April 24, 1998
PRIVATE AND CONFIDENTIAL
Stonington Partners, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. End
THIS MUTUAL CONFIDENTIALITY AGREEMENT is by and between Global
Motorsport Group, Inc., a Delaware corporation ("Global") and Stonington
Partners, Inc. (the "Company"). References herein to Global or the Company shall
refer to Global and the Company and their respective subsidiaries or affiliates
controlled by Global or the Company.
WHEREAS, Global and the Company desire to disclose to each other
certain confidential and proprietary information relating to their respective
businesses for the purpose of facilitating discussion of a potential business
transaction; and
WHEREAS, both parties acknowledge the need to protect the
confidentiality of such information.
NOW, THEREFORE, in consideration of the foregoing, the parties hereby
agree as follows:
1. As used herein the term "Confidential Information" shall mean any
and all data and information relating to the business of the disclosing party
that is disclosed to the other party pursuant to this Agreement. Confidential
Information shall not include information that: (a) is now, or hereafter
becomes, through no act or failure to act on the part of the receiving party,
generally known or available to the public; (b) is rightfully known by the
receiving party at the time of receiving such information; (c) is furnished to
others by the disclosing party without restriction on disclosure; (d) is
hereafter rightfully furnished to the receiving party by a third party without
any breach of any confidentiality obligation to the other party to the knowledge
of receiving party; (e) is independently developed by the receiving party
without any breach of this Agreement; or (f) is required to be disclosed by the
Stonington Partners, Inc.
April 24, 1998
Page 2
receiving party by judicial action after all reasonably available legal remedies
to maintain the confidentiality of such information have been exhausted.
Confidential Information may include information disclosed to Global or the
Company by a third party, including Global's financial advisor, and information
disclosed to the receiving party that is confidential information of an
affiliate of the disclosing party. Confidential Information also includes the
fact that discussions are or negotiations are taking place concerning a
potential transaction and any of the terms, conditions or other facts with
respect to any such potential transaction.
Both Global and the Company further acknowledge that certain of the Confidential
Information may be "Insider Information" with respect to one or more of the
involved parties. Both Global and the Company are therefore subject to Rule
10b-5 under the Securities Exchange Act of 1934 with respect to such
information. Disclosing certain non-public information to any other person or
trading in the stock of any company described in the Confidential Information
while this information remains non-public may be a violation of the Rule and
could subject Global or the Company to the penalties provided under the Act.
2. Each party hereto may use the other party's Confidential Information
only for purposes of analyzing and discussing the proposed transaction. Each
party further agrees that the Confidential Information will not be used to
enhance, better, develop, perfect or improve any products now produced by the
receiving party or to be produced by the receiving party in the future, whether
or not such products are competitive with those products by the disclosing party
as of the date hereof. Each party further agrees not to engage in any reverse
engineering of the Confidential Information. Each party shall use the same care
and discretion, but in no event less that reasonable care and discretion, to
prevent disclosure, publication, or dissemination of the other party's
Confidential Information as it employs with similar information of its own.
Disclosure by each party hereto of the Confidential Information of the other
party may be made only to employees, agents, advisors, financing sources or
independent contractors (such agents, advisors, financing sources or independent
contractors (collectively, "Representatives") of the receiving party who are
directly involved in consideration of the proposed transaction that is the
subject of this Agreement, and who have a specific need to know such
information, and have obligated themselves to hold such Confidential Information
in trust and confidence or otherwise to comply with the terms of this Agreement.
Global and the Company agree to diligently monitor each such person and, upon
request by the other party hereto, to promptly furnish to the requesting party a
list of the receiving party's Representatives having had access to such
Confidential Information.
3. Within ten (10) days following the receipt of a written request
referencing this Agreement from either party hereto, the other party will
deliver to the requesting party all materials relating to the Confidential
Information received from the
2
Stonington Partners, Inc.
April 24, 1998
Page 3
requesting party. At the same time, the other party also agrees to destroy
its work product which relates to the Confidential Information.
