Website.
(2) If LICENSOR requires, MASTER LICENSEE shall provide such
information that LICENSOR periodically prescribes relating to MASTER
LICENSEE,
CARIBOU MLA XX XXXXX (2004)
16
Sublicensees, and Coffeehouses operating in the Development Area in
connection with any Website that LICENSOR chooses to maintain.
(3) If MASTER LICENSEE requests the right to establish a Website
relating directly or indirectly to the Marks and Coffeehouses operating in
the Development Area, and LICENSOR approves that request:
(a) MASTER LICENSEE shall obtain LICENSOR's prior written
approval of any domain names relating to the Website and allow
LICENSOR to register such domain name(s) in its own name;
(b) before establishing the Website, MASTER LICENSEE shall
submit to LICENSOR for prior approval a sample of the proposed
Website format, visible content (such as proposed screen shots), and
non-visible content (such as meta tags) in the form and manner
LICENSOR requires; and
(c) MASTER LICENSEE shall not materially modify an approved
Website without LICENSOR's prior written consent and shall comply
with any System Standards that LICENSOR periodically issues with
respect to Websites (including, without limitation, rules relating
to hyperlinks to LICENSOR's Website).
MASTER LICENSEE acknowledges that LICENSOR may at any time revoke its approval
of any Website and/or Website content and require that MASTER LICENSEE
discontinue use of a Website.
9. CONFIDENTIAL INFORMATION.
A. OBLIGATIONS OF MASTER LICENSEE.
LICENSOR possesses (and will continue to develop and acquire) certain
confidential and proprietary information, some of which constitutes trade
secrets under applicable law ("CONFIDENTIAL INFORMATION") relating to
developing, operating, and sublicensing CARIBOU COFFEE Coffeehouses, including,
but not limited to: the terms of this Agreement; Sublicensee and site selection
criteria; plans and specifications for the development of CARIBOU COFFEE
Coffeehouses; specifications for trade secret products; training and operations
materials and manuals; methods, formats, specifications, standards, systems,
procedures, product preparation techniques, sales and marketing techniques,
knowledge, and experience used in developing and operating CARIBOU COFFEE
Coffeehouses; marketing and advertising programs; knowledge of specifications
for and suppliers of various items; and knowledge of operating results and
financial performance of CARIBOU COFFEE Coffeehouses. LICENSOR will disclose
certain Confidential Information to MASTER LICENSEE and its employees in
training programs described in Section 4, the Manuals, and guidance furnished to
MASTER LICENSEE and its employees during the Agreement Term. MASTER LICENSEE and
its Owners agree that they will inform MASTER LICENSEE's employees and others
properly having access to Confidential Information about its confidential
nature.
CARIBOU MLA XX XXXXX (2004)
17
MASTER LICENSEE and its Owners acknowledge and agree that neither MASTER
LICENSEE, any Owner, any Affiliate, nor any of their employees will acquire any
interest in Confidential Information, other than the right to use it as LICENSOR
specifies during the Agreement Term, and that using or duplicating any
Confidential Information in any other business would constitute an unfair method
of competition. MASTER LICENSEE and its Owners further acknowledge and agree
that Confidential Information is proprietary, includes trade secrets of
LICENSOR, is not generally known or easily accessible, and confers a commercial
advantage on LICENSOR. Consequently, LICENSOR will disclose Confidential
Information to MASTER LICENSEE only on the condition that MASTER LICENSEE and
its Owners agree, and they do hereby agree, that during the Agreement Term and
after its expiration or termination they will: (a) not use Confidential
Information in any other business or capacity; (b) keep confidential each item
deemed to be a part of Confidential Information; (c) not make unauthorized
copies of any Confidential Information disclosed via electronic medium or in
written or other tangible form; (d) adopt and implement reasonable procedures
that LICENSOR periodically prescribes to prevent unauthorized use or disclosure
of Confidential Information, including, without limitation, restricting its
disclosure to Sublicensees and others; and (e) impose all of these restrictions
and obligations on all Sublicensees.
Confidential Information does not include information, knowledge, or
know-how that MASTER LICENSEE can demonstrate lawfully came to its attention
before LICENSOR provided such information, knowledge, or know-how to MASTER
LICENSEE directly or indirectly; that, at the time LICENSOR disclosed such
information, knowledge, or know-how to MASTER LICENSEE, already had lawfully
become generally known, in the industry in which CARIBOU COFFEE Coffeehouses
operate, through publication or communication by others (without violating an
obligation to LICENSOR); or that, after LICENSOR discloses such information,
knowledge, or know-how to MASTER LICENSEE, lawfully becomes generally known, in
the industry in which CARIBOU COFFEE Coffeehouses operate, through publication
or communication by others (without violating an obligation to LICENSOR).
However, if LICENSOR includes any matter in Confidential Information, anyone who
claims that it is not Confidential Information must prove that one of the
exclusions provided in this paragraph is satisfied.
All ideas, concepts, techniques, or materials relating to developing,
operating, or sublicensing CARIBOU COFFEE Coffeehouses, whether or not
protectable intellectual property and whether created by or for MASTER LICENSEE,
its Affiliates, their Owners or employees, or Sublicensees, must be promptly
disclosed to LICENSOR and will be deemed to be LICENSOR's sole and exclusive
property, part of the System, and works made-for-hire for LICENSOR. To the
extent any item does not qualify as a "work made-for-hire" for LICENSOR, by this
paragraph MASTER LICENSEE assigns ownership of that item, and all related rights
to that item, to LICENSOR and agrees to take whatever action (including signing
assignment or other documents) LICENSOR requests to evidence its ownership or to
help LICENSOR obtain intellectual property rights in the item. LICENSOR shall
have no obligation to compensate any party for such ideas, concepts, techniques,
or materials.
CARIBOU MLA XX XXXXX (2004)
18
B. OBLIGATIONS OF LICENSOR.
LICENSOR acknowledges that it may learn certain confidential and
proprietary information relating to the financial results of CARIBOU COFFEE
Coffeehouses operated in the Development Area and MASTER LICENSEE's operations
(COLLECTIVELY, "MASTER LICENSEE PROPRIETARY INFORMATION"). During the Agreement
Term and after its expiration or termination, LICENSOR will: (a) not use MASTER
LICENSEE Proprietary Information in any other business or capacity; (b) maintain
the absolute confidentiality of MASTER LICENSEE Proprietary Information, except
(i) as required by law, or (ii) in connection with LICENSOR's proper disclosure
of its financial results of operations or the financial results of operations of
the CARIBOU COFFEE Coffeehouse license network, or (iii) in connection with
LICENSOR's authorized conduct of business as the licensor of the CARIBOU COFFEE
Coffeehouse license network; and (c) not make unauthorized copies of any portion
of MASTER LICENSEE Proprietary Information disclosed via electronic medium or in
written or other tangible form.
