EXHIBIT 10.8
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THiS AGREEMENT is entered into as of the 9 day of May
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1996 by and between King Entertainment, Inc., a Texas corporation, and Xxxxxxx
X. Xxxxxxxxx (hereinafter collectively referred to as "Owner"), with a main
place of business at 0000 Xxxxxxxx, Xxxxxxxxxx, XX 00000 and Prolong Super
Lubricants, Inc. (hereinafter "PROLONG"), with a principal office at 0000 X.
Xxxxxxx Xxx, Xxxxxxx, XX 00000, party of the second part.
WHEREAS, Owner represents that it owns sufficient equipment and has
retained all necessary personnel to enter a Top Fuel drag race vehicle in and
compete in all 1996,1997, 1998 and 1999 national events conducted and sanctioned
by the National Hot Rod Association ("NHRA");
WHEREAS, Prolong is engaged in the business of refining, producing and
selling lubricants, which products Owner intends to use in its Top Fuel race
vehicles;
WHEREAS, the parties desire to enter into an agreement under which Prolong
will agree to provide financial sponsorship for Top Fuel drag race vehicles
owned by Owner and a race team affiliated with Owner entered in the
1996,1997,1998 and 1999 NHRA national events;
WHEREAS, Owner represents and warrants that it has not previously granted
the promotional and other rights herein granted for 1996,1997,1998 and 1999 and
that such rights granted to Prolong will not conflict with any rights granted to
Owner's primary sponsor.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound hereby, the parties agree as follows:
1. Definitions. The following terms shall have the specified meanings for
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the purposes of this Agreement.
a) "Racing Event" or "Race" shall mean all events included within the
1996,1997, 1998 and 1999 schedules of national events sponsored and
sanctioned by NHRA, a listing of which for 1996 is included on Exhibit A to
this Agreement.
b) "Race Team" shall include the cars owned by Owner and to be entered in
the races, Xxxxxxx X. Xxxxxxxxx as the driver, and mechanics, crew chief
and all other persons retained or hired by Owner to provide services
related to participation in the races.
c) "Driver" shall mean Xxxxxxx X. Xxxxxxxxx.
d) "Race Car" shall mean a Top Fuel drag race vehicle designated as the
"Budweiser King Prolong Top Fuel Dragster", owned and operated by Owner and
entered in all Races.
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2. Sponsorship. Owner hereby grants Prolong an associate sponsorship and
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promotional rights for the Driver, Race Team, race cars and support
vehicles, all as more fully provided in this Agreement. Prolong
acknowledges that Anheuser-Xxxxx Companies, Inc. (Budweiser) is the primary
sponsor of the race car and race team, and that Prolong's rights hereunder
are subject to Budweiser's primary sponsorship rights.
3. Racing Obligations. Owner represents and warrants that it owns sufficient
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equipment, has retained or will retain the services of personnel to perform
and hereby covenants to perform the following racing responsibilities:
a) Owner shall own and make available one or more Top Fuel drag race
vehicles to compete in the Racing Events herein defined, and shall provide
garage, repair and storage facilities for the Race Car.
b) Xxxxxxx X. Xxxxxxxxx shall serve as driver for the entire 1996,
1997,1998 and 1999 NHRA seasons and for other promotional services and
personal appearances necessary to carry out this Agreement. In the event
Xxxxxxx X. Xxxxxxxxx should be unable to serve as driver during the term of
this Agreement due to injury or illness or circumstances beyond the control
of Xxxxxxx X. Xxxxxxxxx, Owner shall retain a qualified substitute driver
to complete the events and provide promotional services and personal
appearances over the term of this Agreement, which substitute driver shall
be acceptable to Prolong.
c) Owner shall provide all parts, accessories, equipment, trailers and
transporters necessary to enter all Racing Events, and shall service,
maintain and repair the Race Cars so that they are in good condition and
repair suitable for use in all Races.
d) Owner will retain the services, for all Racing Events throughout the
term of this Agreement, personnel necessary to enter all Races.
e) The Race Car shall prominently display the Prolong logo in twelve
locations. The exact location and size of the Prolong identification on the
Race Car shall be as agreed upon by Owner and Prolong. The race car
transporter shall display Prolong identification on both side panels and on
rear door, in sizes and locations to be mutually agreed by Owner and
Prolong. Prolong acknowledges that the rear door identification for 1996 is
of a smaller size and agrees to incur the cost of repainting the rear door
of the transporter, if desired, for the 1997 season to enlarge
identification. No identification of any entity which manufactures, sells
or distributes lubricants shall be displayed on the Race Car or transport
vehicles, except that of Prolong's identification .
