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PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A REQUEST FOR
CONFIDENTIAL TREATMENT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.7
LICENSE AGREEMENT
BY AND BETWEEN
NATIONAL ASSOCIATION FOR STOCK CAR AUTO RACING, INC.
AND
LBE TECHNOLOGIES, INC.
THIS LICENSE AGREEMENT (this "Agreement") is made and entered into this
18th day of August, 1997 (the "Effective Date") by and between the NATIONAL
ASSOCIATION FOR STOCK CAR AUTO RACING, INC., a Florida corporation with a
principal business address of X.X. Xxx 0000, Xxxxxxx Xxxxx, Xxxxxxx 00000-0000
("Licensor") and LBE TECHNOLOGIES, INC., a California corporation with a
principal business address of 00000 Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxx 00000
("Licensee").
RECITALS
WHEREAS, Licensor, by the expenditure of time, skill, effort and money,
has developed and owns a distinctive system for establishing, operating and
sanctioning stock car and stock truck racing in North America and is engaged in,
among other things, the promotion of racing events and development and
merchandising of various products relating to stock car and stock truck racing,
and is the owner of certain trademarks and service marks and the goodwill
related thereto; and
WHEREAS, Licensee, by the expenditure of time, skill, effort and money,
has developed and owns a distinctive system for photonic, electronic,
electromechanical and hydraulic simulated representation real world vehicle
operation, including stock car racing and for simultaneous competitive display
of multiple vehicles in apparent real-time and for the engagement of viewers and
spectators, and is the owner of certain trademarks, technical know-how, and
trade secrets.
WHEREAS, Licensee desires to acquire a license from Licensor to obtain the
right to use certain trademarks, service marks and trade dress owned by Licensor
(i) for implementation of the NASCAR marks into the visual display of the NASCAR
stock car and NASCAR stock truck simulators (as defined below), and (ii) in the
development, design, operation, promotion and advertising of retail outlets that
offer to the general public simulator games and concessions predominately
consisting of interactive stock car and stock truck simulation entertainment
(including the Simulators) and which retail outlets have a theme associated and
identified with NASCAR stock car and stock truck racing, and other related
NASCAR themes, and Licensor desires to grant Licensee such license upon the
terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the terms and conditions set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
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1. DEFINITIONS
The following terms shall have the following meanings in this Agreement:
(a) "Advertising" means all forms of advertising, including but not
limited to print advertisements and promotional literature, television and radio
commercials, and advertisements on or through on-line services, the World Wide
Web and other portions of the Internet.
(b) "Affiliate" means, with respect to any Person, any other natural
person or Entity that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with such
Person. The term "control" (including, with correlative meaning, the terms
"controlling," "controlled by" and "under common control with" means the
possession, directly or indirectly, of the power to direct or cause direction of
the management and policies of a Person, whether through the ownership of voting
securities, by Contract or otherwise; provided, however, that in no event shall
Licensor be deemed an Affiliate of Licensee. For purposes of the definition of
Affiliate, the term "Contract" shall mean any agreement, lease, license,
evidence of debt, mortgage, deed of trust, note, bond, indenture, security
agreement, commitment, instrument, understanding, or other contract, obligation
or arrangement of any kind.
(c) "Entertainment Store" or collectively "Entertainment Stores" shall
mean a self contained retail outlet that offers entertainment to the general
public predominately consisting of indoor simulated stock car and stock truck
race driving experiences using the Simulators and indoor grandstand spectator
seating, but also including a refreshment area and a retail merchandise area,
with a predominant theme associated and identified with NASCAR stock car and
stock truck racing, and other NASCAR racing theme(s) promoted and approved by
NASCAR during the term of this Agreement.
(d) "Entity" or collectively "Entities" shall mean corporations, limited
liability companies, partnerships, joint ventures or other forms of legal
entity.
(e) "Gross Revenue" shall mean all monies and things of value received or
earned or accrued by the Licensee or relating to or associated with the
Entertainment Store, less applicable sales and use taxes, as a result of or in
connection with a revenue-producing activity of any kind on or in connection
with the goods and services licensed under this Agreement. In computing Gross
Revenue, the gross amount set forth in any contract or agreement giving rise to
the right of payment shall be included, and any applicable commissions, fees or
expenses paid to or deducted by sales agents, consultants and other parties
shall not be deducted therefrom. However, Licensee may approach Licensor from
time to time, when unique circumstances warrant the Licensee's use of a third
party sales agent in securing, a sponsorship for the Entertainment Stores and/or
the Remote Sites, at which time the Licensor shall reasonably consider deducting
the sales commission from Gross Revenue computation. Provided however, that the
sales commission rate is based upon a reasonable industry standard and that the
sales agent has been pre-approved by the Licensor, such approval shall not be
unreasonably withheld.
(f) "NASCAR Marks" shall mean only those trademarks, service marks, logos,
emblems or indicia of origin owned exclusively by NASCAR as are listed and
described on
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Exhibit A attached hereto, which NASCAR Marks may be supplemented from time to
time by NASCAR in NASCAR's sole discretion.
(g) "NASCAR Trade Dress" refers to the overall image and impression of the
NASCAR and its sanctioned events and shall be given the meaning ascribed to it
under the cases applying Section 43(a) of the Xxxxxx Act and the cases applying
and interpreting that statute.
(h) "Person" shall mean any natural person or Entity.
(i) "Royalties" shall mean the aggregate of all royalties described in
this Agreement, including, but not limited to royalties described in Section 4
of this Agreement.
(j) "Simulators" shall mean interactive, two-passenger, stock car or stock
truck simulation equipment developed and owned by Licensee, including hardware,
software, firmware and other components, with working gas, clutch and brake
pedals, rearview mirrors and racing tires, which will be mounted on "motion
platforms" capable of moving the Simulator in four degrees of freedom, and which
will incorporate NASCAR stock car and/or stock truck racing theme(s) and which
are developed and owned by the Licensee and which incorporate the NASCAR Marks
and any other elements unique to NASCAR as licensed in this Agreement. Licensor
recognizes that the Licensee has agreements with and will from time to time
establish agreements with stock car drivers, team owners and tracks which are
not subject to the terms herein. In addition, Licensor acknowledges that
Licensee may develop simulations that do not pertain to stock car and stock
truck racing; these simulators shall not be subject to the term herein.
(k) "Site" shall mean the individual location of an Entertainment Store as
approved by Licensor in accordance with Section 9(a) hereof.
(l) "Site Trade Dress" refers to the overall image and impression of the
Entertainment Stores and the Remote Sites and shall be given the meaning
ascribed to it under the cases applying Section 43(a) of the Xxxxxx Act, and the
cases applying and interpreting that statute.
2. GRANT OF LICENSE
(a) Grant of License. Subject to the terms and conditions set forth
herein, Licensor hereby grants to Licensee, during the term of this Agreement,
the non-exclusive, limited right and license to use the NASCAR Marks and NASCAR
Trade Dress solely in connection with: (i) the development, design, creation,
implementation and display of software in the Simulators at locations approved
by NASCAR as provided in this Agreement; (ii) the design, development, building,
construction of the Entertainment Stores and the Remote Sites (as defined in
Section 2(c) hereof) within the territory consisting of the entire world (the
"Territory") and the ownership and operation thereof (the "Business"); and (iii)
"Promotional Activities" relating to the Entertainment Stores and Remote Sites,
all such Promotional Activities are subject to the prior approval of Licensor.
As used herein, the term "Promotional Activities" shall mean all forms of
advertising, marketing, promotional and sponsorship activities relating to or
associated with the Entertainment Stores or Remote Sites.
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(b) Non-Exclusivity. Licensee acknowledges, understands and confirms that
the license granted to Licensee by Licensor during the term of this Agreement
and subject to the terms and conditions of this Agreement are nonexclusive and
Licensor retains the right, at its sole option and discretion, to operate, or
grant to any other Person the right to operate, Entertainment Stores (or any
other related concept) at any location within or outside the Territory, however,
Licensor shall not be entitled to use any of the Licensee's Intellectual
Property [as defined in Section 12(b) of this Agreement] in any other
Entertainment Store not associated with the Licensee. Upon termination or
expiration (without renewal of this Agreement), Licensee shall have no further
rights hereunder, other than the rights held prior to the Grant of License.
(c) Remote Sites. In connection with the license granted to Licensee by
Licensor pursuant to this Agreement, Licensee shall have the right, at its sole
expense, to transport one or more Simulators to locations other than the
premises of the Entertainment Stores temporarily operated by Licensee
(individually a "Remote Site" or collectively the "Remote Sites") for the
purpose of making the Simulators available for use by the general public at
sporting or other entertainment and promotional events; provided that the
locations and times of operation for each Remote Site has been previously
approved in writing by Licensor; and further provided that, in connection with
each Remote Site, Licensee complies with all of the terms and conditions of this
Agreement applicable to the Entertainment Stores insofar as such terms and
conditions could apply to the Simulators or the Remote Site. Notwithstanding the
foregoing, in connection with the Remote Sites, except with respect to the fee
charged by Licensee with respect to the use and operation of the Simulators by
customers, Licensee shall not be permitted to sell at or around a Remote Site
located at or in close proximity to any NASCAR-sanctioned race track facility,
any merchandise or other products or services bearing, containing or displaying
the NASCAR Marks, without Licensor's prior approval. Licensee shall be permitted
to sell approved merchandise at locations other than NASCAR-sanctioned race
track facilities, provided that Licensee has obtained any and all necessary
permits, permissions, licenses, etc. necessary for this type of activity.
(d) Limitations on License Granted to Licensee. In connection with the
license granted to Licensee by Licensor hereunder, Licensee understands and
agrees that:
(1) Theme. Licensee shall use the NASCAR Marks and NASCAR Trade
Dress only in connection with a NASCAR stock car or NASCAR stock truck racing
theme.
(2) Premiums, Bundling and Sweepstakes. Licensee agrees it is not
entitled to, and shall not, except as approved in advance by Licensor in
accordance with the procedures of this subparagraph 2(d)(2) of this Section 2,
use any of the NASCAR Marks or NASCAR Trade Dress (1) in connection with the
manufacture, sale or distribution of goods or services as premiums or for
promotional, publicity, fund-raising, giveaways, bundling, or disposal purposes
or (2) in connection with any sweepstakes, lottery, game of chance or any
similar promotional or sales program. Licensee may submit from time to time
proposals for the activities described in this subparagraph 2(d)(1) and (2).
Each proposal shall be in writing and describe the proposal in reasonable
detail. NASCAR, in its sole discretion, shall approve or disapprove each
proposal within fifteen (15) business days after actual receipt of such
proposal. Failure of NASCAR to reply to a proposal within this time will be
deemed a disapproval of the proposal. Furthermore, Licensee shall not use any of
the NASCAR Marks or NASCAR Trade Dress in connection with
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any sweepstakes, lottery, game of chance or any similar promotional or sales
program unless such program is consistent with applicable law.
(3) Other Trade Names, Trademarks and Service Marks. Except to the
extent permitted by applicable law, Licensee understands and agrees that it is
not entitled to, and shall not, use the names, pictures, identities, trade
names, trademarks or service marks of any racetrack promoting and presenting
NASCAR-sanctioned events, Persons involved in sponsoring or advertising in
connection with such events, NASCAR-licensed officials, drivers, car and truck
owners and crew members, or the cars or trucks involved in such events (the
"Third Party Marks") either by themselves or in conjunction with the NASCAR
Marks, unless Licensee has obtained the rights beforehand to use such Third
Party Marks from the owners(s) of such marks by written agreement. Unless
approved in advance by NASCAR, Licensee shall not use the NASCAR Marks in such
close physical proximity or in such close connection or combination with its own
marks or the marks of any third party that a reasonable consumer of the services
would be likely to get the impression that the NASCAR Marks do not indicate a
separate source of goods or services from other marks.
(4) Sublicensing. Licensee understands and agrees that this
Agreement does not in any manner whatsoever grant to Licensee any right to
sublicense. Licensee may request Licensor's approval, such approval in
Licensor's sole discretion, for sublicensing the rights and license granted to
it under this Agreement to any Person. Each of such request by Licensee shall be
in writing and describe the proposal in reasonable detail. NASCAR, in its sole
discretion, shall approve or disapprove of each proposal within fifteen (15)
business days after actual receipt of such proposal. Failure of NASCAR to reply
to a proposal within this time will be deemed a disapproval of the proposal. The
parties agree that no such sublicensing agreements approved by Licensor and
between Licensee and any other Person may without NASCAR's express written
permission include rights which allow the Person to use the NASCAR Marks or
NASCAR Trade Dress in marketing anything other than the activities licensed in
this Agreement or to hold himself or itself out to the public as an "official"
(or "home" or other words of similar import) provider of NASCAR goods or
services or to be otherwise endorsed by NASCAR.
(5) Warranty Within Territory. NASCAR expressly does not warrant or
represent that the rights under the license granted hereunder are enforceable or
noninfringing upon the rights of others outside of the United States, Canada and
Australia, even though the Territory provided in this Agreement extends beyond
the United States, Canada and Australia. Licensee agrees that use of the Marks
outside of these countries shall be at the sole risk of the Licensee, and that
Licensee agrees to indemnify and hold NASCAR and its Affiliates, and the
shareholders, employees, directors, officers and agents of each of them harmless
against all cost and expense incurred, including settlements, judgments and
reasonable attorneys' fees in the defense of any claim that arises solely as a
result of the use by one of the Licensee (and not by NASCAR or any other NASCAR
licensee) of the NASCAR Marks outside of the United States, Canada and
Australia. From time to time Licensee may present a list of prospective
territories outside of the United States, Canada and Australia in which the
Licensee is considering establishing additional Entertainment Store locations,
at which time the Licensor will notify the Licensee of any known rights-related
issues that might encumber such expansion.
