SETTLEMENT AGREEMENT RESPECTING SUMS DUE FROM POWER SPORTS FACTORY TO ANDRETTTI IV AS OF October 23rd, 2009
EXHIBIT
10(k)
RESPECTING SUMS DUE FROM
POWER SPORTS FACTORY TO ANDRETTTI IV
AS OF October 23rd,
2009
THIS SETTLEMENT AGREEMENT
(“Agreement”) is entered into as of this 23rd day of October, 2009 between Power
Sports Factory, Inc. (“PSF”) and Andretti IV, LLC (“Andretti IV”) (collectively
the “Parties).
RECITALS
A. The
Parties are parties to an Exclusive Licensing Agreement dated May 15, 2007
wherein PSF has been, among other things, granted the rights to use the
“Andretti” name and personal publicity rights of several members of the Andretti
family in connection with the branding and sale of the “Andretti/Benelli” line
of motor scooters to be distributed by PSF (“Benelli Agreement”).
B. The
Parties are also parties to an Exclusive Licensing Agreement dated June 27, 2008
wherein PSF has been, among other things, granted the rights to use the
“Andretti” name and personal publicity rights of several members of the Andretti
family in connection with the branding and sale of the “Andretti/Yamati” line of
motor scooters to be distributed by PSF (“Yamati Agreement”).
C. Both
the Benelli Agreement and the Yamati Agreement contain provisions relating to
compensation payable to Andretti IV in consideration for the grant of rights
which included the requirement for PSF to pay Andretti IV a minimum guaranteed
amount per year of said Agreements.
D. As
of July 31st, 2009, PSF owes Andretti IV Nine Hundred Fifty Thousand Dollars
($950,000) pursuant to the Benelli Agreement and Three Hundred Ninety Thousand
Dollars ($390,000) pursuant to the Yamati Agreement for a total of One Million
Three Hundred Forty Thousand Dollars ($1,340,000) as minimum guaranteed amounts
owing pursuant to said Agreements (“the December 31, 2008/2009
Debt”).
E. While
the Benelli Agreement and the Yamati Agreement shall be modified to represent a
$65 payment per bike starting on January 1st 2010,
the Parties wish to settle the December 31, 2008/2009 Debt as set forth in this
Agreement.
NOW,
THEREFORE, in consideration of the mutual promises herein and the fulfillment of
all of them, the sufficiency of which is acknowledged by the Parties, it is
agreed as follows:
AGREEMENT
1. Settlement
of December 31, 2008/2009 Debt: In full settlement of the
December 31, 2008/2009 Debt, PSF shall effectuate the following:
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a.
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Pay
to Andretti IV the sum of One Hundred Fifty Thousand Dollars
($150,000). Payable $30,000 on October 23rd, 60,000
on or before December 1st,
2009 and $60,000 on or before January 1st,
2010.
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b.
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All
future payments will be made on a per bike basis of $65 per bike sold.
Payment will be made on a quarterly basis 45 days after PSF closes its
financial quarter.
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c.
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The
payment of this sum will be made via wire transfer and received by Andretti
IV not later than Friday, October 23rd, 2009.
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d.
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Execute an Amendment to the Benelli Agreement and to the Yamati Agreement which will document a change all future years of contract to contain no minimum payments and a flat licensing fee of $65 per bike. |
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e.
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PSF
will not issue any press releases on this settlement and shall only issue
information to the SEC as required by
law.
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2. Default: PSF shall be in
default under this Agreement if it fails to comply completely and timely with
obligations set forth in Paragraph 1 (“Default”). Upon Default, this
Agreement shall, at Andretti IV’s election evidenced by written notice to PSF,
be null and void (except for Andretti IV’s right to file a lawsuit for the entry
of a Consent Judgment) and all sums payable pursuant to the Benelli Agreement
and the Yamati Agreement in their original forms shall be immediately due and
owing..
3. Release
and Discharge of December 31, 2008/2009 Debt: In consideration
of PSF’s full compliance and satisfaction of the terms of this Agreement,
Andretti IV shall release and discharge PSF, along with their current and former
shareholders, officers, directors, representatives, attorneys, insurers, agents,
and employees, and together with any and all persons, firms, corporations,
affiliates, and subsidiaries, who are or may be liable therefor, from the
December 31, 2008/2009 Debt. Except as otherwise provided herein, all
other terms and conditions of the Benelli Agreement and the Yamati Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the
Parties have signed this Agreement as of the date set forth below.
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/s/
Xxxxx
Xxxxxxxx
Xxxxx
Xxxxxxxx
Chief
Executive Officer
Date: October
23rd, 2009
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ANDRETTI
IV, LLC
/s/Xxxxx
Xxxxxxxx
Xxxxx
Xxxxxxxx
Member
Date:
October 23rd, 2009
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