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EXHIBIT 10.25
SERVICE AGREEMENT
Effective April 30, 1997 ("Effective Date") Xxxx Xxxxxxxxx, Inc., 0000
Xxxxxx Xxxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000 ("DEI") and Xxxxxxx
Xxxxxxxxx Racing, 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000 ("RCR")
(referred to hereinafter individually as "Licensor" and collectively as
"Licensors") and LBE Technologies, Inc., 00000 Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxx
00000 ("Company") agree as follows:
1. Services, Payment and Options. Each Licensor agrees to undertake and
complete the services specified in Exhibit A ("Services"). As the only
consideration due Licensors regarding the subject matter of this Agreement,
Company shall pay the fees and grant the stock options set forth in Exhibit A.
2. Inventions; Proprietary Information.
a. Company shall own all right, title and interest (including
patent rights, copyrights, trade secret rights, trademark rights and other
rights throughout the world) relating to any and all inventions (whether or not
patentable), works of authorship, designations, designs, know-how, ideas and
information made or conceived or reduced in practice, in whole or in part, by
each Licensor during the term of this Agreement that relate to the subject
matter of, or arise out of, the Services or any Proprietary Information (as
defined below) (collectively, "Inventions") and each Licensor will promptly
disclose and provide all Inventions to Company. Each Licensor hereby makes all
assignments necessary to accomplish the foregoing ownership. Each Licensor shall
further assist Company, at Company's expense, to further evidence such record
and perfect such assignments, and to perfect, obtain, maintain, enforce, and
defend any rights assigned.
b. Licensors each agree that all Inventions and all other
business, technical and financial information (including, without limitation,
the identity of and information relating to Company's customers or employees)
each Licensor develops, learns or obtains during the period over which it is (or
is supposed to be) providing Services that relate to Company or the business or
demonstrably anticipated business of Company or that are received by or for
Company in confidence, constitute "Proprietary Information." Licensors will hold
in confidence and not disclose or, except in performing the Services, use any
Proprietary Information. However, a Licensor shall not be obligated under this
paragraph with respect to information such Licensor can document is or becomes
readily publicly available without restriction through no fault of either
Licensor. Upon termination and as otherwise requested by Company, each Licensor
will promptly return to Company all items and copies containing or embodying
Proprietary Information, except that each Licensor may keep its personal copies
of its compensation records and this Agreement.
c. As additional protection for Proprietary Information, each
Licensor agrees that during the period over which it is (or is supposed to be)
providing Services, and for one year thereafter, (i) such Licensor will not
encourage or solicit any employee or consultant of Company to leave Company for
any reason; (ii) such Licensor will not engage in any activity that is in any
way competitive with the business or demonstrably anticipated business of
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Company; and (iii) such Licensor will not assist any other person or
organization in competing or in preparing to compete with any business or
demonstrably anticipated business of Company.
3. Grant of Rights.
a. Publicity. DEI grants Company a worldwide non-exclusive
license to use, reproduce, disseminate, display, perform, record, photograph,
alter and otherwise exploit R. Xxxx Xxxxxxxxx'x ("Xxxxxxxxx") names, likeness,
biographical data, memorabilia (along with any trademarks or service marks
incorporated therein, including without limitation those of any sponsor of
Xxxxxxxxx during the effective term of this Agreement with DEI) and/or voice, in
whole or in part, in connection with the promotion of Company's current and
future business, products and services, including but not limited to display and
other use at Company's Centers (as defined below). RCR grants Company a
worldwide non-exclusive license to use, reproduce, disseminate, display,
perform, record, photograph, alter and otherwise exploit Xxxxxxx Xxxx
Childress's ("Childress") names, likeness, biographical data, memorabilia
(alone, with any trademarks or service marks incorporated therein, including
without limitation those of any sponsor of Childress during the effective term
of this Agreement with RCR) and/or voice, in whole or in part, in connection
with the promotion of Company's current and future business, products and
services, including but not limited to display and other use at Company's
Centers (as defined below). To the extent any of the foregoing grants are
ineffective under applicable law, each Licensor hereby agrees to provide, or, if
necessary, to obtain from third parties, at no expense to Company, any and all
waivers, approvals, licenses and consents required to accomplish the purpose of
the foregoing grants. From time to time, as reasonably requested by Company,
each Licensor will confirm in writing that any such waivers, approvals, licenses
and consents have been obtained or granted. Each Licensor has no knowledge that
any of the foregoing grants are ineffective as of the Effective Date.
b. Auto Design. RCR grants Company a nonexclusive worldwide
license to incorporate the Auto Design (as defined below) into Productions (as
defined below). This license grant includes the right to reproduce, use,
display, digitize, broadcast, perform, modify, and distribute the Auto Design,
in whole or in part, as incorporated in any Production and any advertising and
promotion related to any Production. The rights granted herein shall not confer
in RCR or DEI any rights of ownership in any Production, including, without
limitation, the copyright thereto, all of which shall be and remain the
exclusive property of Company, except that RCR shall retain copyright in the
Auto Design. This license grant includes, without limitation, use of the Auto
Design on Simulators (as defined below) and as computer graphics projected on a
monitor and/or screen at Centers (as defined below).
i. Definition of "Auto Design". "Auto Design" shall mean
the trade dress, name and design of (a) the race car known as "the #3 car" and
(b) any race car RCR or Xxxxxxx Xxxx Childress uses in professional auto racing
during the effective term of this Agreement with RCR ("Future Auto Design").