(e) "NASCAR Silicon Motor Speedway" Xxxx and Logo. The word xxxx NASCAR
SILICON MOTOR SPEEDWAY is included in the NASCAR Marks licensed to Licensee in
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Section 2(a) above. In addition, Licensee may develop logos containing this xxxx
and versions of the xxxx in stylized lettering (collectively, the "Speedway
Logos") which, subject to the prior written approval by NASCAR of the appearance
and use of such Speedway Logos, shall also be included in the NASCAR Marks
licensed under this Agreement. NASCAR shall, at its own discretion and expense
pursue U.S. trademark registrations for the word xxxx NASCAR SILICON MOTOR
SPEEDWAY and the Speedway Logos, and such foreign registrations as are mutually
agreed upon between the parties. NASCAR shall, both during and after the Term of
this Agreement, own all right, title and interest in the word xxxx NASCAR
SILICON MOTOR SPEEDWAY and the Speedway Logos, which may be used by Licensee
only during the term of this Agreement and only in accordance with the terms of
this Agreement, except that Licensee shall be permitted both during and after
the term of this Agreement to use the word xxxx SILICON and the word xxxx
SILICON MOTOR SPEEDWAY (without the word NASCAR) and logos containing these
marks and stylized letter versions of these marks, provided that such logos and
stylized letter versions are not confusingly similar to any of the Speedway
logos. Notwithstanding the foregoing, Licensee shall be permitted to use the
fonts contained in the stylized letter version of the words "SILICON MOTOR
SPEEDWAY" found in the NASCAR Marks and Speedway logos and attached to this
Agreement, provided that these uses are not confusingly similar to any of the
Speedway logos and provided that these fonts shall not be used by the Licensee
or featured in any logo for an Entertainment Store following the termination of
this Agreement. Licensor agrees not to use the NASCAR SILICON MOTOR SPEEDWAY
word xxxx or any of the Speedway Logos following the termination of this
Agreement without the prior consent of the Licensee. Licensor also agrees not to
alter the Speedway logos without the prior consent of the Licensee; however,
Licensor shall be permitted to alter the word-xxxx NASCAR and its design as part
of the Speedway logos at any time and at the Licensor's sole discretion.
3. TERM OF LICENSE
(a) Term. The Term of this Agreement shall be for a period of four (4)
consecutive years commencing on the Effective Date and ending on August 12, 2001
(the "Term"). The Term may be earlier terminated by Licensor and Licensee as
provided in this Agreement.
(b) Renewal. The term of this Agreement may only be renewed upon the
mutual written agreement of Licensor and Licensee.
4. ROYALTIES
(a) Guaranteed Minimum Royalty.
(1) Schedule. In consideration of the license granted to Licensee
hereunder, Licensee shall pay to Licensor a nonrefundable advance against
royalties owed under this Agreement (the "Guaranteed Minimum Royalty") as
follows:
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Quarterly Guaranteed Annual Guaranteed
Minimum Royalty Minimum Royalty
Calendar Year Payment by Licensee Payment by Licensee
------------- -------------------- -------------------
1998 $ 50,000 $200,000
1999 $125,000 $500,000
2000 $200,000 $800,000
2001 (through Aug. 18) $278,970 $650,000
(2) Payment Terms. Guarantees shall be calculated on a [***]
basis and payable in conjunction with the [***] royalty payment schedule, as
specified in this Section 4(b)(4). The Guaranteed Minimum Royalty for each
calendar year shall be credited against the Revenue Royalty only for that same
calendar year. Under no circumstances shall any payments of the Guaranteed
[***] Minimum Royalty be refundable, including upon termination or
expiration of this Agreement by either party for any reason.
(3) Guarantee Waiver. In the event that Licensee pays Licensor [***]
in royalties by end of the [***] , Guarantee Minimum Royalties for years three
and four shall be waived.
(b) Revenue Royalty. In consideration of the license granted hereunder,
Licensee shall pay to Licensor a percentage of the categories of Gross Revenue
defined in this Section 4(b) (collectively referred to as the "Revenue Royalty")
as follows:
(1) Entertainment Store Revenue Royalty. Licensee shall pay to
Licensor the following royalties associated with each Entertainment Store:
(i) Simulator Revenue Royalty. Licensee shall pay to Licensor
a revenue royalty in an amount equal to [***] of each Entertainment Store's
Simulator Revenue for each calendar [***] (the "Simulator Revenue Royalty"). The
term "Simulator Revenue" means Gross Revenue derived directly from allowing use
of the Simulators located in such Entertainment Store, whether by cash, check,
credit card, debit card, or any other means of payment and any revenue derived
from the sale of NASCAR Silicon Motor Speedway Driver Licenses. The value of
gift certificates relating to Simulators and the amounts paid therefor shall be
included in Simulator Revenue upon the issuance of such gift certificates.
(ii) Merchandise/Food and Beverage Revenue Royalty. Licensee
shall pay to Licensor a royalty in an amount equal to [***] of each
Entertainment Store's Merchandise/Food and Beverage Revenue for each calendar
[***] (the "Merchandise/Food and Beverage Revenue Royalty"). The term
"Merchandise/Food and Beverage Revenue" means Gross Revenue derived from sales
by Licensee of merchandise and food and beverages at such Entertainment Store,
whether by cash, check, credit card, debit card or other means of payment. The
value of gift certificates relating to merchandise and/or food and beverage
sales and the amounts paid therefor shall be included in Merchandise/Food and
Beverage Revenue upon the issuance of such gift certificates.
(iii) Sponsor Revenue Royalty. Licensee shall pay to Licensor
a royalty in an amount equal to [***] of each Entertainment Store's Sponsor
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Revenue for each calendar year (the "Sponsor Revenue Royalty"). The term
"Sponsor Revenue" means Gross Revenue derived from sponsors, promoters, and
advertisers in connection with the development and operation of the
Entertainment Stores or one or more parts thereof or activities therein.
(2) Remote Site Revenue Royalty. Licensee shall pay to Licensor the
following royalties associated with each Remote Site:
(i) Remote Simulator Revenue Royalty. Licensee shall pay to
Licensor a royalty in an amount equal to [***] of each Remote Site's Remote
Simulator Revenue for each calendar [***] (the "Remote Simulator Revenue
Royalty"). The term "Remote Simulator Revenue" means Gross Revenue derived from
allowing use of the Simulators located in each Remote Site, whether by cash,
check, credit card, debit card or other means of payment. The value of gift
certificates relating to the Simulators of the Remote Sites and the amounts paid
therefor shall be included in Remote Simulator Revenue upon the issuance of such
gift certificates.
(ii) Remote Sponsor Revenue Royalty. Licensee shall pay to
Licensor a royalty in an amount equal to [***] of each Remote Site's Remote
Sponsor Revenue for each calendar [***] (the "Remote Sponsor Revenue Royalty").
The term "Remote Sponsor Revenue" means Gross Revenue derived from sponsors,
promoters, and advertisers in connection with the development and operation of
the Remote Sites or activities therein.
(3) Miscellaneous Revenue Royalty. In the event that the
Entertainment Stores produce revenue related to a stock car or stock truck theme
other than the revenue derived in the aforementioned categories, Licensee and
Licensor shall [***]. The term "Miscellaneous Revenue" means any Gross
Revenue not included in Simulator Revenue, Merchandise/Food and Beverage
Revenue, Sponsor Revenue, Remote Simulator Revenue, and Remote Sponsor Revenue
as defined above.
(4) Payment of the Revenue Royalty. The Revenue Royalty hereunder
shall be accounted for and paid [***] during the term of this Agreement, shall
be nonrefundable, and shall be fully earned when paid. Such [***] payments of
the Revenue Royalty will be based on the Simulator Revenue, Merchandise/Food and
Beverage Revenue, Sponsor Revenue, Remote Simulator Revenue, Remote Sponsor
Revenue, and Miscellaneous Revenue for the preceding calendar quarter, with a
credit for any Guaranteed Minimum Royalty payment made to Licensor for that
calendar year. Payment of the Revenue Royalty shall be due and payable by
Licensee to Licensor on or before the [***] day of the first calendar month
following each calendar [***] .
(5) Interest on Late Payments. All payments which are not timely
paid to Licensor by Licensee in accordance with this Section 4, will bear
interest after their due date at a rate of [***] per month or the highest
contract rate of interest permitted by law, whichever is less. Licensee and
Licensor each acknowledge that this Section 4(b)(5) does not constitute
Licensor's agreement to accept any payments after they are due or its commitment
to extend credit to, or otherwise finance Licensee's operation of, any
Entertainment Store or Remote Site.
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(6) Quarterly and Annual Revenue Royalty Reports. On or before the
thirtieth (30th) day of the first calendar month following each calendar quarter
during the term of this Agreement, Licensee shall deliver to Licensor a complete
and accurate written statement setting forth the amount of Licensee's Simulator
Revenue, Merchandise/Food and Beverage Revenue, Sponsor Revenue, Remote
Simulator Revenue, Remote Sponsor Revenue, and Miscellaneous Revenue for the
preceding calendar quarter, including a complete and accurate copy of the state
and local sales tax return (if any is required) at such time that the tax
returns are actually due to the state and local governments. On or before March
1 of each calendar year during the term of this Agreement, Licensee shall
deliver to Licensor a complete and accurate written statement setting forth the
amount of the Simulator Revenue, Merchandise/Food and Beverage Revenue, Sponsor
Revenue, Remote Simulator Revenue, Remote Sponsor Revenue, and Miscellaneous
Revenue for the calendar year. Each of the quarterly reports and the annual
reports referenced herein shall be signed and verified by one of Licensee's
principal executive officers. Licensee shall also deliver to Licensor any other
sales data which may be reasonably requested from time to time by Licensor in
the form, manner and frequency requested.
(7) Underpayment or Overpayment of the Revenue Royalty. On or before
March 1st of each calendar year during the term of this Agreement, Licensee
shall calculate the Simulator Revenue, Merchandise/Food and Beverage Revenue,
Sponsor Revenue, Remote Simulator Revenue, Remote Sponsor Revenue, and
Miscellaneous Revenue for the preceding calendar year and shall deliver directly
to Licensor funds in an amount equal to the total Revenue Royalty payment owed
for the preceding calendar year less (i) all [***] Revenue Royalty payments made
by Licensee to Licensor with respect to the preceding calendar year and (ii) the
Guaranteed Minimum Royalty paid by Licensee to Licensor with respect to the
preceding calendar year ("Reconciliation Amount"); provided, however, that no
interest shall be due on the Reconciliation Amount if timely paid [including,
but not limited to, the interest set forth in Section 4(b)(5)]. If Licensee
overpaid the Revenue Royalty owed for the preceding calendar year, such
overpayment may be applied to offset against subsequent Revenue Royalty payments
owed by Licensee pursuant to this Section 4(b)(7).
(8) No Credits Against the Guaranteed Minimum Royalty. No payment of
the Revenue Royalty for any calendar year in excess of payments of the
Guaranteed Minimum Royalty shall be credited against the Guaranteed Minimum
Royalty due to Licensor for any other calendar year.
(9) Payment of Revenue Royalty Upon expiration of the Agreement.
Upon expiration of the term of this Agreement, Licensee shall as soon as
practicable calculate the Simulator Revenue, Merchandise/Food and Beverage
Revenue, Sponsor Revenue, Remote Simulator Revenue, Remote Sponsor Revenue, and
Miscellaneous Revenue for the partial calendar year ending on the date of such
expiration and shall deliver to Licensor an amount equal to Revenue Royalty owed
for such partial calendar year less all [***] Revenue Royalty payments
previously made by Licensee to Licensor with respect to such partial calendar
year; provided, however, that in the event that Licensee overpaid the Revenue
Royalty owed for such partial calendar year, such overpayment shall be promptly
refunded to Licensee by Licensor.
(10) Records and Audits. Licensee's books and records which relate
to the calculation and determination of the Revenue Royalty shall be made
available at Licensee's office for inspection, examination, copying, or audit by
a certified public accountant or other
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authorized representative selected by Licensor at its sole discretion during,
normal business hours upon ten (10) business days prior written notice to
Licensee by Licensor, provided that the Licensor shall not be entitled to no
more than to two (2) individual audits each year. Such examination, copying or
audit shall be at Licensor's sole expense unless it is disclosed that the
Simulator Revenue, Merchandise/Food and Beverage Revenue, Sponsor Revenue,
Remote Simulator Revenue, Remote Sponsor Revenue, and Miscellaneous Revenue
reported by Licensee for the period being audited by Licensor is understated to
the extent of [***] or more, in which case all costs and expenses related to
such audit shall be borne by Licensee. Licensee shall immediately pay Licensor
on demand any deficiency in the Revenue Royalty, together with: (i) interest at
the lower of the maximum rate permitted by law or [***] per annum, accruing from
the date on which they are paid in full, (ii) a late fee of [***] of the amount
of fees so understated, and (iii) if applicable, all costs and expenses of
Licensor related to such audit.
5. DEVELOPMENT FEE
(a) Development Fee. Simultaneously with the execution and delivery of
this Agreement, Licensee shall pay, by cashier's check, money order or by wire
transfer, to NASCAR an amount equal to [***] (the "Development Fee"), which
Development Fee shall be nonrefundable and fully earned by Licensor when paid by
Licensee.
(b) Credit Applied Against Royalty Payments. Upon execution of this
Agreement and the payment to Licensor of the Development Fee by Licensee,
Licensor agrees to provide Licensee with an aggregate credit in the amount of
[***] (the "Credit") which shall be applied against the payments of Royalties
otherwise due to Licensor hereunder as such Royalties become due and payable
until such time as the Credit has been applied in full to payment of such
Royalties by Licensee after which time Licensee shall be required to pay all
further Royalties to Licensor as they become due as provided hereunder.
6. DEVELOPMENT OF THE INITIAL PLAN OF BUSINESS
(a) Initial Plan. On or before the Effective Date of the Agreement,
Licensee agrees to submit, in the form of a written proposal to Licensor,
Licensee's plans and specifications (the "Initial Plan") regarding the
development, design, building, construction and operation of the Entertainment
Stores (the "Business"). Such Initial Plan shall be prepared by Licensee at its
own expense and shall include, without limitation, detailed and specific plans
regarding the management, marketing, advertising, design, attractions, building,
construction, proposed locations of the Entertainment Stores, Site Trade Dress,
and systems development for the Business as well as future plans for expansion
of the Business. Licensor agrees to approve or disapprove the Initial Plan
within thirty (30) days after the delivery of the Initial Plan to Licensor from
License, such approval shall not be unreasonably withheld.
