EXHIBIT 10.4
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LICENSING REPRESENTATION AGREEMENT
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This licensing representation agreement ("Agreement") is made by and
between Cragar Industries, Inc ("CRAGAR"), a corporation organized and existing
under the laws of the State of Delaware with its principal place of business at
0000 X. Xxxxxxxxxx Xxxx, Xxxxx X-000, Xxxxxxxxxx, Xxxxxxx 00000, and
Trademarketing Resources Inc. ("TRI"), a corporation organized and existing
under the laws of the State of California, with its principal place of business
at 0000 Xx. Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000.
WHEREAS, CRAGAR is the sole and exclusive owner of certain trademark
rights; and
WHEREAS, CRAGAR desires to appoint TRI, and TRI desires to act, as
CRAGAR's exclusive agent for the purpose of exercising the merchandising rights
in and to these trademark rights, on or in association with products, services
and premiums of all description, as well as in the promotion and advertising of
said products, services and premiums in all media and such other uses as are
commonly understood to be included within that phrase in the licensing industry;
and
WHEREAS, both CRAGAR and TRI are in agreement with respect to the terms
and conditions upon which TRI shall act as Licensing Agent.
NOW, THEREFORE, in consideration of these promises and agreements set
forth herein, the parties, each intending to be legally bound hereby, do promise
and agree as follows:
1. MEANING OF TERMS
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A. "LICENSED MATERIAL" means the graphic representations of the
following:
CRAGAR, STARWIRE, TRU-SPOKE, STREET PRO, CRAGAR S/S, CRAGAR LITE,
KEYSTONE KLASSIC and such other related marks and artwork as may
be designated by CRAGAR.
B. "TRADEMARKS" means "CRAGAR, STARWIRE, TRU-SPOKE, STREET PRO,
CRAGAR S/S, CRAGAR LITE, KEYSTONE KLASSIC" and the representations
of Licensed Material included in Subparagraph 1.A. above.
C. "TERRITORY" means worldwide.
D. "LICENSEE" means those entities that enter into License
Agreement(s) with CRAGAR through TRI's efforts.
E. "LICENSE AGREEMENT" means a written agreement between CRAGAR and a
Licensee relating to the Licensee's use of the Licensed Material.
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F. "LICENSE PROPOSAL" means a bona fide term sheet signed by a
potential Licensee which sets forth the basic business terms of a
License Agreement an example of which is set forth in Schedule C.
2. AGENCY GRANT
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(A) Pursuant to the terms hereof, CRAGAR hereby appoints TRI to
represent CRAGAR in the Territory in connection with the
merchandising of the Licensed Material on an exclusive basis,
subject to CRAGAR's approval, for the purpose of generating,
negotiating and otherwise exploiting and entering into business
opportunities in the areas of merchandising rights as defined
below in Paragraph 5.
(B) CRAGAR agrees to refer to TRI through the principals of TRI
(Xxxxxx X. Xxxxxx, Xx., Xxxxxx Xxxx, and Xxxxxxx X. Xxxxxx) (the
"Principals") all new inquiries received after the date of this
Agreement relating to the licensing or merchandising rights with
respect to the Licensed Material. The Principals agree that their
individual duties ("Duties") under this Agreement as to CRAGAR
herein shall be as set forth in Schedule A.
(C) TRI shall have no authority to promote, negotiate, administer or
manage any licensing arrangement entered into by CRAGAR prior to
the effective date of this Agreement, unless and until such
authority is expressly granted to TRI by CRAGAR in writing.
3. TERM
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(A) This Agreement is for a term of 4 years and shall become effective
as of April 1, 2001 (the "Effective Date") and shall extend
through and including March 31, 2005 (hereinafter the "Term"),
unless terminated earlier in accordance with any provision herein.
Provided that TRI is not in default of any provision of this
Agreement and both parties provide written approval, then the Term
shall automatically be extended for an additional 4 years ending
on March 31, 2009. In the event the parties wish to renew or
extend this Agreement, beyond March 31, 2009 a separate written
agreement during the first 36 months of this Agreement signed by
each of the parties must be executed. CRAGAR shall have the option
in its sole discretion to terminate this Agreement 24 months after
the Effective Date if CRAGAR has not been presented during the
first 24 months of this Agreement with Licensing Proposals from
TRI with cumulative proposed guarantees of at least $[*] due on or
before March 31, 2005. CRAGAR shall also have the election in its
sole discretion to terminate this Agreement 36 months after the
Effective Date if CRAGAR has not been presented during the first
36 months of the Agreement with Licensing Proposals from TRI with
cumulative proposed guarantees of at least $[*] due on or before
March 31, 2005.
