EXHIBIT 10.65

 

 

 

 

 

 

 

 

TRADEMARK LICENSE AGREEMENT

 

 

 

 

between

 

 

MRS. FIELDS FRANCHISING, LLC

a Delaware limited liability company

 

 

and

 

 

 

SHADEWELL GROVE IP, LLC

a Delaware limited liability company

 

 

 

 

 

DATED:  DECEMBER 24, 2004

 

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TABLE OF CONTENTS

 

RECITALS

 

 

 

AGREEMENT

 

 

 

1.

DEFINITIONS

 

 

2.

GRANT OF LICENSE

 

 

3.

RESERVATION OF RIGHTS

 

 

4.

LICENSE TRANSFER

 

 

5.

LICENSE FEE AND ROYALTIES

 

 

6.

GUARANTEED ROYALTY

 

 

7.

LICENSE RETENTION

 

 

8.

SHADEWELL REPORTS

 

 

9.

DEVELOPMENT OF ROYALTY BEARING PRODUCTS

 

 

10.

ADVERTISING AND PROMOTION REQUIREMENTS

 

 

11.

LABELING

 

 

12.

USE OF LICENSED NAMES AND MARKS

 

 

13.

INFRINGEMENT

 

 

14.

INSURANCE

 

 

15.

CONFIDENTIALITY

 

 

16.

TERM AND TERMINATION

 

 

17.

DISPOSAL OF INVENTORY UPON EXPIRATION

 

 

18.

FINAL STATEMENT UPON TERMINATION OR EXPIRATION

 

 

19.

REPRESENTATIONS AND WARRANTIES

 

 

20.

INDEMNIFICATION

 

 

21.

NOTICES

 

 

22.

GENERAL PROVISIONS

 

 

EXHIBIT “A” LICENSED NAMES AND MARKS

 

 

EXHIBIT “B” ROYALTY BEARING PRODUCTS

 

 

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TRADEMARK LICENSE AGREEMENT

 

THIS TRADEMARK LICENSE AGREEMENT (the “Agreement”) is made and entered into this
24th  day of December, 2004 by and between MRS. FIELDS FRANCHISING, LLC, a
Delaware limited liability company (“MFF”), and Shadewell Grove IP, LLC, a
Delaware limited liability company (“Shadewell”). MFF and Shadewell are
sometimes collectively referred to herein as the “parties.”

 

RECITALS

 

WHEREAS, MFF is an affiliate and licensee of The Mrs. Fields’ Brand, Inc., the
sole owner of certain trademarks, service marks, and trade names, which have
become associated with high quality food products, and has the right under its
license to sublicense such marks in the manner set forth herein;

 

WHEREAS, Shadewell desires to acquire a license from MFF to package, distribute
and sell through designated distribution channels pre-packaged, ready-to-eat
shelf stable brownies and ready-to-eat shelf stable dessert toppings and syrups,
each utilizing the Mrs. Fields trademarks, service marks and trade names, and
MFF desires to grant Shadewell such license upon and subject to the provisions
of this Agreement;

 

NOW THEREFORE, in consideration of the covenants and agreements contained herein
and other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

1.                                       DEFINITIONS

 

(a)                                  “Change of Control” shall mean (i) any
merger or consolidation of Shadewell with or into another corporation or entity,
in which the members of Shadewell immediately prior to the transaction
collectively own less than 50% of the voting power of the surviving entity
immediately after the transaction or (ii) the sale of all or substantially all
of the interests in Shadewell to a third party.

 

(b)                                 “Designated Distribution Channels” shall
mean grocery stores, supermarkets, drug stores, convenience stores, club stores,
mass merchandisers and other similar retail prepackaged, shelf-stable food and
snack retail distribution channels.

 

(c)                                  “Initial Term” shall have the meaning set
forth in Section 16 hereof.

 

(d)                                 “Licensed Names and Marks” shall mean those
trademarks, trade names and service marks identified on Exhibit A hereto.

 

(e)                                  “Minimum Amount” shall mean (i) prior to a
Change of Control, $50,000 and (ii) after a Change of Control, $125,000, which
amounts shall be reduced by the amount of Running Royalties paid to MFF during
the applicable year.

 

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(f)                                    “Minimum Net Sales” shall mean (i) prior
to a Change of Control, Net Sales of at least $1,000,000 and (ii) after a Change
of Control, Net Sales of at least $2,500,000.

 

(g)                                 “Net Sales” shall mean gross sales minus
cash discounts for early payments.

 

(h)                                 “Protected Information” shall mean Mrs.
Fields recipes, formulations, systems, programs, procedures, manuals,
confidential reports and communications, marketing techniques and arrangements,
purchasing information, pricing policies, quoting procedures, financial
information, employee, customer, supplier and distributor data, all of the
materials or information relating to the business or activities of MFF or its
affiliates which were not otherwise known to Shadewell prior to the commencement
of the negotiations leading to this Agreement, or generally known to others
engaged in similar businesses or activities, and all modifications, improvements
and enhancements which are derived from or relate to Shadewell’s access to or
knowledge of any of the above enumerated materials or information (whether or
not any of the above are reduced to writing or whether or not patentable or
protectable by copyright) which Shadewell receives, receives access to,
conceives or develops or has received, received access to, conceived or
developed, in whole or in part, directly or indirectly, in connection with
Shadewell’s license hereunder.  Information which is independently developed by
Shadewell, or which was already in the possession of Shadewell prior to the date
of this Agreement and which was not obtained in connection with the transactions
contemplated by this Agreement, or information which is or becomes publicly
available without breach of (i) this Agreement, (ii) any other agreement or
instrument to which Shadewell is a party or a beneficiary, or (iii) any duty
owed to MFF by Shadewell, shall not be considered Protected Information
hereunder.

 

(i)                                     “Royalty Bearing Product(s)” shall mean
the food products described on Exhibit B hereto using the Licensed Names and
Marks.

 

(j)                                     “Royalty Default Rate” shall mean the
interest rate which is the lesser of (i) the annual rate from time to time
publicly announced by Citibank, N.A. at its “base rate” or “prime rate” (or any
successor rate) plus two percent (2%) or (ii) the highest applicable legal rate.