(b) Licensee's Continuing Obligation to Provide Status Reporting to
Licensor. Licensee agrees that at least once every three (3) months commencing
on the last day of the third (3rd) month following the date on which the Initial
Plan is approved by Licensor, and on the last day of the month each and every
three (3) months thereafter during the term of this Agreement, Licensee shall
have a continuing obligation to deliver to Licensor a written status report
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providing a general overview of progress made by Licensee in meeting the
objectives and plans set forth and described in the Initial Plan. Any proposed
material modifications by Licensee to the Initial Plan or any material
alterations to any previously approved Initial Plan are subject to the approval
of Licensor.
7. ENTERTAINMENT STORES' DESIGN AND TRADE DRESS
(a) Entertainment Stores' Design. Licensee shall be responsible for
developing the Business, including, without limitation the requirements for
building and constructing each Entertainment Store, the Simulators and the
dimensions, design, image, interior, layout, and Site Trade Dress of each
Entertainment Store; all of which shall be in substantial compliance with the
Initial Plan.
(b) Site Trade Dress. The Site Trade Dress of each Entertainment Store
that is opened to the general public must substantially comply with the Initial
Plan, as such Initial Plan may be amended from time to time with Licensor's
approval.
8. DEVELOPMENT SCHEDULE
(a) Total Number of Entertainment Stores. Licensee shall develop a total
of at least eleven (11) Entertainment Stores within the Territory during the
term of this Agreement pursuant to the terms of this Agreement in accordance
with the following development schedule (the "Development Schedule"):
(i) Licensee shall have opened to the general public at least
[***] Entertainment Store on or before December 31, 1997;
(ii) Licensee shall have opened to the general public at least
[***] additional Entertainment Stores on or before December 31, 1998,
resulting in a cumulative minimum number of at least [***] Entertainment
Stores opened to the general public and in operation by December 31, 1998;
(iii) Licensee shall have opened to the general public at
least [***] additional Entertainment Stores on or before August 31, 1999,
resulting in a cumulative minimum number of at least [***] Entertainment Stores
opened to the general public and in operation by August 31, 1999; and
(iv) Licensee shall have opened to the general public at least
[***] additional Entertainment Stores on or before August 31, 2000, resulting
in a cumulative minimum number of at least eleven (11) Entertainment Stores
opened to the general public and in operation by August 31, 2000.
Licensee understands and acknowledges that the development and
establishment by Licensee of any Remote Units shall not be counted towards nor
shall it satisfy any of Licensee's obligations to fully comply with the
development schedule contained in this Section 8.
(b) Additional Entertainment Stores. During the term of this Agreement,
and subject to the other provisions of this Agreement, including, but not
limited to, Licensor's consent to the
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Site of each of the Entertainment Stores as set forth in Section 9(a) below,
Licensee is free to develop more than the minimum number of Entertainment Stores
specified in the Development Schedule.
(c) Failure to Comply with Development Schedule. Strict compliance with
the Development Schedule specified in this Section 8(a) is of the essence in
this Agreement. Licensee's failure to fulfill its specified development
obligations with respect to the Development Schedule specified in Section 8(a)
shall constitute a default under Section 20 hereof. However, if the Licensee is
working in good faith to rectify any Development Schedule deficiencies, Licensor
shall consider waiving a portion or all of this stipulation using its reasonable
discretion.
(d) Force Majeure. Notwithstanding the foregoing, if Licensee is unable to
comply with the Development Schedule as set forth in this Section 8 solely due
to an event of "Force Majeure," the Development Schedule shall be extended by
Licensor for a reasonable period of time not to exceed nine (9) months, as
determined by Licensor in its reasonable discretion; provided that, Licensee
continues at all times during the term of this Agreement to use its best efforts
to fully comply with and timely satisfy the Development Schedule and perform all
of its obligations in accordance with this Agreement. For purposes of this
Agreement, "Force Majeure" shall mean an event caused by fire, strike, flood,
embargo, Acts of God, or other similar causes beyond Licensee's control.
9. CONDITIONS PRECEDENT TO THE DEVELOPMENT OF THE ENTERTAINMENT STORES
Prior to developing, acquiring, constructing, designing and building each
Entertainment Store, Licensee shall have satisfied all of the following
conditions (each of which shall be in form and substance reasonably satisfactory
to Licensor). Licensor recognizes that some of these conditions may be unable to
be met by the Licensee until after the development process has already begun;
Licensee shall notify the Licensor when this occurs:
(a) Site. Licensee shall have received the prior approval of Licensor as
to the suitability and selection of the Site on which the Entertainment Store
shall be located and Licensee shall have obtained all rights necessary in order
to operate the Entertainment Store in the manner provided for in this Agreement
by either holding fee simple title to the Site, Letter of Intent with the
Xxxxxx, or by entering into a lease for the Site (provided that the term of such
lease shall not be less than the term of this Agreement):
(b) Licenses and Permits. Licensee shall have obtained all licenses,
permits and other governmental authorizations and approvals necessary or
required for the development, construction and building of the Entertainment
Store or to conduct the businesses currently contemplated by Licensee (including
without limitation all necessary licenses and permits relating to zoning,
building, utility, sign, health, sanitation, business and other permits and
licenses required to build, acquire and construct the Entertainment Store):
(c) Compliance with Laws. Licensee shall have complied with all applicable
federal, state, local, municipal and county laws, rules and regulations
necessary or required for the development, construction, acquisition and
building of the Entertainment Store:
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(d) Insurance. Licensee has furnished Licensor with complete and accurate
copies of all certificates of insurance and copies of insurance policies
pertaining to the Entertainment Store, as required by this Agreement in
accordance with Section 18:
(e) Design. Licensee shall have received the prior approval of Licensor as
to the design (including the Site Trade Dress) of the Entertainment Store.
Provided, however, if the design is consistent with the Initial Plan previously
approved by the Licensor, no such additional approval shall be necessary:
(f) Related Items. Licensee shall have provided to Licensor all other
related items which Licensor may reasonably request or require in connection
with the development, construction, acquiring and building, of the Entertainment
Store.
Licensee acknowledges that Licensor's consent to a proposed Site for an
Entertainment Store and any information communicated to Licensee regarding the
proposed Site does not constitute a representation or warranty of any kind,
express or implied, as to the suitability of the proposed Site for an
Entertainment Store or for any other purpose. Licensor's consent to such Site
indicates only that Licensor believes that the particular Site meets the general
criteria of Site acceptability which Licensor has established as of the time of
its consent to the Site. Application of criteria that have appeared effective
with respect to other locations of Entertainment Stores may not accurately
reflect the potential for all locations of the Entertainment Stores, and, after
Licensor's consent to the Site, demographic and/or other factors included in or
excluded from Licensor's Site criteria could change, thereby altering the Site's
potential. The uncertainty and instability of such criteria are beyond
Licensor's control, and Licensee agrees that Licensor will not be responsible
for the failure of the Site to which Licensor has consented to meet Licensee's
expectations as to potential revenue or operational criteria.
10. CONDITIONS PRECEDENT TO THE OPENING OF EACH ENTERTAINMENT STORE
Prior to the opening to the general public of each Entertainment Store,
Licensee shall have satisfied all of the following conditions (each of which
shall be in form and substance satisfactory, to the Licensor):
(a) Compliance with Initial Plan. The Entertainment Store has been
designed and constructed in substantial compliance with the Initial Plan, and as
such Initial Plan may be modified from time to time with the approval of
Licensor.
(b) Inspection. Licensor has inspected and/or approved the Entertainment
Store. As an alternative to Licensor's physical inspection of the Entertainment
Store, Licensor may request that Licensee provide Licensor with such videotapes
and/or photographs of the Entertainment Store as Licensor deems necessary to
provide Licensor's approval as to the Entertainment Store.
(c) Licenses and Permits. Licensee shall have obtained all licenses,
permits and other governmental authorizations and approvals necessary or
required for the ownership, use and operation of the Entertainment Store and to
conduct the related businesses currently contemplated by Licensee (including
without limitation all necessary licenses and permits
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relating to zoning, building, utility, sign, health, sanitation, business and
other permits and licenses required to own and operate the Entertainment Store):
(d) Compliance with Laws. Licensee shall have complied with all applicable
federal, state, local, municipal and county laws, rules and regulations
necessary or required for the ownership, operation and use of the Entertainment
Store:
(e) Insurance. Licensee has furnished to Licensor with complete and
accurate copies of all certificates of insurance and copies of insurance
policies pertain to the Entertainment Store, as required by this Agreement in
accordance with Section 18:
(f) Simulators. Licensee shall have at least four (4) Simulators on
display at each Entertainment Store and offered for use to prospective customers
of the Entertainment Store.
(g) Related Items. Licensee has provided Licensor with all other related
items which Licensor may reasonably request or require in connection with the
opening to the general public of the Entertainment Store. Licensor shall not
unreasonably uphold the opening of the Entertainment Store locations.
11. DESIGN AND OPERATION STANDARDS OF THE ENTERTAiNMENT STORES
(a) General Provisions. In order to maintain uniform standards of
operation for the Entertainment Stores to be developed by Licensee under the
terms of this Agreement and to protect the goodwill of Licensor in the NASCAR
Marks and NASCAR Trade Dress, Licensee covenants and agrees to operate the
Entertainment Store at all times as a high quality retail outlet consisting of
interactive stock car and stock truck racing simulation entertainment as
described herein, offering high quality products and services to the general
public, and Licensee further covenants and agrees at all times during the Term
to fully comply with the following standards and operating procedures:
(i) Licensee shall maintain accurate, orderly books and
records, including, without limitation sales, inventory, and expense
information.
(ii) Licensee shall maintain an amount of capital that is
necessary or desirable for the efficient and profitable operation of the
Entertainment Stores, including sufficient working capital.
(iii) Licensee shall (1) maintain its trade accounts in
current status and seek to resolve any disputes with trade suppliers promptly,
(2) timely pay all creditors of Licensee and the Entertainment Stores in full,
(3) satisfy all debts and liabilities of Licensee and the Entertainment Stores
as they become due and (4) timely pay all taxes incurred in connection with the
operation of the Business or the assets related thereto, unless Licensee is, in
good faith and by appropriate proceedings, contesting such amount.
(iv) Licensee shall operate the Entertainment Stores in
compliance with all applicable federal, state, local, county and municipal laws,
rules and regulations relating thereto.
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(v) Upon five (5) days advance written request by Licensor,
Licensee shall provide Licensor or its employees, representatives and agents
access to any of the Entertainment Stores in order to conduct physical
inspections of such Entertainment Store and interview Licensee's managers and
employees at any reasonable time to determine whether such Entertainment Store
is being operated in accordance with the terms of this Agreement and to ensure
protection of the NASCAR Marks, NASCAR Trade Dress and the Site Trade Dress, and
the goodwill associated therewith. In addition, Licensor and/or its designated
representatives or agents shall have the right at any time during such
Entertainment Store's regular business hours to observe, photograph and
videotape the operations of such Entertainment Store for such consecutive or
intermittent periods as it deems necessary and inspect and copy any books,
records and documents relating to Licensee's operation of such Entertainment
Store. Licensee agrees to fully cooperate with Licensor in connection with any
such inspection, observations, photographing, videotaping, copying, and
interviews, all such costs shall be at Licensor's expense.
(vi) Licensee shall maintain each of the Entertainment Stores'
interior and exterior and the surrounding area within Licensee's control in a
high degree of cleanliness, orderliness and sanitation and comply with the
requirements of all federal, state, municipal and county laws, rules and
regulations relating thereto.
(vii) Licensee shall maintain all licenses, permits and other
governmental authorizations and approvals necessary or required for the
ownership, use and operation of the Entertainment Stores, and Licensee shall
maintain all minimum levels of insurance as required by this Agreement in
accordance with Section 18.
(viii) Licensee shall maintain at least four (4) Simulators on
display at each Entertainment Store and offered for use to prospective customers
of the Entertainment Store.
(ix) During the Term of this Agreement, in connection with
those Entertainment Stores that predominately contain the NASCAR stock car and
NASCAR stock truck racing theme(s), Licensee shall use the name "NASCAR Silicon
Motor Speedway" in identifying itself and in connection with all related signage
thereof, provided however, in connection with any Entertainment Store which
predominately contains racing themes other than the stock car and stock truck
racing theme, Licensee may, at its option, in the alternative, use the name
"Silicon Motor Speedway" in identifying itself.
(b) Retail Merchandising Sales Space. Licensee covenants and agrees that
any retail merchandising sales areas within an Entertainment Store shall not
have in excess of 700 square feet of Retail Merchandising Sales Space and/or not
exceed more than fifteen (15) percent of the total Entertainment Store space or
whichever is less, unless a larger space is expressly approved by Licensor in
writing. As used herein, the term "Retail Merchandising Sales Space" means the
actual square footage of any and all space in the Entertainment Store in which
any of the following take place: (i) merchandise sales occur, (ii) merchandise
is displayed, (iii) merchandise is stored, or (iv) merchandise is otherwise
sold. Licensee from time to time may request from the Licensor that the Retail
Merchandising Sales Space be expanded, Licensor will evaluate each request on a
case-by-case basis and issue any approval or disapproval. In the event that the
Licensee's Retail Merchandising Sales Space in any way violates any of the
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Licensor's current Agreements with any of the Licensor's other licensees or
sponsors, the Licensee shall use its best efforts to work with the Licensor to
resolve any of these issues. In addition, the Licensee shall not be permitted to
operate any "free-standing" merchandise kiosks within sixteen (16) miles of any
NASCAR Thunder retail store developed or opened prior to or subsequent to the
date of this Agreement. Licensee understands and agrees that in no event shall
any such "free-standing" merchandise kiosks be any larger than 300 square feet.