10. EXCLUSIVE RELATIONSHIP.
MASTER LICENSEE and its Owners acknowledge and agree that LICENSOR would
be unable to protect Confidential Information against unauthorized use or
disclosure or to encourage a free exchange of ideas and information among master
licensees, licensees, and Sublicensees of CARIBOU COFFEE Coffeehouses if master
licensees, licensees, Sublicensees, and their management personnel were
permitted to hold ownership interests in or perform services for Competitive
Businesses. MASTER LICENSEE and its Owners further acknowledge that restrictions
on the right of MASTER LICENSEE and Restricted Persons to hold ownership
interests in or perform services for Competitive Businesses will not hinder
their activities under this Agreement or otherwise. LICENSOR has entered into
this Agreement with MASTER LICENSEE on the express condition that MASTER
LICENSEE and Restricted Persons will deal exclusively with LICENSOR with respect
to the type of business conducted by a CARIBOU COFFEE Coffeehouse. MASTER
LICENSEE and Restricted Persons therefore agree that, during the Agreement Term,
neither MASTER LICENSEE nor any Restricted Person will have any direct or
indirect (through a Restricted Person or otherwise) ownership interest in, or
perform services as a director, officer, manager, employee, consultant,
representative, or agent for, any Competitive Business located or operating
anywhere in the world. MASTER LICENSEE acknowledges that a breach of this
Section 10 by any Restricted Person shall be deemed a breach of this Agreement
by MASTER LICENSEE and grounds for LICENSOR to terminate this Agreement.
11. INDEPENDENT CONTRACTORS/INDEMNIFICATION.
A. INDEPENDENT CONTRACTORS.
This Agreement does not create a fiduciary relationship between LICENSOR
and MASTER LICENSEE, they are and shall be independent contractors, and nothing
in this Agreement is intended to make either party a general or special agent,
joint venturer, partner, or employee of the other for any purpose. MASTER
LICENSEE shall conspicuously identify itself in all dealings with others as an
independent master licensee and sublicensor of CARIBOU COFFEE Coffeehouses and
conspicuously and prominently place such other notices of
CARIBOU MLA XX XXXXX (2004)
19
independent ownership on forms, business cards, stationery, and other materials
that LICENSOR periodically requires. Neither MASTER LICENSEE nor LICENSOR has
any right to create any obligation on behalf of the other except as expressly
provided in this Agreement.
B. TAXES.
Consistent with Section 7 above, LICENSOR shall have no liability for any
withholding, sales, use, value added, service, stamp duty, occupation, excise,
gross receipts, income, property, payroll, or other taxes, whether levied upon
this Agreement, MASTER LICENSEE, one or more Coffeehouses, MASTER LICENSEE's
property, or LICENSOR, in connection with MASTER LICENSEE's business (except any
taxes that LICENSOR by law must collect from MASTER LICENSEE on product
purchases from LICENSOR and LICENSOR's own income taxes). MASTER LICENSEE must
pay all such taxes and reimburse LICENSOR for any taxes that LICENSOR must pay
to any taxing authority on account of either MASTER LICENSEE's operation of its
business or payments that MASTER LICENSEE makes to LICENSOR.
C. INDEMNIFICATION.
MASTER LICENSEE agrees to indemnify, defend, and hold harmless LICENSOR,
its Affiliates, each of their respective shareholders, directors, officers,
employees, and agents, and all of their respective successors and assignees (THE
"INDEMNIFIED PARTIES") against, and to reimburse any one or more of the
Indemnified Parties for, all claims, causes of action, costs, expenses, losses,
liabilities, damages, and obligations they incur directly or indirectly arising
from or relating to: (1) any and all taxes described in Section 11.B.; (2) the
operation of MASTER LICENSEE's business pursuant to this Agreement, including,
without limitation, any claims by third parties for which LICENSOR might be
subsidiarily liable under the Legal Requirements; (3) the operation of any
Coffeehouse; or (4) MASTER LICENSEE's, its Affiliates', or their Owners' breach
of this Agreement. For purposes of this indemnification, "claims" shall mean and
include all obligations, actual and consequential damages, and costs that any
indemnified Party reasonably incurs in defending any claim against it,
including, without limitation, reasonable accountants', attorneys', attorney
assistants', arbitrators', and expert witness fees, costs of investigation and
proof of facts, arbitration and court costs, travel and living expenses, and
other expenses incurred during, in preparation for, or in contemplation of
litigation or alternative dispute resolution, regardless of whether litigation
or alternative dispute resolution actually is commenced. Each Indemnified Party
shall have the right to defend any claim against it, and reasonably to settle
any claims, at MASTER LICENSEE's expense. This indemnity shall continue in full
force and effect subsequent to and notwithstanding the expiration or termination
of this Agreement. An Indemnified Party need not seek recovery from any insurer
or other third party, or otherwise mitigate its losses and expenses, in order to
maintain and recover fully a claim against MASTER LICENSEE under this Section. A
failure to pursue a recovery or mitigate a loss will not reduce or alter the
amounts that an Indemnified Party may recover from MASTER LICENSEE under this
Section.
CARIBOU MLA XX XXXXX (2004)
20
12. MARKS.
A. GOODWILL AND OWNERSHIP OF THE MARKS.
MASTER LICENSEE's right to use the Marks is derived only from this
Agreement (and, as applicable, License Agreements) and limited to offering and
granting Sublicenses in the Development Area and performing its obligations
under Sublicense Agreements in accordance with this Agreement's terms. MASTER
LICENSEE's unauthorized use of any Xxxx is a breach of this Agreement and
infringes LICENSOR's rights in the Marks. MASTER LICENSEE acknowledges and
agrees that all use of the Marks by MASTER LICENSEE, its Affiliates, and
Sublicensees and any goodwill established by that use are exclusively for
LICENSOR's benefit and that this Agreement does not confer any goodwill or other
interests in the Marks upon MASTER LICENSEE. MASTER LICENSEE may not at any time
during or after the Agreement Term contest or assist any other person in
contesting the validity, or LICENSOR's ownership, of the Marks, attempt to
register with any governmental or other authority any of the Marks (or any
translation or foreign language equivalent thereof), or obstruct LICENSOR's
efforts to register the Marks (or any translation or foreign language equivalent
thereof). LICENSOR reserves all rights not expressly licensed to MASTER
LICENSEE.
B. REGISTRATION OF THE MARKS IN THE DEVELOPMENT AREA.
LICENSOR will take reasonable action to protect the Marks in the countries
comprising the Development Area, including (where reasonable) by filing
applications to register the Marks listed on Exhibit C in such countries. MASTER
LICENSEE agrees to provide, at its own cost, such information and materials that
are necessary to facilitate registration or other forms of protection that
LICENSOR adopts for the Marks, provided that LICENSOR shall bear the cost of
filing and prosecuting any and all applications that are filed. MASTER LICENSEE
shall assist LICENSOR as requested (including by executing any necessary
documents) with filing one or more registered user or similar agreements that
are necessary or desirable in the trademark registry for the countries
comprising the Development Area, recording MASTER LICENSEE as a registered user,
or the local equivalent, of the registered Marks. MASTER LICENSEE hereby agrees
that LICENSOR may cancel all such recordings upon the expiration or termination
of this Agreement for any reason and that MASTER LICENSEE will assist LICENSOR
to achieve such cancellation (including executing necessary documents). LICENSOR
has exclusive authority to control all aspects of the registration process, and
all registrations, registration applications, and other documents relating to
the registration process shall list LICENSOR as owner of all rights in and to
the registrations, applications, and Marks.