f) Owner shall provide crew and driver uniforms which prominently feature
Prolong identification and shall require the Driver and all crew members to
wear such uniforms during all races, and during qualifying and practice
runs on Saturdays and Sundays of race weekends. No identification or logos
shall appear on the Driver or crew uniforms that conflict with Prolong
Super Lubricants. Prolong acknowledges that the embroidery work had been
completed on the 1996 Driver and crew uniforms prior
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to Prolong contracting with Owner. Owner agrees for the 1996 season,
Prolong patches (provided by Prolong), will be sewn on all Driver and crew
uniforms in an available location. For the years 1997,1998 and 1999,
Prolong will be placed on the front of the Driver and crew uniforms.
g) Owner shall enter, use their best efforts to qualify in and race the
Race Car in each 1996,1997, 1998 and 1999 Racing Event.
h) Owner shall not enter any race car not sponsored by Prolong and that
does not bear the Prolong color scheme and identification in any NHRA
national drag racing event during the term of this Agreement.
Provided, however, that should Owner determine to field a second (or more)
race cars during the 1996, 1997, 1998 and 1999 NHRA seasons, Owner shall
afford Prolong the first right of refusal as associate sponsor for such
race cars and teams. Should Prolong decline to sponsor a second (or more)
race cars, Owner may contract with another manufacturer or distributor of
lubricants or lubricant related products as either a primary or associate
sponsor of such second (or more) race cars. Xxxxxxx X. Xxxxxxxxx'x name
shall not be used to promote or endorse any product that conflicts with
Prolong on any additional race cars.
4. Promotional Responsibilities of Owner. Owner and its employees shall
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provide the following promotional services for Prolong.
a) Owner's car, Driver, race crew, supporting personnel and car shall be
known collectively as the "Budweiser King Prolong Race Team", and shall be
thus designated, when appropriate, in all press releases, promotional
material and all other material released to the public by Owner and all
such material shall include reference to the team's associate sponsorship
by Prolong, when appropriate.
b) The Driver shall at no additional fee, appear at 6 events each year
during 1996, 1997,1998 and 1999 as designated by Prolong, at locations
other than the race track. Such appearances shall include, but not limited
to, participation in the preparation of television, radio or magazine
advertising for Prolong Super Lubricants if requested by Prolong, public
appearances, photographic and recording sessions, sales meetings and trade
shows. Prolong shall reimburse Owner for reasonable expenses of the Driver,
and or crew, incurred in such appearances (air fare, lodging, local
transportation and meals), upon presentation of supporting documentation.
Appearances by the Driver, in excess of 6 each year, shall be at a fee of
$3,000 per appearance. Owner, the Driver and other team members shall not
be entitled to any additional compensation for such appearances, excepting
only residuals at ASCAP scale for any television broadcast of programs or
advertisements in which they appear.
All appearances by the Driver on behalf of Prolong shall be subject to the
reasonable approval of Owner, and shall be consistent with and designed to
preserve and xxxxxx the good name, reputation, and public image of Xxxxxxx
X. Xxxxxxxxx. All appearances shall be scheduled during normal business
hours
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unless otherwise approved by Owner, not to exceed one hour in length and
will not conflict or interfere with racing activities.
Prolong agrees to attempt to give Owner at least 10 days' prior notice of
the times and places the Driver is to appear. Owner agrees to exercise its
best efforts to comply with such requests and agrees not to withhold its
consent to any appearance unreasonably, consistent with the Driver's travel
and racing schedule.
c) Owner, the Driver and the Budweiser King Prolong Team shall not, during
the term of this Agreement, endorse, participate in the advertising of or
permit its or their names, trademarks, likenesses, logos or other
identifying marks to be used in the advertising or promotion of any
lubricant, other than that of Prolong. The Driver shall not drive any race
car or wear any uniform bearing the identification of any manufacturer of
lubricants other than Prolong without the written consent of Prolong.
d) Owner or his designated delegate shall use their best efforts in and
cooperate with Prolong in other promotional activities not specified herein
at the reasonable request of Prolong.
e) The Driver and other crew members shall wear uniforms bearing Prolong
identification in the winner's circle or designated winner's area at all
race tracks, and Owner shall distribute hats bearing Prolong's
identification (furnished by Prolong) to be worn, when appropriate, by some
or all crew members and associated personnel in all such areas.
f) Owner shall have no right to use or license to third parties any of
Prolong's names, logos, trademarks or other identifying marks without the
prior consent of Prolong. Prolong consents the use of Prolong's name and
trademark as displayed on the Race Car by the primary sponsor and secondary
sponsors of the Race Car in advertising and promotional material. Prolong
also agrees that Owner may use Prolong's name and trademark for the purpose
of producing souvenir items that display the Budweiser King/Prolong Top
Fuel race vehicle.