Licensee further understands and agrees that it shall be required to cease
operation and close to the general public any such "free-standing" merchandise
kiosk within five (5) months following written notice by Licensor.
(c) Advertising/Promotion and Right of Approval. All advertising and
Promotional Activities shall conform to the standards and requirements that
Licensor prescribes from time to time and must be approved in advance by
Licensor, and, in connection therewith, Licensee covenants and agrees as
follows:
(i) Licensee shall be required to conduct all advertising or
promotion generally in accordance with the general marketing and design aspects
set forth in the Initial Plan. Any actual advertising or promotion by Licensee
shall be conducted in a dignified and professional manner generally consistent
with the Initial Plan. Not in limitation of the foregoing, Licensee shall
continuously maintain white pages and yellow pages telephone directory listings
in the telephone book(s) which cover the local telephone calling area in which
each of the Entertainment Stores are located.
(ii) Licensor shall have the right of prior approval of all
uses of the NASCAR Marks on or in conjunction with the Entertainment Stores and
in materials used for Promotional Activities. Licensee agrees to submit in a
timely manner to Licensor, free of cost, for its prior approval as to quality,
style and content, all uses of the NASCAR Marks on or in conjunction with the
Entertainment Stores and all advertising and promotional materials used for
Promotional Activities. Comments or approval with respect to any materials for
which Licensee must seek Licensor's approval hereunder will be provided by
Licensor to Licensee within [***] business days from the date of Licensor's
receipt of such materials. Licensor shall provide Licensee with a copy of any
existing advertising guidelines developed from time to time by Licensor.
(iii) Licensee agrees that [***] or more of its Promotional
Activities for advertising with respect to the activity licensed by this
Agreement shall be directed to the interactive Simulators contained within the
Entertainment Stores licensed hereunder by Licensor.
(d) Maintenance and Changes to the Entertainment Stores. In connection
with the operation of the Entertainment Stores, Licensee covenants and agrees
that:
(i) It shall at all times maintain the Entertainment Stores,
their respective furnishings, fixtures and equipment (including without
limitation, the Simulators) in good condition and in repair and shall be solely
responsible for all maintenance, repair, and replacement where necessary to
maintain such furnishings, fixtures and equipment in the Entertainment Stores in
good operating condition, and it shall be solely responsible for all liabilities
arising from the operation of the Entertainment Stores.
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(ii) It shall obtain the approval of Licensor prior to making
any changes to the Site Trade Dress as applied at the Entertainment Stores if
such changes result in any of the Entertainment Stores being materially
different from any other Entertainment Stores developed pursuant to this
Agreement or from the Entertainment Stores design approved pursuant to Section 7
hereof. To the extent any change is made to the Site Trade Dress as applied at
any of the Entertainment Stores Licensor shall have reasonable access to such
Entertainment Store while the work is in progress to verify that such
alterations or modifications of the Site Trade Dress as applied at such
Entertainment Store complies with this Section 11.
(e) Approved Products, Merchandise, Merchandise Sales, and Food Sales. In
connection with the sale of approved products, merchandise and food sales at or
around the Entertainment Stores, in connection with any activity approved in
advance by Licensor in accordance with the terms and conditions contained in
Section 2(d), Licensee covenants and agrees as follows:
(i) Unless otherwise approved by Licensor, Licensee agrees to
purchase from Licensor's approved and authorized licensees all articles,
products and merchandise that bear, contain or display any of the NASCAR Marks,
provided that this merchandise is comparable to any other vendor merchandise
that the Licensee is considering and within [***] of the other vendor's pricing.
However, if the Licensor's licensees do not offer merchandise that is comparable
to other vendor's merchandise and not within [***] of the other vendor's prices,
the Licensor will consider licensing the Licensee's other vendors on a temporary
basis to produce NASCAR SILICON MOTOR SPEEDWAY exclusive merchandise, provided
that each vendor would enter into a separate License Agreement with Licensor,
such approval and licensing of other vendors shall not be unreasonably withheld.
(ii) Except as provided herein, Licensee agrees that [***] of
the merchandise bearing or containing the NASCAR Marks sold by Licensee at the
Entertainment Stores shall be manufactured pursuant to license agreements with
Licensor's approved and authorized licensees unless Licensor expressly approves
the sale of other items bearing, displaying or containing, the NASCAR Marks at
the Entertainment Stores.
(iii) "Official Label" means an "Officially Licensed Product"
tag or label in the form prescribed by Licensor which shall be affixed to each
Licensed Product, its Packaging or Advertising by the Licensee.
(iv) Licensee agrees not to sell any food or beverage items at
the Entertainment Stores other than items listed and described on the menu
attached on Exhibit B. Food items shall be limited to snack food types (i.e.,
pre-packaged chips, pretzels, soft-drinks, etc.) and be self service (meaning no
waiters and/or waitresses). In addition, prior to offering any food item for
sale, Licensee shall seek written approval for all such food items for each
Entertainment Store, except for items previously approved by Licensor and
appearing on Exhibit B. Licensee may request, from time to time, that Licensor
approve additional food items for sale at the Entertainment Stores, such
approval subject to Licensor's sole discretion.
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(f) Exclusive Sponsors and Exclusive Licensee.
(i) Licensee acknowledges and agrees that Licensor has entered
into and may in the future enter into exclusive relationships with sponsors and
licensees (to the exclusion of Licensee) with respect to, among other things,
merchandise, programming, racing events, racing services, advertising and
promotion, official sponsorships and other designations, and products and
services that display or promote the NASCAR Marks (collectively, "Exclusive
Sponsors and Licensees"). A current listing of all Exclusive Sponsors and
Licensees is attached hereto as Exhibit C. Licensor agrees to provide Licensee
updates and changes to such listing periodically during the term of this
Agreement. Licensee agrees to honor the commitments that Licensor has made to
Exclusive Sponsors and Licensees. Licensee agrees that prior to negotiating with
any sponsor or company that manufactures or produces a product or provides a
service in a category in which one of Licensor's Exclusive Sponsors and
Licensees engages, Licensee shall first negotiate with Licensor's Exclusive
Sponsors and Licensees for any and all Promotional Activities for the
Entertainment Stores. If Licensee desires to enter into a relationship with a
sponsor that is not one of Licensor's Exclusive Sponsors and Licensees for
Promotional Activities that will take place within the Entertainment Stores,
Licensee must obtain Licensor's approval, which approval shall not be
unreasonably withheld.
(ii) If, however, Licensee desires to enter into a
relationship with a sponsor that is not one of Licensor's Exclusive Sponsors and
Licensees for Promotional Activities outside of the Entertainment Stores,
Licensee must obtain Licensor's approval, which may not be unreasonably
withheld. Notwithstanding the foregoing, Licensee may however, have [***]
sponsors per Entertainment Store location in competing categories with
Licensor's Exclusive Sponsors and Licensees per year. If Licensee enters into an
agreement with one of Licensor's Exclusive Sponsors and Licensees but is
thereafter notified by Licensor that such sponsor or entity is no longer one of
Licensor's Exclusive Sponsors and Licensees, Licensee may continue to use such
sponsor or entity only during the term of Licensee's agreement with such entity.
From and after the expiration of the term of such agreement or its earlier
termination, whichever shall occur first. Except as provided herein, Licensee
agrees to use its best efforts to enter into an agreement with one of Licensor's
then current Exclusive Sponsors and Licensees unless otherwise approved by
Licensor, which approval shall not be unreasonably withheld. All sponsor or
vendor agreements entered into by Licensee shall have a term of no more than
five (5) years with no automatic renewals.
12. OWNERSHIP AND PROTECTION OF NASCAR MARKS AND TRADE OR RELATED PROPRIETARY
RIGHTS
(a) Licensor's Rights. Licensee acknowledges and agrees that NASCAR
exclusively owns and will continue to exclusively own during and after the Term
of this Agreement the NASCAR Marks and any registrations therefor and all
goodwill associated with them, as well as any trademarks, trade names, logos and
service marks adopted and used or approved for use by NASCAR and all goodwill
associated with them, and the NASCAR Trade Dress and all goodwill associated
with them, along with NASCAR's unique characteristics, NASCAR Rulebook, and
"look and feel" (all collectively referred to herein as the "NASCAR Indicia").
Licensor acknowledges that the Licensee owns the Site Trade Dress, however,
Licensee agrees that all NASCAR Trade Dress items and NASCAR Indicia contained
within the Site Trade Dress are owned by the Licensor. Licensee further
acknowledges that NASCAR owns and will
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continue to own during and after the Term of this Agreement all common law and
statutory copyrights in its rules, procedures, publications and all other
original works of authorship fixed in a tangible means of expression
(hereinafter "NASCAR Copyrighted Works"), and that NASCAR owns and will continue
to own during and after the Term of this Agreement trade secret rights in its
customer lists, membership lists, and other information meeting the definition
of a Licensor Trade Secret in Section 15 of this Agreement. The NASCAR Marks,
NASCAR Indicia, NASCAR Copyrighted Works, and Licensor Trade Secrets are
hereinafter referred to collectively as the "NASCAR Intellectual Property."
Licensee acknowledges that nothing contained in this Agreement shall provide
Licensee with any right, title or interest to the NASCAR Intellectual Property
other than the right to use the NASCAR Marks and NASCAR Trade Dress pursuant to
the licenses granted under this Agreement. Licensee further acknowledges and
agrees that nothing contained in this Agreement shall, in any manner whatsoever,
preclude, restrict or prohibit Licensor from selling, distributing,
manufacturing or providing, or authorizing others to do so, any products,
merchandise or services containing, displaying or bearing the NASCAR Marks or
the NASCAR Trade Dress, or any trade or service marks other than the NASCAR
Marks, within or outside the Territory through distribution channels other than
the Entertainment Stores.
(b) Licensee's Intellectual Property. Except for NASCAR's right, title and
interest in the Marks, NASCAR Indicia, NASCAR Copyrighted Works, and NASCAR
Trade Secrets, it is expressly agreed that Licensee is the sole owner of all
right, title and interest, including all copyrights, patents, trademarks, trade
names, trade secrets, algorithms, audio visual rights and moral rights and other
intellectual property rights, in the Entertainment Stores and pertaining to the
Simulators created by Licensee and its personnel and any collateral materials
such as customer lists, source code, object code, algorithms, audio visual
displays, technical specifications, user manuals, documentation, fonts (such as
that used in the "Silicon" portion of the NASCAR Silicon Motor Speedway logo as
found in Exhibit A) and quick reference guides underlying the Entertainment
Stores and Simulators created, designed, authored or conceived by Licensee or
its personnel (hereinafter referred to collectively as "Licensee's Intellectual
Property").
(c) Acknowledgment of Validity of the Marks. Licensee acknowledges the
validity of each of the NASCAR Marks and the state and federal registrations
NASCAR owns, obtains or acquires for the NASCAR Marks. Licensees shall not, at
any time, file any trademark application with the United States Patent and
Trademark Office, or any application with any other governmental entity in any
country claiming rights in the NASCAR Marks, NASCAR Indicia, NASCAR Copyrighted
Works, or Licensor Trade Secrets. Except as expressly authorized in advance by
NASCAR, Licensee shall not use any of the NASCAR Marks or any similar xxxx as,
or as part of, a trademark, service xxxx, trade name, fictitious name, company
or corporate name anywhere in the world other than "NASCAR Silicon Motor
Speedway" as provided in this Agreement. Any trademark or service xxxx
registration obtained or applied for that contains the Marks or any similar xxxx
shall be transferred to NASCAR without compensation beyond the mutual promises
in this Agreement.
(d) Challenge or Objection. Licensee shall not oppose or seek to cancel or
challenge in any forum, including, but not limited to, the United States Patent
and Trademark Office, any application or registration of NASCAR. Licensee shall
not object to, or file any action or lawsuit
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because of, any use by NASCAR of the NASCAR Intellectual Property for any goods
or services, whether such use is by NASCAR directly or through different
licenses or authorized users, except that Licensees may bring a breach of
contract claim for breach of any exclusive rights they are granted under this
Agreement.
(e) Good Will. Licensee acknowledges that: (1) the NASCAR Marks are unique
and original and NASCAR holds the right to the commercial exploitation of the
NASCAR Marks; (2) NASCAR has acquired valuable goodwill in the Marks and the
NASCAR Trade Dress; and (3) all goodwill derived from Licensee's use of any
NASCAR Marks, NASCAR Trade Dress and Site Trade Dress will inure to the benefit
of NASCAR.
(f) Infringement by Third Parties. Licensee shall not, during the Term or
anytime thereafter, dispute or contest, nor cause or assist or aid others in
disputing or contesting, NASCAR's exclusive right to the NASCAR Intellectual
Property. Licensee shall fully cooperate with and assist NASCAR (at NASCAR's
cost and expense) in preventing or prosecuting any infringement of NASCAR
Intellectual Property which NASCAR in its sole discretion decides to pursue, and
Licensee shall not share in any recovery in any such action. Licensee shall give
prompt written notice to Licensor of any improper use of the NASCAR Marks or
NASCAR Trade Dress, any other trademark or service xxxx or trade dress used by
any third party except Licensor's authorized licensees which is confusingly
similar to the NASCAR Marks or NASCAR Trade Dress which comes to Licensee's
attention or any event or advertisement which it believes may constitute an
infringement upon NASCAR Marks or other NASCAR Intellectual Property or any
challenge to Licensor's ownership or Licensee's use of the NASCAR Marks or
NASCAR Intellectual Property, which comes to Licensee's attention.
(g) Quality Standards. Licensee acknowledges that if any aspect of the
goods and services promoted and marketed by it hereunder were of inferior
quality in design or workmanship, the goodwill which NASCAR has established and
now possesses in the NASCAR Marks and NASCAR Trade Dress would be impaired.
Licensee agrees to maintain the quality of goods and services offered in
connection with the NASCAR Marks, NASCAR Trade Dress, Site Trade Dress at a high
level.