C. LIMITATIONS ON MASTER LICENSEE'S USE OF THE MARKS.
MASTER LICENSEE may not use any Xxxx (1) as part of any corporate or legal
business name, (2) with any prefix, suffix, or other modifying words, terms,
designs, or symbols (other than logos LICENSOR licenses to MASTER LICENSEE), (3)
in selling any unauthorized services or products, (4) as part of any domain
name, homepage, electronic address, or otherwise in connection with a Website,
or (5) in any other manner that LICENSOR has not expressly authorized in
writing. If LICENSOR discovers MASTER LICENSEE's unauthorized use of the Marks,
LICENSOR may require MASTER LICENSEE to destroy all offending items reflecting
CARIBOU MLA XX XXXXX (2004)
21
such unauthorized use. MASTER LICENSEE agrees to give the notices of trade and
service xxxx registrations that LICENSOR specifies and to obtain any fictitious
or assumed name registrations required under applicable law. All Marks shall be
displayed in the manner LICENSOR periodically prescribes. Neither MASTER
LICENSEE nor its Affiliates may use or attempt to register any other trademarks,
service marks, or other commercial symbols in connection with developing,
operating, or sublicensing CARIBOU COFFEE Coffeehouses.
MASTER LICENSEE shall police the use of the Marks by Sublicensees and
ensure that all Sublicense Agreements contain the same provisions regarding the
Marks as those contained in this Agreement. MASTER LICENSEE shall advise
LICENSOR of all breaches regarding use of the Marks and the action that MASTER
LICENSEE proposes to take. If MASTER LICENSEE fails to take appropriate action
to safeguard LICENSOR's rights to the Marks when required to do so, LICENSOR may
take reasonable action at MASTER LICENSEE's expense to protect the Marks.
D. NOTIFICATION OF INFRINGEMENT AND CLAIMS.
MASTER LICENSEE shall immediately notify LICENSOR of any apparent
infringement or challenge (actual or threatened) to MASTER LICENSEE's, an
Affiliates', or a Sublicensee's use of any Xxxx or of any person's claim of any
rights in any Xxxx or confusingly or deceptively similar trademark or service
xxxx. MASTER LICENSEE shall not communicate with any person other than its
counsel, LICENSOR, and LICENSOR's counsel regarding any such infringement,
challenge, or claim. LICENSOR will take the action it deems appropriate to
protect the Marks (including no action if none is warranted) and control
exclusively any settlement, litigation, arbitration, or administrative
proceeding arising from any infringement, challenge, or claim or otherwise
concerning any Xxxx. MASTER LICENSEE agrees to sign any documents and take any
other reasonable action that, in the opinion of LICENSOR's counsel, are
necessary or advisable to protect and maintain LICENSOR's interests in the
Marks. LICENSOR will reimburse MASTER LICENSEE for its costs of taking any
action that LICENSOR has asked MASTER LICENSEE to take.
E. DISCONTINUANCE OF USE OF MARKS.
If it becomes reasonably advisable at any time in LICENSOR's sole judgment
for MASTER LICENSEE, its Affiliates, and/or Sublicensees to modify, discontinue
using, and/or replace any Xxxx and/or to use one or more additional, substitute,
or replacement trade or service marks together with or in lieu of any previously
designated Xxxx, MASTER LICENSEE and its Affiliates agree immediately to comply
with, and to require Sublicensees immediately to comply with, LICENSOR's
directions. LICENSOR shall have no obligation to reimburse MASTER LICENSEE, its
Affiliates, or Sublicensees for expenses they incur to modify or discontinue
using a Xxxx or to adopt substitute or replacement Marks, including, without
limitation, any expenses relating to replacing advertising or promotional
materials or changing signs or for any loss of goodwill related to a
discontinued Xxxx. However, any required changes will not be unreasonable.
CARIBOU MLA XX XXXXX (2004)
22
F. DISCLAIMER OF WARRANTIES.
LICENSOR warrants that, to the best of its knowledge as of the Effective
Date, MASTER LICENSEE's use of the Marks in compliance with this Agreement in
the Development Area will not infringe upon the trademark rights of any third
party. Except for Iraq and Yemen, LICENSOR warrants that, as of the Effective
Date, it has registered, has applied to register, or is in the process of
preparing applications to register the Marks indicated as registered or pending
on Exhibit C within the countries comprising the Development Area. Except as
stated in the two previous sentences, LICENSOR disclaims all warranties of any
nature regarding the Marks, including any express or implied warranty that the
Marks may be used, or that the Marks do not infringe the rights of any third
party, in the countries comprising the Development Area.
LICENSOR has applied for registrations of the Marks indicated on Exhibit C
in the countries comprising the Development Area. MASTER LICENSEE acknowledges
and agrees that: (i) LICENSOR makes no representation that any Marks for which
applications are currently pending, or for which applications may be filed in
the future, will be registered in the countries comprising the Development Area;
(ii) LICENSOR makes no representation that any Marks will continue to be
registered in any of the countries comprising the Development Area; and (iii)
LICENSOR will have no liability to MASTER LICENSEE or its Owners if LICENSOR
does not obtain registrations for one or more of the Marks in the countries
comprising the Development Area.
13. TRANSFER.
A. BY LICENSOR.
MASTER LICENSEE acknowledges that LICENSOR maintains a staff to manage and
operate the System and that staff members can change as employees come and go.
MASTER LICENSEE represents that it has not signed this Agreement in reliance on
any particular shareholder, director, officer, or employee remaining with
LICENSOR in that capacity. LICENSOR may change its ownership or form and/or
assign this Agreement and any other agreement to a third party without
restriction. After LICENSOR's assignment of this Agreement to a third party who
expressly assumes the obligations under and would be the new owner of this
Agreement, LICENSOR no longer will have any performance or other obligations
under this Agreement. Such an assignment shall constitute a release and novation
with respect to this Agreement, and the new owner-assignee shall be liable to
MASTER LICENSEE as if it had been an original party to this Agreement.
MASTER LICENSEE acknowledges and agrees that LICENSOR also may delegate
any or all of its obligations under this Agreement to an Affiliate or an
unaffiliated third party, in which case the Affiliate or unaffiliated third
party will be obligated to perform the delegated functions for MASTER LICENSEE
in compliance with this Agreement. LICENSOR will remain responsible for their
proper performance.
CARIBOU MLA XX XXXXX (2004)
23
B. BY MASTER LICENSEE.
MASTER LICENSEE understands and acknowledges that the rights and duties
this Agreement creates are personal to MASTER LICENSEE and its Owners and that
LICENSOR has entered into this Agreement in reliance upon its perceptions of the
individual or collective character, skill, aptitude, attitude, business ability,
and financial capacity of MASTER LICENSEE and its Owners. Therefore, neither (i)
this Agreement (or any right granted by or interest in this Agreement), (ii) any
ownership or other interest in MASTER LICENSEE (including, but not limited to,
the right to receive all or any part of MASTER LICENSEE's profits or losses) or
its Owners (if such Owners are legal entities), (iii) all or substantially all
of MASTER LICENSEE's assets, nor (iv) any interest of MASTER LICENSEE in or to a
Sublicense Agreement may be transferred without LICENSOR's prior written
approval. Any transfer without LICENSOR's approval is a breach of this Agreement
and has no effect, meaning that MASTER LICENSEE will continue to be obligated to
LICENSOR for all of its obligations under this Agreement. Despite the
restrictions, in this Section 13.B., MASTER LICENSEE may transfer this Agreement
to one of its Affiliates if the Affiliate has been capitalized with at least $10
Million Dollars (to be verified by MASTER LICENSEE in the manner LICENSOR
reasonably requires), MASTER LICENSEE guarantees its Affiliate's performance of
the obligations under this Agreement, and MASTER LICENSEE and its Affiliate sign
the documents LICENSOR reasonably requires to effect the transfer of this
Agreement to the Affiliate.
