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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report. . . . . . . . . . . . . . . . . . August 11, 1997
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CABLE CAR BEVERAGE CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 0-14784 52-0880815
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State or other jurisdiction Commission (I.R.S. Employer
of incorporation File Number Identification No.)
717 17th Street, Suite 1475 Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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Amendments to Agreements with Stewart's Restaurants, Inc.
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On June 24, 1997 the Company entered into agreements with
Stewart's Restaurants, Inc. ("Stewart's Restaurants") amending and
modifying its licensing agreements with Stewart's Restaurants. The
agreements were further amended on August 11, 1997. Among other
things, these amendments (i) gave the Company ownership of the
forumulas for and manufacturing rights to concentrates used to make
Stewart's soft drinks; (ii) provide that the Company is permitted to
use the Stewart's trademark on any other product of any type; and (iii)
granted to the Company the perpetual exclusive worldwide license to
manufacture, distribute and sell post-mix syrups and premises for
Stewart's beverages throughout the world (fountain-type beverages),
subject to certain rights retained by Stewart's Restaurants. As
consideration for these amendments, the Company agreed to issue to
Stewart's Restaurants an aggregate of 150,000 shares of the Company's
Common Stock and to pay Stewart's Rstaurants $400,000 in cash, of which
$250,000 is payable on March 31, 1998 and $150,000 is payable on March
31, 1999.
Item 7. Financial Statements and Exhibits
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(c)Exhibits.
10-V Agreement of June 24, 1997 (amending Master Agreement) -
Stewart's Restaurants, Inc., as amended August 11, 1997
10-W Agreement of June 24, 1997 (amending Fountain Agreement)
- Stewart's Restaurants, Inc., as amended August 11,
1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
(Registrant) CABLE CAR BEVERAGE CORPORATION
(Date) August 19, 1997
By:(Signature) /s/ Myron D. Stadler
(Name and Title) Myron D. Stadler
Chief Accounting Officer
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10-V
CABLE CAR BEVERAGE CORPORATION
717 17th Street, Suite 1475
Denver, Colorado 80202
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June 24, 1997 as amended
on August 11, 1997
Stewart's Restaurants, Inc.
114 West Atlantic Avenue
Clementon, New Jersey 08021
Gentlemen:
Reference is made to the Agreement dated July 11, 1989, as amended
(as so amended, the "Prior Master Agreement") between us and you. This letter
agreement confirms the amendments and modifications to the Prior Master
Agreement that we have agreed to. Except as amended by this letter agreement,
the Prior Master Agreement, shall continue in full force and effect. Unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings given to them in the Prior Master Agreement. To the extent there is
any inconsistency between the terms of this letter agreement and the Prior
Master Agreement, the terms of this letter agreement shall govern.
Accordingly, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1.Territory. Subject to continuing to meet the minimum case
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requirements set forth in the last sentence of paragraph 3 of the Prior Master
Agreement after the date hereof, the territory of Licensee's rights under the
Prior Master Agreement is now worldwide as provided in paragraph 3 of the
Prior Master Agreement.
2.Quality Control.
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(a) Licensee and Owner shall comply with standards of quality
comparable to that maintained by Licensee in selling and
distributing STEWART'S soft drinks.
(b) Commencing January 1, 1998, Licensee may purchase soft
drink concentrates or syrups for making STEWART'S soft
drinks (which term, for all purposes of this letter
agreement and the Prior Master Agreement, shall include
all non-carbonated and carbonated non-alcoholic
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beverages, excluding postmix syrup and premix beverages)
from any supplier; provided that any concentrates or
syrups purchased shall comply with the quality standards
set forth in clause (a) above; provided, further, that
the Licensee will offer to purchase concentrates and
syrups for a minimum of an aggregate of 3.0 million
cases of soft drinks during the five year period 1998-
2002 from the existing supplier of concentrates and
syrups for STEWART'S soft-drinks at existing prices.
Licensee will submit to the Owner such samples and
analyses as Owner may from time to time reasonably
request in connection with STEWART'S soft drinks, it
being understood however, that the Owner may object
to any such sample or analysis only if it does not
comply with the quality standards set forth in clause
(a) above. Licensee shall be permitted to deal directly
with and make payment to, any of such suppliers. Owner
agrees that it will from time to time as reasonably
requested by Licensee provide, at mutually agreed upon
fees, consulting services to Licensee with respect to
the production of STEWART'S soft drinks.
(c) Licensee agrees to comply in all material respects with
all applicable requirements of laws and regulations.
(d) Licensee agrees to use commercially reasonable effects
to require sublicensees to maintain uniform quality and
control over soft drinks made and offered for sale under
the STEWART'S trademark.
3.Labeling and Advertising. Licensee agrees that all labels,
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containers, advertising and other promotional material of Licensee bearing
the STEWART'S mark shall be in good taste and of good quality. Owner shall
not have approval rights with respect to any labels, containers, advertising
or other promotional matter of Licensee and its sublicensees. Licensee
agrees to provide to Owner, on or about July 1 of each year, commencing July
1, 1998, samples of all labels then used on Licensee's STEWART'S products.
In the event Licensee changes the logo or design used in connection with the
Stewart's trademark, Owner agrees that upon written request of Licensee, and
subject to Owner's agreements with third parties then in effect, it will make
corresponding changes to paper goods, advertising materials and other
promotional materials used by Owner at Owner's Locations (as defined below)
in connection with its use of the Stewart's trademark; provided, however,
that Owner shall be entitled to use all of its inventory of such items before
making said changes; and provided, further, that Owner shall have no
obligation or duty now, or at any time hereafter, to change signage at Owner's
Locations (as defined below).