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[*] CONFIDENTIAL TREATMENT REQUESTED - Indicates material that has been omitted
and for which confidential treatment has been requested.
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(B) The parties agree that at the end of the second year of this
Agreement they will sit down in good faith and reach mutual
agreement on specific royalty targets for Years 3 and 4 of this
Agreement for international licenses outside of North America.
4. THIRD PARTY LICENSE AGREEMENTS
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All proposed license agreements presented by TRI under this Agreement
shall be subject to the express written approval of CRAGAR. It is
understood that TRI will submit all such proposed agreements to CRAGAR
for its consideration, approval and execution, and CRAGAR will,
thereupon, advise TRI within fifteen (15) business days after receipt
of the proposed agreement as to whether it agrees or disagrees to the
terms thereof and whether it will execute same. Failure to act within
said fifteen (15) day period shall be deemed a disapproval of any such
agreement by CRAGAR. All License Agreements shall be between CRAGAR and
the Licensee presented by TRI. A basic form license agreement that is
to be used by TRI in negotiating license agreements will be provided by
TRI to CRAGAR for its approval.
5. TRI'S GENERAL DUTIES AND OBLIGATIONS
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TRI is hereby authorized, empowered and required to do the following on
behalf of CRAGAR:
(A) Develop a written strategic plan of action identifying the goals
and objectives, time frames for action, and overall direction for
the licensing program contemplated hereunder. This written
strategic plan will be developed by TRI and provided to CRAGAR no
later than August 15, 2001, for review and approval by CRAGAR. As
part of this written strategic plan, TRI will submit to CRAGAR,
for its approval, product categories and product concept
descriptions. Such product concept descriptions shall outline the
basic product type, form, and other distinguishing characteristics
such as unique distribution or manufacturing characteristics.
TRI's responsibilities under this subparagraph shall further
include submission to CRAGAR of quarterly status reports, and
periodic updates as appropriate, covering TRI's implementation of
its written strategic plan. Notwithstanding this requirement,
CRAGAR may grant approval of specific product licensing requests
prior to submission and approval of the written strategic plan. =
(B) Seek out, negotiate and present for approval and execution by
CRAGAR business opportunities relating to the merchandising of the
Licensed Material which, subject to the express written approval
of CRAGAR, shall be to CRAGAR's benefit.
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(C) Monitor and oversee CRAGAR's License Agreements with Licensees to
ensure that the Licensees' advances, royalties, minimums and sales
reports are promptly submitted.
(D) Wherever necessary, conduct personal visits to the Licensees'
manufacturing facilities to ensure the Licensees are complying
with the quality control provisions of the License Agreements.
(E) Submit to CRAGAR a written report after each of said visits
identified above in Subparagraph 5(D).
(F) Collect all advances, minimums and royalties due under the License
Agreements during the Term of this Agreement, as part of TRI's
management of the on-going relationships with Licensees. All
payments from Licensees are to be transmitted to TRI by check,
money order or wire transfer payable to CRAGAR and are to be
deposited by TRI in its designated bank account for CRAGAR income
(hereinafter the "CRAGAR Royalty Account"). TRI shall endeavor
within forty (40) days, but in any event no later than forty-five
(45) days after the close of each calendar quarter, provide CRAGAR
with a statement reflecting all income received from Licensees in
connection with the Licensed Material during the preceding
calendar quarter. Each statement shall be in writing and provide
an accounting of all sources of income and the amounts derived
therefrom and shall be accompanied by payment of all revenues due
CRAGAR. At this same time, TRI is authorized to deduct its
compensation as defined by Paragraph 6 herein. Such statement and
all payments to CRAGAR are to be sent to CRAGAR at the following
address:
Attn: Xxxxxxx X. Xxxxxxxxx, Ph.D.
Chairman and CEO
Cragar Industries, Inc.
0000 X. Xxxxxxxxxx Xxxx, Xxxxx X-000
Xxxxxxxxxx, XX 00000
(G) Engage in such other activities as the parties may mutually agree
upon and, in general, use its best efforts consistent with sound
business practices to maximize revenue generated from the
exploitation of the rights granted hereunder and to enhance the
value and reputation of the Licensed Material.
