This Trademark License and Royalty Agreement (the “Agreement”) is effective [DATE],
BETWEEN: [YOUR COMPANY NAME] (the "Licensor"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at:
[YOUR COMPLETE ADDRESS]
AND: [COMPANY NAME] (the "Licensee"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at:
WHEREAS the Licensor is the owner of the [COUNTRY] rights to those trade marks (“Marks”) listed in Schedule “A”;
AND WHEREAS the Licensor and the Licensee have entered into an agreement of even date (the “Asset Purchase Agreement”) pursuant to which the Licensor has sold to the Licensee and the Licensee has purchased from the Licensor all the assets of the [NUMBER] centers currently operated by the Licensor in the Province of [STATE/PROVINCE] (the “Licensor”);
WHEREAS, as part of the said transaction, the Licensor has agreed to grant to the Licensee the right to use the Marks in the Province of [STATE/PROVINCE] for a period of [NUMBER] years from the date hereof and to permit the Licensee to use the “Licensor” name jointly with its “[COMPANY NAME]” brand name on the [COMPANY NAME] as well as on the [NUMBER] [COMPANY NAME] shops currently owned and operated by the Licensee (the “[COMPANY NAME]”), as well as any new centers opened and operated by the Licensee in the Province of [STATE/PROVINCE] under one or both of the “[COMPANY NAME]” and “[COMPANY NAME]” names (the “[COMPANY NAME]”), in consideration of the payment by the Licensee to the Licensor of the royalties hereinafter stipulated, the whole upon the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants herein, the parties agree as follows:
WHEREAS, as part of the said transaction, the Licensor has agreed to grant to the Licensee the right to use the Marks in the [STATE/PROVINCE] for a period of ten (10) years from the date hereof and to permit the Licensee to use the [SPECIFY] name jointly with its [SPECIFY] brand name on the [SPECIFY] Centers as well as on the [NUMBER] of [SPECIFY] shops currently owned and operated by the Licensee, as well as any new centers opened and operated by the Licensee in the [STATE/PROVINCE] under one or both of the [SPECIFY] and [SPECIFY] names, in consideration of the payment by the Licensee to the Licensor of the royalties hereinafter stipulated, the whole upon the terms and conditions hereinafter set forth;
DEFINITIONS AND INTERPRETATION
In this Agreement the following terms shall have the following meanings:
“Affiliate” has the meaning given to “affiliated body corporate” by the [COUNTRY] Business Corporations [ACT/LAW/RULE].
“Centers” means, collectively, the Licensor, [COMPANY NAME] and [COMPANY NAME], as each such term is defined in the preamble hereto.
“Gross Sales” for any period means the total of all amounts directly or indirectly received or receivable during that period by the Centres (whether evidenced by cash, check, credit card or otherwise in any manner) from the sale of goods or the provision of services by the Centres, together with all other income generated during that period from all other business of any nature conducted at or originating from the Centres and all proceeds received by the Licensee during that period from any business interruption insurance in respect of the Centres. Gross Sales does not, however, include the amount of any provincial retail sales-tax or other direct tax imposed by any duly constituted governmental authority on the sale of goods or services which is required to be collected at the point of sale from the customer by the Licensee as agent for such authority.
“Marks” means the trade marks, trade names, design marks and other commercial symbols listed in Schedule “A” and all other trade names, trade marks, design marks and commercial symbols which the Licensor may from time to time designate for use in the operation of the Centres.
“Notice” means written notice given in accordance with Section 15.
Words importing the singular number include the plural and vice versa and words importing the masculine gender include the feminine and neuter genders.
Interpretation Not Affected by Headings
The division of this Agreement into articles and insertion of headings is for convenience and reference only and shall not affect the construction or interpretation of this Agreement.