4.Sublicensees. The Licensee shall be permitted to use any form
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of sublicensing agreement with sublicensees that is not inconsistent with the
Prior Master Agreement, as amended hereby.
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5.Royalties. Licensee shall pay the per case royalties set forth
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in the Prior Master Agreement for all soft drinks sold by the Licensee under
the STEWART'S trademark. Payment of such royalties shall be made monthly
within 20 days after the month for which such royalties shall apply and shall
be accompanied by documentation setting forth the calculation of such
royalties. Within 120 days of the end of each fiscal year, the Licensee shall
deliver to the Owner a certification from a "Big-Six" accounting firm
certifying the amount of royalties due to the Owner with respect to such
fiscal year.
6.New Products.
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(a) In addition to all rights granted under the Prior Master
Agreement and this letter agreement with regard to soft
drinks, Licensee shall also be permitted to use the
STEWART'S trademark, mark or other identifying means on any
other product of any type, (such other products are referred
to as "New Products"), provided that such New Products comply
with the quality standards set forth in paragraph 2(a) above;
provided that if the quality standard set forth in paragraph
2(a) would be inapplicable to such New Product, then such New
Product shall be of good quality. Owner shall be entitled to
a royalty of 2% of the "net sales" of any New Products
produced by the Licensee in accordance with the terms of this
paragraph. For purposes of this letter agreement, "net sales"
of a New Product means the sum of money actually received by
Licensee from sales of such New Product less, to the extent
applicable, the sum of (i) sales, excise, use, currency,
repatriation and similar taxes, (ii) returns, (iii) trade
discounts, (iv) sales commissions, (v) shipping costs and
(vi) credits (other than advertising credits).
(b) Owner shall not manufacture, distribute or sell any products
bearing the STEWART'S trademark, mark or other identifying
means without the prior written consent of the Licensee, which
consent may be given or withheld by Licensee in its sole
discretion. Notwithstanding the foregoing, Licensee
acknowledges that Owner retains all rights to own, operate,
license or franchise STEWART'S Restaurants, Drive-Ins and
mobile food and beverage concession trailers, in each case
where the STEWART'S brand is the primary brand associated with
such location (collectively, "Owner's Locations"), and to sell
post mix syrups and pre mix beverages at or to Owner's
Locations. Licensee also acknowledges that (i) Owner retains
all rights to sell and market good quality ice cream and hot
dogs using the STEWART'S trademark, (ii) Owner retains all
rights to do STEWART'S advertising (provided that such
advertising is in good taste and of good quality) for, and
to sell paper goods, promotional items and food intended for
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immediate consumption at Owner's Locations identified by the
STEWART'S trademark at or to, Owner's Locations and (iii)
Owner may, subject to (x) such products meeting the quality
standards set forth in paragraph 2(a) above and (y) obtaining
the prior approval of Licensee (which approval will not be
unreasonably withheld or delayed), sell and market popsicles,
water ice and chile using the STEWART'S trademark.
Licensee shall not be entitled to a royalty with respect to
sales of any product produced, distributed or sold by
Owner in accordance with the terms of this paragraph 6.
Notwithstanding the foregoing, Owner's right to sell and
market any product listed in clause (iii) above shall
automatically revert to Licensee (A) if within four (4) years
and six months of the initial date of this letter agreement
Owner is not actively selling or marketing such product or
(B) if after Owner has commenced selling or marketing such
product a two-year period shall have elapsed during which
Owner shall not be selling or marketing such product.
Owner agrees to execute and deliver to Licensee such
documents as Licensee shall reasonably request to evidence
any such reversion of rights to Licensee.
(c) Each party agrees to indemnify and hold the other party
harmless from any and all claims, suits, loss or damage
(including reasonable attorneys' fees and expenses) arising
out of or relating to any products produced, distributed or
sold by such party in accordance with the terms of this
paragraph 6.
7.Notice of Infringement. Owner agrees to notify Licensee in
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writing of any suspected infringement of the STEWART'S mark and/or of any
claim made against it or adverse to or conflicting with the ownership of the
STEWART'S mark by the Owner. Each party agrees that it will not intentionally
do anything harmful to the reputation of the STEWART'S mark or to the other
party's interest therein.
8.Registration.
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(a) The Owner agrees that it will take whatever action may be
required by law to secure and maintain its federal
registration or registrations in the United States of
STEWART'S for soft drinks or in connection with any of
Licensee's New Products, including the timely filing of
applications for registration and acquisition of any
renewals or extensions thereof. Owner hereby appoints
Licensee its attorney and agent-in-fact, and if the Owner
fails to so act, Licensee may act on Owner's behalf to
maintain said registrations at Owner's expense, provided that
Licensee first makes written demand upon the Owner to so act
and the Owner fails to act within twenty (20) days of its
receipt of the demand; and provided, further, that any costs
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incurred in connection with the registration of New Products
in the United States shall be paid by Licensee except that
Licensee may credit any such amount paid by it against
royalties owed by Licensee to Owner with respect to such New
Product.
(b) The Owner agrees to take whatever action may be requested by
Licensee to register and maintain the mark STEWART'S for soft
drinks or in connection with any of Licensee's New Products,
in countries outside of the United States, including the
timely filing of applications for registration and acquisition
of any renewals or extensions thereof. The filing and
prosecution of such applications shall be the responsibility
of Owner, who shall be promptly reimbursed for all reasonable
expenses, including attorney's fees, in connection therewith
by the Licensee. If it fails to so act, Licensee may act as
an agent on Owner's behalf to maintain said registrations at
Owner's expense, provided that Licensee first makes written
demand upon the Owner to so act and the Owner fails to act
within twenty (20) days of its receipt of the demand;
provided, further, that any costs incurred in connection with
the registration of the STEWART'S trademark for soft drinks
or New Products in any foreign jurisdiction shall be paid by
Licensee, except that Licensee may credit any such amount paid
by it against royalties owed by Licensee to Owner with
respect to sales by Licensee in such jurisdiction. The
Owner's obligations under this paragraph shall cease upon the
transfer of the foreign rights to the Licensee pursuant
to paragraph 17(b) of the Prior Master Agreement.