5. Other Sponsor Rights. In addition to the other rights granted to Prolong,
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Owner hereby grants Prolong the following rights and privileges:
a) During the term of the Agreement, Prolong shall be the exclusive
lubricant sponsor of Owner, the Driver, team, and the Budweiser King
Prolong Top Fuel Dragster in drag racing. No decal or identification of any
other lubricant company shall be placed on the Budweiser King Prolong Top
Fuel Dragster.
b) Prolong shall have the right at no fee or compensation to Owner or
others, to use the names "Budweiser King Prolong Race Team" and the names,
trademarks, photographs of and likenesses of Owner, Driver, other team
members and the Race Car in Prolong's advertising (including print, point
of purchase, radio and television) and promotional material during the term
of this Agreement with the prior approval of Owner. All use of such
material shall cease immediately upon expiration of this
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Agreement. Owner warrants that it has obtained all releases and/or consents
necessary for this purpose, and will make such available to Prolong upon
request. Prolong may promote its sponsorship in any manner it deems proper,
subject to the prior approval of Owner.
c) During the term of this Agreement, and without payment or consideration
other than the sponsorship fee and as provided in Paragraph 4 (b), Owner
and Xxxxxxx X. Xxxxxxxxx consent to the non-exclusive use (including but
not limited to reproduction, display, broadcasting, televising, publication
and distribution) in any media of Xxxxxxx X. Xxxxxxxxx'x name, biographical
information, photograph and any other likeness including caricatures,
either in whole or in part and in any form, style, size and color selected
by Prolong and approved by Owner (which approval shall not be unreasonably
withheld). Xxxxxxx X. Xxxxxxxxx agrees that his name, biographical
information, and photograph or likeness and the name and photograph or
likeness of the Budweiser King Prolong Top Fuel Dragster may be used for
the aforesaid purposes alone or in conjunction with each other and/or with
sketches, cartoons, captions, films, artwork, textual matter or other
photographs. Any print or electronic advertisement involving Xxxxxxx X.
Xxxxxxxxx and the Budweiser King Prolong Top Fuel Dragster shall be subject
to the prior approval of Owner, which shall not be unreasonably withheld.
d) During the term of this Agreement, Owner, the Driver and the Budweiser
King Prolong Race Team and crew shall not endorse, participate in the
advertising or promotion of, or permit its or their names, likenesses,
logos, trademarks or other identifying marks to be used in the advertising
or promotion of any lubricant other than that of Prolong.
e) Should Prolong desire to undertake any merchandising or souvenir
program using the Owner's logos or trademarks, the name or likeness of
Driver or Xxxxxxx X. Xxxxxxxxx (Xxxxx Xxxxxxxxx) or the Budweiser King
Prolong Top Fuel Dragster, Owner and Prolong will negotiate royalty terms
for any such program. Prolong further agrees that it shall not manufacture
or license, or authorize any third party to manufacture, souvenirs bearing
the logo or trademarks or the name or likeness of the Driver without the
prior approval of Owner.
6. Fee. In consideration for the obligations and services of Owner and Xxxxxxx
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X. Xxxxxxxxx and the sponsorship rights granted herein, Prolong agrees to
pay Owner a sponsorship fee for each of the 1996,1997,1998 and 1999 racing
seasons as follows:
1996: $50,000 in cash, payable $5,000 at commencement, and $5,000 per month
on the 10th day of each month beginning April 10th, 1996 through December
10th, 1996; plus 100,000 shares of common stock of Prolong International
Corporation, the parent company of Prolong Super Lubricants, Inc., a
publicly traded company (Trading symbol "PROL" on the OTC Bulletin Board)
to be delivered upon signing of this Agreement; plus 50,000 additional
shares of common stock to be delivered in four equal increments of 12,500
shares deliverable January 1,1997, April 1, 1997, July 1, 1997 and October
1,1997. Stock herein to be issued subject to SEC Rule 144.
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1997. $350,000 in cash, payable in 6 installments of $29,166 per month on
the l0th day of each month beginning January lOth, 1997 and 2 installments
of $87,502 payable July 1,1997 and October 1,1997 along with the 50,000
shares of stock referenced above in 1996 to be delivered in 1997.