(H) While TRI is empowered to propose all necessary art, design,
editorial and other related approvals for the creation of the
Licensed Material, as well as to enforce the appropriately high
standard of quality for all such Licensed Material created and
produced pursuant to License Agreements entered into pursuant to
this Agreement, CRAGAR retains the right to grant final, or
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interim when specifically requested, approval on art, design and
editorial matters. TRI agrees to submit to CRAGAR, for final
approval, drafts, prototypes, and finished samples of all Licensed
Material and any and all advertising, promotional and packaging
material related to said Licensed Material. CRAGAR will respond to
TRI regarding approval within ten (10) business days after receipt
of such samples. Failure to respond within said period shall be
deemed disapproval by CRAGAR. TRI further agrees to provide
CRAGAR, prior to the commencement of distribution of any Licensed
Material at least two (2) complete samples of all Licensed
Material being manufactured and/or distributed by each Licensee
and all advertising, promotional and packaging material related to
same for purposes of verifying TRI's approval of quality, as well
as to ensure, solely at the discretion of CRAGAR, that the
appropriate trademark and/or copyright notices have been applied
to the Licensed Material and to the advertising, promotional and
packaging material related to said Licensed Material. If, in the
sole judgment of CRAGAR, the quality of any Licensed Material or
of any advertising, promotional or packaging material relating to
said Licensed Material is not of acceptable standard, CRAGAR
reserves the right to require TRI to use commercially reasonable
efforts to remedy the problem with the Licensee in question.
(I) Work together with CRAGAR to explore fully any internal resources
that CRAGAR may possess that may be beneficial to the success of
its licensing program established hereunder.
(J) Work together with CRAGAR to explore fully promotional
opportunities with other companies that may assist CRAGAR in its
overall business objectives and the success of its licensing
program established hereunder.
6. TRI'S COMPENSATION
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(A) During the Term of this Agreement, TRI's sole compensation for the
services that it renders pursuant to this Agreement (excluding the
current licenses set forth in Schedule B which are subject to a
separate compensation arrangement as set forth therein) shall be a
commission based on a percentage of cumulative Gross Royalty
Income received during the Term of this Agreement from Licensees
obtained by TRI for all Licensed Material as follows:
[*]% of the first $[*] of cumulative Gross Royalty Income from all
licensees and; [*]% of cumulative Gross Royalty Income from all
licensees from $[*] to $[*] and; [*]% of cumulative Gross Royalty
Income from all licensees above $[*]. Notwithstanding the
foregoing, inn the event cumulative Gross Royalty Income paid
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[*] CONFIDENTIAL TREATMENT REQUESTED - Indicates material that has been omitted
and for which confidential treatment has been requested.
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and reported to CRAGAR equals or exceeds $[*] through the calendar
quarter ending March 31, 2004 then TRI shall receive [*]% of all
Gross Royalty Income paid thereafter until the expiration of this
Agreement.
(B) For purposes of this Agreement, "Gross Royalty Income" shall mean
all royalty payments, including guarantees, advances paid against
royalties, and all other consideration of any type or nature that
are collected and paid to CRAGAR pursuant to a License Agreement.
(C) Upon expiration or termination (whichever is sooner) of this
Agreement (collectively referred to herein as the "termination
date"), TRI shall be entitled to compensation according to the
commission percentage in Subparagraph 6(A) above for a period of
48 months following such termination date, for all Gross Royalty
Income derived from license agreements entered into during the
term of this Agreement except as per 6.(D), below. At the
termination date of this Agreement, if Cragar, within twelve
months of the termination date, should enter into a License
Agreement with a third party based upon a License Proposal from a
potential Licensee received by TRI and presented to Cragar within
twelve (12) months prior to the termination date hereof, then TRI
shall be entitled to compensation from said license agreement
according to the commission percentage in Subparagraph 6(A) above
for a period of 36 months following such termination date, for all
Gross Royalty Income derived from the license agreement. TRI shall
provide to Cragar a list of said License Proposals within 30 days
of termination date.
(D) If TRI should unilaterally terminate this Agreement without cause,
then TRI shall continue to receive compensation according to the
commission percentage in Subparagraph 6(A) for the shorter of one
year from the termination date or for up to the remaining duration
of those License Agreements that it had obtained for Cragar prior
to the termination date.
7. COSTS AND EXPENSES
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(A) CRAGAR shall reimburse TRI for its documented reasonable
out-of-pocket expenses incurred in directly fulfilling its
obligations under this Agreement (E.G., travel, and related
lodging and food, long distance telephone calls, postage including
UPS, FedEx, marketing materials and trade shows), provided,
however, that TRI shall seek and receive prior written approval
from CRAGAR for any such expense greater than $500.00.