9.Infringement. The Owner and Licensee jointly or singly may
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police the mark STEWART'S including the institution of proceedings in the
appropriate tribunals to prevent trademark infringement, unauthorized use of
the mark, colorable imitations, unfair competition and/or the registration by
others of confusingly similar marks, except that the Licensee shall not take
any such action without first advising Owner in writing of such intention to
act and giving Owner the first option to so act. Owner shall notify Licensee
within ten (10) business days after the date of receipt of such notice from
Licensee of Owner's decision to institute any proceeding or other action
under this paragraph. If Owner fails to notify Licensee of its decision
within ten (10) business days or elects to take no action, Licensee shall be
free to take any action it deems appropriate to protect its interest under
this agreement. Where such action is instituted by either party, the other
party agrees to furnish such assistance as may reasonably be requested
including becoming a party to the action. The cost of all policing of the
mark shall be borne equally by the parties if the policing relates to a third
party use of a mark in connection with soft drinks; provided that the cost
borne by Owner pursuant to this sentence during any calendar year shall not
exceed the royalties paid by Licensee to Owner with respect to such calendar
year; and provided, further that the cost borne by Owner pursuant to this
sentence in any calendar year with respect to all unsuccessful actions which
were brought by Licensee after Owner elected not to bring such actions shall
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not exceed 25% of the royalties paid by Licensee to Owner with respect to
such calendar year. Notwithstanding the foregoing, to the extent any
proceeding to police the mark "Stewart's" is brought in a jurisdiction
outside of the United States (a "Foreign Jurisdiction"), the costs to be
borne by Owner in accordance with the previous sentence in connection with
such proceeding during any calendar year shall be paid as follows: First, the
Owner shall be obligated to pay in cash that portion of such costs in an
amount up to the royalties paid by the Licensee to Owner with respect to such
calendar year with respect to such Foreign Jurisdiction, and second, the
balance of such costs shall be paid by the Owner through credit against
future royalties paid by the Licensee to Owner with respect to such Foreign
Jurisdiction on a dollar for dollar basis. The cost of any action (other
than with respect to soft drinks) under this paragraph shall be borne by the
party instituting such action. In the event that a monetary recovery is
awarded in any action brought pursuant to this paragraph, such recovery shall
first be used to reimburse each party (pro rata) for any costs that it
incurred as a result of such action, thereafter each party shall be entitled
to receive any damages that are expressly awarded to such party by the court
(pro rata based on the relative amounts of such awards) and thereafter,
any remaining amounts shall be paid to the party that brought such action.
10.Ownership.
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(a) The rights to be transferred in accordance with paragraph
13(B) of the Prior Master Agreement shall include the
associated goodwill.
(b) The Licensee shall own all formulae, rights to packaging and
other rights with respect to soft drinks and New Products
bearing the STEWART'S trademark (other than ownership of the
STEWART'S trademark in the United States). Owner shall at
Licensee's cost, assign whatever rights it has to such
formulae, packaging and other rights (other than ownership
of the STEWART'S trademark in the United States) with respect
to such products. Owner agrees that, if Licensee shall change
any formula for any soft drink sold under the STEWART'S
trademark, Owner shall change the formula that it uses for
the corresponding post mix syrup and pre mix beverage so as
to be substantially identical with Licensee's formula so long
as such change is being made by Licensee in its reasonable
business judgment (i) in order to enhance the quality or
flavor of such soft drink, (ii) if any formula ingredient
becomes unavailable (by governmental regulation or otherwise)
or (iii) if the relative cost of any formula ingredient
becomes commercially unreasonable for use. Licensee agrees
in any such case to use commercially reasonable efforts to
maintain the quality of any such product; provided, however,
in the case of clause (i) Owner shall not be required to
change its formula without its consent, which shall not be
unreasonably withheld.
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11.Term. The Prior Master Agreement, as amended hereby, shall
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be perpetual unless sooner terminated as provided in the Prior Master
Agreement, as amended hereby.
12.Termination.
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(a) In the case of a material violation by either party of any
one or more of the material terms of this letter agreement
or the Prior Master Agreement and the failure of the
violating party to correct such violation within forty-five
(45) days following the receipt of written notice of
violation from the other party, such other party shall be
entitled to terminate this letter agreement and the Prior
Master Agreement on forty-five (45) days prior written notice;
provided, however, that if any such breach is curable by
Licensee, then for so long as Licensee is attempting in good
faith to cure such breach, the Owner may not terminate this
letter agreement or the Prior Master Agreement.
(b) Notwithstanding anything to the contrary, the Prior Master
Agreement may be canceled immediately by the Owner in the
event of Licensee's failure to prepare the soft drinks
identified by trademark STEWART'S in substantial conformity
with the quality standards being met by Licensee as of the
date hereof. Such cancellation shall be effective on the
date written notice thereof is received by the Licensee;
provided, however, that if any of the foregoing violations
are the result of a mistake or oversight not involving any
bad faith or willful misconduct or adulteration or
substitution on the part of the Licensee, itself, then
cancellation shall only be effective in the event that
Licensee fails to correct such violation within ninety (90)
days following receipt of written notice of violation (which
shall include full details of such violation) from the Owner;
provided, further, that if any of the foregoing violations
are the result of a default by a sublicensee, the Owner's
sole remedy shall be to have the right to require Licensee
to terminate its sublicense with such sublicensee, except that
if Licensee shall fail, within sixty (60) days of the date
Owner makes such request, to take reasonable steps to pursue
the termination of such sublicense, then Owner shall have the
right to terminate this letter agreement and the Prior Master
Agreement.