(h) Copyright. Licensee shall not attempt to obtain or assert copyright or
trademark rights on behalf of Licensee in any artwork, logo or design which
contains the NASCAR Marks or the NASCAR Trade Dress. If any such works are
created, Licensee shall include copyright notices on behalf of NASCAR in such
works, and assign to NASCAR any copyrights obtained or asserted by Licensee.
(i) Injunctive Relief. Licensee acknowledges that its breach of the
intellectual property provisions of this Agreement will result in immediate and
irreparable harm to Licensor and that money damages alone would be inadequate to
compensate Licensor. Therefore, in the event of such breach, Licensor may, in
addition to other remedies, immediately obtain and enforce injunctive relief
prohibiting the breach or threatened breach or compelling specific performance.
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13. NON-ASSIGNABILITY AND TRANSFERABILITY OF AGREEMENT OR OWNERSHIP INTEREST
OF LICENSEE
(a) Transfer by Licensor. This Agreement is fully assignable by Licensor
to any Affiliate of Licensor and inures to the benefit of such assignee or any
other legal successor to the interest of Licensor and if such assignee or other
legal successor agrees to assume the rights and obligations of Licensor under
this Agreement, Licensor shall be released from all obligations and liabilities
hereunder. Licensee agrees to execute any documents and other forms that
Licensor may reasonably request in connection with any such transfer or
assignment by Licensor.
(b) Transfer by Licensee. Licensee understands and acknowledges that the
rights and duties created by this Agreement are personal to Licensee and that
Licensor has granted the licenses hereunder to Licensee in reliance upon its
perceptions of Licensee's individual character, skill, aptitude, attitude,
business ability and financial capacity. Accordingly, Licensee agrees as
follows:
(i) Restrictions on Transfer of Licenses. Licensee shall not
sell, assign, convey, give away, pledge, encumber, mortgage, or otherwise
transfer all or any portion of any right and/or interest in this Agreement, the
NASCAR Marks, or the NASCAR Trade Dress, any license granted hereunder, or any
interest herein or related thereto (collectively, the "Proprietary Interests")
without the prior written consent of Licensor, which may be withheld by Licensor
for any reason whatsoever.
(ii) Permitted Transfers. If Licensor shall consent to a
transfer under subparagraph (i) of this Section 13 above, Licensee shall
nonetheless remain primarily and fully obligated to Licensor under this
Agreement. In addition, the transferee shall be bound by the terms of this
Agreement (including, but not limited to Licensor's right to terminate this
Agreement) as if such transferee had originally signed this Agreement as
Licensee, and the transferee shall sign all documents, instruments and
agreements that Licensor requires in order to bind transferee to the terms and
conditions of this Agreement.
(iii) Exception to Restrictions on Transfers. The restrictions
in Section 13(b)(i) above shall not apply to an Initial Public Offering or any
Secondary Offering by Licensee (as such terms are defined in the Warrant
attached hereto as Exhibit D to this Agreement), provided that such Initial
Public Offering or any Secondary Offering by Licensee is in accordance with the
terms of this Agreement and the Warrant. Licensor's consent to a transfer of
this Agreement or any interest in Licensee does not constitute a representation
as to the fairness of the terms of any contract between Licensee and the
transferee, does not provide any guarantee of the prospects of success of the
transferee nor does such consent provide any waiver of any claims Licensor may
have against Licensee or as to Licensor's right to demand the transferee's exact
compliance with any of the terms and conditions of this Agreement.
14. NON-DISCLOSURE
(a) Non-Disclosure of Licensor Trade Secrets. For purposes of this Agreement,
the term "Licensor Trade Secrets" means any information of Licensor and/or its
Affiliates which (i) derives its economic value, actual or potential, from not
being generally known to other persons who can obtain economic value from its
disclosure or use, (ii) is the subject of efforts
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that are reasonable under the circumstances to maintain its secrecy or
confidentiality, or (iii) is identified by Licensor in writing as confidential.
Licensor Trade Secrets shall include, without limitation, financial documents
and information, marketing, plans and strategies and other items not related to
the Business but excluding Licensee Trade Secrets and Licensee Confidential
Information (the above information hereinafter referred to as the "Licensor
Proprietary Information"). Licensee acknowledges and agrees that all of the
Licensor Proprietary Information is economically valuable, that such value is
derived from such Licensor Proprietary Information containing Licensor Trade
Secrets not generally known to others, and that reasonable efforts have been
taken by Licensor to maintain the secrecy and confidentiality of the Licensor
Proprietary Information and Licensor Trade Secrets, and that Licensee has
entered into this Agreement in order to use such Licensor Proprietary
Information to the economic benefit of Licensee. To the extent that any Licensor
Trade Secrets are disclosed to Licensee pursuant to this Agreement, Licensee
shall not, during and after the term of this Agreement for so long as any such
information shall remain trade secrets, use or permit the duplication or
disclosure of any such Licensor Trade Secrets, unless such use, duplication or
disclosure is specifically authorized by Licensor in advance in writing.
(b) Non-Disclosure of Licensee Trade Secrets. For purposes of this
Agreement, the term "Licensee Trade Secrets" means any information of Licensee
and/or its Affiliates which (i) derives its economic value, actual or potential,
from not being generally known to other persons who can obtain economic value
from its disclosure or use, (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or confidentiality, or (iii) is
identified by Licensee in writing as confidential. Licensee Trade Secrets shall
include, without limitation, financial documents and information, marketing
plans and strategies of Licensee and other items whether or not related to the
Business (the above information hereinafter referred to as "Licensee Proprietary
Information"). Licensor acknowledges and agrees that all of the Licensee
Proprietary Information is economically valuable, that such value is derived
from such Licensee Proprietary Information containing Licensee Trade Secrets not
generally known to others, and that reasonable efforts have been taken by
Licensee to maintain the secrecy and confidentiality of the Licensee Proprietary
Information and Licensee Trade Secrets. To the extent that any Licensee Trade
Secrets are disclosed to Licensor pursuant to this Agreement or otherwise,
Licensor will not, during and after the term of this Agreement for so long as
any such information shall remain trade secrets, use or permit the duplication
or disclosure of any such Licensee Trade Secrets, unless such use, duplication
or disclosure is specifically authorized by Licensee in advance in writing.
(c) Non-Disclosure of Licensor Confidential Information. For purposes of
this Agreement, the term "Licensor Confidential Information" shall mean any data
or information of Licensor which is not related to the Business, other than
Licensor Trade Secrets, that is competitively sensitive, that is not disclosed
to the public by Licensor or that is not generally known by the public,
including without limitation any of the Licensor Proprietary Information, and
other items or compilations of such information, whether in printed or magnetic
form, relating to Licensor and/or its business or that is identified by Licensor
in writing as confidential. Licensor Confidential Information shall also mean
any information received by Licensee from Licensor or any agent or Affiliate of
Licensor or any other third party providing such information in confidence to
Licensee. To the extent that any Licensor Confidential Information is disclosed
to Licensee, Licensee shall not, during the term of this Agreement and for five
(5) years after
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termination or expiration of this Agreement, use or permit the duplication or
disclosure of any such Licensor Confidential Information, unless such use,
duplication or disclosure is specifically authorized by Licensor in advance.
(d) Non-Disclosure of Licensee Confidential Information. For purposes of
this Agreement, the term "Licensee Confidential Information" shall mean any data
or information, other than Licensee Trade Secrets, that is competitively
sensitive, that is not disclosed to the public by Licensee or that is not
generally known to the public, including without limitation items or
compilations of such information, whether in printed or magnetic form, used in
or related to the Business, or that is identified by Licensee in writing, as
confidential. Licensee Confidential Information also shall mean any information
received by Licensor or Licensee from any agent or Affiliate of Licensee or any
other third party providing such information in confidence to such party. To the
extent that any Licensee Confidential Information is disclosed to Licensor,
Licensor shall not, during the term of this Agreement and for five (5) years
after termination or expiration of this Agreement, use or permit the duplication
or disclosure of any such Licensee Confidential Information, unless such use,
duplication or disclosure is specifically authorized by Licensee in advance in
writing.
(e) Exception. Licensee and Licensor shall not be obligated to maintain in
confidence under Sections 14(a) through 14(d) above:
(i) information which is, or subsequently may become within
the knowledge of the public generally through no fault of the receiving party;
(ii) information which the receiving party can show was
previously known to it as a matter of record at the time of receipt;
(iii) information which may subsequently be obtained lawfully
from a third party who has lawfully obtained the information through no fault of
Licensee or Licensor; and
(iv) information which may subsequently be developed as a
matter of record, independently of disclosure, by the Licensee.
(f) Ownership. All Licensor Trade Secrets and Licensor Confidential
Information furnished or disclosed by Licensor to Licensee directly or
indirectly hereunder are and shall remain the property of Licensor. Any
reproductions, notes, summaries or similar documents relating to the Licensor
Trade Secrets and Licensor Confidential Information and any files, memoranda or
reports relating thereto shall become and remain the property of Licensor
immediately upon their creation. Upon termination of this Agreement or upon the
prior demand of Licensor, Licensee shall immediately return all such materials
together with all copies thereof to Licensor. It is also understood that all
Licensee Trade Secrets and Licensee Confidential Information furnished or
disclosed by Licensee to Licensor directly or indirectly hereunder are and shall
remain the property of Licensee. Any reproductions, notes, summaries or similar
documents relating to the Licensee Trade Secrets and Licensee Confidential
Information and any files, memoranda or reports relating thereto shall become
and remain the property of Licensee immediately upon their creation. Upon
termination of this Agreement or upon the prior demand
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of Licensee, Licensor shall immediately return all such materials together with
all copies thereof to Licensee.
15. LICENSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Licensee makes to and for the benefit of Licensor the following
representations, warranties and covenants:
(a) Authority. Licensee has the requisite authority to execute, deliver
and perform its obligations under this Agreement, Licensee has obtained all
required corporate approval including board of directors or other consents,
Licensee is duly organized or formed and validly existing, in good standing,
under the laws of the state of its incorporation or formation, and Licensee's
entering into this Agreement does not in any manner whatsoever violate or
conflict with any other agreement previously entered into by Licensee, an
Affiliate of Licensee, any Owner or any Affiliate of any Owner. Furthermore,
Licensee represents and warrants that it is the sole and exclusive owner of all
intellectual property rights in the Simulators, including but not limited to all
patents, copyrights, trade secrets and other proprietary rights in the software,
hardware, firmware and other components of the Simulators.
(b) Exclusivity Regarding Simulators. Except as expressly provided in
Section 16(h) hereof, Licensee covenants and agrees that the Simulators shall be
available for use by the general public or otherwise solely at the Sites of the
Entertainment Stores [each Site subject to the prior approval of Licensor in
accordance with Section 9(a) hereof] and in connection therewith. Except as
provided herein, Licensee further covenants and agrees not to sell, convey,
transfer or assign, nor grant a license to use, any of the stock car or stock
truck themed Simulators nor any of the hardware, software, firmware or other
components of these Simulators to any Person without the prior approval of
Licensor, which approval shall not be unreasonably withheld, however, Licensee
shall be permitted to sell Simulators or any components of the Simulators to any
Licensor wholly-owned subsidiaries or Licensor joint venture partners of the
Licensee. Notwithstanding the foregoing, if at any time during the Term of this
Agreement Licensee is willing to sell one or more Simulators solely to Licensor,
Licensee agrees to sell [***] individual Simulators to Licensor at a purchase
price equal to Licensee's actual cost of labor, equipment and materials for each
such Simulator.
(c) Ownership. Exhibit E to this Agreement completely and accurately
describes all of Licensee's current owners together with their respective
ownership and voting interests in Licensee (such owners, together with any
successors thereto or other owners of ownership or voting interest in Licensee,
the "Owners" or, singly, an "Owner"). Each of the Owners are set forth on
Exhibit E.
(d) Warrant. Licensee has duly executed and delivered to Licensor the
Warrant in the form attached hereto as Exhibit D (the "Warrant).
(e) Conflicts. Licensee acknowledges that upon execution of the Agreement,
that the Licensor has previously engaged in various marketing and promotional
activities which are designed to promote and enhance the sport of stock car and
stock truck racing and the goodwill of the NASCAR Marks. Licensee further
acknowledges that Licensor's marketing, and promotional activities involve
relationships with numerous companies, organizations and
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***Confidential treatment requested.
25
individuals who serve as sponsors, owners, advertisers and business partners
(hereinafter referred to as "Other NASCAR Licensees"). Licensee agrees that in
the event Licensor determines that Licensee's activities taken pursuant to this
Agreement come into conflict with the interests or rights of other NASCAR
Licensees, Licensee shall in good faith cooperate with Licensor in order to
resolve the conflict and, in the event the conflict cannot be resolved, shall
take the action requested by NASCAR as long as it is legal and commercially
practical to do so. Licensee acknowledges that NASCAR has previously granted a
license to third parties who will operate an online multiplayer service (which
has been referred to publicly as the NASCAR Racing Online Series) which will
allow multiple players to compete online in the same race, and may to some
extent directly or indirectly compete with Licensee for the same users (although
targeted at home users rather than users in retail outlet locations).
(f) Control of NASCAR Marks and NASCAR Trade Dress. It understands that it
is an essential condition of this Agreement to protect the high reputation
enjoyed by Licensor and the NASCAR Marks, and that Licensor retains the sole and
exclusive right and authority to control the nature and quality of each and
every use of the NASCAR Marks and NASCAR Trade Dress by Licensee, and Licensee
shall comply with and abide by any and all requirements or restrictions on the
use of the NASCAR Marks and NASCAR Trade Dress under the terms of this
Agreement. Licensee agrees that the NASCAR Marks and NASCAR Trade Dress shall be
used solely in connection with the Entertainment Stores and that Licensor shall
retain the sole and exclusive right and authority to control the nature,
quality, and character of the goods and services with which the NASCAR Marks and
NASCAR Trade Dress are utilized, provided, however, that Licensee shall not be
obligated to replicate the numbers, sponsors, or colors of the cars of actual
NASCAR competitors. Licensee agrees that it shall not use the term "SpeedPark"
in any manner to identify the Entertainment Stores or in conjunction with the
NASCAR trials. In the event that it becomes advisable at any time, in Licensor's
sole discretion, to modify or discontinue the use of any one or more of the
NASCAR Marks or to use one or more additional or substitute marks, Licensee
agrees at its expense to promptly comply with the instructions of Licensor in
that regard as soon as commercially practicable but, in any event, no later than
four (4) years from receipt of notice of such instructions from Licensor.
