MOTORSPORTS EMPORIUM LICENSE AGREEMENT
This agreement is made this August 9, 2005 (the "Agreement") by and
between: Xxxxxxx X. Xxxxxxxx, an individual, 00000 Xxxxx 00xx Xxxxx, Xxxxxxxxxx,
XX 00000, hereinafter referred to as "Licensor", and MotorSports Emporium, Inc.,
a Nevada Corporation, 00000 X. Xxxx Xxxx. Xxxxx 0, Xxxxxxxxxx, XX 00000
hereinafter referred to as "Licensee."
WHEREAS, the Licensor is engaged in the business of developing and
marketing products in the nature of performance brake fluids and has, over the
years, acquired and developed substantial and valuable technical knowledge,
know-how, and experience in the design and development of such systems and
products described in detail in Schedule A attached hereto (the "Technology");
WHEREAS, the Licensee desires to utilize the Technology in the design,
development and sale of the products listed in the attached Schedule A (the
"Licensed Product");
WHEREAS, Licensor and Licensee believe it is in their mutual interest and
desire to enter into an agreement whereby Licensee would use the Licensor's
Technology in the manufacture and sale of the Licensed Product pursuant to the
terms and conditions hereinafter provided;
WHEREAS, the Licensor owns and operates the World Wide Web sites known as
xxx.xxxxxxxxxxxxxxxxxx.xxx and xxx.xx000.xxx (the "Websites");
WHEREAS, Licensee desires to license the Websites for its own use as it
relates specifically to Licensed Product;
WHEREAS, Licensor is the sole and exclusive owner of those certain patents,
trademarks, copyrights and registrations identified more fully in Schedule B
attached hereto (the "Intellectual Property");
WHEREAS, Licensee desires to obtain from Licensor a license to use the
Trademarks on and in association with the Licensed Product and to receive
technical assistance from Licensor for the application and sale of Product, for
the Specified Market, in the specified Territory and Licensor is willing to
grant such right to Licensee; and,
WHEREAS, Licensor has agreed to sell Prospeed GS610 exclusively through
licensee with licensee performing all transactions related to marketing,
advertising, manufacture and sales of Licensed Product.
NOW, THEREFORE, to affect the above purpose, and in consideration of the
mutual covenants and premises set forth herein, Licensor and Licensee hereby
agree as follows:
1.0 DEFINITIONS:
The terms defined in this Section shall, for all purposes of the Agreement,
except where the context clearly requires otherwise or except as otherwise
indicated, have the meaning specified below:
1
1.1 "Technology" shall mean the know-how, services, product and blends and
application techniques, specifications of which are licensed,
registered or applied for by the Licensor or issued or assigned to the
Licensor during the Term of the Agreement which are attached hereto in
Exhibit "A".
1.2 "Technical Information" shall mean all Proprietary and confidential
information, technical data, processes, and specifications known to
Licensor in connection with the application of the Licensed Product
including, but not limited to, the name, and source of supply of
Prospeed GS610, product information, technical specifications, terms
of purchase and quantity discounts, business relationships, including
the names of distributors marketing Prospeed GS610, terms of
distribution agreements, business and development plans, marketing
plans, actual and potential customers, strategies, reports, marketing
projections, and support documentation.
1.3 "Territory" shall mean the United States of America, and all
recognized foreign countries, worldwide except countries which any
government agency of the U.S. Government prohibits shipment of the
Licensed Product.
1.4 "Intellectual Property" shall mean the patents, trademarks, and
copyrights as licensed or used by Licensor, developed in conjunction
with the Licensed Product. Intellectual Property shall include all
current and future brake fluid patents which have been or may be
applied for or granted to Licensors, and includes those trademarks
listed in Exhibit "B".
1.5 The term "Specified Market" shall mean the brake fluid markets for all
individual, business and governmental entities, which use the Licensed
Product.
1.6 "Licensed Product" shall further mean the brake fluid blend as defined
by Exhibit "A" and any subsequent performance
improvements/modifications.
1.7 "Effective Date" shall mean the date on which the Agreement is
executed.