13.Right of First Refusal. Owner, William Fessler and Michael W.
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Fessler hereby grant to Licensee a right of first refusal with respect to (i)
any shares of stock of Owner or any equity interest in any parent company of
Owner which is proposed to be sold, and (ii) any proposed sale of the Prior
Master Agreement, the Agreement dated December 1, 1993, as amended, between
the parties hereto or any of Owner's rights with respect to the STEWART'S
trademark; provided that such shares of stock, equity interests or rights may
be transferred to immediate family members of William Fessler or Michael W.
Fessler so long as prior to such transfer such transferee agrees to be bound
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by the terms of this letter agreement as if such transferee were an original
signatory hereto; and provided, further that the provisions of this paragraph
13 shall not be applicable to any sale of shares pursuant to a bonafide
underwritten initial public offering of shares registered with the Securities
and Exchange Commission on Form S-1 or any successor or similar form.
Licensee shall have fifteen (15) business days from the date on which it
receives a notice (which notice shall contain a description of the proposed
sale, the name and address of the proposed purchaser and a copy of all
agreements with such proposed purchaser) with respect to such proposed sale
(the "Notice Date") to notify Owner whether it will exercise its right of
first refusal. If Licensee shall elect to exercise such right, the proposed
sale to Licensee shall be consummated within 45 days after the Notice Date,
subject to extension for receipt of all necessary governmental and regulatory
approvals.
14.Arbitration. All disputes under this letter agreement or the
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Prior Master Agreement shall be resolved through binding arbitration in
Philadelphia, Pennsylvania under the commercial rules and regulations of the
American Arbitration Association. In any such dispute, the arbitrators shall
have the right in their discretion to award attorneys' fees, costs and
damages.
15.Expenses. Licensee shall pay Owner within 10 days of the date
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hereof the sum of $2,500 to compensate Owner for legal and other expenses
incurred in connection with this letter agreement.
16.Notices. Any notice given by either party hereunder shall be
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deemed to have been properly given if sent by telecopy (provided that receipt
is acknowledged), registered or certified mail (return receipt requested) or
by reputable overnight courier to the address of the party set forth below:
If to Owner, to:
Stewart's Restaurants, Inc.
114 West Atlantic Avenue
Clementon, NJ 08021
Attn: President
Telecopy: (609) 783-7616
If to Licensee, to:
Cable Car Beverage Corporation
717 17th Street
Denver, Colorado 80202
Attn: President
Telecopy: (303) 298-1150
With a copy to:
Triarc Companies, Inc.
280 Park Avenue
New York, NY 10017
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Attn: General Counsel
Telecopy: (212) 451-3216
Each party shall promptly advise the other in writing in the
manner provided above whenever its address for notices hereunder shall change.
17.Assignment. This letter agreement shall be binding on the
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successors and permitted assigns of the Licensee, Owner, William Fessler and
Michael W. Fessler. This letter agreement may not be assigned by Licensee
(other than to an affiliate thereof) without the prior written consent of the
Owner, which consent shall not be unreasonably withheld or delayed. Owner's
right to assign its rights under this letter agreement or under the Prior
Master Agreement shall be subject to paragraph 13 of this letter agreement.
Owner hereby acknowledges and consents to the acquisition (including through
a merger where the Licensee is the surviving corporation) of all of the
outstanding capital stock of Licensee by Triarc Companies, Inc. or its
affiliates.
18.Governing Law. This letter agreement shall be governed by the
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law of the State of New Jersey.
19.Amendment. This letter agreement may not be amended or
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otherwise modified, and no provision hereof may be waived, except in writing
signed by each of the parties hereto.
20.Effectiveness. This letter agreement shall be effective upon
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execution by each of the parties hereto. This letter agreement shall
supersede all prior agreements between the parties hereto with respect to the
subject matter hereof (including, without limitation, the Prior Master
Agreement to the extent amended hereby). This letter agreement is the legal,
valid and binding obligation of each of the parties hereto. The parties
hereto intend to execute and deliver a definitive new Master Agreement
embodying the terms of this letter agreement, but until such time as it is
executed and delivered, this letter agreement shall be deemed a legal, valid
and binding obligation of each of the parties hereto. In consideration for
the execution, delivery and performance of this letter agreement, Licensee
agrees promptly to issue to Owner: (i) 10,000 shares of common stock of
Licensee. (Owner acknowledges that such shares will not be registered under
the Securities Act of 1933, as amended, and agrees to execute and deliver a
subscription agreement containing customary representations and warranties
substantially in the form forwarded to Owner on July 2, 1997); and (ii)
$200,00 payable in cash, as follows: $125,000 payable on March 31, 1998 and
$75,000 payable on March 31, 1999. The obligation referenced in the
preceding clause (ii) shall be evidenced by Licensee's Promissory Note, the
form and terms of which shall be mutually agreed to by the parties.
21.Counterparts. This letter agreement may be executed in one or
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more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The parties
agree that a telecopied signature shall be deemed an original and shall be
sufficient to evidence execution and delivery of this letter agreement by the
applicable party.