Out-of-pocket expenses shall not exceed $1,500 per month without
the written advance approval of CRAGAR. In addition, CRAGAR agrees
to fund certain other "special projects" (typically items such as
a licensing brochure or consumer research requested by CRAGAR),
provided, however, that TRI shall seek and receive prior written
approval from CRAGAR for any such expenses related to said special
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[*] CONFIDENTIAL TREATMENT REQUESTED - Indicates material that has been omitted
and for which confidential treatment has been requested.
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projects. It is agreed and understood that all other expenses
incurred by TRI related to this Agreement shall be borne by TRI,
unless otherwise approved and accepted by CRAGAR in writing.
Expenses reimbursable under this subparagraph shall not include
TRI's routine office expenses and overhead such as local phone
expense, rent, and office supplies. For all expenses for which TRI
seeks reimbursement, TRI shall provide verification and
documentation of such expenses to CRAGAR. Cragar shall provide
payment to TRI by the fifteenth of the month following the receipt
of documented and agreed upon expenses.
(B) CRAGAR further agrees to provide development fees to the
Principals for performing their Duties hereunder in an aggregate
amount of $120,000 of CRAGAR freely trading unrestricted common
stock per annum for each of the first 4 years of the Term of this
Agreement (the "Stock") to offset partially the start-up costs
that will be individually incurred by the Principals in fulfilling
their obligations under Schedule A of this Agreement. The dollar
amount for each Principal shall be as set forth alongside the name
of each in Schedule A. Provided that TRI gives written notice to
Cragar at least 30 days prior to date of grant of stock, TRI may,
in its sole discretion and with the approval of its shareholders,
change the allocation percentages in Schedule A. The total amount
of shares of Stock for both Year One and Year Two shall be
determined by dividing $120,000 by the closing market price of the
Stock on a nationally recognized exchange on the Effective Date of
this Agreement. Year One Stock shall vest immediately on the
Effective Date of this Agreement and CRAGAR covenants that it will
within 30 days after the Effective Date file an S-8 Registration
Statement with the SEC covering 240,000 shares of common stock In
the event that the S-8 registration statement does not become
effective on or before June 30, 2001,then the Principals and TRI
at their election may either terminate their obligations under
this Agreement or TRI at its election, in lieu of the stock grant,
may receive as the assignee on behalf of the Principals all of
their $120,000 development fees first offset from cumulative Gross
Royalty Income earned under Subparagraph 6 (A) prior to any
sharing between CRAGAR and TRI. The offset of $120,000 shall also
apply in any subsequent year if for any reason Year Two, Year
Three or Year Four Stock shall not be freely tradable and
unrestricted on their vesting date. Year Two Stock shall vest and
be payable to the Principals April 1, 2002. The total amount of
shares of Stock for Year Three and Year Four shall be determined
by dividing $120,000 by the average of the closing market prices
of the Stock for the thirty days prior to the date of grant on
April 1, 2002 and April 1, 2003, respectively. Year Three Stock
shall be granted on April 1, 2002 and shall vest and be payable
April 1, 2003. Year Four Stock shall be granted on April 1, 2003
and shall vest and be payable April 1, 2004. Notwithstanding the
number of shares of Stock calculated for any year, the minimum
number of shares of Stock during any year shall not be less than
10,000 and not more than 80,000 shares (to be adjusted for stock
splits, if any).
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(C) In the event CRAGAR elects to terminate this Agreement due to
insufficient Licensing Proposals presented to it, as provided
under Subparagraph 3.(A) then no Stock shall vest for Year Three
and Year Four if this Agreement terminates at the end of 24 months
and no Stock shall vest and be payable for Year Four if this
Agreement terminates at the end of 36 months.
(D) TRI shall have during the Term of this Agreement the continuing
option to purchase additional CRAGAR common stock from CRAGAR at a
price 10% below market price at the time of exercise from any or
all compensation that TRI receives under Paragraph 6 herein.
(E) Any Principal shall lose his right to additional stock grants, but
shall not give up any of his obligations under this Agreement, if
the said Principal (including any of his relatives, affiliates,
principles, or other related parties) take a short position in
Cragar Stock.