This Agreement shall be governed by, and construed and enforced in accordance with, the [YOUR COUNTRY LAW] of the Province of [STATE/PROVINCE] without regard to its conflicts of [YOUR COUNTRY LAW] rules. In the event that this Agreement is sought to be enforced in any jurisdiction other than the Province of [STATE/PROVINCE], the parties intend that the court of such jurisdiction shall apply [STATE/PROVINCE] [YOUR COUNTRY LAW]. Where actions or proceedings are instituted in a court of a jurisdiction other than [STATE/PROVINCE], the rules of procedure and process of such claims shall be those of said jurisdiction other than [STATE/PROVINCE] notwithstanding that the Agreement shall be interpreted in accordance with the [YOUR COUNTRY LAW] of [STATE/PROVINCE] without regard to its conflict of [YOUR COUNTRY LAW] rules.
Any legal action or proceeding with respect to this Agreement and any action for enforcement of any judgment in respect thereof may be brought in the courts of the Province of [STATE/PROVINCE] or of any other province of [COUNTRY] and, by execution and delivery of this Agreement, each of the parties hereto hereby accepts for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts.
Each of the parties hereto irrevocably consents to the service of process out of any of the aforementioned courts in any action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the parties hereto at their respective addresses set forth in Section 15 hereof. Each of the parties hereto hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.
All amounts referred to in this Agreement are in the lawful money of [COUNTRY], unless otherwise stated.
All calculations and financial documents required to be made or produced under or pursuant to this Agreement shall be made or produced in accordance with generally accepted accounting principles which are from time to time approved by the [COUNTRY] Institute of Chartered Accountants as set forth in the publication known as the [SPECIFY] and applicable as at the date on which any calculation or financial document is required to be made or produced, save and except as may be specifically provided herein.
If any provision of this Agreement shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect or render invalid or unenforceable such provision in any other jurisdiction or any other provision of this Agreement in any jurisdiction.
In the event that any action to be taken hereunder falls on a day, which is not a Business Day, then such action shall be taken on the next succeeding Business Day.
The preamble forms an integral part of this Agreement.
GRANT OF LICENSE
Grant and Term
Subject to the provisions of this Agreement, the Licensor hereby grants to the Licensee the right to use the Marks in the Province of [STATE/PROVINCE] in connection with the operation of the Centres for a term of [NUMBER] years from the date hereof, subject always to earlier termination as provided herein.
The Licensor shall not grant further licenses to other licensees in the Province of [STATE/PROVINCE] in respect of the Marks during the term hereof, provided that the Licensee is operating a minimum of [NUMBER] Centers in the Province of [STATE/PROVINCE] at all times during the term hereof. The Licensor may grant such licenses in the event that the Licensee at any time during the term hereof is operating [NUMBER] or fewer Centers in the Province of [STATE/PROVINCE]. Notwithstanding the foregoing, the Licensor at all times reserves the right to itself use the Marks in the Province of [STATE/PROVINCE] and elsewhere.
The Licensee may request the renewal of the present license for additional periods of [NUMBER] years each, upon terms and conditions to be negotiated in good faith between the parties, provided that the following conditions precedent are met at the time of each [NUMBER] year renewal:
the Licensee must give Notice to the Licensor of its election to renew its license not less than
months nor more than
months prior to the end of the expiring term.
The Licensee must not be in breach of any of its obligations to the Licensor (whether or not under this Agreement) or its Affiliates as at the expiry of the expiring term and must have substantially complied with all such obligations during such term.
The Licensee must deliver a general release at the time of each renewal, in form prescribed by the Licensor, of all claims against the Licensor, its Affiliates and their respective officers and directors.
The Licensee agrees to reimburse the Licensor on demand for all costs and expenses incurred by the Licensor in connection with any renewal.
Assignment of License
The license granted herein to use and display the Marks is personal to the Licensee and may not be transferred by the Licensee in whole or in part to any other person, other than to an assignee of all or part of the assets of the [STATE/PROVINCE] Centres, and in such event not without the prior written consent of the Licensor, which shall not be unreasonably withheld.