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22.Release.(a) Owner's Release. In consideration of the
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consideration payable pursuant to paragraph 20 of this letter agreement, the
Owner, and each of its affiliates, officers, directors, employees (including
Messrs. Michael and William Fessler), executors, representatives, agents,
successors and assigns (collectively, the "Owner Group") covenants not to sue
or pursue any litigation against, and waives, releases and discharges
Licensee and each of its affiliates, officers, directors, employees
(including Samuel Simpson and William Rutter), executors, agents, successors
and assigns, any parent entity, present or future, (collectively, the
"Licensee Group"), from any and all charges or causes of action it may have
against any of them, including but not limited to any claims, demands, rights,
judgments, defenses, actions or causes of action whatsoever, of any and every
kind and description, whether known or unknown, incurred or not incurred, that
the Owner Group have, ever had, now have, or shall or may hereafter assert
with respect to any fact or event existing on August 11, 1997 or occurring
before such date (collectively, "Claims") for or on the account of any
liability, damage, loss, costs and expense of whatever kind connected with,
arising out of or in any way related to the terms of this letter agreement
and the negotiation of the terms hereof, including any Claims made or that
would have been made in the letter dated July 18, 1997 from Archer & Greiner
to Licensee; provided, however, that nothing in this subparagraph 22 shall
release the Licensee Group from any obligation arising under the terms of the
Prior Master Agreement.
(b) Licensee Release. In consideration of the terms and provisions
---------------------
of this letter agreement, the Licensee Group covenants not to sue or pursue
any litigation against, and waives, releases and discharges the Owner Group
from any and all charges or cause of action it may have against any of them,
including but not limited to any Claims for or on the account of any
liaibility, damage, loss, costs and expense of whatever kind connected with,
arising out of or in any way related to the terms of this letter agreement
and the negotiation of the terms hereof; provided, however, that nothing in
this subparagraph (b) shall release the Owner Group from any obligation
arising under the terms of the Prior Master Agreement.
IN WITNESS WHEREOF, this letter agreement has been duly executed
as of the day, month, and year first above written.
(Registrant) STEWART'S RESTAURANTS, INC.
(Date) August 11, 1997
By:(Signature) /s/ Michael W. Fessler
(Name and Title) Michael w. Fessler
President
(Registrant) CABLE CAR BEVERAGE CORPORATION
(Date) August 11, 1997
By:(Signature) /s/ Samuel M. Simpson
(Name and Title) Samuel M. Simpson
President
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PARAGRAPHS 13, 17 AND 20 AGREED TO AND ACCEPTED:
/s/ William Fessler
____________________________________
William Fessler
/s/ Michael W. Fessler
____________________________________
Michael W. Fessler
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10-W
CABLE CAR BEVERAGE CORPORATION
717 17th Street, Suite 1475
Denver, Colorado 80202
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June 24, 1997, as amended on
August 11, 1997
Stewart's Restaurants, Inc.
114 West Atlantic Avenue
Clementon, New Jersey 08021
Gentlemen:
Reference is made to the Agreement dated December 1, 1993, as amended
(as so amended the "Prior Fountain Agreement") between us and you. This
letter agreement confirms the amendments and modifications to the Prior
Fountain Agreement that we have agreed to. Except as amended by this letter
agreement, the Prior Fountain Agreement shall continue in full force and
effect. Unless otherwise defined herein, all capitalized terms used herein
shall have the meanings given to them in the Prior Fountain Agreement. To
the extent there is any inconsistency between the terms of this letter
agreement and the Prior Fountain Agreement, the terms of this letter
agreement shall govern.
Accordingly, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. Grant of License; Territory.
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(a) Owner hereby grants to Licensee a perpetual exclusive license
to manufacture, distribute and sell, and to license others to
manufacture, distribute and sell post mix syrups and pre mix
beverages throughout the world, except that Owner shall retain
only the right to sell post mix syrups and pre mix beverages
to any of Owner's company-owned, licensed or franchised
STEWART'S Restaurants, Drive-Ins or mobile food and beverage
concession trailers, in each case where the STEWART'S brand is
the primary brand associated with such location. Licensee
agrees to respect the geographic limitations on sales of
STEWART'S products by Owner or third parties to the extent
that such limitations are set forth in writing in an agreement
existing on the date hereof with Owner's licensees or
franchisees. Owner represents that in no circumstance, other
than with respect to a licensee in Huntington, West Virginia,
is the geographic limitation contained in any such agreement
in excess of 5 miles. To the extent permitted by applicable
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law, Owner agrees not to enter into or renew any license,
franchise or similar agreement which contains any geographic
limitation on the right of Licensee to sell any product under
the STEWART'S trademark.
(b) Owner agrees to assign the Licensee all of its rights
under and with respect to its agreements with Somerset
Syrup, of Edison, New Jersey, General Carbonator, of
Philadelphia, Pennsylvania, Doug's Classic 57, in
Alliance, Ohio ("Doug's") and Arlene's Dog n' Suds, in
Elyria, Ohio ("Arlene's"); provided that Licensee shall
enter into a sublicense agreement with Owner pursuant to
which Owner may continue to sell STEWART'S products to
Doug's and Arlene's.
2.Quality Control.
(a) Licensee and Owner shall comply with standards of quality
comparable to that maintained by Licensee in selling and
distributing STEWART'S soft drinks (which term, for all
purposes of this letter agreement and the Prior Fountain
Agreement, shall mean all non-carbonated and carbonated
non-alcoholic beverages, in post mix syrup and pre mix
beverage form).
(b) Commencing January 1, 1998, Licensee may purchase soft drink
concentrates or syrups for making STEWART'S post mix syrup
and premix beverages from any supplier without the approval of
Owner; provided, however that any concentrates or syrups
purchased shall comply with the quality standards set forth
in clause (a) above. Licensee will submit to the Owner such
samples and analyses as Owner may from time to time reasonably
request in connection with STEWART'S soft drinks, it being
understood however, that the Owner may object to any such
sample or analysis only if it does not comply with the quality
standards set forth in clause (a) above. Licensee shall be
permitted to deal directly with and make payment to, any
of such suppliers.