8. TRADEMARK PROTECTION
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(A) It is understood that all Licensees shall be required to take any
necessary precautions as specified by CRAGAR to protect the
Trademarks, including the placing of appropriate trademark notices
on all Licensed Material as well as on all advertising,
promotional and packaging material relating to said Licensed
Material. The following notices, at a minimum, will be required of
all such Licensees:
(TM) and/or(R)Designates a Trademark of CRAGAR.
(B) CRAGAR shall bear the responsibility and cost of obtaining and
maintaining those trademark registrations which, in the sole
opinion of CRAGAR, should be obtained and maintained; provided,
however, that CRAGAR shall use its best efforts to obtain
trademark registrations for all product categories for which the
Trademarks have been licensed and which are actively marketed
within the Territory for which registration is requested.
(C) TRI agrees to give CRAGAR prompt written notice of any unlicensed
use by third parties of Licensed Material or Trademarks, and TRI
will not, bring or cause to be brought any criminal prosecution,
lawsuit or administrative action for infringement, interference
with or violation of any rights to Licensed Material or Trademarks
either by itself or on behalf of CRAGAR. TRI shall not have any
right to recover or share in any damages or other monetary relief
that CRAGAR recovers for any violation of its rights to the
Licensed Material or Trademarks for which TRI does not participate
as a party. TRI shall have no responsibility or obligation to
participate as a party in any action without its prior written
consent which is subject to TRI's sole and absolute discretion,
and should TRI elect to give its consent and become a party,
CRAGAR agrees to reimburse TRI for its reasonable expenses
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incurred at CRAGAR's request, including reasonable attorney's
fees. Only in the event that TRI shares in the expenses of said
action shall TRI be entitled to share in any damages or other
monetary relief recovered, in proportion to TRI's share of the
expense.
9. WARRANTIES AND INDEMNIFICATIONS
-------------------------------
(A) CRAGAR represents and warrants that it is the owner of all rights
in and to the Trademarks and that it has the right to grant the
rights herein granted to TRI. CRAGAR further represents that it
has not granted any other person or firm the right and authority
to represent CRAGAR with respect to the Trademarks in such a
capacity that, to CRAGAR's knowledge, would be in conflict with
this Agreement.
(B) During and after the term hereof, CRAGAR agrees to defend,
indemnify and hold TRI, its stockholders, directors, officers,
employees, agents, parent companies, subsidiaries, and affiliates,
harmless from and against any claims, liabilities, judgments,
penalties, and taxes, civil and criminal, and all costs, expenses
(including, without limitation, reasonable attorneys' fees) which
may arise out of or be related to CRAGAR's warranty, as above
stated.
(C) During and after the term hereof, TRI hereby agrees to defend,
indemnify and hold CRAGAR and any of its related entities,
including each of their stockholders, directors, officers,
employees, agents, parent companies, subsidiaries, and affiliates,
harmless from and against any and all claims, liabilities,
judgments, penalties, and taxes, civil and criminal, and all
costs, expenses (including, without limitation, reasonable
attorneys' fees) which may arise out of any intentional or
negligent acts by TRI, other than as it may relate to the CRAGAR's
warranty, as above stated.
(D) TRI and CRAGAR agree to give each other prompt written notice of
any claim or suit which may arise under the indemnity provisions
set forth above.
10. BOOKS AND RECORDS; RECONCILIATION; RIGHT TO AUDIT
-------------------------------------------------
(A) TRI agrees to keep and maintain accurate and up-to-date books and
records relating to its obligations under this Agreement, the
CRAGAR Royalty Account, and each License Agreement. TRI shall
preserve such records for a period of two (2) years after either
termination or expiration of this Agreement.
(B) TRI shall conduct a quarterly reconciliation and shall endeavor to
remit to CRAGAR within forty (40) days, but in no event longer
than forty-five (45) days of the end of each Quarter all Net
Revenues not already remitted by TRI during such Quarter.
"Quarter" shall be defined as a calendar quarter beginning on
January 1, April 1, July 1, and October 1 of each calendar year
during the Term. "Net Revenues" shall be defined as Gross Royalty
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Income less TRI's compensation and expense reimbursements
permitted pursuant to the terms of Paragraph 6 hereof. All
payments under this subparagraph to CRAGAR shall be accompanied by
a quarterly report reconciling the payments to CRAGAR.