(g) Additional Covenant by Licensee. Licensee covenants and agrees to use
its best efforts to provide and grant to Licensor the licensing right to use
Simulators within the theme park commonly known as "DAYTONA USA" located on the
property of the Daytona International Speedway, provided that financially
reasonable terms are reached with Licensor. In addition, proposed Entertainment
Stores within the Volusia County, Florida limits shall be approved or
disapproved based on the Licensor's sole discretion.
(h) Licensee's Requirement to Disclose to Licensor all Owners and
Directors of Licensee. Licensee covenants and agrees to provide Licensor, within
five (5) business days following any request by Licensor from time to time
during the Term of this Agreement, a complete and accurate written list and
description, as of the date of such request by Licensor, of: (x) all of the
owners of Licensee, together with their respective ownership and voting interest
in Licensee; and (y) the Members of the Board of Directors of Licensee, and the
total authorized number of Board of Directors of Licensee.
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16. LICENSOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Licensor hereby makes to and for the benefit of Licensee the following
representations, warranties and covenants:
(a) Authority. It has the authority to execute, deliver and perform its
obligations under this Agreement, Licensor has obtained all required board of
directors or other consents, and it is duly organized or formed and validly
existing in good standing under the laws of the state of its incorporation or
formation.
(b) Representations. It has the exclusive ownership right, title, and
interest to all of the existing registrations and pending applications for
registration of the NASCAR Marks as listed from time to time on Exhibit A
hereto, and within the United States, to the knowledge of Licensor, the NASCAR
Marks do not infringe the rights of any third party, and that Licensor is
authorized to grant to Licensee the license to use such NASCAR Marks on the
terms and conditions in this Agreement.
(c) Covenant. Licensor shall use commercially reasonable efforts to assist
Licensee in creating the most NASCAR authentic experience possible. NASCAR's
Competition, Administration, Marketing, Licensing, and Public Relations
departments shall work with Licensee to develop an official and realistic NASCAR
atmosphere in the Entertainment Stores. In addition, Licensor shall provide
Licensee with reasonable assistance and direction in the Licensee's efforts to
obtain sponsorship.
17. INDEMNIFICATION
(a) Licensee agrees to indemnify, defend and hold harmless Licensor, its
shareholders, directors, officers, employees, affiliates, professionals and
agents, from any and all loss, costs, expenses (including reasonable attorneys'
fees) claims, damages and liabilities related to or associated with Licensee or
arising out of Licensee's ownership or operation of the Entertainment Stores,
including, but not limited to (i) claims related to personal or property
injuries occurring in the Entertainment Stores or any surrounding area within
Licensee's control, (ii) any unauthorized use of or infringement of any
trademark, service xxxx, trade dress, copyright patent, process, method or
device by Licensee, (iii) alleged defects or deficiencies in any of the
Entertainment Stores or the use thereof, or any false advertising, fraud or
misrepresentation by Licensee, (iv) the unauthorized use of the NASCAR Marks or
NASCAR Trade Dress or any breach by Licensee of this Agreement (v) libel or
slander against, or invasion of the right of privacy, publicity or property of,
or violation or misappropriation of any other right of any third party, (vi) the
breach of any covenants, representations, and/or warranties of Licensee
contained in this Agreement and/or (vii) the breach of agreements or alleged
agreements made or entered into by Licensee to effectuate the terms of this
Agreement. Licensor shall give Licensee notice of the making of any claim or the
institution of any action hereunder and Licensor may at its sole discretion
participate in any action.
(b) Licensee agrees to notify Licensor immediately of any apparent
infringement or challenge to Licensee's use of any NASCAR Marks, or of any claim
by any person of any rights in any NASCAR Marks, and Licensee agrees not to
communicate with any person other than Licensor, or its respective attorneys and
Licensee's attorneys, in connection with any such
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infringement, challenge, or claim, unless legally required to do so. Licensor
has sole discretion to take such action as Licensor deems appropriate and the
right to control exclusively any litigation, U.S. Patent and Trademark Office
proceeding, or any other proceeding arising out of such infringement, challenge,
or claim or otherwise relating to any NASCAR Marks, the Speedway Logos or
related wordmarks. Licensee agrees to render such assistance and do such acts
and things as, in the opinion of Licensor's attorneys, may be reasonably
necessary or advisable to protect and maintain Licensor's interest in any
litigation, Patent and Trademark Office or other proceeding, or otherwise to
protect and maintain Licensor's interest in the wordmark NASCAR SILICON MOTOR
SPEEDWAY and the Speedway Logos. Licensee shall not institute any suit or take
any action on account of any infringements or imitations without first obtaining
the consent of Licensor to do so. Licensee understands and agrees that it is not
entitled to share in any proceeds received by Licensor (by settlement or
otherwise) in connection with any formal or informal action brought by Licensor
hereunder.
(c) Licensor agrees to indemnify and defend Licensee against and to
reimburse Licensee for all damages for which Licensee is held liable in any
claim or proceeding referred to in Section 17(b) hereof in the United States,
Canada and Australia, provided that Licensee's use of the NASCAR Marks was
authorized by Licensor pursuant to and in compliance with this Agreement and for
all costs reasonably incurred by Licensee in the defense of any such claim
brought against Licensee or in any such proceeding, in which Licensee is named
as a party, provided that Licensee has timely notified Licensor of such claim or
proceeding, having given Licensor sole control of the defense (including the
selection of attorneys to represent Licensee) and settlement of any such claim
or proceeding, and have otherwise complied with this Agreement. If it becomes
legally necessary for Licensee to modify or discontinue the use of any NASCAR
Marks and/or use one or more additional or substitute trademarks or service
marks, Licensee agrees to comply with Licensor's directions within a reasonable
time after receiving notice thereof. Licensor shall not be obligated in any
manner whatsoever to reimburse Licensee for any loss of revenue, lost profits,
start-up or other such expenses, or any direct or consequential damages
attributable to any modified or discontinued NASCAR Marks or for any
expenditures Licensee makes to promote a modified or substitute trademark or
service xxxx.
18. INSURANCE
(a) Insurance Coverage. Licensee shall secure and maintain insurance
coverage for itself and its concessionaires, including general liability and
products liability coverage, with insurance carriers acceptable to Licensor and
in accordance with Licensor's current insurance requirements, as set forth from
time to time by Licensor. Licensee shall provide evidence of such insurance
before obtaining possession of a Site or at such other time that Licensor
specifies. The coverage shall comply with the requirements of any lease for
financing for a Site and include coverage for risk, in such amounts and subject
to such policy limits and deductible amounts as Licensor shall determine from
time to time. In any event (i) the amount of coverage provided for each Site
under any comprehensive general liability insurance shall not be less than
[***]; (ii) property and casualty insurance shall be for the full replacement
value of the Entertainment Store and its contents; (iii) Licensee shall carry
business interruption insurance which shall provide benefits over a period of
not less than [***] and (iv) no insurance shall have greater than a [***]
deductible unless approved in writing in advance by Licensor. Licensee also
shall carry such workers'
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28
compensation insurance for itself and its concessionaires as may be required by
applicable law. In addition, Licensor may require as a condition to approval of
any food and beverage supplier to the Entertainment Stores that such supplier
includes Licensor and Licensee as additional insureds on such supplier's product
liability insurance.
(b) Conditions of Coverage. Licensee agrees to name Licensor as an
additional insured on all insurance policies required by this Section 18 to the
extent of its interest and provide Licensor certificates of insurance evidencing
such coverage. All policies shall provide Licensor with at least thirty (30)
days' prior written notice of cancellation or termination of coverage. Licensor
reserves the right to specify reasonable changes in the types and amounts of
insurance coverage required by this Section 18. Should Licensee fail or refuse
to procure the required insurance coverage from an insurance carrier acceptable
to Licensor, or to maintain such coverage throughout the Term of this Agreement,
Licensor may, but not shall be obligated to, procure such coverage for Licensee,
in which event Licensee agrees to pay the required premiums and/or to fully
reimburse Licensor for them.
19. TERMINATION BY LICENSEE WITH CAUSE
During the term of this Agreement, Licensee in the exercise of its best
business judgment, may determine that it is necessary or advisable to close an
Entertainment Store or to otherwise cease operating such Entertainment Store
pursuant to the terms of this Agreement. If, and only if, Licensee reasonably
determines that with respect to an Entertainment Store it is unprofitable and
the expenses of an Entertainment Store exceed the Gross Revenue from such
Entertainment Store during any full calendar year in the operation of such
Entertainment Store; provided, however, that Licensee shall timely pay all
creditors and satisfy all of its debts and liabilities relating to such
Entertainment Store prior to closing of such Entertainment Store to the general
public. In connection therewith, in the event that Licensee discontinues the
operation of an Entertainment Store or causes the operation of an Entertainment
Store to be discontinued in accordance with this Section 20, Licensee shall
provide Licensor sixty (60) days written notice prior to discontinuing the
operation of an Entertainment Store and Licensee shall fully comply with Section
21 hereof.
This Agreement (i) shall be automatically terminated (without any further
action required by Licensee) upon the expiration of the Term and (ii) may be
terminated, subject to any applicable cure period, in Licensee's sole
discretion, upon the occurrence of any Default (as defined below).
(a) Events of Default; Termination. Licensee may elect, without prejudice
to any other rights or remedies which it may have hereunder, at law or in
equity, immediately to terminate this Agreement upon occurrence of any of the
following (a "Default"), which shall constitute an event of default under this
Agreement.
(i) Misrepresentation and Misconduct. Licensor has knowingly
made any material misrepresentation or omission in connection with its ownership
of the license granted hereby or in connection with entering into this
Agreement; or if Licensor engages in any dishonest conduct or act of moral
turpitude that materially adversely affects the goodwill associated with the
license granted hereunder or the NASCAR Marks.
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20. TERMINATION BY LICENSOR
This Agreement (i) shall be automatically terminated (without any further
action required by Licensor) upon the expiration of the Term and (ii) may be
terminated, subject to any applicable cure period, in Licensor's sole
discretion, upon the occurrence of any Default (as defined below).
(a) Events of Default; Termination. Licensor may elect, without prejudice
to any other rights or remedies which it may have hereunder, at law or in
equity, immediately to terminate this Agreement upon occurrence of any of the
following (a "Default"), which shall constitute an event of default under this
Agreement:
(i) Sums Due. Licensee's failure to pay any sum which is due
and payable within thirty (30) days after written notice from Licensor that such
amount is due pursuant to this Agreement;
(ii) Misrepresentation and Misconduct. Licensee has knowingly
made any material misrepresentation or omission in connection with its securing
of the license granted hereby or in connection with entering into this
Agreement; or if Licensee engages in any dishonest conduct or act of moral
turpitude that materially adversely affects the goodwill associated with the
NASCAR Marks and/or the NASCAR Trade Dress;
(iii) Violations of Laws and Regulations. Licensee violates
any laws, rules and regulations (including without limitation, health, safety or
sanitation law, ordinance or regulation) and does not cure the noncompliance or
violation within ten (10) days or such longer grace period as the authorities
allow) of discovering such noncompliance or violation;
(iv) Transfer or Assignment. Licensee makes an unauthorized
transfer or assignment of this Agreement or the Entertainment Store(s);
(v) Understatement of Gross Revenue. Licensee intentionally
understates any of the Entertainment Stores' Gross Revenue;
(vi) Payment of Taxes. Licensee fails to pay within thirty
(30) days when due any federal or state income, service, sales or other taxes
due on the Licensee's operations, unless it is in good faith contesting its
liability for such taxes, has effectively stayed the enforcement of liability
for such taxes and has established adequate reserves for such taxes;
(vii) Abandonment. Licensee's abandonment of any Entertainment
Store(s) by failure to have any Entertainment Store(s) open to the general
public and operating for five (5) or more consecutive days, or an aggregate of
ten (10) days within any calendar quarter (other than in connection with the
permanent cessation of operating an Entertainment Store pursuant to Section 20
hereof) unless such failure to operate is due to scheduled remodeling repairs,
technology upgrades or renovation approved by Licensor, or due to fire, flood,
earthquake or other similar Acts of God beyond Licensee's control;
(viii) Creditor's Remedies, etc. Licensee or any Entertainment
Store is seized, taken over or foreclosed on by a government official in the
exercise of his duties, or by a
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creditor, lien holder or lessor, or any legal action against Licensee by a
creditor resulting in attachment, garnishment or sequestration of Licensee's
interest in any Entertainment Store, and possession is not regained by Licensee
within thirty (30) days or the attachment, garnishment or sequestration is not
discharged within thirty (30) days; or a levy of execution has been made upon
Licensee or upon any property used in the business and it is not discharged
within thirty (30) days of such levy; or the making of an assignment for the
benefit of creditors or the filing of a voluntary or involuntary petition by or
against Licensee or any Entertainment Store under any Section or chapter of the
United States Bankruptcy Code, as amended, or under any similar law or statute
of the United States or any state thereof; or the appointment of a receiver for
all or substantially all of the assets of any Entertainment Store;
(ix) Litigation. Licensee shall contest the enforceability of
this Agreement, or ownership by Licensor of the NASCAR Marks and/or the NASCAR
Trade Dress;
(x) Closing of Multiple Entertainment Stores. An aggregate of
five (5) or more Entertainment Stores are closed to the general public, in
accordance with Section 19 during the Term of this Agreement;
(xi) Licensor's Failure to Approve Initial Plan. Licensor
disapproves or fails to approve Licensee's Initial Plan within thirty (30) days
after the delivery of the Initial Plan by Licensee to Licensor in accordance
with Section 6(a) hereof;
(xii) Breach of Representations, Warranties and Covenants.