1.8 The "Term" of the Agreement shall be five (5) years initially with an
option to extent the term for an additional five (5) years at sole
discretion of licensee commencing on the Effective Date unless sooner
terminated by the Licensor or Licensee in accordance with the
provisions herein. Thereafter, this Agreement may be renewed by mutual
agreement between the parties hereto.
1.9 "MSDS" shall mean the brake fluid's material data safety sheet.
2.0 LICENSE GRANT
2.1 Licensor hereby exclusively grants to Licensee and its sub licensees,
for the Term of this Agreement, an exclusive right and license to use
the Technical Information in order to manufacture, process, prepare
sell, distribute and advertise the Licensed Product using said
Technology, for the Specified Market, in the Territory during the Term
of this Agreement. Licensee is hereby granted the right to subcontract
for installation, distribution, service and sale and application of
the Product. Licensor retains full rights to use trademarks in
manner(s) which are not brake fluid related and does not conflict
and/or create competition with Licensee in the brake fluid market.
2
2.2. Licensor hereby exclusively grants to Licensee, for the Term of this
Agreement, the exclusive right and license to use, manufacture, have
manufactured, sell, distribute and advertise the Licensed Product in
the Territory.
2.3. Licensor hereby exclusively grants to Licensee, for the Term of this
Agreement, an exclusive license to use the Intellectual Property and
Websites on or in association with the Licensed Product in the
Territory, as well as on packaging, promotional and advertising
material associated therewith when used in accordance with trademark
standards as specified by Licensor. All Intellectual Property and
websites will remain the sole property of the Licensor.
2.4. The Licensee may grant sublicenses to third parties under the
Agreement with the approval of the Licensor, which approval shall not
be unreasonably withheld.
2.5. During the term of this Agreement, Licensor shall not distribute or
sell the Licensed Product in the Territory directly or through any
business affiliated with Licensor whatsoever, however Licensor may
contract with Licensee to sell the Product for Licensee.
2.6. Licensor represents and warrants that it has the right and power to
grant the licenses granted herein and that there are no other
agreements with any other party in conflict herewith.
2.7 During the term of this Agreement, each party shall advise the other
party of any technical improvements and/or inventions relating to the
Technology and/or the Licensed Product. All such improvements and/or
inventions shall become the property of party to develop said
improvements and/or inventions. If an improvement and/or invention
developed by Licensor is later incorporated in an improved or modified
product by Licensee, such improved product shall be subject to the
payment of a Royalty. Further, if Licensee incorporates any dominant
feature of the Licensed Property on other Product, such other Product
shall be subject to the payment of a Royalty.
3.0 SUPPLY OF TECHNICAL INFORMATION AND AFTER-SALES SERVICES:
3.1 Licensor shall, within ten (10) days after the Effective Date of this
Agreement, provide Licensee with all materials and documents
reasonably required to perform under this Agreement.
3.2 Licensor will supply Technical Information and Licensed Product
support to Licensee for applications and Licensed Product as specified
in Schedule "A".
3.3 Licensor shall, during the Term of this Agreement, provide Licensee
with a support by telephone, e-mail, fax, or if requested by Licensee,
in person at Licensee's home office site at all times reasonably
required by Licensee in connection the support of the Licensed
Product, including the use of reasonable commercial efforts: (i) to
answer Licensee's questions regarding the proper utilization and
optimization of the Licensed Product; and (ii) to provide solutions to
problems that arise with the Licensed Product.
3
3.4 Licensee recognizes that such Technology is the proprietary and
confidential property of Licensor. Accordingly, Licensee shall not,
without the prior express written consent of Licensor, during the term
of this Agreement, disclose or reveal to any third party or utilize
for its own benefit other than pursuant to this Agreement, any such
Technology provided by Licensor concerning the Licensed Product,
provided that such information was not previously known to Licensee or
to the general public. Licensee further agrees to take all reasonable
precautions to preserve the confidentiality of Licensor's Technology
and shall assume responsibility that its employees, sublicensees
and/or assignees will similarly preserve this information against
third parties. The provisions of this clause shall survive termination
of this Agreement.