"Auto Design" includes, without limitation, the colors and combination thereof,
overall design, placement, shape and size of design elements, decals, logos,
lettering and trademarks, and any changes made thereto during the effective term
of this Agreement with RCR.
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ii. Definition of "Production"; "Center"; and "Simulators."
"Production" shall mean any of the following: (i) Company's current or future
auto racing simulation centers ("Centers"); (ii) Company's boardable auto-shaped
racing simulation control modules ("Simulators"); and (iii) other multimedia
uses of any kind, including but not limited to computer software, graphical
displays, and audio soundtracks.
iii. Quality Approval. After the Auto Design has been
incorporated into a Simulator but before the Simulator is commercially
distributed or displayed, Company shall submit photographs of the Simulator to
RCR for a quality control review. RCR shall have the opportunity to review the
Simulator photographs for ten (10) business days and submit any suggested
changes or improvements in the reproduction of the Auto Design to Company by the
end of this period. Where reasonably possible, and considering production
schedules and technical limitations, Company shall incorporate these changes and
improvements in the final Simulator. RCR's failure, within the ten (10) day
period, to either (i) approve the reproduction of the Auto Design in the
Simulator or (ii) submit suggestions shall be deemed to be approval of the
reproduction of the Auto Design. Subject to the foregoing, RCR retains final
approval of the reproduction of the Auto Design on a Simulator, which shall not
be unreasonably withheld.
4. Representations and Warranties. Each Licensor represents and warrants
that: (i) the Services will be performed in a professional and workmanlike
manner and that none of such Services or any part of this Agreement is or will
be inconsistent with any obligation such Licensor may have to others; (ii) all
work under this Agreement shall be such Licensor's original work and none of the
Services or Inventions or any development, use, production, distribution or
exploitation thereof will infringe, misappropriate or violate any intellectual
property or other right of any person or entity; and (iii) such Licensor has the
full right and power to make the assignments and grant the rights to Company as
provided for in this Agreement. RCR represents and warrants that RCR owns all
right, title and interest in the Auto Design, including all copyrights,
trademarks and other intellectual property rights therein. Each Licensor shall
indemnify, defend and hold harmless Company and its officers, employees, and
agents from any claims, demands, liabilities, losses, damages, judgments or
settlements (including, reasonable attorneys' fees) arising from any breach by
such Licensor of any warranty or representation made by such Licensor hereunder,
including without limitation a claim of infringement or violation of any
intellectual property right or right of publicity or privacy. Execution by
Xxxxxxxxx and Childress, respectively, and delivery to Company of Releases
(i.e., documents granting DEI and RCR, respectively, such permission and rights
necessary for Licensors to enter into this Agreement) in a form satisfactory to
Company is a condition precedent to the effectiveness of this Agreement.
5. Termination; Extension.
a. Termination. The term of this Agreement shall be four (4)
years from the Effective Date, except that this Agreement may be terminated
earlier as follows. Company may terminate this Agreement: (i) upon thirty (30)
days' written notice, only with respect to a breaching Licensor, if such
Licensor breaches a material provision of this Agreement, including without
limitation failure to perform the Services set forth on Exhibit A, unless the
breach is cured within the notice period; (ii) immediately, only with respect to
the affiliated Licensor, if Xxxxxxxxx or Childress commits (or is accused by a
credible third party of committing) an illegal
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or immoral act; (iii) at any time upon sixty (60) days' written notice, only
with respect to DEI, if Xxxxxxxxx is no longer actively engaged in his NASCAR
race driving, and/or NASCAR team owner career; and (iv) at any time upon sixty
(60) days' written notice, only with respect to RCR, if an Auto Design is no
longer utilized on a racing car actively participating in professional auto
racing. If Company breaches a material provision of this Agreement with respect
to a Licensor, such Licensor may terminate this Agreement, only with respect to
such Licensor, upon thirty (30) days' written notice, unless the breach is cured
within the notice period. Sections 2 (subject to the limitations on Section 2(c)
stated therein) through 6 of this Agreement and any remedies for breach of this
Agreement shall survive any termination or expiration, except that the licenses
granted pursuant to Section 3(a) and Section 3(b) shall be limited such that
Company may continue to use, to the full extent of the rights granted
thereunder, only those Productions or promotional materials already in
production or manufactured prior to the effective date of termination or
expiration of this Agreement.
b. Automatic Extension. On the fourth anniversary of the
Effective Date of this Agreement, if the value of the stock underlying all the
stock options granted pursuant to this Agreement (whether or not such options
have been exercised) equals or exceeds One Million U.S. Dollars ($1,000,000) as
determined by (i) if Company's stock has been listed on a national stock
exchange or consolidated reporting system for at least thirty (30) days, the
average closing sales price for the thirty (30) days preceding the fourth
anniversary date or (ii) if Company's stock is not so listed, the fair market
value as determined by the Company's Board of Directors (the "Board") in good
faith; then the term of this Agreement shall be automatically extended to eight
(8) years from the Effective Date.