(F) During the Term of this Agreement and for a period of two (2)
years after either termination or expiration of this Agreement,
CRAGAR may, during reasonable business hours, audit the books and
records of TRI relating to this Agreement and of the CRAGAR
Royalty Account in order to verify the accuracy thereof and of the
royalty reports generated by TRI hereunder. In the event that
there is any discrepancy in CRAGAR's favor between the amount
actually paid CRAGAR and that which was owed CRAGAR, TRI shall
immediately remit payment to CRAGAR in the amount of such
discrepancy plus any interest calculated at the then-prevailing
prime rate. In the event that there is any discrepancy in CRAGAR's
favor between the amount actually paid CRAGAR and that which was
owed CRAGAR, and such amount exceeds $5,000 for each year the
Agreement is in effect, TRI shall be responsible for payment of
CRAGAR's costs of auditing the books and records of TRI.
11. INSURANCE
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CRAGAR and TRI shall separately maintain during the Term of this
Agreement the following types and levels of insurance: Comprehensive
General Liability Insurance with the minimum bodily injury and property
damage limits of $1,000,000 each occurrence; and naming the other party
as an additional insured under its Comprehensive General Liability
Insurance policy. Upon request, the parties shall furnish to each other
evidence of such insurance coverage in the form of a Certificate of
Insurance indicating that premiums have been paid for the then current
term. Neither party shall make any material change to this coverage
without providing the other party with notice.
12. RELATIONSHIP OF THE PARTIES
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This Agreement shall not be construed to place the parties in the
relationship of partners or joint venturers. It is understood and
agreed that TRI is acting as an independent contractor and that neither
party shall have any right or power to obligate, bind, or commit the
other to any expense, liability, or matter other than as expressly
provided and authorized in this Agreement. Specifically, TRI and CRAGAR
acknowledge that TRI has no authority to bind CRAGAR to any licensing
commitment to any potential licensees, and all such commitments are
only binding upon CRAGAR pursuant to a License Agreement fully executed
by both CRAGAR and Licensee.
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13. ASSIGNMENT/SUB-LICENSE
----------------------
TRI's rights and/or obligations hereunder shall not be assigned or
delegated by any act of TRI except upon the express written approval of
CRAGAR. TRI shall have no right to grant any licenses or sub-licenses
without CRAGAR's prior express written approval. CRAGAR shall, however,
have the right to assign its rights and delegate its obligations under
the Agreement without the prior approval of, but with reasonable
written notice to, TRI.
14. TERMINATION
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CRAGAR shall have the right at any time to terminate this Agreement for
cause in the event that TRI violates any of its obligations under this
Agreement including, without limitation, its payment obligation. CRAGAR
shall have the right to terminate this Agreement, without payment of
any penalty, by giving written notice of termination to TRI, and the
termination shall be effective thirty (30) days after such notice is
mailed to TRI, unless TRI, in the interim, shall remedy the violation
to the reasonable satisfaction of CRAGAR within such 30 days.
15. EFFECT OF TERMINATION OR EXPIRATION
-----------------------------------
(A) In the event of termination or expiration of this Agreement:
(i) TRI shall promptly turn over to CRAGAR all books and records
relating to each Licensee and shall immediately take all
steps necessary to withdraw its name from any accounts
established on behalf of CRAGAR for purposes of this
Agreement including, without limitation, the CRAGAR Royalty
Account, and
(ii) All future payments from Licensees shall be made directly to
CRAGAR or its duly appointed representative.
(B) It is further understood and agreed that after termination or
expiration of this Agreement, all rights granted to TRI shall
forthwith revert to CRAGAR who shall be free to itself
commercialize the Licensed Material and/or to contract with others
to commercialize the Licensed Material except that CRAGAR shall
continue to pay TRI its compensation as provided in 6.(C) and
6.(D). TRI shall refrain from further efforts to commercialize the
Licensed Material and will not make any further reference to it,
either directly or indirectly.
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16. NON-COMPETITION, NON-SOLICITATION AND NON-DISCLOSURE.