Licensee breaches any representation, warranty or covenant contained in this
Agreement;
(xiii) Change in Majority Ownership or Majority Control of
Licensee. Except upon the completion of an Initial Public Offering, the original
owners of Licensee, such original owners' being all of those Owners of Licensee
as of December 15, 1997 (collectively, the "Original Owners"), fail to maintain
at all times during the Term of this Agreement, for any reason whatsoever, at
least fifty-one percent (51%) or more of the outstanding total and ownership
interest in Licensee;
(xiv) Certain Changes in Connection with Board of Directors of
Licensee. More than two (2) of the six (6) original Members of the Board of
Directors of Licensee, such original Members of the Board of Directors of
Licensee being those Members of the Board of Directors of Licensee as of the
Effective Date of this Agreement, as are listed and described on Exhibit E (the
"Original Directors"), do not remain or serve, for any reason whatsoever, as
Members of the Board of Directors of Licensee, unless otherwise approved in
writing by Licensor; or the authorized number of Board of Directors of Licensee
at any time during the Term of this Agreement exceeds seven (7), unless
otherwise approved in writing by Licensor;
(xv) Breach of any Term. Licensee fails to comply with or
violates any of the terms or conditions of this Agreement and such failure or
violation is not cured within twenty (20) days of the date of notice that such
failure or violation occurred; provided, however, such failure or violation can
be corrected or cured but cannot be corrected and cured (to the satisfaction of
Licensor) within such twenty (20) days, Licensee shall be provided with an
additional reasonable amount of time to correct and cure such failure or such
violation; provided
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that Licensee at all times uses its best efforts to correct and cure such
failure or violation; and further provided that, in no event shall such time
period to correct or cure such failure or violation by Licensee extend beyond
sixty (60) days following the date of notice that such failure or violation
occurred; and
Notwithstanding the provisions described in this Section 20, if any,
applicable law or regulation of a governmental authority having jurisdiction
over this Agreement, Licensor and/or Licensee limit-, Licensor's rights of
termination or requires different or longer notice periods than those set forth
herein, the affected portions of this Section 20 shall be deemed amended solely
to conform to such laws and regulations.
(b) Successive Breaches. In addition to and not in limitation of any of
Licensor's remedies for any event of Default set forth in Section 20, if, after
a breach by Licensee of a provision of this Agreement, for which License has
been given notice and an opportunity to cure (if any) as provided herein,
Licensee breaches the same provision twice within any one hundred eighty (180)
day period, Licensor may also immediately terminate this Agreement upon any such
subsequent breach of the same provision within such one hundred eighty day (180)
period, provided that Licensee has been given notice of such subsequent breach
and, if the provision breached provides for an opportunity to cure, Licensee has
also been provided with an additional ten (10) day period during which to cure
such subsequent breach.
(c) Effective Date of Termination. Termination of this Agreement shall be
effective immediately upon Licensor's giving to Licensee written notice of
termination in accordance with the notification provisions set forth in Section
22.
(d) Choice of Remedies. Upon the occurrence of an event of Default under
this Agreement, Licensor may in its sole discretion independently exercise or
not exercise any or all rights which it may have under this Agreement or any
other agreements by and between Licensee and Licensor, and the exercise of
Licensor's rights under this Agreement shall not exclude any other remedies
which Licensor may have at law or in equity. All such remedies of Licensor are
cumulative.
21. EFFECT OF TERMINATION OR EXPIRATION
Upon termination or expiration of this Agreement with respect to any of
the Entertainment Stores, or the closing of an Entertainment Store pursuant to
Section 20:
(a) De-identification. Licensee covenants and agrees that it shall:
(i) after [***] days following the date of termination, not
directly or indirectly at any time or in any manner identify itself or any
business as one of Licensor's licensees, use any NASCAR Xxxx, any colorable
imitation thereof or other indicia of NASCAR in any manner or for any purpose or
utilize for any purpose any trade-name, trade or service xxxx or other
commercial symbol that indicates or suggests a connection or association with
Licensor;
(ii) cease all use of and remove, destroy and/or deliver to
Licensor all signs, signs/faces, advertising and promotion materials, forms and
other materials containing any
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32
NASCAR Xxxx or otherwise identifying or relating to NASCAR, to the satisfaction
of Licensor within [***] days following the date of termination;
(iii) during the period prior to the discontinuance of use of
the NASCAR Marks at the Entertainment Stores, remain obligated to pay Royalties
with respect to the Gross Revenue of the Entertainment Stores and otherwise
comply with the terms of this Agreement;
(iv) within [***] days following such termination, turn over
to Licensor all copies of all records, files, instructions, correspondence,
agreements, and any and all other materials relating to the NASCAR Marks, in
Licensee's possession, and all copies thereof (all of which are hereby
acknowledged to be Licensor's sole property);
(v) within [***] days and at its own expense make such
alterations to the Entertainment Stores or otherwise to distinguish the
Entertainment Stores clearly from their former appearance and remove any
tradename, trade or service xxxx or other commercial symbol that indicates or
suggests a connection or association with Licensor so as to prevent confusion
therewith by the public; and
(vi) subject to the terms and conditions in this Agreement,
Licensee shall within [***] days remove from the software of all Simulators all
uses of the NASCAR Marks, NASCAR Trade Dress, NASCAR Indicia, NASCAR Copyrighted
Works, and Licensor Trade Secrets.
(vii) furnish Licensor, within [***] days after the effective
date of expiration or termination of this Agreement, with evidence satisfactory
to Licensor of Licensee's compliance with the foregoing obligations.
(b) Licensee further covenants and agrees that within [***] days following
such termination or expiration of this Agreement, it shall pay all creditors of
the Entertainment Stores in full and discharge and fully satisfy all debts and
liabilities relating to or associated with the Entertainment Stores.
(c) All of Licensee's obligations that expressly or by their nature
survive the expiration or termination of this Agreement under this Agreement
will continue in full force and effect subsequent to and notwithstanding its
expiration or termination and until they are satisfied in full or by their
nature expire.
22. NOTICES
Unless otherwise specified herein, all notices, requests, demands,
payments, consents and other communications hereunder shall be transmitted in
writing, and shall be deemed to have been duly given when hand delivered, upon
delivery when sent by express mail, courier, overnight mail or other overnight
or next day delivery service, or three (3) days after the date mailed when sent
by registered or certified United States mail, postage prepaid, return receipt
requested, or when deposited with a public telegraph company for immediate
transmittal, charges prepaid, or by telecopier, with a confirmation copy sent by
U.S. mail, postage prepaid, addressed as follows:
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33
Licensor: NASCAR
X.X. Xxx 0000
Xxxxxxx Xxxxx, XX 00000-0000
Attention: Xxx Xxxxxxx
with a copy to (which shall not constitute notice):
NASCAR
00000 Xxxxx Xxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Contract Administrator
with a copy to (which shall not constitute notice):
Xxxxxx & Bird LLP
0000 X. Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Licensee: LBE Technologies, Inc
00000 Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
with a copy to (which shall not constitute notice):
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Esq.
23. MISCELLANEOUS
(a) Further Acts. The parties agree to execute such other documents and
perform such further acts as may be necessary or desirable to carry out the
purposes of this Agreement.
(b) Entire Agreement. This Agreement and the exhibits hereto, which are
incorporated herein by this reference, represent the entire understanding
between the parties with respect to the subject matter contained herein and
supersedes all other negotiations, agreements, representations and covenants,
oral or written, and any other agreement executed by Licensor or its affiliates
and Licensee in connection herewith. The parties intend this Agreement to be the
entire integration of all of their agreements of any nature on the subject
matter hereof. This Agreement may not be modified except by a written instrument
signed by the parties.
(c) Waiver. Failure by the parties to enforce any of their respective
rights under this Agreement shall not be construed as waiver of such rights. Any
waiver, including waiver of default, in any one instance shall not constitute a
continuing waiver or a waiver in any other
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instance. Any acceptance of money or other performance by one party from another
party shall not constitute a waiver of any default except as to the payment of
the particular payment or performance so received.
(d) Effectiveness. The submission of this Agreement does not constitute an
offer to license and this Agreement shall become effective only upon execution
thereof by Licensee and Licensor.
(e) Governing Law. THIS AGREEMENT IS A CONTRACT MADE UNDER AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA.
(f) Severability. In the event that any term or provision in this
Agreement is held to be invalid, void, illegal or unenforceable in any respect,
the Agreement shall not fail, but shall be deemed amended to delete the void or
unenforceable term or provision, and the remainder of this Agreement shall be
enforced in accordance with its terms and shall not in any way be affected or
impaired thereby. In the event that any term or provision of this Agreement is
held to be unreasonable, the same shall not fail, but shall be deemed amended
only to the extent necessary to render it reasonable, and the parties agree to
be bound by the same as thus amended.
(g) Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(h) Disclaimer of Warranties. Licensee hereby acknowledges and agrees that
Licensor has made no promises, representations, guarantees or warranties, of any
nature, that the Entertainment Stores will be successful or profitable. Licensee
further represents to Licensor that Licensee has independently reviewed and
evaluated the business to be conducted by Licensee hereunder, and the decision
to enter into this Agreement was made by Licensee solely in reliance upon such
independent evaluation.
(i) Relationship of the Parties. The relationship between the parties
hereto is solely that of licensee and licensor, and nothing herein shall be
deemed or construed to create any franchise, joint venture, partnership or any
relationship other than that of licensee and licensor. In all dealings with
third parties, including, without limitation, employers, suppliers and
customers, Licensee shall disclose in an appropriate manner acceptable to
Licensor, that Licensee is an independent entity licensed by Licensor. Nothing
in this Agreement is intended by the parties hereto to create a fiduciary
relationship between them, nor to constitute one party an agent, legal
representative, subsidiary, franchise, joint venture, partner, employee or
servant of another party for any purpose whatsoever. It is understood and agreed
that Licensee is an independent contractor and is in no way authorized to make
any contract, warranty or representation or to create any obligation on behalf
of Licensor.
(j) Jurisdiction. ANY DISPUTE ARISING OUT OF OR RELATED TO THE AGREEMENT,
WHICH CANNOT BE RESOLVED BY NEGOTIATION, SHALL BE SETTLED BY BINDING ARBITRATION
IN ACCORDANCE WITH THE AMERICAN ARBITRATION ASSOCIATION COMMERCIAL ARBITRATION
RULES AND PROCEDURES AS AMENDED BY THIS AGREEMENT. THE COST OF ARBITRATION,
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INCLUDING THE FEES AND EXPENSES OF THE ARBITRATOR, SHALL BE SHARED EQUALLY BY
THE PARTIES UNLESS THE ARBITRATION AWARD PROVIDES OTHERWISE. EACH PARTY SHALL
BEAR THE COST OF PREPARING AND PRESENTING ITS CASE. THE PARTIES AGREE THAT THIS
PROVISION AND THE ARBITRATOR'S AUTHORITY TO GRANT RELIEF SHALL BE SUBJECT THE
UNITED STATES ARBITRATION ACT, 9 U.S.C. 1-16 ET SEQ. (AUSAA@), THE PROVISIONS OF
THIS AGREEMENT, AND THE ABA-AAA CODE OF ETHICS FOR ARBITRATORS IN COMMERCIAL
DISPUTES. THE PARTIES AGREE THAT THE ARBITRATOR SHALL HAVE NO POWER OR AUTHORITY
TO MAKE AWARDS OR ISSUE ORDERS OF ANY KIND EXCEPT AS EXPRESSLY PERMITTED BY THIS
AGREEMENT, AND IN NO EVENT SHALL THE ARBITRATOR HAVE THE AUTHORITY TO MAKE ANY
AWARD THAT PROVIDES FOR PUNITIVE OR EXEMPLARY DAMAGES. THE ARBITRATOR'S DECISION
SHALL FOLLOW THE PLAIN MEANING OF THE RELEVANT DOCUMENTS, AND SHALL BE FINAL AND
BINDING. THE AWARD MAY BE CONFIRMED AND ENFORCED IN ANY COURT OF COMPETENT
JURISDICTION. ALL POST-AWARD PROCEEDINGS SHALL BE GOVERNED BY THE USAA. THIS
PROVISION SHALL NOT BE CONSTRUED SO AS TO PROHIBIT EITHER PARTY FROM SEEKING
PRELIMINARY OR PERMANENT INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT
JURISDICTION.
(k) Headings. Titles and captions of sections, subsections and clauses in
this Agreement are for convenience only, and neither limit nor amplify the
provisions of this Agreement.
(l) Survival of Representations, Warranties and Covenants. The several
representations and warranties of Licensee contained in this Agreement and each
of the covenants of Licensee contained in Section 4, Section 12, Section 14,
Xxxxxxx 00, Xxxxxxx 00, Xxxxxxx 00(x) and Section 21 hereof, and the
indemnification obligations of Licensee contained herein, shall all survive the
expiration or termination of this Agreement indefinitely.
The representations and warranties of Licensor contained in this
Agreement, and each of the covenants of Licensor contained in Section 14 and
Section 16 hereof, shall all survive the expiration or termination of this
Agreement indefinitely.
(m) Approvals and Similar Actions. Where the approval, acceptance,
consent, authorization, or similar action of Licensor is required under this
Agreement, such approval, acceptance, consent, authorization, or similar action
must be in writing, and the same may be given, denied or withheld by Licensor in
its sole discretion, except where otherwise indicated.
(n) Equitable Relief. In the event of a breach or threatened breach by
either Licensor or Licensee of the terms hereof, the non-breaching party shall
be entitled to injunctive and other equitable relief.
(o) Warranty Disclaimer. EXCEPT AS PROVIDED HEREIN, EACH OF THE PARTIES
AGREES THAT NONE OF THE PARTIES HERETO MAKES ANY WARRANTIES, EITHER EXPRESS OR
IMPLIED, WITH RESPECT TO ANY OF THE SIGNS, FIXTURES, FURNISHINGS, DECOR,
APPROVED EQUIPMENT, OTHER EQUIPMENT, PRODUCTS, SUPPLIES, INVENTORY AND MATERIALS
THAT MAY BE
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USED IN CONNECTION WITH ANY ENTERTAINMENT STORE. FURTHERMORE, NONE OF THE
PARTIES MAKES ANY WARRANTY OF MERCHANTABILITY FOR A PARTICULAR PURPOSE.
