Contract analysis

I. Purpose of This Letter We write to report on the court-ordered mediation session held yesterday, February 15, 2023, in the above-referenced matter. The mediation was conducted before retired Judge Harold K. Novotny of Novotny ADR Services LLC, located at 140 Broadway, Suite 2810, New York, New York 10005. We are pleased to report that, following a full day of intensive negotiations, the parties reached a framework

II. Background and Mediation Context To ensure that this letter provides a self-contained record for your files and for the benefit of MCB's leadership team, we briefly summarize the procedural posture of the litigation and the circumstances leading to yesterday's mediation. Federal Court Litigation. MCB filed its Complaint on November 7, 2022, in the United States District Court for the Southern District of New York

III. Summary of Mediation Proceedings A. Opening Sessions Judge Novotny convened the mediation at approximately 9:30 a.m. with a joint opening session in the main conference room of Novotny ADR Services. The mediator provided introductory remarks regarding the confidentiality of the proceedings, the non-binding nature of any framework reached during the session, and the ground rules for the day. Following these preli

IV. Framework Term Sheet — Summary of Principal Terms We set forth below a detailed summary and analysis of each of the principal terms contained in the framework term sheet. We note at the outset that the framework term sheet is expressly non-binding and is intended to serve as the basis for negotiation of a definitive Trademark Coexistence Agreement. Certain material terms remain subject to further negotiation, as

I. Governing Law and Dispute Resolution The framework provides that the definitive Trademark Coexistence Agreement will be governed by the law of the State of New York. This is consistent with MCB's preference and with the location of the pending federal court action. With respect to dismissal mechanics, the framework contemplates the following: (a) Upon execution of the definitive agreement and receipt of the settle

V. Assessment of the Framework Terms A. Strengths of the Framework Calderwood & Harkness believes the framework term sheet represents a strong outcome for MCB. We highlight the following particular strengths: Monetary Recovery. A settlement payment in the range of $1,200,000 to $1,500,000 provides meaningful monetary compensation for the infringement of MCB's trademark rights. While a damages award at trial could pot

1. Target a settlement amount of $1,350,000, the midpoint of the agreed range, during final negotiations of the definitive agreement. This figure reflects a fair assessment of the strength of MCB's claims balanced against the litigation risks identified above.

2. Insist on a robust liquidated-damages provision of $500,000 per occurrence for breach of the channel or product-category restrictions, in addition to actual damages. This provision is essential to deter breach and ensure effective enforcement of the coexistence restrictions.

3. Negotiate precise mark-modification specifications, including the minimum 75% type-size ratio, clear positioning requirements for the BRINDOVAL prefix, and font-style requirements to ensure that the modified mark as used in commerce effectively distinguishes Brindoval's products from MCB's.

4. Ensure that the trade-dress review mechanics in the definitive agreement provide MCB with a meaningful opportunity to object to any replacement trade dress that is insufficiently differentiated, while stopping short of a full approval right that could raise enforceability concerns.

VI. Next Steps and Timeline We propose the following next steps and timeline for the completion of the definitive Trademark Coexistence Agreement:

1. First Draft of Definitive Agreement. Calderwood & Harkness will prepare the first draft of the definitive Trademark Coexistence Agreement. We anticipate circulating the initial draft to Halverson McKay & Pruitt LLP by early March 2023, subject to MCB's authorization to proceed.

2. Negotiation Period. We expect the negotiation of the definitive agreement to take approximately six to eight weeks from the date of circulation of the first draft, targeting completion of a fully executed agreement by late April 2023. This timeline is subject to the pace of negotiations and the complexity of any open issues.

3. Escrow Agent. In parallel with the negotiation of the definitive agreement, we will identify a mutually acceptable escrow agent and negotiate the terms of an escrow agreement to govern the deposit and release of the settlement payment.

4. MCB Signatory. The framework term sheet anticipates that you, Thomas R. Hennessy, will sign the definitive agreement on behalf of MCB. We request that you confirm that you will serve as the authorized signatory or, alternatively, designate another officer of MCB with appropriate authority.

5. Client Authorization. We respectfully request that MCB confirm its authorization to proceed on the framework terms described in this letter, including any modifications to MCB's negotiation parameters that you or MCB's leadership may wish to communicate. We are prepared to begin drafting immediately upon receipt of your authorization.

6. Brand Management Review. Rachel Dominguez and MCB's brand management team should be prepared to review and comment on the trade-dress specifications, mark-modification requirements, and any brand-guideline provisions that will be incorporated into the definitive agreement. Their input will be particularly important in defining the visual and typographic standards for the modified mark and the replacement trade dre

7. Notification to Waypoint Capital Partners LLC. We recommend that MCB advise Waypoint Capital Partners LLC (Managing Partner James Alderton) of the mediation outcome and the proposed resolution. As MCB's majority equity holder, Waypoint has historically been involved in strategic brand-protection decisions, and we believe it is appropriate to ensure that Waypoint's leadership is informed of and comfortable with the

VII. Confidentiality Notice We remind you that the mediation statement submitted by MCB, the mediation statement submitted by Brindoval, and all oral and written communications exchanged during the mediation are subject to the confidentiality protections set forth in the mediation agreement executed by the parties with Novotny ADR Services LLC prior to the commencement of the mediation session. These communications a

VIII. Closing We would like to schedule a call with you — and with Sandra Kwan and Rachel Dominguez as appropriate — at your earliest convenience to discuss the framework terms in detail and to obtain MCB's formal authorization to proceed with the negotiation of the definitive agreement. Please let us know your availability for a call early next week. We are also available to meet in person at MCB's offices if you wo