 

(k)                                  “Royalty Waiver” shall have the meaning set
forth in Section 5 hereof.

 

(l)                                     “Running Royalty” or “Running Royalties”
shall mean the royalty or royalties from time to time payable pursuant to
Section 5.

 

(m)                               “Territory” shall mean United States, Mexico
and Canada.

 

 

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2.          GRANT OF LICENSE

 

(a)           Grant.  Subject to the terms and conditions of this Agreement, MFF
hereby grants to Shadewell, and Shadewell hereby accepts the grant by MFF of,
the exclusive right and license to use the Licensed Names and Marks to market
Royalty Bearing Products through Designated Distribution Channels throughout the
Territory.  Except as stated in Section 3, MFF shall not compete with Shadewell
in the (i) use of any trademark, service mark or tradename in marketing Royalty
Bearing Products in Designated Distribution Channels in the Territory or (ii)
license any third party to use the same in marketing any Royalty Bearing
Products in Designated Distribution Channels in the Territory.

 

(b)           First Right of Offer - Products.  If at any time during the
Initial Term and Option Periods MFF determines to offer a license for the sale
of a Brownie  Product or a Topping Product marketed through the Designated
Distribution Channels for countries outside the Territory to a third party
manufacturer, licensee or marketing company, prior to offering the applicable
product marketed through the Designated Distribution Channels to a non-related
party by any means, MFF shall notify Shadewell and provide Shadewell a sixty
(60) day period of time thereafter during which MFF shall negotiate exclusively
in good faith with Shadewell for the license to sell the applicable products
through the Designated Distribution Channels, for countries outside the
Territory.  The terms and conditions upon which MFF grants a license, if any,
pursuant to this Section shall be as negotiated by MFF and Shadewell during such
60 day period; provided, that MFF is only free to reject Shadewell offer if an
agreement cannot be reached as to the Licensing Fee and the Running Royalty and
after such rejection, MFF can negotiate with any third party for the license to
sell the applicable products marketed through the Designated Distribution
Channels for countries outside the Territory and accept such third party offer
only if it exceeds Shadewell’s best offer.  Any agreement reached with Shadewell
during such 60-day period shall be documented in a separate agreement or
addendum to this Agreement and shall become effective only when signed by all
parties.

 

3.             RESERVATION OF RIGHTS

 

                MFF reserves all rights with respect to the Licensed Names and
Marks not expressly licensed to Shadewell hereunder, and MFF may use or grant
licenses to others to use the Licensed Names and Marks in any other manner or in
connection with any goods or services, other than for sale of Royalty Bearing
Products in Designated Distribution Channels in the Territory.  Without limiting
the foregoing, the license granted pursuant to this Agreement shall be exclusive
to Shadewell except that MFF shall not be precluded from, and hereby expressly
retains the right to:  (i) own, operate, and grant or license others the right
to own and operate Mrs. Fields Cookies stores which sell cookie, bakery and/or
ice cream products (whether or not such products are Royalty Bearing Products)
under the Licensed Names and Marks at locations within the Territory on such
terms and conditions, as MFF, in its sole discretion, deems appropriate, (ii)
offer for sale and sell, and license others to offer for sale and sell, any
products or services under the Licensed Names and Marks which are not Royalty
Bearing Products, and (iii) offer for sale and sell, and license others to offer
for sale and sell, any products or services under the Licensed Names and Marks,
whether or not such products are Royalty Bearing

 

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Products, through all channels of distribution other than Designated
Distribution Channels, including without limitation, all e-commerce-based retail
or wholesale, television, mail order and catalog channels.   Notwithstanding the
foregoing, in the event that MFF decides to offer Topping Products through
television, MFF shall purchase from Shadewell all Topping Products to be sold
through television, such Topping Products to be purchased at a “most favored
nations” price. “Most favored nations” price for the purpose of this agreement
will be the lowest net price received by Shadewell from any customer for the
specific store keeping unit (“sku”) of the applicable Topping Product during the
30 day period immediately preceding the order from MFF, less an offset for the
amount of the running royalty otherwise due from Shadewell to MFF which will
instead be credited against the purchase price charged by Shadewell to MFF.

 

 

                4.             LICENSE TRANSFER

 

This Agreement shall be binding upon and inure to the benefit of the parties to
this Agreement and their successors or assigns; provided, that the rights of the
parties under this Agreement may only be assigned  (i) upon written consent by
MFF or (ii) without consent to a parent corporation which owns at least
fifty-one percent (51%) of such assigning party, a fifty-one percent (51%) owned
subsidiary corporation of such party, a fifty-one percent (51%) owned subsidiary
of a parent of such party if such parent owns at least fifty-one percent (51%)
of such party, or to such other business organization which shall acquire 
substantially all of the assets and business of the parties, a parent, or a
subsidiary. Shadewell shall not have the right to grant sublicenses under this
Agreement.  Any assignment, franchise, sublicense, or transfer, not expressly
permitted by this Section 4, is prohibited and will be deemed to be null and
void.

 

5.                                       LICENSE FEE AND ROYALTIES

 

(a)                                  Initial Licensing Fees.  Shadewell shall
not be required to pay an initial license fee in connection with this Agreement.

 

(b)                                 Running Royalties.  Throughout the term
(including Option Periods) of this Agreement, the Running Royalty shall be 5% of
Net Sales of Royalty Bearing Products for the remainder of the term; provided,
there shall be no Running Royalty during the period commencing on the date of
this Agreement and ending one year after the first date that any Royalty Bearing
Products are shipped by Shadewell to customers (the “Royalty Waiver”).

 

(c)                                  Payments.  Shadewell shall remit Running
Royalties to MFF within 60 days following the end of each calendar quarter
covered by the Agreement.  Absent error in the calculation of any amounts due
hereunder, all Running Royalties shall be non refundable.  All fees, royalties,
and amounts payable hereunder shall be paid to MFF in U.S. currency in
immediately available funds at such address or to such account as shall be
designated in writing by MFF.

 

(d)                                 Interest on Late Payments.  Shadewell shall
pay interest on all overdue

 

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 amounts hereunder from the due date of such amounts until paid at the Royalty
Default Rate.