3.5 In the event that Licensor does not seek or obtain trademark
protection for a particular item or in a particular country where
Licensee believes such protection is necessary, With 30 day written
advance notice to Licensor, Licensee shall have the right to seek such
protection in the name of Licensor and setoff all costs associated
with seeking and maintaining such protection against the royalties
owed Licensor.
4.0 SCHEDULE OF EXCLUSIVE LICENSE FEES AND COSTS
4.1 License Fee: In consideration of the grant of this exclusive license,
which exclusive license shall include all terms and conditions as set
forth herein, Licensee shall pay an licensee fee of fifteen thousand
dollars ($15,000).
4.2 Licensee shall additionally pay a monthly royalty fee on collected
gross revenues for actual Licensed Product sold as follows:
4.2.1 Seven (7%) percent on all gross sales as it relates to the
Licensed Product sold;
4.3 The percentage royalty payments described in 4.2.1 shall be made
within ten (10) days after the end of each calendar month accompanied
with a full report of the relevant period's wholesale and retail sales
activities.
4.4 Cost of manufacturing and marketing is the sole responsibility of
Licensee.
5.0 TECHNICAL INFORMATION AND LICENSOR'S TRADEMARKS
5.1 All rights in the Technical Information and the Licensor's trademarks
other than those specifically granted herein are reserved to Licensor.
Licensee acknowledges that Licensee shall not acquire any title or
interest in the Technical Information or Licensor's Trademarks as a
result of the Licensee's use thereof. Within thirty (30) days from the
Effective Date of this Agreement, licensor shall have Licensee
registered as a registered or permitted user, or the like, of the
Licensor's Trademarks with the appropriate governmental agency or
entity, within the Territory, as may be required. Any cost to record
such an application shall be borne by Licensor. Upon termination or
expiration of this Agreement for any reason whatsoever, Licensor may
immediately apply to cancel Licensee's status as a registered or
permitted user. Licensee shall consent in writing to cancellation and
shall join in any cancellation petition.
4
5.2 Licensor shall seek and obtain during the Term of this Agreement at its
own expense, appropriate intellectual property protection for the Licensed
Product. Licensor further represents and warrants that the Trademarks do
not infringe any valid right of any third party.
6.0 REPRESENTATIONS:
6.1 Licensor represents that it possesses sufficient engineering ability
to manage and direct the application of the Licensed Product,
including ability to produce drawings and conceptual designs and to
provide technical assistance to Licensee.
6.2 Licensor represents that it has the intention and ability to develop
distribution and sales channels through which the Licensed Product may
be distributed and sold efficiently.
6.3 Licensor represents that it owns the Technical Information and
Licensed Product and that there are no claims, existing or threatened,
in connection with the Licensor's clear title or license. Licensor
represents that the Licensed Product, Technical information,
Technology and related know-how do and will function for the intended
purpose of each Licensed Product as described in the Technical
Information and, further, that the Licensor has performed sufficient
testing and analysis to prove the usefulness and competitive
efficiency of the technology underlying this Agreement for full scale
field applications.
7.0 NON-COMPETITION:
7.1 During the term of this Agreement, Licensor shall not engage, directly
or indirectly, in the marketing or use of any other brake fluid
without the written consent of the Licensee. Licensor is not
restricted in any way from the production, distribution, marketing
and/or sales of any non brake fluid product.
7.2 Licensee acknowledges and agrees that due to the unique nature of the
Licensed Product, Technical Information, Technology and related
processes and the irreparable harm that disclosure or unauthorized
sales, use, and application shall cause Licensor, Licensee agrees that
during the term of this Agreement, and in the event of termination of
this agreement, Licensee covenants and agrees as follows:
7.2.1 During the term of this Agreement and for a period of ten (10)
years after termination of this Agreement, including but not
limited to, the provisions of Paragraph 10.0, herein, neither
Licensee nor any of its directors, employees, agents, partners,
representatives shall directly or indirectly solicit customers of
or divert business from Licensor for the purpose of brake fluid,
production, application, usage, sales, or manufacturing of
Licensor's patented product, proprietary techniques,
applications, or processes, or any blends, formulae, or Licensed
Product as described herein or developed hereafter by Licensor.