(c) Licensee agrees to comply in all material respects with all
applicable requirements of laws and regulations.
(d) Licensee agrees to use commercially reasonable effects to
require sublicensees to maintain uniform quality and control
over soft drinks made and offered for sale under the STEWART'S
trademark.
(e) Each party agrees to indemnify and hold the other party
harmless from any and all claims, suits, loss or damage
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(including reasonable attorneys' fees and expenses) arising
out of or relating to any products produced, distributed or
sold by such party in accordance with the terms of this letter
agreement and the Prior Fountain Agreement.
3.Labelling and Advertising. Licensee agrees that all labels,
----------------------------
containers, advertising and other promotional material of Licensee bearing
the STEWART'S mark shall be in good taste and of good quality. Owner shall
not have approval rights with respect to any labels, containers, advertising
or other promotional matter of Licensee and its sublicensees. Licensee
agrees to provide to Owner, on or about July 1 of each year, commencing July
1, 1998, samples of all labels then used on Licensee's STEWART'S products.
In the event Licensee changes the logo or design used in connection with the
Stewart's trademark, Owner agrees that upon written request of Licensee, and
subject to Owner's agreements with third parties then in effect, it will make
corresponding changes to paper goods, advertising materials and other
promotional materials used by Owner at Owner's Locations (as defined below)
in connection with its use of the Stewart's trademark; provided, however,
that Owner shall be entitled to use all of its inventory of such items before
making said changes; and provided, further, that Owner shall have no
obligation or duty now, or at any time hereafter, to change signage at Owner's
Locations (as defined below).
4.Sublicensees. The Licensee shall be permitted to use any form
---------------
of sublicensing agreement with sublicensees that is not inconsistent with the
Prior Fountain Agreement, as amended hereby.
5.Royalties.
------------
(a) Licensee shall pay the royalties set forth in the Prior
Fountain Agreement on a monthly basis within 20 days after
the month for which such royalties apply and shall be
accompanied by documentation setting forth the calculation of
such royalties. Within 120 days of the end of each fiscal
year, the Licensee shall deliver to the Owner a certification
from a "Big-Six" accounting firm certifying the amount of
royalties due to the Owner with respect to such fiscal year.
(b) The annual minimum royalties to be paid by Licensee to Owner
under the Prior Fountain Agreement, as amended hereby, shall
be (i) $20,000 for each of calendar years 1998 and 1999, (ii)
$40,000 for calendar year 2000, (iii) $60,000 for calendar
year 2001, (iv) $80,000 for calendar year 2002 and (v)
$100,000 for calendar year 2003 and thereafter. Such minimum
royalties shall be paid in advance, on or prior to January 31
of each year, and shall be credited against actual royalties
due and payable by Licensee to Owner under the Prior Fountain
Agreement.
6.Notice of Infringement. Owner agrees to notify Licensee in
-------------------------
writing of any suspected infringement of the STEWART'S mark and/or of any
claim made against it or adverse to or conflicting with the ownership of the
STEWART'S mark by the Owner. Each party agrees that it will not intentionally
do anything harmful to the reputation of the STEWART'S mark or to the other
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<PAGE>
party's interest therein.
7.Registration.
---------------
(a) The Owner agrees that it will take whatever action may be
required by law to secure and maintain its federal
registration or registrations in the United States of
STEWART'S for soft drinks (including with respect to soft
drinks in post mix syrup and pre mix beverage form) including
the timely filing of applications for registration and
acquisition of any renewals or extensions thereof. Owner
hereby appoints Licensee its attorney and agent-in-fact, and
if the Owner fails to so act, Licensee may act on Owner's
behalf to maintain said registrations at Owner's expense,
provided that Licensee first makes written demand upon the
Owner to so act and the Owner fails to act within twenty (20)
days of its receipt of the demand.
(b) The Owner agrees to take whatever action may be requested by
Licensee to register and maintain the mark STEWART'S for soft
drinks (including with respect to soft drinks in post mix
syrup and pre mix beverage form) in countries outside of the
United States, including the timely filing of applications
for registration and acquisition of any renewals or extensions
thereof. The filing and prosecution of such applications
shall be the responsibility of Owner, who shall be promptly
reimbursed for all reasonable expenses, including attorney's
fees, in connection therewith by the Licensee. If it fails
to so act, Licensee may act as an agent on Owner's behalf to
maintain said registrations at Owner's expense, provided that
Licensee first makes written demand upon the Owner to so act
and the Owner fails to act within twenty (20) days of its
receipt of the demand; provided, further, that any costs
incurred in connection with the registration of the STEWART'S
trademark for soft drinks in any foreign jurisdiction shall
be paid by Licensee, except that Licensee may credit any such
amount paid by it against royalties owed by Licensee to Owner
with respect to sales by License in such jurisdiction. The
Owner's obligations under this paragraph shall cease upon the
transfer of the foreign rights to the Licensee pursuant to
paragraph 17(b) of the Agreement dated July 11, 1989, as
amended, between the parties hereto.