 

 

6.                                       NATIONAL LAUNCH AND SUPPORT

 

 

(a)                                  Prior to the end of calendar year 2006,
Shadewell agrees to launch the marketing and sale of each of the categories of
Royalty Bearing Products (Brownie Products or Topping Products) in at least one
of the Distribution Channels throughout the United States.

 

(b)                                 During each of the calendar years 2007, 2008
and 2009, Shadewell agrees to continue to provide material marketing and sales
support for the sale of each of the categories of Royalty Bearing Products
throughout the United States consistent with past practices.

 

(c)                                  In the event of a breach of the obligations
set forth in 6(a) or 6(b) above, MFF shall have the right, at their election, to
terminate the license granted herein with respect to that category of Royalty
Bearing Product that has failed to meet the above requirements.  The remedy set
forth in this Section 6(c) shall be the sole and exclusive remedy available to
MFF in the event of a breach of Section 6(a) or 6(b) above.

 

 

7.                                       INTENTIONALLY OMITTED

 

 

8.                                       SHADEWELL REPORTS

 

(a)           Periodic Reports.  On or before 60 days following the end of each
calendar quarter covered by this Agreement, Shadewell shall deliver to MFF a
written statement prepared, signed, and certified to be true and correct by
Shadewell’s senior financial officer, or their designee, setting forth the
amount of Royalty Bearing Products sold, including sufficient information and
detail to confirm the calculations, which report shall be accompanied by payment
in full of the amount of Running Royalties then due.

 

(b)           Annual Reports.  Within ninety (90) days following the end of each
calendar year of this Agreement, beginning with the first such year in which
Shadewell has sales of Royalty Bearing Products, Shadewell shall deliver to MFF
a written statement setting forth the amount of Royalty Bearing Products sold
and the calculations, including sufficient information and detail to confirm the
calculations, used to determine such amounts, which calculations shall be signed
and certified as true and correct by an independent certified public accounting
firm chosen by Shadewell and acceptable to MFF, which acceptance shall not be
withheld unreasonably.  If this statement discloses that the amount of Running
Royalties paid during any period to which the report relates was less

 

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than the amount required to be paid or that any other amount is due MFF,
Shadewell immediately shall pay such amounts, together with accrued interest at
the Royalty Default Rate in cash or other immediately available funds. MFF shall
have the right to examine and audit the books and records of Shadewell to verify
the amount of Royalty Bearing Products sold.

 

 

9.             DEVELOPMENT OF ROYALTY BEARING PRODUCTS

 

                Shadewell hereby covenants, agrees, warrants and represents
that:

 

(a)           Product Marketing.  All Royalty Bearing Products shall be marketed
and sold as “premium” products consistent with MFF’s then existing image. 
Shadewell accepts full responsibility for and agrees to pay all costs it incurs
associated with all advertising and promotion, packaging design, graphics, and
packaging materials for Royalty Bearing Products.

 

 (b)          Customer Complaints.  Shadewell shall provide MFF a summary of all
written consumer complaints received regarding the quality of the Royalty
Bearing Products and shall maintain all written consumer complaints and a
telephone log for all consumer complaints received by telephone for a period of
one year.  Shadewell will send a written report to MFF each month containing the
comments received, names of complaining persons, with addresses and telephone
numbers (if available).  Comments will be organized and summarized by type of
comment or complaint and by the geographical location of the complaint.  Such
information will also be available for inspection by MFF during normal working
hours upon reasonable notice.  Shadewell further agrees that it will respond to
any written customer complaint within ten (10) days of receipt of such complaint
by written response with either a refund of the customer’s money or a coupon for
the same type of Royalty Bearing Product purchased, depending upon the
complaining customer’s request.  Shadewell further agrees that any complaints
about MFF products which are not Royalty Bearing Products will be forwarded to
MFF within five (5) days of receipt.  MFF agrees that all customer complaints
and comments received by it with respect to Royalty Bearing Products will be
forwarded to Shadewell within five (5) days of receipt.  Shadewell shall further
provide MFF with copies of all responses to complaints, upon request.

 

10.           ADVERTISING AND PROMOTION REQUIREMENTS

 

Shadewell shall market Royalty Bearing Products as premium products or as is
otherwise consistent with MFF’s then existing image so that such marketing shall
not reflect adversely upon Royalty Bearing Products, the good name of MFF, or
the Licensed Names and Marks.  MFF shall have a prior to use reasonable right of
approval for all promotional, marketing and advertising materials and concepts
for each promotional campaign Shadewell uses to market Royalty Bearing
Products.  In that regard, MFF shall have a reasonable right of approval, prior
to

 

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 the development of final television, radio or printed advertisements, the final
“story boards” with respect to television advertising, the final “script” with
respect to radio spots and the final “layouts” with respect to printed
advertisements.  MFF shall also have a reasonable right of approval with respect
to the actors or actresses used in connection with any such advertising
campaigns; provided, that Shadewell shall have the right to make minor
variations in promotional, marketing and advertising materials used in
connection with the approved promotional campaigns.  All advertisements and
advertising campaigns shall conform in all material respects to the approvals
given by MFF.  MFF shall have five (5) business days following the receipt of
the proposed promotional, marketing or advertising materials to send Shadewell
written notice of its disapproval which shall include an explanation of the
basis for disapproval.  If such written disapproval is not received by Shadewell
within this five (5) business day period, the marketing, promotional or
advertising material submitted to MFF shall be deemed approved.  Any material
modifications to any such materials previously approved by MFF shall be subject
to approval pursuant to this Section 10.  Once a promotional campaign has been
approved by MFF, if no material changes are made to it by Shadewell, MFF shall
not rescind its approval and Shadewell may proceed accordingly on the basis that
it is approved.

