[Confidential treatment is being sought for certain portions of this Exhibit, as
indicated by a "[*]" symbol and footnoted as "ommitted pursuant to Rule 406."
Such omitted portions have been filed with the Securities and Exchange
Commission.]
Exhibit 10.26
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-------------------------------
THIS AGREEMENT is entered into as of this 17/th/ day of December , 1999 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 6 Xxxxxx, Xxxxxx, 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 year 2000 national events conducted and sanctioned by the
National Hot Rod Association ("NHRA");
WHEREAS, Prolong is engaged in the business of formulating, producing and
selling lubricants and car care appearance products, 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 year 2000
NHRA national events;
WHEREAS, Owner represents and warrants that it has not previously granted
the promotional and other rights herein granted for the year 2000 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 the purposes of this Agreement.
a) "Racing Event" or "Race" shall mean all events included within the
year 2000 schedule of national events sponsored and sanctioned by NHRA, a
listing of which for 2000 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 Top Fuel Dragster", owned and operated by Owner and entered
in all Races.
2. Sponsorship. Owner hereby grants Prolong an associate sponsorship and
-----------
promotional rights for the Driver, Race Team, race cars and support vehicles,
all as more fully provided in this
1
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
------------------
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 year 2000
NHRA season 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 seven
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. No identification of any entity which manufactures, sells or
distributes lubricants or car care appearance products shall be displayed
on the Race Car or transport vehicles, except that of Prolong's
identification, excepting that if Prolong ceases marketing car care
appearance products Owner shall be then be entitled to display another
enitity's identification in association with car care appearance products.
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. For the year 2000, 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 2000 Racing Event.
2
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 contract period, Owner shall afford Prolong the first
right of refusal as associate sponsor for such race cars and teams. Owner
shall notify Prolong of any such opportunity and Prolong will have 15
(fifteen) days from date of written notification to exercise its option. In
the event the parties fail to reach an agreement within the 15 (fifteen)
day period or 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
-------------------------------------
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 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 4 events each year
during the contract period 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 4 each year, shall be at a fee of
[*] per appearance. Owner, the Driver and other team members shall not be
entitled to any additional compensation for such appearances.
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 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.
3
c) Owner, the Driver and the Budweiser King 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 or car care appearance products, other than that of Prolong,
except as provided for in 3(h). The Driver shall not drive any race car or
wear any uniform bearing the identification of any manufacturer of
lubricants or car care appearance products 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 Top Fuel race
vehicle.
5. Other Sponsor Rights. In addition to the other rights granted to Prolong,
--------------------
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 (except as provided for in 3(h), the Driver,
team, and the Budweiser King Top Fuel Dragster in drag racing. No decal or
identification of any other lubricant company shall be placed on the
Budweiser King Top Fuel Dragster.
b) Prolong shall have the right at no fee or compensation to Owner or
others, to use the names "Budweiser King 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, which consent will not
be unreasonably withheld. 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.
It is understood between the parties that Prolong is utilizing the image
and likeness of Xxxxx Xxxxxxxxx on it's product packaging, in printed ads,
on brochures and flyers, in television commercials and in various other
marketing media which is in wide circulation in the marketplace. Upon
expiration of this Agreement Prolong shall cease printing and producing
marketing materials that utilize Owners images, trademarks, and references.
In the event
4
Owner contracts with another lubricant manufacturer or another car care
appearance manufacturer, Prolong shall expedite the phase out of Owners
images and shall make its best effort to cease using, in any material way,
Owners images prior to Owners start date under his contract with his new
sponsor. In the event this agreement expires and Owner does not contract
with a lubricant or car care appearance product manufacturer, Prolong shall
be allowed to work off its remaining inventory of printed materials,
whether on packaging or otherwise, but in any event not to exceed six
months after expiration of this agreement. In the event Prolong continues
to work off marketing inventory containing Owners image, and Owner has no
direct conflict with another current sponsor, Prolong shall pay to Owner
[*] per month, up to a maximum of six months, for each month Prolong is
using Owners image in the marketplace.
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 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 or the Budweiser King Top Fuel Dragster or Team 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 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 (except as provided
for in 3(h).
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 Top
Fuel Dragster or Team, 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 or
promotional items bearing the logo or trademarks or the name or likeness of
the Driver, Race Car or Race Team without the prior written approval of
Owner.
6. Fee. In consideration for the obligations and services of Owner and Xxxxxxx
----
X. Xxxxxxxxx and the sponsorship rights granted herein, Prolong agrees to
pay Owner a sponsorship fee for the year 2000 racing season as follows:
5
[*] ([*] dollars) payable in 4 (four) equal quarterly installments and due
as follows:
February 1, 2000 [*]
April 1, 2000 [*]
July 1, 2000 [*]
October 1, 2000 [*]
Prolong further agrees to guarantee the use of the Budweiser King Pit Side
Hospitality area for a minimum of 10 (ten) days during the contract period.
The per day charge is [*] (totaling [*] for the contract period) plus cost
for catering or any additional incidentals requested by Prolong. Payment is
due to Owner no later than 30 (thirty) days from the date of each use.
Prolong agrees to pay Owner a performance bonus 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 [*]% 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, 2000.
In the event Owner should fail to enter a scheduled NHRA sanctioned
national event during the contract period, 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, except as provided for in
3(h), 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
------------------------
the date hereof and shall continue in effect through December 31, 2000,
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 2001 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 May 15, 2000. Owner shall then, prior to
June
6
1, 2000, meet and negotiate in good faith a sponsorship fee for the 2001,
2002 and 2003 NHRA seasons. In the event the parties fail to reach
agreement and to enter into a written agreement prior to June 15, 2000, the
parties shall have no further rights or obligations with respect to one
another hereunder, other than to complete performance of this contract.
9. Sole Risk. Owner acknowledges and agrees that race cars entered in any
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Race 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 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, judgments, 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
---------
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.
7
12. Compliance with Law. Owner shall, at its sole expense, comply with all
-------------------
federal, state and local laws and regulations applicable to its business
and racing activities contemplated hereby.
13. Termination. In the event of the occurrence of any of the following,
-----------
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 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. In the event of the occurrence of any of the following,
-----------------
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
----------------------
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.
8
Owner's Driver, mechanics, and other employees are not intended to be and
shall not be deemed to be employees or agents of Prolong.
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.
6 Thomas
Xxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Senior Vice President Corporate Development
Chief Operating Officer
17. Entire Agreement. This Agreement incorporates the complete and final
----------------
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
--------------
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
--------------
accordance with the laws of the State of California.
20. Captions. The captions herein are inserted for convenience of reference
--------
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 shall not be deemed to be a waiver of such right or remedy or of
any other right or remedy.
9
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
this 17th day of December, 1999.
WITNESS:
/s/ Xxxxxxx X. Xxxxxxxxx 12/21/99
__________________________ ------------------------ --------
Xxxxxxx X. Xxxxxxxxx, Individually Date
ATTEST: KING ENTERTAINMENT, INC.
/s/ Xxxxxxx X. Xxxxxxxxx 12/22/99
__________________________ ------------------------ --------
Its: President Date
ATTEST: PROLONG SUPER LUBRICANTS, INC.
/s/ Xxxxxx Xxxxxxx 12/22/99
__________________________ ------------------------ --------
Xxxxxx Xxxxxxx Date
Senior Vice President Corporate
Development
Chief Operating Officer
10