MASTER LICENSEE shall notify LICENSOR, and send LICENSOR such information
that LICENSOR requests regarding any proposed transfer, at least one hundred
twenty (120) days before the transfer's proposed effective date (although this
does not mean that LICENSOR has approved or must approve the proposed transfer)
and shall reimburse LICENSOR for all reasonable expenses (including, without
limitation, attorneys' fees) LICENSOR incurs in evaluating, documenting, and
approving or disapproving a proposed transfer. As used in this Agreement, the
term "transfer" includes, without limitation, whether voluntary, involuntary,
direct, or indirect: an assignment, sale, gift, or other disposition; the grant
of a mortgage, charge, lien, or security interest (including, without
limitation, the grant of a collateral assignment); a merger or consolidation,
issuance of additional ownership interests, or redemption of ownership
interests; a sale of voting interests or of securities convertible to voting
interests; an agreement granting the right to exercise, or control the exercise
of, voting rights of any holder of an ownership interest; and a transfer that
occurs as a result of divorce, insolvency, or entity dissolution, (upon death)
by will or intestate succession, or by declaration of, or transfer to, a trust.
If MASTER LICENSEE (and its Owners) are fully complying with this
Agreement, then, subject to the other provisions of this Section 13, LICENSOR
will not unreasonably withhold its approval of a transfer that meets all of this
Section's requirements. An ownership interest in MASTER LICENSEE or its Owners
that is not a Controlling Interest (determined as of the date on which the
proposed transfer will occur) may be transferred if the proposed transferee and
its direct and indirect Owners are of good character, do not own any interest in
or perform services for a Competitive Business, and otherwise meet LICENSOR's
then applicable standards for international master licensees for CARIBOU COFFEE
Coffeehouses. If the proposed transfer is of this Agreement or a Controlling
Interest in MASTER LICENSEE or one of its Owners, or is
24
one of a series of transfers (regardless of the time period over which these
transfers take place) that in the aggregate transfer this Agreement or a
Controlling Interest in MASTER LICENSEE or one of its Owners, then all of the
following conditions must be met before or concurrently with the effective date
of the transfer:
(1) the transferee has the necessary business experience, aptitude,
and financial resources to operate MASTER LICENSEE's business and perform
its obligations under this Agreement and all Sublicense Agreements;
(2) MASTER LICENSEE has paid all rental payments, fees, and other
amounts owed to LICENSOR and its Affiliates and is not then otherwise in
default of any obligation under this Agreement or any Sublicense
Agreement;
(3) neither the transferee nor any of its Owners or Affiliates have
an ownership interest in or perform services for a Competitive Business;
(4) the transferee (or its managing Owner) and such other persons
that LICENSOR reasonably designates complete LICENSOR's standard training
program at the transferee's expense;
(5) the transferee has agreed to be bound by all of the terms and
conditions of this Agreement and all Sublicense Agreements, and the
transferee's Owners have agreed to guaranty the transferee's performance,
and to comply personally with the obligations, under this Agreement;
(6) MASTER LICENSEE (and all transferring Owners of MASTER LICENSEE)
execute a general release, in a form satisfactory to LICENSOR, of any and
all claims against LICENSOR and its Affiliates and their respective
shareholders, officers, directors, employees, and agents;
(7) LICENSOR has determined that the purchase price and payment
terms will not adversely affect the transferee's operation of the business
under this Agreement; and
(8) if MASTER LICENSEE and/or any of its Owners finance any part of
the purchase price, it and/or they agree that all of the transferee's
obligations under promissory notes, agreements, or security interests are
subordinate to the transferee's obligation to pay rental payments, fees,
and other amounts due to LICENSOR and otherwise to comply with this
Agreement and Sublicense Agreements.
C. LICENSOR'S RIGHT OF FIRST REFUSAL.
If MASTER LICENSEE or any of its Owners at any time determines to sell or
transfer an interest in this Agreement (or any right granted by this Agreement),
any ownership or other interest in MASTER LICENSEE (including, but not limited
to, the right to receive all or any part of MASTER LICENSEE's profits or
losses), all or substantially all of MASTER LICENSEE's assets, or the interest
of MASTER LICENSEE in or to any Sublicense Agreement in a transaction that
otherwise would be allowed under Section 13.B. above, MASTER LICENSEE
CARIBOU MLA XX XXXXX (2004)
25
or its Owners, as applicable, agree to obtain from a responsible and fully
disclosed buyer, and send LICENSOR, a true and complete copy of a bona fide,
executed written offer (which may include a letter of intent) relating
exclusively to this Agreement, the assets of MASTER LICENSEE, the Sublicense
Agreement(s), or an ownership or other interest in MASTER LICENSEE. The offer
may not include the purchase of any other property or rights. The offer must
include details of the payment terms of the proposed sale and the sources and
terms of any financing for the proposed purchase price. To be a valid, bona fide
offer, the proposed purchase price must be in a U.S. dollar amount, and the
proposed buyer must submit with its offer an xxxxxxx money deposit equal to five
percent (5%) or more of the offering price. The right of first refusal process
will not be triggered by a proposed transfer that would not be allowed under
Section 13.B. above. LICENSOR may require MASTER LICENSEE (or its Owners) to
send LICENSOR copies of any materials or information sent to the proposed buyer
or transferee regarding the possible transaction.
LICENSOR or its designee shall have the right, exercisable by written
notice delivered to MASTER LICENSEE or the Owner within forty-five (45) days
after the date MASTER LICENSEE delivers to LICENSOR an exact copy of such offer
and such other information that LICENSOR reasonably requests, to notify MASTER
LICENSEE or the Owner of its intent to purchase such interest for the price and
on the terms and conditions contained in such offer, provided that LICENSOR may
substitute cash for any form of payment proposed in such offer. LICENSOR's
credit shall be deemed to be equal to the credit of any proposed purchaser.
LICENSOR shall have not less than seventy-five (75) days following its notice to
prepare for closing. If LICENSOR does not exercise its right of first refusal,
MASTER LICENSEE or the Owner may complete the sale to the proposed purchaser
pursuant to and on the exact terms of the original offer, subject to LICENSOR's
approval of the transfer as provided in this Section. This means that, even if
LICENSOR does not exercise its right of first refusal (whether or not it is
properly triggered as provided above), if the proposed transfer otherwise would
not be allowed under Section 13.B. above, MASTER LICENSEE or its Owners may not
move forward with the transfer at all.
If the sale to the proposed purchaser is not completed within two hundred
(200) days after delivery of the offer to LICENSOR, or there is a material
change in the terms of the sale (which MASTER LICENSEE must tell LICENSOR
immediately), LICENSOR shall have an additional right of first refusal for
thirty (30) days on the terms and conditions applicable to the initial right of
first refusal, except that LICENSOR shall have the option to substitute any of
the modified terms of purchase for those contained in the original offer.
D. DEATH OR DISABILITY OF AN OWNER.
Upon the death or disability of an Owner of MASTER LICENSEE, the executor,
administrator, conservator, or other personal representative of such Owner
shall, within a reasonable time from the date of death or disability (not to
exceed nine (9) months), transfer the Owner's interest in and obligations under
this Agreement, MASTER LICENSEE, and the assets of MASTER LICENSEE to a third
party approved by LICENSOR in accordance with this Section 13.