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(a) General. In consideration of the payment of the CRAGAR common
stock, and in order to induce the CRAGAR to enter into this
Agreement and to consummate the transactions contemplated hereby,
each of the Shareholders (defined as the principals of TRI) hereby
acknowledges that he is a beneficiary of the CRAGAR common stock
payments to TRI and each of the Shareholders hereby severally
covenants and agrees as follows:
(i) Without the prior written consent of CRAGAR, such Shareholder
shall not for a period of one (1) year from and after the
termination date and during the term of this Agreement (A)
directly or indirectly acquire or own in any manner any
interest in any person, firm, partnership, corporation,
association or other entity which engages or plans to engage
in any significant manner relative to that entity's core
business or the business segment of the entity that will be
the focus of TRI's engagement in any facet of the Business
(defined as custom automotive wheels) or which competes or
plans to compete in the Business with CRAGAR or any of its
subsidiaries or Affiliates, anywhere in the world (the
"Territory"), (B) be employed by or serve as an employee,
agent, officer, director of, or as a consultant to, any
person, firm, partnership, corporation, association or other
entity which engages or plans to engage in any facet of the
Business or which competes or plans to compete in any way in
any significant manner with Cragar or any of its subsidiaries
or Affiliates within the Territory, or (C) utilize his
special knowledge of the business of Cragar and his or its
relationships with customers, suppliers and others to compete
with Cragar and/or any of its Affiliates in any business
which in any way in any significant manner engages or plans
to engage in the Business; provided, however, that nothing
herein shall be deemed to prevent such Shareholder from
acquiring through market purchases and owning, solely as an
investment, less than three percent in the aggregate of the
equity securities of any class of any issuer whose shares are
registered under ss.12(b) or 12(g) of the Securities Exchange
Act of 1934, as amended, and are listed or admitted for
trading on any United States national securities exchange or
are quoted on the National Association of Securities Dealers
Automated Quotation System, or any similar system of
automated dissemination of quotations of securities prices in
common use, so long as such Shareholder is not a member of
any "control group" (within the meaning of the rules and
regulations of the United States Securities and Exchange
Commission) of any such issuer. Such
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Shareholder acknowledges and agrees that the covenants
provided for in this Section 16 (a) are reasonable and
necessary in terms of time, area and line of business to
protect the Company's Trade Secrets. Such Shareholder further
acknowledges and agrees that such covenants are reasonable
and necessary in terms of time, area and line of business to
protect the CRAGAR's legitimate business interests, which
include its interests in protecting CRAGAR's (i) valuable
confidential business information, (ii) substantial
relationships with customers throughout the United States,
and (iii) customer goodwill associated with the ongoing
Business. Shareholder expressly authorizes the enforcement of
the covenants provided for in this Section 1.1(a) by (A)
Cragar and its subsidiaries, (B) CRAGAR's permitted assigns,
and (C) any successors to CRAGAR's business. To the extent
that the covenants provided for in this Section 1.1(a) may
later be deemed by a court to be too broad to be enforced
with respect to its duration or with respect to any
particular activity or geographic area, the court making such
determination shall have the power to reduce the duration or
scope of the provision, and to add or delete specific words
or phrases to or from the provision. The provision as
modified shall then be enforced.
16. FINAL STATEMENT
---------------
Upon termination or expiration of this Agreement, TRI shall deliver to
CRAGAR a statement indicating the number and description of all License
Agreements which TRI has obtained for CRAGAR and provide CRAGAR with a
copy of each such agreement.
17. NOTICES
-------
All notices hereunder shall be given by addressing them as indicated
below and by depositing them as certified mail or registered mail,
return receipt requested, postage prepaid, or by delivering them to a
national overnight courier service. Such notice shall be effective as
of the date of receipt by the other party.
The addresses of the parties until further notice are:
Xxxxxxx X. Xxxxxxxxx, Ph.D. Xxxxxx X. Xxxxxx, Xx.
Chairman & CEO President & CEO
Cragar Industries, Inc. Trademarketing Resources, Inc.
0000 X. Xxxxxxxxxx Xxxx, Xxxxx X-000 0000 Xxxxx Xxxxxxx, Xxxxxx 000
Xxxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
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18. CONFIDENTIALITY
---------------
(A) TRI agrees to keep the terms and conditions of this Agreement and
all License Agreements strictly confidential, and TRI shall not
disclose such terms and conditions to any third party without
obtaining CRAGAR's prior written consent; provided, however, that
this Agreement and any License Agreement may be disclosed on a
need-to-know basis to TRI's attorneys and accountants who agree to
be bound by this confidentiality provision. CRAGAR hereby consents
to TRI's disclosure of information of a financial nature in this
Agreement and any License Agreement to its auditors and to
financial institutions in the ordinary course of business.
(B) TRI further agrees to keep strictly confidential all information
disclosed by CRAGAR to TRI pursuant to this Agreement and
designated in writing by CRAGAR as "confidential." TRI shall not
acquire any right or interest in any such confidential information
disclosed by CRAGAR. Upon termination or expiration of this
Agreement, all such confidential information, if in written form,
shall be returned to CRAGAR.