 

11.                                 LABELING

 

Whenever Shadewell uses the Licensed Names and Marks, Shadewell shall affix the
appropriate trademark notice and agrees to use the registration symbol of “R” 
in connection with its use of the Licensed Names and Marks, or “TM” where the
mark has not been registered federally, and in each instance where appropriate
accompanied by the words “Reg. TM of MFF” or a reasonable facsimile thereof or
such other reference as may be designated by MFF from time to time.  Where a
Licensed Name and Mark is used more than once on packaging, in copy or
advertising or on the Royalty Bearing Products, the “R” or “TM” designation need
only be used once either on the most prominent use of the Licensed Name and
Mark, or if all uses are of equal prominence, then on the first use of the
Licensed Name and Mark in or on each package, copy, advertisement, or product. 
Shadewell shall use the Licensed Names and Marks only as trademarks, service
marks, or trade names and shall affix the notice as specified.  Shadewell shall
not have the right, unless previously agreed in writing by MFF, to use other
trademarks, service marks, or trade names in marketing and promoting Royalty
Bearing Products.  MFF shall have the right to own and register any such other
trademark, service mark, or trade name which is registerable, including a
Licensed Name or Mark or “Fields” in any format, and such trademarks, service
marks, and trade names owned or registered by MFF shall be included in the
Licensed Names and Marks, and Shadewell shall cooperate with MFF by providing
packaging, labeling, and documentation as may be required to obtain and maintain
such registration.

 

12.                                 USE OF LICENSED NAMES AND MARKS

 

(a)           Restrictions On Use.  Unless MFF consents in writing, which
consent shall not be unreasonably withheld, Shadewell shall use the Licensed
Names and Marks:

 

(i)            only for the purposes of and pursuant to this Agreement,

 

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(ii)                                  only in a manner consistent with the scope
of the relevant registration of the Licensed Names and Marks or applications
therefor in the Territory,

 

(iii)                               only in the manner permitted and prescribed
by MFF as set forth herein,

 

(iv)                              only with respect to Royalty Bearing Products,
and

 

(v)                                 only to sell Royalty Bearing Products
through Designated Distribution Channels.

 

(b)                                 Recognition of Goodwill.  Shadewell
recognizes the value of the goodwill associated with the Licensed Names and
Marks and acknowledges that the Licensed Names and Marks and all rights therein
and goodwill pertaining thereto belong exclusively to MFF.

 

(c)                                  Validity of Other Agreements.  Shadewell
agrees that it will not, during the term of this Agreement or thereafter, attack
the title or any rights of MFF in and to the Licensed Names and Marks, or any
other license agreement or franchise agreement involving the Licensed Names and
Marks to which MFF is a party.

 

(d)                                 Validity of Licensed Names and Marks. 
Shadewell agrees that it will not intentionally destroy, impair or in any way
impede the effect and validity of the Licensed Names and Marks.

 

(e)                                  Validity of the Other Retail Agreements. 
Nothing in this paragraph shall restrict Shadewell’s rights under any other
license agreements that it may have with MFOC or its affiliates.

 

13.           INFRINGEMENT

 

Shadewell agrees to assist MFF, at MFF’s cost and expense, to the extent
necessary in the procurement of any protection or to protect any of MFF’s rights
to the Licensed Names and Marks, and MFF, if it so desires, may commence or
prosecute any claims or suits in its  own name or, with Shadewell’s consent, in
the name of Shadewell or join Shadewell as a party thereto.  Shadewell shall
notify MFF in writing of any infringements or imitations by others of the
Licensed Names and Marks which may come to Shadewell’s attention, and MFF shall
have the sole right to determine whether or not any action shall be taken on
account of any such infringements or imitations at MFF’s cost and expense. 
Shadewell shall not institute any suit or take any action on account of any such
infringements or imitations without first obtaining the written consent of MFF.

 

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14.           INSURANCE

 

Shadewell shall obtain and keep in force, at its sole expense, product liability
insurance providing adequate insurance for MFF against any claims and suits
involving product liability arising out of, or with respect to, the transactions
contemplated by this Agreement and the Retail Agreements, in no less than Ten
million dollars ($10,000,000.00) combined single limit on bodily injuries and/or
property damage in the aggregate.  Within thirty (30) days after the date of
this Agreement, Shadewell shall submit to MFF a certificate of insurance naming
MFF as an additional insured and providing that any cancellation or material
change or alteration which reduces coverage or any benefits accruing to MFF
shall become effective only upon thirty (30) days prior notice to MFF.  The
requirements of this Section 14 are acknowledged by Shadewell to be a material
term of this Agreement as defined in paragraph 16(b)(ii).

 

15.           CONFIDENTIALITY

 

(a)                                  Acknowledgment of Confidentiality. 
Shadewell understands that any Protected Information disclosed to it by MFF
under this Agreement is secret, proprietary and of great value to Shadewell,
which value may be impaired if the secrecy of the Protected Information is not
maintained.

 

(b)                                 Reasonable Security Measures.  MFF has taken
and will continue to take reasonable security measures to preserve and protect
the secrecy of the Protected Information and Shadewell agrees to take all
measures reasonably necessary to protect the secrecy of such information in
order to prevent it from falling into the public domain or into the possession
of persons not bound to maintain the secrecy of such information.

 

(c)                                  Non-Disclosure Obligation.  Shadewell
agrees not to disclose the Protected Information obtained pursuant to this
Agreement, to any person or entity (other than Shadewell’s key officers and
employees to whom disclosure is necessary and to co-packers whom have executed a
Confidentiality Agreement pursuant to paragraph 4), during the term of this
Agreement or at any time following the expiration or termination of this
Agreement.

 

(d)                                 Burden of Proof.  Shadewell hereby
acknowledges and agrees that if Shadewell shall disclose, divulge, reveal,
report, publish, transfer or use, for any purpose whatsoever, except as
authorized herein, any Protected Information, and Shadewell shall assert as a
defense that such information (i) was already known to Shadewell or developed
prior to the execution of this Agreement, (ii) was independently developed by
Shadewell, (iii) was disclosed to third parties without violation of this
Agreement, (iv) was already in the public domain prior to the execution of this
Agreement, or (v) entered the public domain without violation of this Agreement,
then Shadewell shall bear the burden of proof with respect to the same.