8.0 CONFIDENTIALITY AND NONDISCLOSURES:
8.1 Licensee shall hold in confidence the Technical Information that is
identified as "proprietary" or "confidential" when delivered to
Licensee (hereinafter referred to as "Confidential Information").
5
8.2 Licensee shall use the Confidential Information for the sole purpose
of application and marketing the Licensed Product. Licensee shall
refrain from using or allowing the use of the Confidential Information
for any other private or commercial purpose.
8.3 Licensee agrees that the Confidential Information shall be shown to or
discussed only with selected individuals employed by Licensee on a
"need to know" basis for the purposes of performing under this
Agreement. Licensee shall take, and shall cause all its employees to
take reasonable precaution to insure the confidentiality of the
Confidential Information.
8.4 The Confidential Information received by Licensee shall not be
disclosed or divulged to any third party or parties without prior
written approval of Licensor. Prior to showing the Confidential
Information to, or discussing it with, any third party, Licensee shall
require the third party to maintain the confidentiality under the same
terms hereof.
8.5 Upon termination of this Agreement, Licensee shall cease to use and
shall forthwith return or surrender to Licensor all the Confidential
Information and all reproductions thereof in their custody or
possession.
8.6 Licensee understands and agrees that Licensor might be irreparably
harmed by violation of this Article, and that the use of the
Confidential Information for the business purposes of any party other
than Licensor could enable such party to compete unfairly with
Licensor. In the event that Licensee becomes aware of any breach of
the confidentiality of, or the misappropriation of, any of the
Confidential Information, Licensee will promptly give notice thereof
to Licensor. In addition, Licensor shall be entitled to injunctive
relief, to enforcement by specific performance of this Article and to
damages or may terminate this Agreement.
8.7 The obligation of Licensee under this Article shall survive the
termination or rescission of the Agreement for a period of ten (10)
years after such expiration, termination, or rescission.
9.0 INDEMNIFICATION
9.1 Licensee shall indemnify, defend and hold Licensor, its affiliates,
subcontractors, directors, officers, employees, shareholders and
agents harmless from any and all costs and demands resulting from any
damage, loss or injury, whether to property or persons, including
death, resulting from, arising out of, or in connection with: (1)
negligence; (2) intentional acts; or (3) errors and omissions of the
Licensee, its employees, officers, directors, contractors, or agents
in connection with the application, handling or marketing of the
Product.
9.2 Licensee shall be responsible for carrying product liability insurance
in an amount consistent with adequate coverage. Licensor will be named
to be covered by this policy to the extent there is no additional cost
to Licensee.
9.3 Licensor shall indemnify, defend, and hold Licensee harmless from any
and all suits or proceeding based in a claim that the Licensed Product
constitutes an infringement of any United States of America or foreign
patent. Licensee shall promptly notify Licensor of the existence of
any claim of infringement on any Licensed Product or Technology or
associated processes to which Licensor's indemnification obligation
would apply, and shall give Licensor the reasonable opportunity to
defend the same at its own expense, provided that Licensee shall at
all times also have the right to full participation in the defense at
its expense. Licensee, at its sole option, may actively participate in
the defense of any such suit or proceeding, sharing in the cost of
said defense if it participates in such suit or proceeding. Licensee
shall cooperate with Licensor in the defense of any proceeding for any
infringement under this indemnification. Awards from any such
proceeding shall be divided between the Licensor and Licensee on a
pro-rata basis in proportion to the costs of the Licensee and Licensor
in connection with such proceeding or suit.