Modification in the Marks
The Licensee hereby acknowledges and agrees that the Licensor may from time to time hereafter, upon Notice and acting reasonably, adopt and use new or modified Marks. The license hereby granted shall automatically extend to such new or modified Marks, and the Licensee hereby agrees to promptly accept, implement, use and display all such changes in the conduct of the Centres, at its sole cost.
ROYALTIES PAYABLE BY LICENSEE
The Licensee shall pay to the Licensor on the [NUMBER] day of each calendar month a royalty equal to [PERCENTAGE %] percent of the Licensee’s Gross Sales in respect of all products (other than tires) sold and all services provided by the [STATE/PROVINCE] Centres in the immediately preceding month.
The Licensee shall pay to the Licensor on the [NUMBER] day of each month a royalty equal to [PERCENTAGE %] percent of the Licensee’s Gross Sales in respect of all products (other than tires) sold and all services provided by the [COMPANY NAME] in the immediately preceding month, provided however that no royalties shall be payable by the Licensee to the Licensor in respect of any large fleet contract of the Licensee for which the License charges in excess of [AMOUNT] annually, including without limitation the Licensee’s contract with the [COUNTRY] Armed Forces.
The Licensee shall pay to the Licensor on the [NUMBER] day of each month a royalty equal to [PERCENTAGE %] of the Licensee’s Gross Sales in respect of all products (other than tires) sold, and all services provided, in the immediately preceding month by any [COMPANY NAME].
Moratorium on Royalties
Notwithstanding the foregoing, no royalties shall be payable by the Licensee to the Licensor pursuant hereto in respect of the initial [NUMBER] month period immediately following the closing of the acquisition pursuant to the Asset Purchase Agreement, and the royalties otherwise payable hereunder shall be reduced by [PERCENTAGE %] percent for the [NUMBER] to the [NUMBER] months inclusively immediately following the said closing.
Minimum and Maximum Royalties
The royalties provided for herein should be payable for a minimum of [NUMBER] years from the date of the aforesaid asset purchase closing. There shall be no maximum or ceiling placed on the amount of royalties payable hereunder.
RECORDS AND REPORTING
The Licensee shall at its cost establish a bookkeeping, accounting and record-keeping system reasonably satisfactory to the Licensor (including without limitation the use and retention of cash register tapes, check stubs, bank deposit receipts, sales tax records and returns, cash disbursement journals and general ledgers, together with such further and other records and documents as may from time to time be reasonably required by the Licensor. All personnel employed by the Licensee shall record at the time of sale, in the presence of customers, all receipts from sales or other transactions, on cash registers having a cumulative total. Such cash registers shall be sealed in a manner reasonably satisfactory to the Licensor and shall have such other features as may be reasonably required by the Licensor.
Reports and Financial Information
The Licensee agrees to furnish to the Licensor throughout the term of this agreement:
day of each calendar month, a report setting out the total Gross Sales for the preceding calendar month period, signed and verified by the Licensee’s Chief Financial Officer, together with such other information and supporting records as the Licensor may from time to time reasonably require;
by the [NUMBER] day following the close of each fiscal quarter of the Licensee, an unaudited balance sheet for the Licensee as at the close of such period together with an unaudited statement of income of the Licensee for such period, in each case signed and verified by the Licensee’s Chief Financial Officer, and accompanied by such other information and supporting records as the Licensor may from time to time reasonably require; and
as soon as practicable and in any event within [NUMBER] days after the end of each fiscal year of the Licensee, unaudited financial statements of the Licensee prepared in accordance with generally accepted accounting principles consistently applied, and consisting at a minimum of (i) a balance sheet as at the close of such fiscal year, and (ii) a statement of income and a statement of source and application of funds for such fiscal year, setting forth in each case in comparative form the corresponding figures for the previous fiscal year, in each case signed and verified by the Licensee’s Chief Financial Officer and accompanied by accountant’s comments.
The Licensee agrees upon receipt of Notice from the Licensor to cause all financial statements thereafter submitted under this Subsection to be audited by a firm of independent chartered accountants acceptable to the Licensor and to be accompanied by a certificate thereon of such firm, all at the Licensee’s expense.