 

(e)                                  Mutuality of Obligations.  MFF hereby
agrees that any information which it receives from Shadewell which is within the
scope of the definition of Protected

 

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Information, shall be treated as confidential by MFF, and MFF hereby agrees to
be bound by the terms of this Agreement with respect to any such information it
receives from Shadewell, to the same extent that Shadewell is bound by the terms
of this Agreement with respect to Protected Information, as set forth above in
paragraphs 15(a), (b), (c) and (d).

 

 

16.           TERM AND TERMINATION

 

(a)           Term.  The initial term of this Agreement shall begin upon the
execution hereof and shall continue for a period of sixty months (“Initial
Term”).  So long as Shadewell is not in material default, this Agreement would
then automatically renew for successive five year terms (“Option Periods”) or
until such time as either party provides a written notice of non-renewal to the
other party no more than 90 days and no less than twenty (20) days before the
conclusion of an Option Period.   Notwithstanding the above, if during the fifth
year of the Initial Term Shadewell has achieved Minimum Net Sales of Brownie
Products or paid the Minimum Amount for the Brownie Products, then MFF shall not
exercise its non-renewal rights under this paragraph 16(a) with respect to the
Brownie Products.  Notwithstanding the above, if during the fifth year of the
Initial Term Shadewell has achieved Minimum Net Sales of Topping Products or
paid the Minimum Amount for the Topping Products, then MFF shall not exercise
its non-renewal rights under this paragraph 16(a) with respect to the Topping
Products.  Notwithstanding the above, if during the fifth year of an Option
Period (after the initial Option Period) Shadewell has achieved or paid a
minimum of a 2% growth of Running Royalties for the Brownie Products as compared
to the Running Royalties for the Brownie Products for the fourth year of such
Option Period, then MFF shall not exercise its non-renewal rights under this
paragraph 16(a) with respect to the Brownie Products.    Notwithstanding the
above, if during the fifth year of an Option Period (after the initial Option
Period) Shadewell has achieved or paid a minimum of a 2% growth of Running
Royalties for the Topping Products as compared to the Running Royalties for the
Topping Products for the fourth year of such Option Period, then MFF shall not
exercise its non-renewal rights under this paragraph 16(a) with respect to the
Topping Products.  In the event that this Agreement is not renewed with respect
to the Brownie Products or the Topping Products, as applicable, this Agreement
shall remain in full force and effect with respect to the other Royalty Bearing
Products until terminated in accordance with this Section 16. MFF’s termination
rights under paragraph 16(b) shall not be deemed altered or waived by this
paragraph 16(a).

 

(b)           Termination.  This Agreement may be terminated as follows:

 

(i)            If Shadewell defaults in the payment of any Running Royalties
then this Agreement and the license granted hereunder may be terminated upon
notice by MFF effective thirty (30) days after receipt of such notice, without
prejudice to any and all other rights and remedies MFF may have hereunder or by

 

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law provided, and all rights of Shadewell hereunder shall cease, provided that
Shadewell has not cured such default within five (5) days of receipt of such
notice.

 

(ii)           If Shadewell fails to perform in accordance with any material
term or condition of this Agreement (other than as described in paragraph
16(b)(i) above) and such default continues unremedied for thirty (30) days after
the date on which Shadewell receives written notice of default, unless such
remedy cannot be accomplished in such time period and Shadewell has commenced
diligent efforts within such time period and continues such effort until the
remedy is complete, then this Agreement may be terminated upon notice by MFF,
effective upon receipt of such notice, without prejudice to any and all other
rights and remedies MFF may have hereunder or by law provided.

 

(iii)          If Shadewell is determined to be insolvent, or files a petition
in bankruptcy or for reorganization, or takes advantage of any insolvency
statute, or makes an assignment for the benefit of creditors, or undertakes any
similar action, under any federal, state or foreign bankruptcy, insolvency or
similar law, unless such is dismissed, removed or otherwise cured within thirty
(30) days or unless Shadewell has filed for Chapter 11 Reorganization protection
under Federal Bankruptcy Laws, then this Agreement and the License granted
hereunder may be terminated upon notice by MFF, effective upon receipt of such
notice, without prejudice to any and all other rights and remedies MFF may have
hereunder or by law provided, and the license herein granted shall not
constitute an asset in reorganization, bankruptcy, or insolvency which may be
assigned or which may accrue to any court or creditor appointed referee,
receiver, or committee.

 

(iv)          If MFF is determined to be insolvent, or files a petition in
bankruptcy or for reorganization, or takes advantage of any insolvency statute,
or makes an assignment for the benefit of creditors, or undertakes any similar
action, under any federal, state or foreign bankruptcy, insolvency or similar
law, or fails to perform in accordance with any material term or condition of
this Agreement and such default continues for thirty (30) days after MFF
receives written notice of default, then this Agreement and the License granted
hereunder may be terminated upon notice by Shadewell, effective upon receipt of
such notice, without prejudice to any and all other rights and remedies
Shadewell may have hereunder or by law provided, and the license herein granted
shall not constitute an asset in reorganization, bankruptcy, or insolvency which
may be assigned or which may accrue to any court or creditor appointed referee,
receiver, or committee.

 

(v)           If MFF fails to perform in accordance with any material term or
condition of this Agreement and such default continues unremedied for thirty
(30) days after the date on which MFF receives written notice of default, then
this Agreement may be terminated upon notice by Shadewell, effective upon
receipt

 

13

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of such notice, without prejudice to any and all other rights and remedies
Shadewell may have hereunder or by law provided.

 

(c)           Rights Upon Termination or Cancellation.  On any cancellation,
termination or expiration of this Agreement;

 

(i)            Shadewell agrees to immediately pay to MFF all currently owed
Running Royalties and any additional royalties pursuant to Section 17 and to
return all Protected Information, confidential documents and other material
supplied by MFF to Shadewell and agrees never to use, disclose to others, nor
assist others in using the Protected Information.

 

(ii)           Shadewell will be deemed to have automatically and irrevocably
assigned, transferred, and conveyed to MFF any rights, equities, good will,
titles or other rights in and to the Licensed Names and Marks and Royalty
Bearing Products which may have been obtained by Shadewell or which may have
vested in Shadewell in pursuance of any endeavors covered hereby, and Shadewell
will execute any instruments requested by MFF to accomplish or confirm the
foregoing.  Any such assignment, transfer or conveyance shall be without
consideration other than the mutual covenants and considerations of this
Agreement.