(p) Marketing Fund Contribution. In addition to any amounts payable by
Licensee under this Agreement, Licensee shall pay to Licensor an amount equal to
[***] in each year of the term, beginning in 1998, of this Agreement in
consideration for Licensee's participation in Licensor's Buyer's Guide and other
promotional projects determined by Licensor. The fee payable by Licensee under
this SECTION 23(p) shall be subject to an [***] increase of up to [***] during
the term of this Agreement in Licensor's sole discretion and without notice to
Licensee. Licensee hereby agrees to participate in Licensor's Buyer's Guide,
which participation includes, but is not limited to, providing Licensor with all
necessary materials for the Buyer's Guide.
[Signatures Appear on the Following Page]
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***Confidential treatment requested.
37
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Agreement Date first above written.
LICENSOR:
NATIONAL ASSOCIATION FOR
STOCK CAR AUTO RACING, INC.
By: /s/
---------------------------------------------
Title: VP Licensing
------------------------------------------
LICENSEE:
LBE TECHNOLOGIES, INC.
By: /s/ XXXXX XXXXXXXXX
---------------------------------------------
Title: President & CEO
------------------------------------------
Attest: XXXXX XXXXX
-----------------------------------------
Title: VP Business Development
------------------------------------------
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EXHIBIT A
GENERAL DESCRIPTION OF NASCAR MARKS
1. The general xxxx NASCAR & DESIGN as reflected in U.S. Reg. No.
1,850,527, and any modifications or replacements thereof.
2. The xxxx NASCAR SILICON MOTOR SPEEDWAY & Design [picture to be
included].
H-1
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[GRAPHICS]
H-2
40
AMENDMENT #1 TO THE LICENSE AGREEMENT
BY AND BETWEEN LBE TECHNOLOGIES, INC.
AND NATIONAL ASSOCIATION FOR STOCK CARE AUTO RACING, INC.
This Amendment (the "Amendment") shall amend the License Agreement (the
"Agreement") by an between LBE TECHNOLOGIES, INC. ("License") and National
Association for Stock Car Auto Racing, Inc. ("Licensor").
RECITALS
WHEREAS, Licensee and Licensor have entered into the Agreement, the
effective date of which was August 18, 1997.
WHEREAS, Licensee and Licensor wish to amend the Agreement as set forth in
this Amendment.
WHEREAS, Defined terms not defined herein will have the same meanings as
ascribed to such terms in this Agreement.
THEREFORE, for adequate consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
AMENDMENT
The License Agreement is hereby modified by the following:
1. Both parties acknowledge and agree that Licensee has changed its
corporate name to SILICON ENTERTAINMENT, INC. a, California Corporation with a
principal business address of 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000.
All rights and obligations held by LBE Technologies, Inc. under the Agreement
and Amendment hereto shall now be held by Silicon Entertainment, Inc.
2. DEFINITIONS.
"Category" means operator assisted location-based interactive
stockcar or stock-truck entertainment experiences that consist of no less than
five (5) linked simulator units, with each on a motion-based platform and each
allowing a maximum of two (2) people to participate in each individual simulator
unit; each location shall be permanent in nature, in an out of home retail
environment, such as a mall, and shall be no less than 3,000 square feet in size
with a minimum of three (3) permanent perimeter walls and a fixed ceiling.
3. Paragraph 2(b) is amended, in its entirety as follows:
"Exclusivity. Licensee acknowledges, understands and confirms that the
license granted to Licensee by Licensor during the term of this Agreement
and subject to the terms and conditions of this Agreement are EXCLUSIVE in
the category only for a period commencing the date of this Amendment and
ending on
H-3
41
December 31, 2002. The license does not include coin-operated video
games or arcade games, including, but not limited to networked arcade
units; individual "free-standing" simulator units; simulators that permit
more than two users to participate at one time and that are not user
controlled, such as the "Xxxxxxxx" simulators. In the event Licensor
elects to exercise its option to render this Agreement NON-EXCLUSIVE in
the category as provided for in Section 5(a) herein; Licensor shall retain
the right, at its sole discretion, to operate or grant to any other person
the right to operate Entertainment Stores (or any other related concept)
at any location within or outside the Territory, provided however,
Licensor shall not be entitled to use any of Licensee's Intellectual
Property (as defined in Section 12(b) of the Agreement) in any other
Entertainment Store associated with the Licensor. Upon termination or
expiration (without renewal of this Agreement), Licensee shall have no
further rights hereunder, other than the rights held prior to the Grant of
License."
4. Paragraph 2(d)(5) shall be amended, in its entirety, as follow:
"Warranty Within Territory". Licensor imposes upon Licensee no limitation
on the territorial scope of the License, which is worldwide in scope, but
Licensor expressly does not warrant or represent that the rights under the
license granted hereunder are enforceable or non-infringing upon the rights of
others outside of the United States and Canada. Licensee agrees that use of the
Marks outside of these countries shall be at the sole risk of the Licensee, and
that Licensee agrees to indemnify and hold Licensor and its affiliates,
shareholders, employees, directors, officers and agents of each of them harmless
against all cost and expense incurred, including settlements, judgments and
reasonable attorney's fees in the defense of any claim that arises solely as a
result of the use by of Licensee of the Marks outside of the United States and
Canada. At Licensee's expense, Licensee may present a list of prospective
territories outside of the United States and Canada in which the Licensee is
considering establishing additional Entertainment Store locations, at which time
the Licensor will research and notify the Licensee of any known rights-related
issues that might encumber such expansion; provided that Licensee may offset
such costs and expenses against future royalties earned from such countries. For
example; if Licensee notifies Licensor that it would like to go to Country X,
Licensor will research any and all third-parties rights, which might encumber
such expansion and Licensor shall take any steps it deems necessary, at its sole
discretion with respect to clearing such rights, and all costs associated with
such research and steps taken to clear the NASCAR Marks ("Costs") shall be paid
for by Licensee; provided further that Licensee may offset future royalties or
Guaranteed Minimum Royalties earned in Country X against such Costs."
5. Paragraph (3) "TERMS OF LICENSE" shall be amended, in its entirety, as
follows:
"(a) Term. The Term of this Agreement shall commence on the Effective Date
of the Agreement and end on December 31, 2005; with the period beginning
with the Effective Date of the Amendment and commencing until December 31,
2002 being EXCLUSIVE. At the end of the Exclusivity Period NASCAR shall
have the option, in its sole discretion, to extend the exclusivity period.
If Licensor
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elects to not extend the exclusivity period, the remaining term January 1,
2003 through December 31, 2005 shall be NON-EXCLUSIVE."
6. Paragraph 4(a)(1) "Guaranteed Minimum Royalty" shall be amended, in its
entirety, as follows:
"(1) Schedule. In consideration of the license granted to Licensee,
hereunder, Licensee shall pay to Licensor a non-refundable advance against
royalties owed under this Agreement (the "Guaranteed Minimum Royalty") as
follows:
Quarterly Guaranteed Annual Guaranteed
Minimum Royalty Minimum Royalty
Calendar Year Payment by Licensee Payment by Licensee
------------- -------------------- -------------------
1998 $50,000 $200,000
1999 $125,000 $500,000
2000 $200,000 $800,000
2001 $243,750 $975,000
2002 $292,500 $1,170,000
2003 $336,250 $1,345,000
2004 $375,000 $1,500,000
2005 $412,500 $1,650,000
7. Paragraph 8(a)(iii) shall be amended, in its entirety, as follows:
"(iii) Licensee shall have opened to the general public at least
[***] additional Entertainment Stores on or before September 30, 1999, resulting
in a cumulative minimum number of at least [***] Entertainment Stores opened to
the general public and in operation by September 30, 1999; and . . .
8. EXCLUSIVITY FEE
(a) Licensee shall pay Licensor an Exclusivity Fee of [***] which
shall be fully earned and non-refundable upon receipt by Licensor upon the
signing of this Amendment #1 and shall not be credited against royalties or
Annual Guaranteed Minimum payments owed to the Licensor by the Licensee.
(b) Licensor shall have the rights provided in the Nonstatutory
Stock Option, included as Exhibit A. These rights include but are not limited to
the purchase of [***] shares of Licensee's stock at [***] per share.
9. SPECIAL STIPULATIONS
(a) Licensee acknowledges, understands and confirms that the license
granted to Licensee by Licensor during the term of this Agreement and Addendum
thereto shall become non-exclusive on July 1, 2000, in the event Licensee fails
to execute a public offering of stock on or before June 30, 2000.
H-5
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43
(b) The Las Vegas location of the NASCAR Cafe shall be permitted to
operate a simulator experience similar to that of Licensee and this operation
shall be excluded from the exclusivity provision in Paragraph 3(a) of this
Amendment. Notwithstanding the foregoing, NASCAR will utilize commercially
reasonable efforts to ensure that the simulator experience located at the NASCAR
Cafe in Las Vegas does not directly convey an "official" or perceived
endorsement by NASCAR. NASCAR shall determine what constitutes an "official" or
perceived endorsement at its reasonable discretion.
10. All other provisions of the Agreement shall remain in full force and
effect, it being understood that, in the event of a conflict the terms of this
Amendment and the Agreement, the terms of this Amendment will take precedence.
IN WITNESS WHEREOF, the parties have executed the Amendment to be
effective the date of last signature below.
LICENSEE: LICENSOR:
SILICON ENTERTAINMENT, INC. NATIONAL ASSOCIATION FOR STOCK CAR
AUTO RACING, INC.
By: /s/ XXXXX XXXXX By: /s/
--------------------------------- ---------------------------------
Print Name: Print Name:
------------------------- -------------------------
Title: VP Title:
------------------------------ ------------------------------
Date: 7-7-99 Date:
------------------------------- -------------------------------
H-6
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AMENDMENT #2 TO THE LICENSE AGREEMENT
BY AND BETWEEN LBE TECHNOLOGIES, INC.
AND NATIONAL ASSOCIATION FOR STOCK CAR AUTO RACING, INC.
This Amendment (the "Amendment") shall amend the License Agreement (as
amended), (the "Agreement") by and between LBE TECHNOLOGIES, INC. ("Licensee")
and National Association for Stock Car Auto Racing, Inc. ("Licensor").
RECITALS
WHEREAS, Licensee and Licensor have entered into the Agreement, the
effective date of which was August 18, 1997 and which was subsequently amended.
WHEREAS, Licensee and Licensor wish to amend the Agreement as set forth in
this Amendment.
WHEREAS, Defined terms not defined herein will have the same meanings as
ascribed to such terms in the Agreement (as amended).
THEREFORE, for adequate consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
AMENDMENT
The Licensee Agreement is hereby modified by the following:
1. Section 20(a)(xiv) of the Agreement, as amended, is hereby deleted in
its entirety and the following language is substituted therefore:
Section 20(a)(xiv) Certain Changes In Connection With Board of Directors of
Licensee
More than two (2) of the (5) Members of the Board of Directors of Licensee,
such members of the Board of Directors of Licensee being those Members of the
Board of Directors of Licensee as of the Effective Date of this Amendment, and
as are listed and described on Exhibit E, do not remain or serve, for any reason
whatsoever, as Members of the Board of Directors of Licensee, unless otherwise
approved in writing by Licensor; or the authorized number of Board of Directors
of Licensee at any time during the Term of this Agreement exceeds seven (7),
unless otherwise approved in writing by Licensor.
2. Section 8 of the Agreement (as amended is hereby deleted in its
entirety and the following is substituted therefore
8. DEVELOPMENT SCHEDULE
(a) Total Number of Entertainment Stores. Licensee shall develop
a total of at least eleven (11) Entertainment Stores within the Territory
during the Term of this
45
Agreement pursuant to the terms of this Agreement in accordance with the
following development schedule (the "Development Schedule")
(i) Licensee shall have opened to the general public at least [***]
Entertainment Store on or before December 31, 1997;
(ii) Licensee shall have opened to the general public at least [***]
additional Entertainment stores on or before December 31, 1998
resulting in a cumulative minimum number of at least [***]
Entertainment Stores opened to the general public and in
operation by December 31, 1998;
(iii) Licensee shall have opened to the general public at least [***]
additional Entertainment stores on or before January 31, 2000
resulting in a cumulative minimum number of at least nine (9)
Entertainment Stores opened to the general public and in
operation by January 31, 2000;
(iv) Licensee shall have opened to the general public at least [***]
additional Entertainment stores on or before August 31, 2000
resulting in a cumulative minimum number of at least thirteen
(13) Entertainment Stores opened to the general public and in
operation by August 31, 2000;
3. Exhibit E, the section titled Board of Directors is hereby deleted and
the following substituted therefore:
Board of Directors
Xxxxx X. Xxxxx - President, Chief Executive Officer and Chairman of the Board
Xxxxxxx Xxxx - Director
Xxxxxx Xxxxxxxx - Director
Xxxxx Xxxxxx - Director
Xxxxxx Xxxxxxx - Director
10. All other provisions of the Agreement, as amended, shall remain in full
force and effect, it being understood that, in the event of a conflict the
terms of this Amendment and the Agreement, the terms of this Amendment will
take precedence.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THE AMENDMENT TO BE
EFFECTIVE THE DATE OF LAST SIGNATURE BELOW.
*** Confidential treatment requested.
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LICENSEE: SILICON LICENSOR: National Association for
ENTERTAINMENT, Inc. Stock Car Auto Racing, Inc.
By: /s/ XXXXXXXXXXX X. XXXXX By: /s/
------------------------------ ------------------------------
Print Name: Xxxxxxxxxxx X. Xxxxx Print Name:
---------------------- ----------------------
Title: V.P. Title:
--------------------------- ---------------------------
Date: 9-7-99 Date:
---------------------------- ----------------------------