CARIBOU MLA XX XXXXX (2004)
26
14. TERMINATION OF AGREEMENT.
A. BY MASTER LICENSEE.
Provided MASTER LICENSEE is in substantial compliance with this Agreement,
MASTER LICENSEE may terminate this Agreement, effective thirty (30) days
following its delivery of written notice of termination to LICENSOR, if LICENSOR
commits a material breach of its obligations under this Agreement and fails to
cure such breach within sixty (60) days after MASTER LICENSEE delivers notice of
such breach to LICENSOR (or, if such breach cannot reasonably be cured within
sixty (60) days, if LICENSOR fails to undertake within sixty (60) days after
delivery of notice, and continue until completion, reasonable efforts to cure
such breach). MASTER LICENSEE's termination of this Agreement other than as
provided in this Section 14.A. shall be deemed a termination by MASTER LICENSEE
without cause.
B. BY LICENSOR.
LICENSOR may (at its option) terminate this Agreement and all of MASTER
LICENSEE's rights under this Agreement, effective upon its delivery of written
notice of termination to MASTER LICENSEE, if:
(1) MASTER LICENSEE fails to satisfy the Development Quota for any
two (2) Development Periods (regardless of whether they are consecutive)
during the Development Term;
(2) MASTER LICENSEE or any of its Owners makes or attempts to make
an assignment or transfer in violation of this Agreement;
(3) MASTER LICENSEE or any of its Owners is convicted by a court of,
or pleads guilty or no contest to, a crime or offense, or engages in any
other conduct, that might adversely affect the goodwill associated with
the Marks or the reputation of LICENSOR, MASTER LICENSEE, or CARIBOU
COFFEE Coffeehouses;
(4) MASTER LICENSEE or any of its Owners applies for the
registration of any Xxxx anywhere in the world, makes any unauthorized use
of the Marks, or makes any unauthorized use or disclosure of Confidential
Information, or any Restricted Person violates the restrictions in Section
10;
(5) MASTER LICENSEE becomes insolvent in the sense that it is unable
to pay its bills as they become due or its liabilities exceed its assets;
makes an assignment for the benefit of creditors or admits its inability
to pay its obligations as they become due; files a voluntary petition in
bankruptcy or under any similar law, files any pleading seeking any
reorganization, liquidation, or dissolution under any law, admits or fails
to contest the material allegations of any such pleading filed against it,
or is adjudicated a bankrupt or insolvent; or has a receiver, trustee,
liquidator, or other person acting in a comparable capacity appointed for
a substantial part of its assets;
CARIBOU MLA XX XXXXX (2004)
27
(6) MASTER LICENSEE violates any material Legal Requirement
applicable to its business under this Agreement and does not begin to
correct the violation immediately and correct the violation completely
within a reasonable time (which in no event shall be longer than thirty
(30) days) after MASTER LICENSEE has received notice of the violation
(whether from LICENSOR or any government agency);
(7) MASTER LICENSEE for any reason fails to pay any amounts owed
to LICENSOR or its Affiliates when due and does not correct the failure
within thirty (30) days after LICENSOR delivers written notice of the
failure;
(8) MASTER LICENSEE fails to comply with any other provision of
this Agreement and does not correct such failure within forty-five (45)
days after LICENSOR delivers written notice of the failure;
(9) LICENSOR elects to terminate this Agreement as provided in
Section 6.E.; or
(10) MASTER LICENSEE's or an Owner's assets, property, or
interests are blocked under any law, ordinance, or regulation relating to
terrorist activities, or MASTER LICENSEE or any of its Owners otherwise
violate any such law, ordinance, or regulation.
C. TERMINATION OF DEVELOPMENT RIGHTS.
Upon the occurrence of any of the events specified in Section 14.B. above,
LICENSOR may, at its option, elect to terminate only the Development Term and
MASTER LICENSEE's right to grant additional Sublicenses instead of terminating
this Agreement entirely. However, such termination shall be without prejudice to
LICENSOR's right to terminate this Agreement at any time thereafter for the same
default or any other defaults under this Agreement. In addition, MASTER LICENSEE
acknowledges that it is not entitled to, and shall not receive, any
compensation, other benefit, or reduction in the fees payable to LICENSOR as a
result of LICENSOR's exercising its rights under this Section 14.C.
15. RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION.
X. XXXXX.
MASTER LICENSEE and its Owners agree that, after the termination of this
Agreement or expiration of the Agreement Term, they will: (1) not directly or
indirectly identify MASTER LICENSEE or themselves in any business as a current
or former master licensee of, or as otherwise currently or formerly associated
with, LICENSOR; (2) not use any Xxxx, or any trade name, trademark, or
commercial symbol that is deceptively similar to, or a colorable imitation of,
any Xxxx in any manner or for any purpose; (3) not use any trade name,
trademark, or commercial symbol that suggests or indicates a connection or
association with LICENSOR; (4) remove and cease using all signs containing any
Xxxx and return to LICENSOR or destroy all forms and materials containing any
Xxxx; (5) return to LICENSOR all copies of the Manuals and any other
confidential materials that LICENSOR has loaned or made available to MASTER
LICENSEE pursuant to this Agreement; and (6) cause all Sublicensees whose
Sublicense
CARIBOU MLA XX XXXXX (2004)
28
Agreements are not assigned to LICENSOR (or its designee) pursuant to Section
15.B. below to comply with the obligations in subparagraphs (1) through (5)
above and any other post-termination obligations under the applicable Sublicense
Agreements.
B. SUBLICENSE AGREEMENTS.
In addition to LICENSOR's rights and MASTER LICENSEE's obligations under
this Section, upon the termination of this Agreement for any reason, MASTER
LICENSEE agrees to assign to LICENSOR or its designee, at LICENSOR's option,
MASTER LICENSEE's rights and obligations under those Sublicense Agreements that
LICENSOR designates. LICENSOR shall give MASTER LICENSEE written notice of its
exercise of this option within sixty (60) days after the effective date of this
Agreement's termination. If LICENSOR exercises its option in this Section 15.B.,
it shall have ninety (90) days from the date of the notice exercising the option
to designate the Sublicense Agreements to be assigned and to prepare for
closing. LICENSOR (or its designee) shall not be obligated to pay MASTER
LICENSEE for any Sublicense Agreement assigned. All Sublicense Agreements
transferred shall be assigned free and clear of any liens, charges, and
encumbrances.
MASTER LICENSEE agrees to execute, and require all Sublicensees to
execute, all documents reasonably required by LICENSOR in connection with the
assignment. MASTER LICENSEE hereby appoints LICENSOR its true and lawful agent
and attorney-in-fact with full power and authority to take the action necessary
to complete the assignments. MASTER LICENSEE agrees that this power of attorney
shall continue in full effect regardless of the termination or expiration of
this Agreement. MASTER LICENSEE's approved form of Sublicense Agreement shall
provide that, if the Sublicense Agreement is not assigned to LICENSOR (or its
designee) for whatever reason, such Sublicense Agreement shall terminate and the
Sublicensee no longer will have the right to operate the Coffeehouse.