8.Infringement. The Owner and Licensee jointly or singly may
---------------
police the mark STEWART'S including the institution of proceedings in the
appropriate tribunals to prevent trademark infringement, unauthorized use of
the mark, colorable imitations, unfair competition and/or the registration by
others of confusingly similar marks, except that the Licensee shall not take
any such action without first advising Owner in writing of such intention to
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act and giving Owner the first option to so act. Owner shall notify Licensee
within ten (10) business days after the date of receipt of such notice from
Licensee of Owner's decision to institute any proceeding or other action
under this paragraph. If Owner fails to notify Licensee of its decision
within ten (10) business days or elects to take no action, Licensee shall be
free to take any action it deems appropriate to protect its interest under
this agreement. Where such action is instituted by either party, the other
party agrees to furnish such assistance as may reasonably be requested
including becoming a party to the action. The cost of all policing of the
mark shall be borne equally by the parties if the policing relates to a third
party use of a mark in connection with soft drinks; provided that the cost
borne by Owner pursuant to this sentence during any calendar year shall not
exceed the royalties paid by Licensee to Owner with respect to such calendar
year; provided, further, that the cost borne by Owner pursuant to this
sentence in any calendar year with respect to all unsuccessful actions which
were brought by Licensee after Owner elected not to bring such actions shall
not exceed 25% of the royalties paid by Licensee to Owner with respect to
such calendar year. Notwithstanding the foregoing, to the extent any
proceeding to police the mark "Stewart's" is brought in a jurisdiction
outside of the United States (a "Foreign Jurisdiction"), the costs to be
borne by Owner in accordance with the previous sentence in connection with
such proceeding during any calendar year shall be paid as follows: First, the
Owner shall be obligated to pay in cash that portion of such costs in an
amount up to the royalties paid by the Licensee to Owner with respect to such
calendar year with respect to such Foreign Jurisdiction, and second, the
balance of such costs shall be paid by the Owner through credit against future
royalties paid by the Licensee to Owner with respect to such Foreign
Jurisdiction on a dollar for dollar basis. The cost of any action (other
than with respect to soft drinks) under this paragraph shall be borne by the
party instituting such action. In the event that a monetary recovery is
awarded in any action brought pursuant to this paragraph, such recovery shall
first be used to reimburse each party (pro rata) for any expenses that it
incurred as a result of such action, thereafter each party shall be entitled
to receive any damages that are expressly awarded to such party by the court
(pro rata based on the relative amounts of such awards) and thereafter, any
remaining amounts shall be paid to the party that brought such action.
9.Ownership. The Licensee shall own all formulae, rights to
------------
packaging and other rights with respect to STEWART'S soft drinks in post mix
syrup and pre mix beverage form (other than ownership of the STEWART'S
trademark in the United States). Owner shall at Licensee's cost, assign
whatever rights it has to such formulae, packaging and other rights (other
than ownership of the STEWART'S trademark in the United States) with respect
to such products. Owner agrees that, if Licensee shall change any formula
for any soft drink sold under the STEWART'S trademark in post mix syrup or
pre mix beverage form, Owner shall change the formula that it uses for its
corresponding product so as to be substantially identical to Licensee's
formula so long as such change is being made by Licensee in its reasonable
business judgement (i) in order to enhance the quality or flavor of such soft
drink, (ii) if any formula ingredient becomes unavailable (by governmental
regulation or otherwise) or (iii) if the relative cost of any formula
ingredient becomes commercially unreasonable for use. Licensee agrees in any
such case to use commercially reasonable efforts to maintain the quality of
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any such product; provided, however, the the case of clause (i) Owner shall
not be required to change its formula without its consent, which shall not be
unreasonably withheld.
10.Term. The Prior Fountain Agreement, as amended hereby, shall
--------
be perpetual unless sooner terminated as provided in the Prior Fountain
Agreement, as amended hereby.
11.Termination.
---------------
(a) In the case of a material violation by either party of any
one or more of the material terms of this agreement and the
failure of the violating party to correct such violation
within forty-five (45) days following the receipt of written
notice of violation from the other party, such other party
shall be entitled to terminate this letter agreement and the
Prior Fountain Agreement on forty-five (45) days prior
written notice; provided, however, that if any such breach is
curable by Licensee, then for so long as Licensee is
attempting in good faith to cure such breach, theOwner may
not terminate this letter agreement or the Prior Fountain
Agreement.
(b) Notwithstanding anything to the contrary, the Prior Fountain
Agreement may be canceled immediately by the Owner in the
event of Licensee's failure to prepare the soft drinks
identified by trademark STEWART'S in substantial conformity
with the quality standards being met by Licensee as of the
date hereof. Such cancellation shall be effective on the
date written notice thereof is received by the Licensee;
provided, however, that if any of the foregoing violations
are the result of a mistake or oversight not involving any
bad faith or willful misconduct or adulteration or
substitution on the part of the Licensee, itself, then
cancellation shall only be effective in the event that
Licensee fails to correct such violation within ninety (90)
days following receipt of written notice of violation (which
shall include full details of such violation) from the Owner;
provided, further, that if any of the foregoing violations
are the result of a default by a sublicensee, the Owner's
sole remedy shall be to have the right to require Licensee
to terminate its sublicense with such sublicensee, except
that if Licensee shall fail, within sixty (60) days of the
date Owner makes such request, to take reasonable steps to
pursue the termination of such sublicense, then Owner shall
have the right to terminate this letter agreement and the
Prior Fountain Agreement.
12.Arbitration. All disputes under this letter agreement or the
---------------
Prior Fountain Agreement shall be resolved through binding arbitration in
Philadelphia, Pennsylvania under the commercial rules and regulations of the
American Arbitration Association. In any such dispute, the arbitrators
shall have the right in their discretion to award attorneys fees, costs and
damages.
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13.Expenses. Licensee shall pay Owner within 10 days of the date
------------
hereof the sum of $2,500 to compensate Owner for legal and other expenses
incurred in connection with this letter agreement.
14.Notices. Any notice given by either party hereunder shall be
-----------
deemed to have been properly given if sent by telecopy (provided that receipt
is acknowledged), registered or certified mail (return receipt requested) or
by reputable overnight courier to the address of the party set forth below:
If to Owner, to:
Stewart's Restaurants, Inc.