6
10.0 TERMINATION:
10.1 This Agreement may be terminated immediately by Licensor upon:
10.1.1 The failure of Licensee to cure a material breach of this
Agreement within sixty (60) days of receipt of written notice to
Licensee of such breach;
10.1.2 The failure of Licensee to pay any license fee as described
herein within sixty (60) days from the due date;
10.1.3 In the event Licensee is delinquent in royalty fee to Licensor
or its affiliates under this Agreement or otherwise, Licensor may
terminate this Agreement. Licensor's rights to terminate by
reason of default on royalty payments by Licensee, as provided
for this section, shall not be valid until such time as Licensor
has transferred Technical Information to Licensee as required
herein.
10.2 This Agreement may be terminated immediately by Licensee upon:
10.2.1 The failure of Licensor to cure a material breach of this
Agreement within (60) days of receipt of written notice to
Licensor of such breach;
10.3 Upon termination of this Agreement for any reason whatsoever Licensee
will return to Licensor all notes, records, documents, drawings,
specifications, and all other information in any form relating to
Licensor under this Agreement, all of which shall remain the sole
property of Licensor.
10.4 After the initial five year term of the Agreement, should Licensee not
desire to exercise its option to enter into the second 5 year term,
all rights and properties will be returned to Licensor and Licensor
may sell or License the Technology to third parties, except that in
the event Licensor desires to sell the rights and properties and
receives bids from unrelated third parties for said rights and
properties, licensee may purchase all rights and properties at a
discounted price of 80% of the third party's bid price average. In
addition, licensor shall receive the following: 10.4.1 7% royalty fee
for life on all gross sales of Prospeed GS610
10.5 Licensee's right to purchase the rights and properties for 80% of the
third's party's price shall extend for a period of 365 days after the
termination of this agreement.
11.0 TECHNICAL ASSISTANCE
11.1 It is mutually agreed upon by Licensor and Licensee that Licensor
shall provide the following services under the conditions as
stipulated hereunder:
11.1.1 All assistance requested by Licensee to market, sell and
promote Licensed Product.
7
11.3 Licensee will handle all accounting/sales of Licensed Product.
12.0 ARBITRATION:
12.1 All disputes, controversies, or differences arising out of, relating
to, or in connection with this Agreement between the parties hereto,
or any breach thereof, which cannot be resolved amicably by the
parties shall be finally settled by arbitration by a panel of three
(3) arbitrators in accordance with the Rules of and Procedures of the
American Arbitration Association. Each party shall appoint one (1)
arbitrator and the two (2) arbitrators shall appoint the third
arbitrator. Any decision rendered by such arbitration shall be binding
upon both parties. The place of arbitration shall be in Maricopa
County in the State of Arizona. The award rendered by the arbitrators
shall be final and binding upon the parties hereto.
13.0 APPLICABLE LAW:
13.1 This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona.
14.0 FORCE MAJEURE:
14.1 Neither party shall be liable to the other party for the failure or
delay in performance of any of its obligations under this Agreement
due to acts of God, fire, flood, strikes, labor troubles or other
industrial disturbances, acts of Government, laws and regulations,
torts, insurrections or any other cause beyond the control of the
affected party. Upon the occurrence of such an event, the affected
party shall immediately notify the other party with as much detail as
possible. The affected party shall, immediately after the cause is
removed, perform such obligations with all due diligence.
14.2 In the event that the prevention of performing the obligation under
this Agreement shall continue beyond a period of six (6) months, the
party unaffected by such event shall have the right to terminate this
Agreement upon thirty (30) days prior notice to the other party.
15.0 ASSIGNMENT
15.1 Neither party shall assign any of its rights or obligations, or this
Agreement, in whole or in part, to a third party, except as provided
for in the case of:
15.1.1 Licensee's rights granted herein to subcontract for the
application of the Licensed Product and/or Patent applications
and the establishment and expansion of the sales, distribution,
service, and use and applications network development within the
designated Territory
15.1.2 Licensor shall not have the right to assign this Agreement to
any third party who purchases or lawfully obtains all or
substantially all of the assigning party's assets subject to
Licensee's prior written approval.
16.0 NOTICES:
16.1 All notices or communications given or required to be given
hereunder shall be given by personal delivery or by registered
airmail or by cable, telex, or facsimile followed by a letter
dispatched within twenty-four (24) hours to the following
addresses:
To Licensor: Xxxxxxx X. Xxxxxxxx
00000 Xxxxx 00xx Xxxxx
Xxxxxxxxxx, XX 00000
8
To Licensee: MotorSports Emporium, Inc.