C. NO COMPENSATION.
Except as explicitly set forth in Section 16 below, MASTER LICENSEE
acknowledges and agrees mat it shall not be entitled to any form of
compensation, remuneration, damages, or reimbursement whatsoever as a result of
the expiration or termination for any reason of the Development Term, the
Agreement Term, or this Agreement.
D. GOVERNMENT FILINGS.
MASTER LICENSEE shall, at its own expense, promptly cooperate with
LICENSOR in connection with filing any documents with any governmental agency
and taking any other action that LICENSOR deems necessary or advisable as a
direct or indirect result of the termination or expiration of this Agreement.
MASTER LICENSEE hereby appoints LICENSOR its true and lawful agent and
attorney-in-fact with full power and authority to take the action necessary to
accomplish the purposes of this Section 15.D.
E. CONTINUING OBLIGATIONS.
All obligations of LICENSOR and MASTER LICENSEE that expressly or by their
nature survive the termination of this Agreement or the expiration of the
Agreement Term shall
CARIBOU MLA XX XXXXX (2004)
29
continue in full force and effect subsequent to and notwithstanding such
expiration or termination until they are satisfied in full or by their nature
expire.
16. ENFORCEMENT.
A. INFORMAL DISPUTE RESOLUTION.
Except as provided in Section 16.B. concerning temporary restraining
orders and injunctive relief, before filing any judicial or arbitration
proceeding, the party intending to file the proceeding must notify the other
party in writing of the existence and nature of the dispute. LICENSOR and MASTER
LICENSEE agree that, within fifteen (15) business days after receiving such
notice, the Chief Executive Officer, Chief Operating Officer, or other senior
executive officer of both LICENSOR and MASTER LICENSEE shall meet at LICENSOR's
principal offices for a minimum of two (2) eight (8) hour days and attempt to
resolve the dispute amicably. If these informal dispute resolution attempts are
unsuccessful, either party may initiate a proceeding as described in Section
16.B.
B. ARBITRATION.
Subject to Section 16.A., LICENSOR and MASTER LICENSEE agree that, except
for controversies, disputes, or claims related to or based on MASTER LICENSEE's
improper use of the Marks or improper use of Confidential Information or MASTER
LICENSEE Proprietary Information, all controversies, disputes, or claims between
LICENSOR and its Affiliates, and their respective shareholders, officers,
directors, agents, and/or employees, and MASTER LICENSEE (and/or its Owners,
guarantors, Affiliates, and/or employees) arising out of or related to:
(1) this Agreement, a License Agreement, or any other agreement
between MASTER LICENSEE and LICENSOR;
(2) LICENSOR's or its Affiliates' relationship with MASTER LICENSEE;
(3) any System Standard relating to the sublicensing, development,
or operation of CARIBOU COFFEE Coffeehouses; or
(4) any Sublicense Agreement or related agreement;
must be submitted for binding arbitration, on demand of either party, to the
American Arbitration Association in the United States. The arbitration
proceedings will be conducted in the English language by a panel of three (3)
neutral arbitrators and, except as this Section 16.B. otherwise provides,
according to the then current commercial arbitration rules of the American
Arbitration Association for international arbitrations. All proceedings will be
conducted at a suitable location chosen by the arbitrators in the Minneapolis,
Minnesota U.S.A. metropolitan area. All matters relating to arbitration will be
governed by the United States Federal Arbitration Act (9 U.S.C. Sections 1 et
seq.). Judgment upon the arbitrators' award may be entered in any court of
competent jurisdiction.
CARIBOU MLA XX XXXXX (2004)
30
The arbitrators have the right to award or include in their award any
relief that they deem proper, including, without limitation, money damages,
specific performance, injunctive relief, and attorneys' fees and costs (as
provided in Section 16.I. below), provided that the arbitrators may not declare
any Xxxx generic or otherwise invalid or award any punitive or exemplary damages
against either party (LICENSOR and MASTER LICENSEE hereby waiving to the fullest
extent permitted by law any right to or claim for any punitive or exemplary
damages against the other).
LICENSOR and MASTER LICENSEE agree to be bound by the provisions of any
limitation on the period of time in which claims must be brought under
applicable law or this Agreement, whichever expires earlier. LICENSOR and MASTER
LICENSEE further agree that, in any arbitration proceeding, each must submit or
file any claim that would constitute a compulsory counterclaim (as defined by
the United States Federal Rules of Civil Procedure) within the same proceeding
as the claim to which it relates. Any claim that is not submitted or filed as
required is forever barred. The arbitrators may not consider any settlement
discussions or offers that might have been made by either MASTER LICENSEE or
LICENSOR.
LICENSOR and MASTER LICENSEE agree that arbitration will be conducted on
an individual, not a class-wide, basis and that an arbitration proceeding
between LICENSOR and its Affiliates, and their respective shareholders,
officers, directors, agents, and/or employees, and MASTER LICENSEE (and/or its
Owners, guarantors, Affiliates, and/or employees) may not be consolidated with
any other arbitration proceeding between LICENSOR and any other person. Despite
LICENSOR's and MASTER LICENSEE's agreement to arbitrate, LICENSOR has the right
in a proper case to seek temporary restraining orders and temporary or
preliminary injunctive relief from a court of competent jurisdiction; provided,
however, that LICENSOR must contemporaneously submit the dispute for arbitration
on the merits as provided in this Section. MASTER LICENSEE has the right in a
proper case to seek temporary restraining orders and temporary or preliminary
injunctive relief from arbitrators in accordance with this Section. The
provisions of this Section are intended to benefit and bind certain third party
non-signatories and will continue in full force and effect subsequent to and
notwithstanding this Agreement's expiration or termination.
C. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS.
All provisions of this Agreement are severable, and this Agreement shall
be interpreted and enforced as if all completely invalid or unenforceable
provisions were not contained in this Agreement. Partially valid and enforceable
provisions shall be enforced to the extent valid and enforceable. To the extent
that any exclusive dealing provision in Section 10 is deemed to be unenforceable
by virtue of its scope in terms of geographic area, activity prohibited, or
length of time, but would be enforceable by reducing any of its terms, MASTER
LICENSEE and LICENSOR agree that such provision shall be enforced to the fullest
extent permissible under the laws and public policies applied in the
jurisdiction in which enforcement is sought. If any applicable and binding law
or rule of any jurisdiction requires more notice than this Agreement requires of
the termination of this Agreement, or some other action that this Agreement does
not require, or if, under any applicable and binding law or rule of any
jurisdiction, any provision of this Agreement or any System Standard LICENSOR
prescribes is invalid, unenforceable, or unlawful, the prior notice and/or other
action required by the law or rule shall be substituted for
CARIBOU MLA XX XXXXX (2004)
31
the comparable requirements of this Agreement, and LICENSOR shall have the right
to modify such invalid or unenforceable provision or System Standard to the
extent required to be valid and enforceable or to delete the unlawful provision
in its entirety. Such modifications to this Agreement shall be effective only in
such jurisdiction, unless LICENSOR elects to give them greater applicability,
and shall be enforced as originally made and entered into in all other
jurisdictions.
D. WAIVER OF OBLIGATIONS.
LICENSOR and MASTER LICENSEE may by written instrument unilaterally waive
or reduce any obligation of or restriction upon the other under this Agreement,
effective upon delivery of written notice to the other or another effective date
stated in the waiver notice. Any waiver granted shall be without prejudice to
any other rights LICENSOR or MASTER LICENSEE has, will be subject to continuing
review by LICENSOR and MASTER LICENSEE, and may be revoked prospectively by
LICENSOR or MASTER LICENSEE at any time and for any reason, effective upon
delivery of ten (10) days' prior written notice. Any waiver must be in writing
to be enforceable.