 

(iii)          Except as provided in Section 17 below, Shadewell further agrees
that it shall forthwith discontinue the use of all Licensed Names and Marks,
including packaging and other paper goods and other objects bearing any Licensed
Names and Marks.

 

(d)           Licensing of Licensed Names and Marks After Termination.  Upon any
expiration or earlier termination of this Agreement, MFF may license others to
use the Licensed Names and Marks to produce, sell, market and advertise products
similar or identical to the Royalty Bearing Products through Designated
Distribution Channels in the Territory.

 

17.           DISPOSAL OF INVENTORY UPON EXPIRATION

 

For a period of six (6) months following the termination or expiration of this
Agreement, Shadewell shall have the right to sell any Royalty Bearing Products
in Shadewell’s inventory. Any sales of Royalty Bearing Products under this
Section shall be, at all times, in accordance with the policies, prices, and
standards established for marketing and distribution of Royalty Bearing Products
pursuant to this Agreement, and shall include payment of all Running Royalties
accrued in accordance with Section 5 hereof.

 

 

14

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18.           FINAL STATEMENT UPON TERMINATION OR EXPIRATION

 

As soon as practicable after termination or expiration of the license granted
hereunder, but in no event more than thirty (30) days thereafter, Shadewell
shall deliver to MFF a statement indicating the number and description of
Royalty Bearing Products packaged in packaging using the Licensed Names and
Marks then in Shadewell’s inventory.  MFF shall have the option to conduct a
physical inventory to ascertain or verify such statement.

 

19.           REPRESENTATIONS AND WARRANTIES

 

(a)                                  Title.  MFF represents and warrants and
Shadewell acknowledges that MFF has represented that MFF is the owner of all
right, title, and interest in and to the Licensed Names and Marks and that such
licensing and Licensed Names and Marks under this Agreement to Shadewell does
not infringe upon the rights of any third parties.  Shadewell further
acknowledges the good will associated with the Licensed Names and Marks and that
such Licensed Names and Marks have acquired secondary meaning in the mind of the
public.  Shadewell shall not during the term of this Agreement dispute or
contest, directly or indirectly, or due or cause to be done, any action which in
any way contests, impairs, or tends to impair MFF’s exclusive rights and title
to the Licensed Names and Marks or the validity of any registrations thereof and
Shadewell shall not assist others in so doing.  Shadewell shall not in any
manner represent that it owns any rights in the Licensed Names and Marks (and/or
registrations therefore), but may, only during the term of this Agreement, and
only if Shadewell has complied with all laws, regulations and registration
requirements within the jurisdiction for so doing, represent that it is a
“licensee” or “official licensee” hereunder.  Shadewell shall not register or
attempt to register in its own name, or that of any third party, any Licensed
Name or Mark.  Subject to the terms and conditions of this Agreement, Shadewell
agrees that any and all uses by Shadewell of the Licensed Names and Marks under
this Agreement shall be on behalf of and accrue and inure to the benefit of
MFF.  MFF will maintain at its sole expense, the proper registration of all
Licensed Names and Marks used under this Agreement.

 

(b)                                 Right To Enter Into This Agreement.  MFF and
Shadewell each warrant and represent for itself that it has the right to enter
into this Agreement, that it will not knowingly subsequently take any action
contrary to this Agreement, and that the entering into of this Agreement will
not knowingly violate any other agreement to which it is a party or conflict
with or violate any law, rule or regulation by which it is bound.

 

(c)                                  MFF’s Image.  MFF represents and warrants
that it will not intentionally do anything to destroy or impair its existing
image.

 

(d)                                 Compliance with Laws.  MFF represents and
warrants the Royalty Bearing Products will be manufactured in compliance with,
and will not be adulterated or misbranded within the meaning of, the Federal
Food, Drug and Cosmetic Act of 1938, or any other federal, state, foreign or
local laws or regulations applicable thereto, will not constitute an article
which may not be introduced into interstate commerce and will be

 

15

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manufactured in substantial compliance with all applicable federal, state,
foreign or local laws and regulations applicable thereto.  MFF agrees to notify
Shadewell promptly of any regulatory action of which MFF has knowledge that is
taken in relation to it by any federal, state, foreign, country or municipal
authority which relates to or affects the manufacture, storage, distribution or
sale of the Royalty Bearing Products.

 

20.           INDEMNIFICATION

 

(a)                                  MFF Indemnification.  MFF hereby
indemnifies Shadewell and forever holds Shadewell harmless from and against all
claims, suits, actions, proceedings, damages, losses or liabilities, costs or
expenses (including reasonable attorneys’ fees and expenses) arising out of,
based upon, or in connection with (i) any breach of any of MFF’s warranties or
representations as set forth in this Agreement or (ii) any claim that the use by
Shadewell of the Licensed Names and Marks as provided in this Agreement
infringes upon any franchise agreement, third party trademark, service mark, or
trade name.

 

(b)                                 Shadewell Indemnification.  Shadewell hereby
indemnifies MFF and forever holds MFF harmless from and against all claims,
suits, actions, proceedings, damages, losses or liabilities, costs or expenses
(including reasonable attorneys’ fees and expenses) arising out of, based upon,
or in connection with, unless it is at the direction of MFF (i) any breach of
any of Shadewell’s warranties or representations as set forth in this Agreement,
(ii) any alleged defects inherent in the distribution or sale of Royalty Bearing
Products;(iii)any injuries or damages to purchasers, users, or consumers of
Royalty Bearing Products arising from or related to the use or consumption of
Royalty Bearing Products; (iv) any injuries or damages arising from Shadewell or
any of Shadewell’s customers, advertising, marketing or promotion of the
Licensed Names and Marks or Royalty Bearing Products; or (v) any alleged
infringement or injuries of any third party’s copyright, patent, or trademark
unless and to the extent (with respect to (iv) and (v) above) such alleged
infringement is based upon Shadewell’s use of the Licensed Names and Marks as
authorized in this Agreement.