00000 X. Xxxx Xxxx.
Xxxxx 0
Xxxxxxxxxx, XX 00000
16.2 Notices and communications shall be deemed received by the
addressee on the date of delivery if delivered personally, on the
fifth (5th) day from the date of posting if sent by registered
mail, or by forty-eight (48) hours after transmission if sent by
cable, telex, or facsimile.
17.0 MISCELLANEOUS PROVISIONS:
17.1 The headings of the Articles have been inserted for convenience
or reference only and shall not affect the interpretation or
construction of the provisions of the Agreement.
17.2 This Agreement shall not be modified except by a written
instrument executed by duly authorized representative of the
parties hereto.
17.3 In the event any term or provision of this Agreement shall for
any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other term or provision of this Agreement, and
this Agreement shall be interpreted and construed as if such term
or provision, to the extent that it is invalid, illegal or
unenforceable, had never been contained in this agreement.
17.4 Waiver of any right by a party hereto towards the other of breach
or a series of breaches hereof shall not affect the right of he
waiving party to exercise any of its rights provided hereunder on
account of any other breach hereof or similar breach subsequent
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on the date first above
written.
The Effective Date of this license shall be August 9, 2005
LICENSEE:
By: /S/ Xxxxx Xxxxxxxx
----------------------------------
Xxxxx Xxxxxxxx, President & CEO
(MotorSports Emporium, Inc)
LICENSOR:
By: /S/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxx, an individual
9
EXHIBIT "A"
Licensed Product
Prospeed GS610 Maximum Performance Brake Fluid is a DOT 4 compliant brake
fluid. It meets and greatly exceeds all requirements of the Federal Motor
Vehicle Safety Standard #116 (FMVSS 116) as well as SAE J1704 and meets all
descriptions per SAE J1709. GS610 has a dry boiling point (ERBP) of 610(degree)
F (321(degree) C) and a wet boiling point (Wet ERBP) of 421(degree)F
(216(degree) C), a viscosity of <1800 centistokes and a density (specific
gravity) of 1.095.
EXHIBIT "B"
Licensor's Trademarks
Name of Applicant: Xxxxxxx X. Xxxxxxxx
Type: Trade
Description of Xxxx: Brake Deeper, Harder, Longer
Date of First Use in this State; 02/06/2003
Classification of Xxxx: 12
Registration Number of Xxxx: 1397823-3
Xxxx Used On or in Connection With: High performance automotive brake system
components State of Minnesota
Name of Applicant: Xxxxxxx X. Xxxxxxxx
Type: Trade
Description of Xxxx: Prospeed
Date of First Use in this State; 04/24/2002
Classification of Xxxx: 12
Registration Number of Xxxx: 1397823-5
Xxxx Used On or in Connection With: High performance automotive brake system
components State of Minnesota
Name of Applicant: Xxxxxxx X. Xxxxxxxx
Type: Trade
Description of Xxxx: Prospeed Motorsport
Date of First Use in this State; 01/16/2002
Classification of Xxxx: 12
Registration Number of Xxxx: 1397823-6
Xxxx Used On or in Connection With: High performance automotive brake system
components State of Minnesota
Name of Applicant: Xxxxxxx X. Xxxxxxxx
Type: Trade
Description of Xxxx: GS610
Date of First Use in this State; 04/24/2002
Classification of Xxxx: 12
Registration Number of Xxxx: 1397823-2
Xxxx Used On or in Connection With: High performance automotive brake system
components State of Minnesota
Name of Applicant: Xxxxxxx X. Xxxxxxxx
Type: Trade
Description of Xxxx: GS610 Maximum Performance Brake Fluid
Date of First Use in this State; 04/24/2002
Classification of Xxxx: 1
Registration Number of Xxxx: 1397823-4
Xxxx Used On or in Connection With: High performance automotive brake system
components State of Minnesota