LICENSOR makes no warranties or guarantees upon which MASTER LICENSEE may
rely, and assumes no liability or obligation to MASTER LICENSEE, by granting or
refusing to grant any waiver, approval, or consent to MASTER LICENSEE. LICENSOR
and MASTER LICENSEE shall not be deemed to have waived or impaired any right,
power, or option reserved by this Agreement (including, without limitation, the
right to demand compliance with every term, condition, and covenant or to
declare any default) because of any custom or practice of the parties that
varies from this Agreement's terms; any failure, refusal, or neglect of LICENSOR
or MASTER LICENSEE to exercise any right, or to insist upon the other's
compliance with its obligations, under this Agreement; any waiver, forbearance,
delay, failure, or omission by LICENSOR to exercise any right, power, or option,
whether of the same, similar, or different nature, with respect to other master
licensees or any CARIBOU COFFEE Coffeehouse; or LICENSOR's acceptance of any
payment from MASTER LICENSEE after any breach of this Agreement.
E. FORCE MAJEURE.
Neither LICENSOR nor MASTER LICENSEE shall be liable for loss or damage or
be in breach of this Agreement if its failure to perform its obligations results
from any of the following and is not caused or exacerbated by the non-performing
party: compliance with any law, ruling, order, regulation, requirement, or
instruction of any government department or agency; acts of God; acts of war or
terrorism; labor strikes; or explosions, earthquakes, floods, or other natural
disasters; provided, however, that the affected party promptly upon the
occurrence of the particular event informs the other in writing that such cause
has delayed or will delay its performance, as applicable. Any delay resulting
from any of these causes shall extend performance accordingly or excuse
performance, in whole or in part, as may be reasonable, except that these causes
shall not excuse payment of amounts owed at the time of such occurrence or
payment of amounts due afterward.
CARIBOU MLA XX XXXXX (2004)
32
F. NO OFFSETS; CUMULATIVE RIGHTS.
MASTER LICENSEE may not offset or withhold any amounts owed to LICENSOR or
its Affiliates on the grounds of LICENSOR's alleged nonperformance of any
obligations under this Agreement or for any other reason. LICENSOR's and MASTER
LICENSEE's rights under this Agreement are cumulative, and no exercise or
enforcement of any right or remedy under this Agreement shall preclude the
exercise or enforcement of any other right or remedy under this Agreement or
otherwise that LICENSOR or MASTER LICENSEE is entitled by law to enforce.
G. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL.
Except with respect to MASTER LICENSEE's obligation to indemnify the
Indemnified Parties under Section ll.C., LICENSOR and MASTER LICENSEE hereby
waive to the fullest extent permitted by law any right to or claim for any
punitive, exemplary, or special damages against the other and agree that, in the
event of a dispute between them, each shall be limited to equitable relief and
recovery of any actual damages it sustains. LICENSOR and MASTER LICENSEE
irrevocably waive trial by jury in any action, proceeding, or counterclaim,
whether at law or in equity, brought by either of them.
H. LIMITATION OF CLAIMS.
Except with regard to MASTER LICENSEE's obligation to pay LICENSOR and its
Affiliates amounts owed under this Agreement or otherwise, any and all claims
arising out of or relating to this Agreement or the relationship between MASTER
LICENSEE and LICENSOR shall be barred unless an arbitration or judicial
proceeding (as permitted) is commenced within two (2) years from the date
LICENSOR or MASTER LICENSEE knew, or exercising reasonable diligence should have
known, of the facts giving rise to such claims.
I. COSTS AND LEGAL FEES.
In the event of any legal proceeding regarding a breach or default under
this Agreement, the prevailing party in that proceeding (as determined by the
trier-of-fact) shall be entitled to receive from the other party all of the
costs and expenses that it incurred in connection with the proceeding,
including, without limitation, reasonable accounting, attorneys', arbitrators',
and related fees, whether incurred prior to, in preparation for, or in
contemplation of the filing of any such proceeding.
J. GOVERNING LAW/CONSENT TO JURISDICTION.
All matters relating to arbitration will be governed by the United States
Federal Arbitration Act (9 U.S.C. Sections 1 et seq.). Except to the extent
governed by the United States Federal Arbitration Act, the United States
Trademark Act of 1946 (Xxxxxx Act, 15 U.S.C. Sections 1051 et seq.), or other
federal law in the United States, this Agreement, the master license, and all
claims arising from the relationship between LICENSOR (or its Affiliates) and
MASTER LICENSEE will be governed by the laws of the State of Minnesota, U.S.A.
However, Minnesota's choice of law and conflict of law rules shall not apply.
Further, any Minnesota law regulating the sale of licenses or franchises or
governing the relationship of a licensor/franchisor and its licensee/franchisee
will not apply unless its jurisdictional requirements are met
CARIBOU MLA XX XXXXX (2004)
33
independently without reference to this Section. The United Nations Convention
on Contracts for the International Sale of Goods is expressly excluded from
application to this Agreement and any transaction pursuant to this Agreement.
Subject to the parties' arbitration obligations under Section 16.B. above,
MASTER LICENSEE and its Owners agree that all actions arising under this
Agreement or otherwise as a result of the relationship between MASTER LICENSEE
and LICENSOR must be commenced in a state or federal court of general
jurisdiction in the State of Minnesota, and MASTER LICENSEE (and each Owner)
irrevocably submits to the jurisdiction of those courts and waives any objection
MASTER LICENSEE (or its Owner) might have to either the jurisdiction of or venue
in those courts. Nonetheless, MASTER LICENSEE and its owners agree that LICENSOR
may enforce this Agreement and any arbitration orders and awards in the courts
of the country in which MASTER LICENSEE is domiciled or operates.
K. BINDING EFFECT.
This Agreement is binding upon MASTER LICENSEE and LICENSOR and their
respective executors, administrators, heirs, permitted assigns, and successors
in interest. This Agreement may not be modified except by a written agreement
signed by duly-authorized officers of both MASTER LICENSEE and LICENSOR.
L. CONSTRUCTION.
The preambles and exhibits are a part of this Agreement which, together
with LICENSOR's System Standards (which may be periodically modified as provided
in this Agreement), constitutes LICENSOR's and MASTER LICENSEE's entire
agreement, and, except for any License Agreements to which LICENSOR and MASTER
LICENSEE (or its Affiliates) are parties, there are no other oral or written
understandings or agreements between LICENSOR and MASTER LICENSEE, or oral or
written representations by LICENSOR, relating to the subject matter of this
Agreement, the master license relationship, or a Coffeehouse (any understandings
or agreements reached, or any representations made, before this Agreement are
superseded by this Agreement). MASTER LICENSEE may not rely on any alleged oral
or written understandings, agreements, or representations not contained in this
Agreement or a License Agreement. Any policies that LICENSOR adopts from time to
time to guide it in its decision-making are subject to change, are not a part of
this Agreement, and are not binding on LICENSOR. Except as expressly provided in
this Agreement, nothing in this Agreement is intended or deemed to confer any
rights or remedies upon any person or legal entity not a party to this
Agreement. Except where this Agreement expressly obligates LICENSOR reasonably
to approve or not unreasonably to withhold its approval of any of MASTER
LICENSEE's actions or requests, LICENSOR has the absolute right to refuse any
request MASTER LICENSEE makes or to withhold its approval of any of MASTER
LICENSEE's proposed, initiated, or completed actions that require LICENSOR's
approval. Headings of sections and paragraphs are for convenience only and do
not define, limit, or construe the contents of those sections or paragraphs. The
term "MASTER LICENSEE" is applicable to one or more persons, a corporation or a
partnership, as the case may be, and the singular usage includes the plural and
the masculine and neuter usages include the other and the feminine. If two or
more persons are at any time MASTER LICENSEE or its Owners under this Agreement,
whether or not as
CARIBOU MLA XX XXXXX (2004)
34
partners or joint venturers, their obligations and liabilities to LICENSOR shall
be joint and several. This Agreement may be executed in multiple copies, each of
which shall be deemed an original.