The Licensee acknowledges that such financial information will be furnished by it solely for the information of the Licensor, and the Licensor undertakes no obligation to review such financial information or to advise the Licensee in connection therewith.
Licensor’s Right to Audit
The Licensor shall have the right without prior notice to the Licensee to inspect and audit the business records, bookkeeping and accounting records, cash register tapes, invoices, purchase orders, payroll records, check stubs and bank deposit receipts of one or more of the [STATE/PROVINCE] Centres, [COMPANY NAME] and [COMPANY NAME], the periodic reports, financial statements, tax returns and other forms, information and supporting records which the Licensee is required from time to time to submit to the Licensor and the books and records of the Licensee as the latter relate to the Centres. The Licensee shall fully co-operate with representatives of the Licensor and independent accountants hired by the Licensor to conduct any such inspection or audit.
If any such inspection or audit discloses an understatement of Gross Sales for any period, the Licensee shall pay to the Licensor, within [NUMBER] days after receipt of the inspection or audit report, the service fee and other sums due on account of such understatement. Further, if such inspection or audit is made necessary by the failure of the Licensee to furnish reports, financial statements, tax returns or schedules or any other documentation as herein required, or if an understatement of Gross Sales for any period is determined by any such inspection or audit to be greater than [PERCENTAGE %] percent, the Licensee shall on demand reimburse the Licensor for the cost of such inspection or audit, including without limitation the charges of any independent accountant retained by the Licensor in connection with such audit or inspection and the travel expenses, room, board and compensation of employees of the Licensor.
Enquiry by Licensor
By its execution hereof, the Licensee authorizes the Licensor to make reasonable enquiry of the Licensee’s bankers, suppliers and other trade creditors as to their dealings with the Licensee in relation to the Centres, to discuss the affairs, finances and accounts thereof with the Licensee’s bankers (and the Licensee hereby authorizes and directs such bankers to discuss with the Licensor the affairs, finances and accounts thereof) and to obtain information and copies of invoices relating to sales or other dealings between all such persons and the Licensee in any way referable thereto. The Licensee agrees on request of the Licensor to promptly execute such directions and other documents as the Licensor may reasonably require, in order to permit such bankers, suppliers or other creditors to disclose any such information and documents to the Licensor.
USE OF THE MARKS
The Licensee may use the Marks only in connection with the distribution of wares and services by the Centres jointly with its own “[COMPANY NAME]” trade marks and trade names (collectively, the “[COMPANY NAME]”). All renderings of the Marks shall be accompanied by a notice indicating the ownership of the Marks by the Licensor, in such form as the Licensor may require from time to time. The Licensee agrees to operate the Centres utilizing the Marks without any accompanying words or symbols of any nature, unless first approved in writing by the Licensor. None of the Marks (nor any part of the Marks) nor any similar words shall be either included in either the corporate name or in any trade name utilized by either the Licensee or by any corporation, partnership or other entity which may at any time have a direct or indirect interest in the Licensee or in which the Licensee may at any time have a direct or indirect interest.
OWNERSHIP OF MARKS
Neither this agreement nor the operation of the Centres shall confer upon the Licensee any interest in any of the Marks, except the right to use and display the Marks strictly in accordance with the terms of this agreement and the Asset Purchase Agreement. The Licensee agrees not to use any of the Marks in any manner calculated to represent that the Licensee is the owner of any of the Marks. The parties agree that all goodwill arising from the use of any of the Marks by the Licensee shall enure solely to the benefit of and shall belong exclusively to the Licensor. The Licensee agrees that it will not during the term of this Agreement or thereafter dispute or contest, directly or indirectly, the validity or enforceability of any of the Marks nor directly or indirectly attempt to depreciate the value of the goodwill attaching to any of the Marks, nor counsel, procure or assist anyone else to do any of the foregoing.