1998: $400,000 in cash, payable in 4 equal installments on the first day of
each calendar quarter.
1999: $425,000 in cash, payable in 4 equal installments on the first day of
each calendar quarter.
Prolong agrees to pay Owner a performance bonus in any year of the
Agreement, excluding 1996, in which Owner is deemed by the NHRA as the
winner of the Top Fuel Championship for the season. Prolong shall pay to
Owner a cash bonus equal to 5% of the then current years cash sponsorship
being paid by Prolong to Owner. Any bonus money due to Owner is due on or
before December 1 of the year the bonus was earned.
In the event Owner should fail to enter a scheduled NHRA sanctioned
national event in any year, other than due to circumstances beyond the
Control of Owner, Prolong shall be entitled to a refund of a pro rata
portion of the applicable year's cash sponsorship fee for each race missed,
based upon the number of scheduled NHRA sanctioned national events for the
applicable year. Notwithstanding the foregoing, no refund shall be payable
for any missed event for which Owner participates in a substitute national
drag race sanctioned by the International Hot Rod Association or in an
independent drag race of comparable national prominence in Prolong's
reasonable judgment. Owner shall exercise its best efforts to participate
in a substitute race during the same calendar year as the missed event;
provided that if it is impossible for Owner to participate in a substitute
race during the same calendar year, Owner shall enter the first available
substitute race or races held in the succeeding year.
7. Lubricants. Upon request of Owner and at no charge, Prolong shall provide
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Owner with Prolong products as necessary for use in the Racing Events.
Owner agrees that no lubricant other than Prolong shall be used in Owner's
race cars during the term of this Agreement as long as the Prolong product
is technically capable for the application.
8. Term and Option to Renew. The term of this Agreement shall commence upon
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the date hereof and shall continue in effect through December 31,1999,
unless earlier terminated as hereafter provided.
Prolong shall be given the first right of refusal to sponsor Owner, the
Race Car and the Race Team for the year 2000 NHRA season, on the same terms
and conditions as set forth herein other than the sponsorship fee. Should
Prolong determine to exercise its option, it shall give written notice
thereof to Owner not later than August 1, 1999. Owner shall then, prior to
August 15, 1999, meet and negotiate in good faith a sponsorship fee for the
2000 NHRA season. In the event the parties fail to reach agreement and to
enter into a written agreement prior to September 1,1999, the parties shall
have no further rights or obligations with respect to one another
hereunder, other than to complete performance of this contract.
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9. Sole Risk. Owner acknowledges and agrees that race cars entered in any Race
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by Owner shall be entered for Owner's sole account and risk. Neither Owner
nor its Driver, mechanics, crew, other employees or shareholders shall make
any claim against Prolong for salary or other payment except as
specifically provided herein.
Owner shall obtain from its Driver and other employees appropriate releases
in form acceptable to Prolong absolving Owner and Prolong and their
subsidiaries, affiliates, officers, employees and shareholders of all
liability for damages, injury or death suffered by the Driver or other
employees as a result of or arising out of racing related activities.
10. Liabilities and Indemnity. Owner shall be solely responsible for all claims
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and liabilities, of whatever kind, arising out of or incidental to its
racing activities, including but not limited to, claims for personal injury
and property damage of Owner, its Driver, Owner's employees, spectators,
other racing teams and other third parties.
Owner further agrees to defend, indemnify, and save Prolong, its officers,
directors, agents and employees harmless from and against any and all
claims, actions, suits, judgment, cost and fees, including reasonable
attorney's fees, which arise from the acts and/or omissions of Owner, its
Driver, mechanics, employees, agents, contractors or third parties under
its control or which arise out of or are related to Owner's racing
activities, transportation to and from Races, and all other acts or
omissions of Owner and Owner's employees and agents. The indemnified claims
include, but are not limited to, claims of Owner, the Driver, Owner's
employees, race spectators, other racing teams and other third parties for
personal injury, death and/or property damage.
11. Insurance. Owner shall obtain and keep in force a policy or policies of
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insurance of the following types and limits to cover the Race Cars, Team
transport vehicles, and all activities of Owner, the Team and all of the
Owner's employees and agents during this Agreement:
a) Collision or casualty insurance covering the Race Cars and Team
transport vehicles, for their full replacement cost.
b) Commercial general and automobile liability in combined single limits
of at least $2 million.