M. GOVERNING LANGUAGE.
This Agreement and the Manuals are written in the English language. Only
the English versions of this Agreement and the Manuals shall be used to
interpret the parties' rights and obligations. All communications between us and
you will be in English. All samples required or requested shall be submitted by
MASTER LICENSEE in their original language along with an English translation
thereof. Any required or desired translations of any materials into the Arabic
language shall be at MASTER LICENSEE's cost.
17. NOTICES, REPORTS, AND PAYMENTS.
All written or tangible notices or reports, and all payments, permitted or
required to be delivered by this Agreement or the Manuals shall be deemed so
delivered: (a) at the time delivered by hand; (b) at the time delivered via
computer transmission if the sender has confirmation of successful transmission;
(c) one (1) business day after transmission by facsimile or other electronic
system if the sender has confirmation of successful transmission; or (d) three
(3) business days after being placed in the hands of an internationally
recognized commercial courier service for next business day delivery. All such
notices, reports, and payments shall be addressed to the parties as follows:
If to LICENSOR: Caribou Coffee Company, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000 U.S.A.
Attention: Chief Executive Officer
If to MASTER
LICENSEE: Xx-Xxxxx Enterprises
X.X. Xxx 000
XXXXX 00000-XXXXXX
Xxxxxxxxx: Executive Director
Any party may change the address for delivery of notices, reports, and payments
by providing fifteen (15) days' prior notice according to this Section. For
purposes of this Agreement, the terms "business day" shall exclude Saturdays,
Sundays, and official holidays in both the United States and any country in the
Development Area.
18. COMPLIANCE WITH ANTI-TERRORISM LAWS.
MASTER LICENSEE and its Owners agree to comply, and to assist LICENSOR to
the fullest extent possible in its efforts to comply, with Anti-Terrorism Laws
(defined below). In connection with that compliance, MASTER LICENSEE and its
Owners certify, represent, and warrant that none of their property or interests
are subject to being blocked under, and that MASTER LICENSEE and its Owners
otherwise are not in violation of, any of the Anti-
35
Terrorism Laws. "Anti-Terrorism Laws" mean Executive Order 13224 issued by the
President of the United States, the USA PATRIOT Act, and all other present and
future laws, ordinances, regulations, policies, lists, and other requirements of
any United States or other country's governmental authority addressing or in any
way relating to terrorist acts and acts of war. Currently, a listing of relevant
designations and the text of the Executive Order are published under the
internet website address, xxx.xxxxxxx.xxx/xxxxxxx/xxxxxxxxxxx/xxxx. Any
violation of the Anti-Terrorism Laws by MASTER LICENSEE or its Owners, or any
blocking of their assets under the Anti-Terrorism Laws, shall constitute good
cause for immediate termination of this Agreement, as provided in Section
14.B.(10) above.
19. MASTER LICENSEE FORMATION AND AUTHORIZATION.
MASTER LICENSEE represents and warrants the following to LICENSOR:
(a) It has and will maintain all required authority to execute, deliver,
and perform its obligations under this Agreement and all related agreements and
is duly organized or formed and validly existing in good standing under the laws
of the place of its incorporation or formation;
(b) Exhibit B to this Agreement completely and accurately describes all
Owners and their interests in MASTER LICENSEE as of the Effective Date; and
(c) MASTER LICENSEE's execution and delivery of, and performance of its
obligations under, this Agreement (and any other agreements contemplated by this
Agreement) will not conflict with, or result in a breach of any term or
provision of, MASTER LICENSEE's charter or governing documents (a copy of which
MASTER LICENSEE has given to LICENSOR before signing this Agreement) or any
other agreement to which MASTER LICENSEE is a party or by which it or any of its
assets are bound or breach any order, writ, injunction, or decree of any court,
administrative agency, or governmental body.
20. DUE DILIGENCE AND ASSUMPTION OF RISK.
MASTER LICENSEE and each Owner have conducted such due diligence and
investigation as they desire; recognize that the business venture described in
this Agreement involves risks; and acknowledge that the success of the business
venture depends upon the abilities of MASTER LICENSEE and its Owners. LICENSOR
EXPRESSLY DISCLAIMS THE MAKING OF, AND MASTER LICENSEE AND EACH OWNER
ACKNOWLEDGE THAT THEY HAVE NOT RECEIVED OR RELIED UPON, ANY
CARIBOU MLA XX XXXXX (2004)
36
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE POTENTIAL PERFORMANCE
OR VIABILITY OF THE BUSINESS VENTURE CONTEMPLATED BY THIS AGREEMENT.
MASTER LICENSEE and each Owner acknowledge that they have received, read,
and understand this Agreement, the documents referred to in this Agreement, and
the exhibits to this Agreement and have had ample time and opportunity to
consult with their advisors concerning the potential benefits and risks of
entering into this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the dates noted below, to be effective as of the Effective Date.
CARIBOU COFFEE COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
Date: 11/10/04
XX-XXXXX ENTERPRISES
By: /s/ Xxxxx Xx-Xxxxx
-----------------------------
Xxxxx Xx-Xxxxx
Title: Executive Director
Date: 6/23/04
OWNERS' UNDERTAKING
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Master License Agreement
(THE "AGREEMENT") between Caribou Coffee Company, Inc. ("LICENSOR") and Xx-Xxxxx
Enterprises ("MASTER LICENSEE") dated_____________________, 2004 and
acknowledges that the execution of this Undertaking is in partial consideration
for, and a condition to the granting of, the master license, and that Licensor
would not have granted the master license without the execution of this
Undertaking by each of the Undersigned;
(2) Each is included in the term "Owner" as defined in Section 2 of the
Agreement; and
(3) The undersigned individually makes all of the covenants, representations,
warranties, and agreements of an Owner set forth in the Agreement and any
exhibits and is obligated to perform
CARIBOU MLA XX XXXXX (2004)
37
thereunder for so long as he qualifies as an Owner and thereafter to the extent
expressly provided by the terms of the Agreement and any exhibits and amendments
thereto.
/s/ Xxxxx X. Xx-Xxxxx
---------------------------------
[Signature]
Xxxxx X. Xx-Xxxxx
[Name]
_________________________________
[Title]
Date: ________________
/s/ Xxxxxxx X. Xxxxx
---------------------------------
[Signature]
Xxxxxxx X. Xxxxx
[Name]
President & CEO
[Title]
Date: 11/10/04
CARIBOU MLA XX XXXXX (2004)
38