 

(c)                                  Conditions of Indemnification.  As a
condition of indemnification under this Section 20, the party seeking
indemnification shall give the other party (for purposes of this Section 20
called the “Indemnifying Party”) immediate notice of and copies of all pleadings
and correspondence related to the assertion of any such claim, proceeding,
action, or suit and agrees not to settle, compromise, or otherwise dispose of
any such claim, proceeding, action or suit without the prior written consent of
the Indemnifying Party.  The Indemnifying Party shall have the right (but not
the obligation) to assume the defense or settlement of any such claim,
proceeding, action, or suit at its expense, by counsel of its choice.  Except
for the settlement of a claim which involves the payment of money only and for
which the party seeking indemnification is wholly indemnified by the
Indemnifying Party, no claim may be settled by the Indemnifying Party without
the written consent of the party seeking indemnification such consent not to be
unreasonably withheld.  If the Indemnifying Party assumes such defense, the
Party seeking indemnity shall cooperate fully with the Indemnifying Party in
defense of the action and the

 

16

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Indemnifying Party shall not be liable to pay or reimburse the other party for
attorneys’ fees or expenses, except such out-of-pocket costs or expenses
incurred by the Indemnified Party in cooperating with the Indemnifying Party.

 

21.           NOTICES

 

All notices provided by this Agreement shall be in writing and shall be given by
facsimile or registered mail, postage prepaid, or by personal delivery, by one
party to the other, addressed to such other Party at the applicable address set
forth below, or to such other addresses as may be given for such purpose by such
other party by notice duly given hereunder.  Notice shall be deemed properly
given on the date of a confirmed facsimile transmission, three (3) days after
the date mailed if given by first class mail or on the date of delivery, which
ever applies:

 

To MFF:

 

Mrs. Fields Franchising, LLC

 

 

2855 E. Cottonwood Parkway, Suite 400

 

 

Salt Lake City, UT 84121

 

 

Attention: General Counsel

 

 

Fax No: (801) 736-5944

 

 

 

To Shadewell:

 

Shadewell Grove IP, LLC

 

 

100 West 5th

 

 

Suite 700

 

 

Tulsa, OK 74103

 

 

 

22.           GENERAL PROVISIONS

 

(a)           No Fiduciary or Other Relationship.  It is understood and agreed
by the parties hereto that this Agreement does not create a fiduciary
relationship between them, that MFF and Shadewell are and shall be independent
contractors and that 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 whatsoever.

 

(b)           Use of Licensed Names and Marks in Contracts.  Shadewell shall not
employ any of the Licensed Names and Marks in signing any contract or applying
for any license or permit or in a manner that may result in MFF’s liability for
any of Shadewell’s indebtedness or obligations, nor may Shadewell use the
Licensed Names and Marks in any way not expressly authorized by MFF.  Except as
expressly authorized in writing, neither MFF nor Shadewell shall make any
express or implied agreements, warranties, guarantees or representations or
incur any debt in the name or on behalf of the other, represent that their
relationship is other than licensor and licensee or be obligated by or have any
liability under any agreements or representations made by the other that are not
expressly authorized in writing.

 

17

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(c)           Severability.  Except as expressly provided to the contrary
herein, each Section, paragraph, term and provision of this Agreement, and any
portion thereof, shall be considered severable and if, for any reason, any such
provision of this Agreement is held to be invalid, contrary to or in conflict
with any applicable present or future law or regulation in a final, unappealable
ruling issued by any court, agency or tribunal with competent jurisdiction in a
proceeding to which MFF is a party, that ruling shall not impair the operation
of, or have any other effect upon, such other portions of this Agreement as may
remain otherwise intelligible, which shall continue to be given full force and
effect and bind the parties hereto, although any portion held to be invalid
shall be deemed not to be a part of this Agreement from the date the time for
appeal expires, if Shadewell is a party thereto, otherwise upon Shadewell’s
receipt of a notice of non-enforcement thereof from MFF.  If any covenant herein
which restricts competitive activity is deemed unenforceable by virtue of its
scope in terms of area, business activity prohibited and/or length of time, but
would be enforceable by reducing any part or all thereof, Shadewell and MFF
agree that the same shall be enforced to the fullest extent permissible under
the laws and public policies applied in the jurisdiction in which enforcement is
sought.

 

(d)           Substitution of Provisions.  If any applicable and binding law or
rule of any jurisdiction requires a greater prior notice of the termination of
this Agreement than is required hereunder, or the taking of some other action
not required hereunder, or if, under any applicable and binding law or rule of
any jurisdiction, any provision of this Agreement is invalid or unenforceable,
the prior notice and/or other action required by such law or rule shall be
substituted for the comparable provisions hereof.  Shadewell agrees to be bound
by any promise or covenant imposing the maximum duty permitted by law which is
subsumed within the terms of any provision hereof, as though it were separately
articulated in and made a part of this Agreement, that may result from striking
from any of the provisions hereof, any portion or portions which a court may
hold to be unenforceable in a final decision to which MFF is a party, or from
reducing the scope of any promise or covenant to the extent required to comply
with such a court order.  Such modifications to this Agreement shall be
effective only in such jurisdiction, unless MFF elects to give them greater
applicability, and shall be enforced as originally made and entered into in all
other jurisdictions.

 

(e)           Waiver.  MFF and Shadewell 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 thereof to the other or
such other effective date stated in the notice of waiver.  Any waiver so granted
by the waiving party shall be without prejudice to any other rights the waiving
party may have, will be subject to continuing review by the waiving party and
may be revoked, in the waiving party’s sole discretion, at any time and for any
reason, effective upon delivery to the other party of ten (10) days’ prior
written notice.

 

(f)            Waiver by Custom or Practice.  MFF and Shadewell 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 exact compliance
with

 

18

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every term, condition and covenant herein or to declare any breach thereof to be
a default and to terminate this Agreement prior to the expiration of its term)
by virtue of any custom or practice of the parties at variance with the terms
hereof; any failure, refusal or neglect of MFF or Shadewell to exercise any
right under this Agreement or to insist upon exact compliance by the other with
its obligations hereunder; any waiver, forbearance, delay, failure or omission
by MFF or Shadewell to exercise any right, power or option, whether of the same,
similar or different nature, or MFF’s acceptance of any payments due from
Shadewell after any breach of this Agreement.