114 West Atlantic Avenue
Clementon, NJ 08021
Attn: President
Telecopy: (609) 783-7616
If to Licensee, to:
Cable Car Beverage Corporation
717 17th Street
Denver, Colorado 80202
Attn: President
Telecopy: (303) 298-1150
With a copy to:
Triarc Companies, Inc.
280 Park Avenue
New York, NY 10017
Attn: General Counsel
Telecopy: (212) 451-3216
Each party shall promptly advise the other in writing in the
manner provided above whenever its address for notices hereunder shall change.
15.Assignment. This letter agreement shall be binding on the
--------------
successors and permitted assigns of the Licensee. This letter agreement may
not be assigned by Licensee (other than to an affiliate thereof) without the
prior written consent of the Owner, which consent shall not be unreasonably
withheld or delayed. Owner's right to assign its rights under this letter
agreement or under the Prior Fountain Agreement shall be subject to the terms
of the Agreement dated July 11, 1989, as amended, between us and you. Owner
hereby acknowledges and consents to the acquisition (including through a
merger where the Licensee is the surviving corporation) of all of the
outstanding capital stock of Licensee by Triarc Companies, Inc. or its
affiliates.
16.Governing Law. This letter agreement shall be governed by the
-----------------
law of the State of New Jersey.
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<PAGE>
17.Amendment. This letter agreement may not be amended or
-------------
otherwise modified, and no provision hereof may be waived, except in writing
signed by each of the parties hereto.
18.Effectiveness. This letter agreement shall be effective upon
-----------------
execution by each of the parties hereto. This letter agreement shall
supersede all prior agreements between the parties hereto with respect to the
subject matter hereof (including, without limitation, the Prior Fountain
Agreement to the extent amended hereby). This letter agreement is the legal,
valid and binding obligation of each of the parties hereto. The parties
hereto intend to execute and deliver a definitive new Fountain Agreement
embodying the terms of this letter agreement, but until such time as it is
executed and delivered, this letter agreement shall be deemed the legal,
valid and binding obligation of each of the parties hereto. In consideration
for the execution, delivery and performance of this letter agreement, Licensee
agrees promptly to issue to Owner: (i) 140,000 shares of common stock of
Licensee (Owner acknowledges that such shares will not be registered under
the Securities Act of 1933, as amended and agrees to execute and deliver a
subscription agreement containing customary representations and warranties
substantially in the form forwarded to Owner on July 2,1997); and (ii)
$200,000 payable in cash, as follows: $125,000 payable on March 31, 1998 and
$75,000 payable on March 31, 1999. The obligation referenced in the preceding
clause (ii) shall be evidenced by Licensee's Promissory Note, the form and
terms of which shall be mutually agreed to by the parties.
19.Counterparts. This letter agreement may be executed in one
----------------
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The parties
agree that a telecopied signature shall be deemed an original and shall be
sufficient to evidence execution and delivery of this letter agreement by the
applicable party.
20.Mutual Releases. (a) Owner's Release. In consideration of
------------------- -------------------
the consideration payable pursuant to paragraph 18 of this letter agreement,
the Owner, and each of its affiliates, officers, directors, employees
(including Messrs. Michael and William Fessler), executors, representatives,
agents, successors and assigns (collectively, the "Owner Group") covenants
not to sue or pursue any litigation against, and waives, releases and
discharges Licensee and each of its affiliates, officers, directors,
employees (including Samuel Simpson and William Rutter), executors, agents,
successors and assigns, any parent entity, present or future, (collectively,
the "Licensee Group"), from any and all charges or causes of action it may
have against any of them, including but not limited to any claims, demands,
rights, judgments, defenses, actions or causes of action whatsoever, of any
and every kind and description, whether known or unknown, incurred or not
incurred, that the Owner Group have, ever had, now have, or shall or may
hereafter assert with respect to any fact or event existing on August 11,
1997 or occurring before such date (collectively, "Claims") for or on the
account of any liability, damage, loss, costs and expense of whatever kind
connected with, arising out of or in any way related to the terms of this
letter agreement and the negotiation of the terms hereof, including any
Claims made or that would have been made in the letter dated July 18, 1997
from Archer & Greiner to Licensee; provided, however, that nothing in this
subparagraph 20 shall release the Licensee Group from any obligation arising
under the terms of the Prior Fountain Agreement.
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(b) Licensee Release. In consideration of the terms and
---------------------
provisions of this letter agreement, the Licensee Group covenants not to sue
or pursue any litigation against, and waives, releases and discharges the
Owner Group from any and all charges or cause of action it may have against
any of them, including but not limited to any Claims for or on the account of
any liability, damage, loss, costs and expense of whatever kind connected
with, arising out of or in any way related to the terms of this letter
agreement and the negotiation of the terms hereof; provided, however, that
nothing in this subparagraph (b) shall release the Owner Group from any
obligation arising under the terms of the Prior Fountain Agreement.
IN WITNESS WHEREOF, this letter agreement has been duly executed
as of the day, month, and year first above written.
(Registrant) STEWART'S RESTAURANTS, INC.
(Date) August 11, 1997
By:(Signature) /s/ Michael W. Fessler
(Name and Title) Michael W. Fessler
President
(Registrant) CABLE CAR BEVERAGE CORPORATION
(Date) August 11, 1997
By:(Signature) /s/ Samuel M. Simpson
Samuel M. Simpson
President
Paragraph 20 Agreed to and Accepted:
/s/ William Fessler
________________________________
William Fessler
/s/ Michael W. Fessler
_________________________________
Michael W. Fessler