From time to time upon request of the Licensor, the Licensee shall sign and deliver to the Licensor a registered user application in form specified by the Licensor, for the purpose of registration of the Licensee as a registered user of the Marks. The Licensee shall reimburse the Licensor upon demand for all costs incurred by the Licensor in connection with the preparation and registration of the registered user application. The Licensee hereby irrevocably appoints the President for the time being of the Licensor as the Licensee’s true and lawful attorney-in-fact, to execute and deliver on behalf of the Licensee all such documents as may be required from time to time by the Licensor to be executed by the Licensee for the purpose of registration of the Licensee as a registered user of the marks or for amending or deleting any such registration. The Licensee agrees that the President of the Licensor may delegate such authority to such other person as he, in his absolute discretion, deems appropriate.
The Licensee agrees to prominently display at each location at which it uses or displays any of the Marks a sign in form prescribed by the Licensor from time to time, indicating that the Marks are registered trade marks of the Licensor and that the Licensee is an authorized licensee of the Marks. If the Licensee utilizes any of the Marks on any stationery, invoices, purchase orders or similar documents, such material shall plainly indicate that the Licensee is a licensee of the Marks.
Prior to any use by the Licensee of any additional or substitute trade mark of the Licensor, the Licensee shall, at its own expense, amend such sign and materials to explicitly refer to each additional or substitute trade mark. Immediately upon termination of the Licensee’s right to use the Marks the Licensee shall remove and destroy all such signs, and shall deliver to the Licensor or, at the Licensor’s option, shall destroy all such material, and shall within [NUMBER] days after such termination deliver to the Licensor a statutory declaration of the Secretary of the Licensee stating that the Licensee has destroyed all such signs and has returned or destroyed all such material.
CHANGE OF MARKS
If it becomes advisable at any time in the sole discretion of the Licensor for the Licensee to modify or discontinue its use of any of the Marks, or to use one or more additional or substitute trade marks, the Licensee agrees to do so at the Licensee’s expense, subject only to the indemnity provisions of Section 13 hereof.
This Agreement and the license granted hereunder may at the option of the Licensor be terminated by the Licensor, effective immediately upon receipt by the Licensee of notice of termination, if the Licensee operates one or more of the Centres in a manner that presents a health or safety hazard to its customers, employees or to the public, or if the Licensee engages in any conduct or practice that, in the reasonable opinion of the Licensor reflects unfavorably upon or is detrimental or harmful to the Marks, to the business, good name, goodwill or reputation of the Licensor, or any of its licensees, and the Licensee fails to see such conduct or practice within [NUMBER] days of receipt of notice of default from the Licensor, or if the Licensee breaches any of its other obligations under this Agreement and does not remedy such default within [NUMBER] days after receipt of notice of default from the Licensor.
CEASE USE OF MARKS
Immediately upon termination of the Licensee s right to use the Marks the Licensee shall cease all further use and display of the Marks, including any colorable imitation thereof. The Licensee shall not thereafter directly or indirectly represent or in any other manner hold itself out to the general public as a former licensee of the Marks.
Neither the Waiver by the Licensor from time to time of any term of this Agreement nor the failure of the Licensor to notify the Licensee of any default under this Agreement shall constitute a waiver, express or implied, of any other term of this Agreement nor shall it constitute consent, acquiescence or waiver of any later default, whether of the same, a different or a continuing character.
INDEMNITY BY LICENSOR
The Licensor agrees to indemnify the Licensee against and to reimburse the Licensee for all damages for which it is held liable and any proceeding arising out of its use of any of the Marks pursuant to and in compliance with this agreement, and for all costs reasonably incurred by the Licensee in the defense of any such claim brought against it or in any such proceeding in which it is named as a party, provided that the Licensee has given to the Licensor prompt notice of any such claim or proceeding and has otherwise complied with this agreement and with the Asset Purchase Agreement.