Such policies shall provide coverage on an occurrence basis and shall
include Prolong as a named insured. No such liability insurance shall be
deemed in any way to limit Owner's obligations under Paragraph 10 of this
Agreement. Upon request of Prolong from time to time, Owner shall deliver
satisfactory proof that such insurance is in full force and effect.
c) Worker's Compensation - as required by law.
12. Compliance with Law. Owner shall, at its sole expense, comply with all
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federal, state and local laws and regulations applicable to its business
and racing activities contemplated hereby.
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13. Termination. ln the event of the occurrence of any of the following,
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Prolong shall have the right to terminate this Agreement by written notice
to Owner:
a) Owner should breach this Agreement in any respect, which breach shall
remain uncured for a period of 10 days following written notice thereof by
Prolong.
b) Proceedings seeking to have Owner declared bankrupt or insolvent should
be brought by or against Owner, or Owner should cease doing business for
any reason;
c) Owner should fail to enter two consecutively scheduled NHRA sanctioned
events, unless such failure is caused by matters beyond the reasonable
control of Owner;
d) If Driver fails to drive the Car in all of the Races, and such failure
is not caused by any illness or injury to Driver or by circumstances beyond
the control of Owner, then Prolong shall have the right to terminate this
Agreement forthwith. Prolong shall also have the option to terminate this
Agreement if Driver dies during the Contract period.
f) Xxxxxxx X. Xxxxxxxxx should sell, assign or otherwise transfer, his
controlling interest in the Race Team or his controlling interest in King
Entertainment, Inc.
Upon any such termination or expiration of the Agreement, Prolong shall be
entitled upon demand to an immediate refund of any unearned portion of the
sponsorship fee determined in accordance with paragraph 6 (except that
Owner's right to make up races shall not apply) and Prolong shall cease all
new production of advertising or promotional material using Owner names.
14. Remedies of Owner. ln the event of the occurrence of any of the following,
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Owner shall have the rights set forth below:
a) If Prolong should breach this Agreement in any respect, which breach
shall remain uncured for a period of ten (10) days following written notice
thereof by Owner, Owner shall have the right to terminate this Agreement at
any time thereafter. In addition, after any such breach but prior to
termination by Owner, Prolong shall remain obligated to perform under this
Agreement, but Owner shall have the right to remove Prolong's name from the
car and to terminate any exhibition of Prolong's name by the Owner, until
such breach is cured.
b) If proceedings seeking to have Prolong declared bankrupt or insolvent
should be brought by or against Prolong, or Prolong should cease doing
business for any reason, Owner shall have the right to terminate this
agreement.
15. Independent Contractor. Owner's relationship to Prolong is that of an
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independent contractor, and this Agreement is not intended to and shall not
be deemed to create any agency, employment, partnership or joint venture
relationship between the parties hereto. Owner's Driver, mechanics, and
other employees are not intended to be and shall not be deemed to be
employees or agents of Prolong.
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16. Notices. Any notice required by this Agreement shall be deemed duly given
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if deposited by certified mail, postage prepaid, addressed as follows:
If to Owner:
King Entertainment, Inc.
0000 Xxxxxxxx
Xxxxxxxxxx, Xx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
If to Prolong:
Prolong Super Lubricants, Inc. (Prolong)
0000 X. Xxxxxxx Xxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, President
17. Entire Agreement. This Agreement incorporates the complete and final
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agreement of the parties relative to the subject matter hereof, and no
covenant not set forth herein shall be binding. This Agreement may not be
amended or supplemented other than in writing signed by both parties
hereto.
18. Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the parties hereto and their respective successors and assigns;
provided, however, that Owner shall have no right to assign this Agreement
or delegate the performance of any duty hereunder, by operation of law or
otherwise.
19. Applicable Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of California.
20. Captions. The captions herein are inserted for convenience of reference
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only, and shall not be used in interpreting any of the terms of the
Agreement.
21. No Waiver. Any failure or delay in exercising any right or remedy hereunder
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shall not be deemed to be a waiver of such right or remedy or of any other
right or remedy.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
this 9 day of May 1996.
WITNESS:
ILLEGIBLE SIGNATURE /s/ XXXXXXX X. XXXXXXXXX 5/9/96
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Xxxxxxx X. Xxxxxxxxx, individually Date
ATTEST: KING ENTERTAINMENT, INC.
ILLEGIBLE SIGNATURE ILLEGIBLE SIGNATURE 5/9/96
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Its: President Date
ATTEST: PROLONG SUPER LUBRICANTS, INC.
ILLEGIBLE SIGNATURE ILLEGIBLE SIGNATURE 5/9/96
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Its: President Date
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