4. The Company agrees that for a period of two years from the date of
this letter agreement, neither the Company nor any of its affiliates will,
unless invited (on an unsolicited basis) by the Board of Directors of Global in
writing: (i) acquire, offer or propose to acquire, or agree or seek to acquire,
directly or indirectly, by purchase or otherwise, more than 2% of any
outstanding class of voting securities or direct or indirect rights or options
to acquire any securities of Global or any subsidiary thereof, or of any
successor to or person in control of Global, or any assets of Global or any
subsidiary or division thereof or of any such successor or controlling person;
(ii) enter into or agree, offer, propose or seek to enter into, or otherwise be
involved in or part of, directly or indirectly, any acquisition transaction or
other business combination relating to all or part of Global or its subsidiaries
or any acquisition transaction for all or part of the assets of Global or any
subsidiary of Global or any of its respective business; (iii) make, or in any
way participate in, directly or indirectly, any "solicitation" of "proxies" (as
such terms are used in the rules of the Securities and Exchange Commission) to
vote, or seek to advise or influence any person or entity with respect to the
voting of, any voting securities of Global; (iv) form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934) with respect to any voting securities of Global
or any of its subsidiaries; (v) seek or propose, alone or in concert with
others, to influence or control Global's management or policies; (vi) directly
or indirectly enter into any discussions, negotiations, arrangements or
understandings with any other person with respect to any of the foregoing
activities or propose any of such activities to any other person; (vii) advise,
assist, encourage, act as a financing source for or otherwise invest in any
other person in connection with any of the foregoing activities or (viii)
disclose any intention, plan or arrangement inconsistent with any of the
foregoing. The Company also agrees that, during the two-year period referred to
in the preceding sentence, neither the Company nor any of its affiliates will:
(i) request Global or its advisors, directly or indirectly, to (1) amend or
waive any provision of this paragraph (including this sentence); or (ii) take
any initiative with respect to Global or any of its subsidiaries which could
require Global to make a public announcement regarding (1) such initiative, (2)
any of the activities referred to in the preceding sentence, (3) the possibility
of a transaction or (4) the possibility of the Company or any other person
acquiring control of Global, whether by means of a business combination or
otherwise. The provisions of this paragraph shall not apply to Representatives
of the Company that are not affiliates of the Company.
5. Each party hereby acknowledges and agrees that in the event of any
breach of this Agreement by the other party, including, without limitation, the
actual or threatened disclosure of a disclosing party's Confidential Information
without the express prior written consent of the disclosing party, the
disclosing party will suffer irreparable harm
3
Stonington Partners, Inc.
April 24, 1998
Page 4
and injury and no remedy at law will afford it adequate protection against or
appropriate compensation for, such injury. Accordingly, each party hereby agrees
that in any such event the other party shall be entitled to specific performance
of a receiving party's obligations under this Agreement, as well as such further
injunctive relief or other remedies available at law or in equity as may be
granted by a court competent jurisdiction. A receiving party agrees to reimburse
a disclosing party for all costs and expenses (including attorneys' fees)
incurred by the disclosing party in successfully enforcing the receiving party's
obligations under this Agreement.
6. This Agreement will continue in full force and effect for so long as
the parties continue to exchange Confidential Information and for a period of
one year thereafter. Both Global and the Company agree that as long as the
parties continue to exchange Confidential Information and for a period of two
years thereafter neither party will, without the prior written consent of the
other party, directly or indirectly, solicit to hire or hire (or cause or seek
to cause to leave the employ of the other party): (i) any officer employed by
the other party; (ii) any other employee employed by the other party with whom
the "hiring" party has contact with or who (or whose performance) became known
to that party in connection with the process contemplated by this Agreement. It
is understood that the provisions of this paragraph will not prohibit either
party from hiring any such person who comes to their attention as the result of
generalized searches for employees, through media advertisements, employment
firms or otherwise, that are not focused on persons employed in connection with
the operation of the other party.
7. Both parties understand and acknowledge that neither parties to this
Agreement nor any officers, directors, employees, representatives or agents of
either party is making any representation or warranty, express or implied, as to
the accuracy or completeness of the Confidential Information and neither party
to this Agreement nor any officers, directors, employees, representatives or
agents of either party will have any liability to the other party or any other
person resulting from either party use of the Confidential Information. Only
those representations or warranties that are made in a definitive agreement
regarding a transaction (a "Definitive Agreement") when, as, and if executed,
and subject to such limitations and restrictions as may be specified in such
Definitive Agreement, will have any legal effect. The term "Definitive
Agreement" does not include an executed letter of intent or any other
preliminary written agreement, nor does it include any written or oral
acceptance of any offer or bid on either parties part.
8. Each party hereby acknowledges that the other party may now market
or have under development products or services that are competitive with
products or services now offered or that may in the future be offered by the
other party, and the parties' communications hereunder will not serve to impair
the right of either party in independently develop, make, use, procure, or
market products or services now or in the future that may be
4
Stonington Partners, Inc.
April 24, 1998
Page 5
competitive with those offered by the other, nor require either party to
disclose any planning or other information to the other, so long as such actions
are not in breach of this Agreement.
9. This Agreement and the rights and obligations of the parties under
this Agreement may be assigned only upon the prior written approval of the
parties hereto. The rights and obligations of the parties hereto will inure to
the benefit of, will be binding upon, and will be enforceable by the parties
hereto and their respective stockholders and permitted successors and assigns.
10. No modifications of this Agreement or waiver of any of its terms
will be effective unless set forth in writing signed by the party against whom
it is sought to be entered.
11. This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
Very truly yours,
Global Motorsport Group, Inc.
By: CLEARLY GULL XXXXXXX & XxXXXXXX INC., its agent
By: \s\Xxxxx X. Xxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxx
Chief Executive Officer
Accepted and agreed as of the
date first above written.
By: \s\ Xxxxxx X. Xxxxxxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
------------------------------------
Title: Vice President & Corporate Counsel
-----------------------------------
5