The Licensee shall, at the Licensor’s cost, co-operate with and assist the Licensor in the prosecution or defense of any proceedings with respect to the Marks and shall execute such documents and do such acts and things as may, in the opinion of counsel for the Licensor, be necessary to the prosecution or defense of any such proceedings. If it becomes advisable at any time, in the sole discretion of the Licensor, for the Licensee to modify or discontinue the use of any of the Marks or to use one or more additional or substitute trade names or trade marks, the Licensee agrees to do so at its cost, except where such change is necessitated as a result of a successful challenge as aforesaid, in which event the Licensee shall make the required change and the foregoing indemnity shall apply.
INDEMNITY BY LICENSEE
The Licensee agrees during and after the term of this Agreement to indemnify the Licensor against all liabilities, loss, damages, costs and expenses (including legal fees on a solicitor and client basis) sustained, suffered or incurred by the Licensor as a result of any act or omission on the part of the Licensee or any of its employees, agents or other persons for whom in [YOUR COUNTRY LAW] it is responsible, or as a result of any claim or demand of any person arising from the operation of the Centers.
Any notice to be given under this Agreement shall be in writing and delivered or, except in the event of disruption of postal service, mailed by prepaid registered mail addressed to the party to whom it is to be given at the address as shown below and such notice shall be deemed to have been given on the day of delivery or on the [NUMBER] business day after mailing as aforesaid, as the case may be.
if to the Licensor:
Attention: [INDIVIDUAL NAME]
Facsimile no.: [FAX NUMBER]
with a copy to:
Attention: [INDIVIDUAL NAME] [TITLE] Corporate Vice-President and Legal Counsel
Facsimile no.: [FAX NUMBER]
and with a second copy to:
[INDIVIDUAL NAME], General Partnership
Attention: [INDIVIDUAL NAME]
Facsimile no.: [FAX NUMBER]
if to the Licensee:
Attention: [INDIVIDUAL NAME], [TITLE] President
with a copy to:
[COMPANY NAME] and [COMPANY NAME]
Attention: [INDIVIDUAL NAME]
Executive [TITLE] Vice-President and [TITLE] General Manager
Facsimile No.: [FAX NUMBER]
Notice of change of address may be given by any party in the same manner.
The Licensee agrees that it is not an agent or employee of the Licensor, but is an independent contractor completely separate from the Licensor. Neither party has any authority to bind or attempt to bind the other party in any manner or form whatever, or to assume or to incur any obligation or responsibility (express or implied) for or on behalf of or in the name of the other party, except as provided in Section [NUMBER] for the limited purposes therein. This Agreement shall not be construed so as to constitute the Licensee a partner, joint venturer, agent, employee or representative of the Licensor for any purpose whatever. Time shall be of the essence of this Agreement.
SUCCESSORS AND ASSIGNS
The provisions of this Agreement shall, except as otherwise provided herein, enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns and each and every person so bound shall make, execute and deliver all documents necessary to carry out this Agreement.
This Agreement and the schedules hereto constitute the entire agreement between the parties with respect to the subject matter hereof and the transactions herein contemplated and replaces all previous agreements and understandings, if any, between the parties with respect to the subject matter hereof and the transaction contemplated herein, save and except the Asset Purchase Agreement.
TIME OF ESSENCE
Time shall be of the essence of this Agreement.
This Agreement may be executed in one or more counterparts each of which when so executed shall be deemed to be an original and such counterparts together shall constitute but one of the same instrument.
The waiver of any of the provisions, terms or conditions contained in this Agreement shall not be considered as a waiver of any of the other provisions, terms and conditions hereof. The failure of any party to seek redress for violation of or to insist upon the strict performance of any provision of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation
Each party to this Agreement shall do such acts and shall execute such further documents, conveyances, deeds, assignments, transfers and the like, and will cause the doing of such acts and will cause the execution of such further documents as are within its power as any other party may in writing at any time and from time to time reasonably request be done or executed, in order to give full effect to the provisions of this Agreement.
IN WITNESS WHEREOF, each party to this agreement has caused it to be executed at [place of execution] on the date indicated above.
Authorized Signature Authorized Signature
Print Name and Title Print Name and Title
Application or Trademark Registration No.