(C) The duties and obligations under this Paragraph 18 shall survive
any termination or expiration of this Agreement.
(D) In the event that TRI is requested or required through legal
process to disclose any confidential information of CRAGAR, TRI
shall provide prompt notice of such request or demand to CRAGAR so
that CRAGAR may seek an appropriate protective order or waive
compliance with the provisions of this Paragraph 18.
19. JURISDICTION AND CHOICE OF LAW
------------------------------
This Agreement and the enforcement hereof shall be subject exclusively
to the internal laws (but not the choice or conflicts of law rules) of
the State of Arizona. The parties hereby irrevocably waives any right
they may have to assert the application of any other law of any other
state or nation in any legal action between them. The parties agree
that no action or proceeding may be maintained by one against the other
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except either in Superior Court for the County of Maricopa, or in the
United States Federal Court, District of Arizona, and that these courts
shall have exclusive jurisdiction over such action or proceeding.
20. CAPTIONS
--------
The captions used in connection with the paragraphs and subparagraphs
of this Agreement are inserted only for purposes of reference. Such
captions shall not be deemed to govern, limit, modify or in any other
manner affect the scope, meaning or intent of the provisions of this
Agreement or any part thereof nor shall such captions otherwise be
given any legal effect.
21. CONSTRUCTION
------------
The language of all parts of this Agreement shall in all cases be
construed as a whole, according to its fair meaning and not strictly
for or against any of the parties. Headings of paragraphs herein are
for convenience of reference only and are without substantive
significance.
22. GOODWILL
--------
TRI acknowledges that the rights and powers retained by CRAGAR
hereunder are necessary to protect CRAGAR's trademarks, copyrights and
property rights, and, specifically, to conserve CRAGAR's goodwill and
good name, and the Trademarks, and therefore TRI agrees that TRI will
not allow the same to become involved in matters which will, or could,
detract from or impugn the public acceptance and popularity thereof, or
impair their legal status.
23. MODIFICATIONS OR EXTENSIONS OF THIS AGREEMENT
---------------------------------------------
Except as otherwise provided herein, this Agreement can only be
extended or modified by a writing signed by both parties; provided,
however, that certain modifications shall be effective if signed by the
party to be charged and communicated to the other party.
24. INTEGRATION
-----------
This Agreement constitutes the entire understanding of the parties, and
revokes and supersedes all prior agreements between the parties, and is
intended as a final expression of their Agreement. It shall not be
modified or amended except in a writing specifically referring to this
Agreement. This Agreement shall take precedence over any other
documents which may be in conflict with said Agreement.
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25. POWER TO SIGN
-------------
The parties warrant and represent that their respective representatives
signing this Agreement have full power and proper authority to sign
this Agreement and to bind the parties.
26. SURVIVAL OF OBLIGATIONS
-----------------------
The respective obligations of the parties under this Agreement, which
by their nature would continue beyond the termination or expiration of
this Agreement, shall survive termination or expiration of this
Agreement.
27. SEVERABILITY OF PROVISIONS
--------------------------
The terms of this Agreement are severable and the invalidity of any
term of this Agreement shall not affect the validity of any other term.
28. FORCE MAJEURE
-------------
If either party is delayed, or interrupted in, or prevented from the
performance of its obligations hereunder by reason of an act of God,
fire, flood, war, public disaster, strikes or labor difficulties,
governmental enactment, regulation or order, or any other cause beyond
its control, and if such party has given the other party prompt notice
thereof and, on request, such confirmatory documentation as the other
party may reasonably request and has in good faith kept the other party
apprised of when the delay, interruption or prevention is expected to
be resolved, the time for the performance of the party's obligations
shall thereupon be extended for a period equal to the duration of the
contingency that occasioned the delay, interruption or prevention, but
not exceeding ninety (90) days unless otherwise mutually agreed. If the
force majeure condition continues for more than ninety (90) days,
either party may terminate this Agreement upon written notice to the
other party.
(Signature Page To Follow)
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Please sign below under the word "Agreed". When signed by both parties this
shall constitute an agreement between CRAGAR and TRI.
AGREED:
CRAGAR INDUSTRIES, INC. TRADEMARKETING RESOURCES INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx By:
-------------------------- ------------------------
Title: Chief Executive Officer Title: Chief Executive Officer
----------------------- -----------------------
Date: April 1, 2001 Date: April 1, 2001
------------------------ -----------------------