 

(g)           Force Majeure.  Neither MFF nor Shadewell shall be liable for loss
or damage or deemed to be in breach of this Agreement if their failure to
perform obligations results from:

 

(i)                                     compliance with any law, regulation,
requirement or instruction of any federal, state, municipal or foreign
government or any department or agency thereof; or

 

(ii)                                  acts of God; or

 

(iii)                               fires, strikes, embargoes, war or riot; or

 

(iv)                              any other similar event or cause.

 

Any delay resulting from any of said causes shall extend performance accordingly
or excuse performance, in whole or in part, as may be reasonable, except that
said causes shall not excuse payments of amounts owed at the time of such
occurrence or payment of any Running Royalties for Royalty Bearing Products due
on any sales thereafter.

 

(h)           Press Release.  Unless consented to by either party in advance or
as required by law, regulation, statute, etc., both parties agree not to issue
any formal press release prior to the introduction of Royalty Bearing Products
through the Designated Distribution Channels.

 

(i)            Temporary Restraining Orders.  Notwithstanding anything to the
contrary contained in this Agreement, MFF and Shadewell shall each have the
right in a proper case to obtain temporary restraining orders and temporary or
preliminary injunctive relief from a court of competent jurisdiction.

 

(j)            Rights Cumulative.  The rights of MFF and Shadewell hereunder are
cumulative and no exercise or enforcement by MFF or Shadewell of any right or
remedy hereunder shall preclude the exercise or enforcement by MFF or Shadewell
of any other right or remedy hereunder which MFF or Shadewell is entitled by law
to enforce.

 

(k)           Costs and Attorney Fees.  If a claim for amounts owed by Shadewell
to

 

19

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MFF or its affiliates is asserted in any judicial proceeding or appeal thereof,
or if MFF or Shadewell is required to enforce this Agreement in any judicial
proceeding or appeal thereof, the party prevailing in such proceeding shall be
entitled to reimbursement of its reasonable costs and expenses, including
reasonable accounting and legal fees, whether incurred prior to, in preparation
for, or in contemplation of the filing of any written demand, claim, action,
hearing or proceeding to enforce the obligations of this Agreement.  If MFF
incurs expenses in connection with Shadewell’s failure to pay when due amounts
owing to MFF, to submit when due any reports, information or supporting records
or otherwise to comply with this Agreement, or if Shadewell incurs expenses in
connection with MFF’s failure to comply with this Agreement, including, but not
limited to legal and accounting fees, the party incurring the expense shall be
reimbursed by the other party for any such reasonable costs and expenses which
it incurs.

 

(l)            Governing Law.  Except to the extent governed by the United
States Trademark Act of 1946 (Lanham Act, 15 U.S.C. ‘‘ 1051 et seq.) or other
federal law, this Agreement, and the relationship between Shadewell and MFF,
shall be governed by the laws of the State of Utah.

 

(m)          Jurisdiction.  Shadewell and MFF hereby irrevocably consent and
agree that any legal action, suit or proceeding arising out of or in any way in
connection with this Agreement may be instituted or brought in the United States
District Court for the District of Utah. Shadewell and MFF hereby irrevocably
consent and submit to, for themselves and in respect of their property,
generally and unconditionally, the jurisdiction of such Court, and to all
proceedings in such Court.  Further, Shadewell and MFF irrevocably consent to
actual receipt of any summons and/or legal process at their respective addresses
as set forth in this Agreement as constituting in every respect sufficient and
effective service of process in any such legal action or proceeding.  Shadewell
and MFF further agree that final judgment in any such legal action, suit or
proceeding shall be conclusive and may be enforced in any other jurisdiction,
whether within or outside the United States of America, by suit under judgment,
a certified or exemplified copy of which will be conclusive evidence of the fact
and the amount of the liability.

 

(n)           Waiver of Punitive Damages.  Except with respect to the
indemnification obligations of the parties hereunder, the parties waive to the
fullest extent permitted by law any right to or claim for any punitive or
exemplary damages against the other and agree that, in the event of a dispute
between them, the party making a claim shall be limited to recovery of any
actual damages it sustains.

 

(o)           Headings.  The headings of the several sections and paragraphs
hereof are for convenience only and do not define, limit or construe the
contents of such sections or paragraphs.

 

(p)           Entire Agreement.  This Agreement and the Exhibits hereto
represent the

 

20

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entire agreement between MFF and Shadewell with respect to the subject matter
hereof and supersede any prior agreements and negotiations between the parties. 
This Agreement does not affect my rights or obligations of the parties under the
Retail Agreement.

 

(q)           Exhibits.  All Exhibits hereto form part of this Agreement.

 

(r)            Counterparts.  This Agreement may be executed simultaneously in
two counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same agreement, binding upon both parties
hereto, notwithstanding that both parties are not signatories to the original or
the same counterpart.

 

(s)           Expenses.  Each party shall bear its own expenses (including
attorneys’ fees and expenses) in connection with the preparation, negotiation,
execution, and delivery of this Agreement.

 

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IN WITNESS THEREOF, this Agreement has been executed by the Parties hereto as of
the date and year first written above.

 

 

 

SHADEWELL GROVE IP, LLC

 

 

 

 

By:

/s/ Tim Bruer

 

 

 

Tim Bruer

 

Its:

President

 

 

 

 

MRS. FIELDS FRANCHISING, LLC

 

 

 

 

By:

/s/ Michael Ward

 

 

 

Michael Ward

 

Its:

Executive Vice President, General Counsel

 

22

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EXHIBIT “A”

 

LICENSED NAMES AND MARKS

 

 

MRS. FIELDS

 

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EXHIBIT “B”

 

ROYALTY BEARING PRODUCTS

 

 

“Brownie Products”:

 

1.  Shelf stable ready-to-eat brownies packaged for retail sale.

 

 

“Topping Products”:

 

1.  Shelf stable ready-to-eat dessert toppings packaged for retail sale.

 

2.  Shelf stable ready-to-eat syrups packaged for retail sale.

 

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