6. Miscellaneous. Each party shall be and act as an independent
contractor and not as partner, joint venture, or agent of any other party and
shall not bind nor attempt to bind any other to any contract, as such. Each
Licensor is an independent contractor and is solely responsible for all taxes,
withholdings, and other statutory or contractual obligations of any sort.
Neither Licensor shall have the right or ability to assign, transfer, or
subcontract any obligations under this Agreement without the written consent of
Company; any attempt to do so shall be void. All notices under this Agreement
shall be in writing, and shall be deemed given when personally delivered, or
three days after being sent by prepaid certified or registered U.S. mail to the
address of the party to be notified as set forth herein or such other address as
such party last provided to the others by written notice. The failure of any
party to enforce its rights under this Agreement at any time for any period
shall not be construed as a waiver of such rights. No changes or modifications
or waivers to this Agreement will be effective unless in writing and signed by
Company, and the Licensor or Licensors who are directly affected thereby. In the
event that any provision of this Agreement shall be determined to be illegal or
unenforceable, that provision will be limited or eliminated to the minimum
extent necessary so that this Agreement shall otherwise remain in full force and
effect and enforceable. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to the
conflicts of laws provisions thereof. In any action or proceeding to enforce
rights under this Agreement, the prevailing party will be entitled to recover
costs and attorneys' fees. Headings herein are for convenience of reference only
and shall in no way affect interpretation of the Agreement.
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Xxxx Xxxxxxxxx, Inc. LBE Technologies, Inc.
(Licensor) (Company)
By: Xxxxxx Xxxx By: Xxxxx Xxxxx
-------------------------------- ---------------------------------
[Print Name]
Signature: /s/ Xxxxxx Xxxx Signature: /s/ Xxxxx Xxxxx
------------------------- --------------------------
Title: President Title: Director of Marketing
Xxxxxxx Xxxxxxxxx Racing
(Licensor)
By: Xxxxxxx Xxxxxxxxx
--------------------------------
[Print Name]
Signature: /s/ Xxxxxxx Xxxxxxxxx
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Title: President
Xxx Xxxx, the undersigned, represents and warrants he has full authority
to execute the foregoing Agreement on behalf of Xxxx Xxxxxxxxx, Inc. and Xxxxxxx
Xxxxxxxxx Racing.
/s/ Xxx Xxxx
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Xxx Xxxx
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Exhibit A
SERVICES:
Product development. As requested by Company, DEI will cause R. Date
Xxxxxxxxx ("Xxxxxxxxx") to test drive the prototype Simulator(s) and provide
feedback as well as arrange visits by Company representatives to the Winston Cup
#3 race shop to obtain various technical information (e.g., engine, audio and
wind tunnel data but not necessarily the latest results).
Public appearances (1 one-day public appearance trip per year).
Licensors will cause Xxxxxxxxx and Xxxxxxx Xxxx Childress ("Childress") to visit
such locations as requested by Company to meet with the media, sponsors and some
of the general public (at Company's request, these appearances may include
display of each Licensor's memorabilia). Xxxxxxxxx and Childress will be
important spokespersons for Company, but Company will use reasonable efforts to
limit this work to high-impact exposures for them. Each public appearance trip
may involve more than one appearance and/or activity, but all such appearances
and/or activities will take place at one city and neighboring area per trip.
Autograph sessions will not exceed two hours.
Delivery of Design Specifications. RCR shall within 10 days of the
Effective Date (or, in the case of any Future Auto Design, within 10 days of
determination of the official new Auto Design) deliver to Company materials and
specifications sufficient to authentically reproduce the Auto Design, including,
but not limited to, paint color codes, measurements of decals, and color
photographs clearly depicting the Auto Design including views of each side,
front, back and top of the #3 car.
Merchandising. Each Licensor shall ensure that Company is able to obtain
such Licensor's licensed merchandise at most favored reseller prices and terms
for licensed merchandise sales.
Video Shoot. Company will be allowed one, two-hour video shoot per year.
The shoot will be scheduled at a mutually acceptable time/place.
FEES:
Company shall pay to each of Xxxxxxxxx and Childress, respectively, the
following fees: $10,000, payable upon execution of this Agreement; $7,500,
payable upon the earlier of (i) the opening to the public of Company's 1st
public commercial Center or (ii) September 1, 1997; and $7,500, payable upon the
earlier of (i) the opening to the public of Company's 2nd such Center or (ii)
November 15, 1997.
Company shall reimburse Licensors collectively up to $3,000 for the cost of jet
fuel if Xxxxxxxxx and Childress use the same private jet on the annual public
appearance trip, such payment to be made in accordance with instructions
received from Licensors. If Xxxxxxxxx and Childress travel via separate private
jets on a public appearance trip, Company shall reimburse each Licensor for up
to $3,000 for jet fuel used on the trip.
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STOCK OPTIONS:
Company will grant to each of Xxxxxxxxx and Childress, respectively,
effective as of the Effective Date of this Agreement, stock options to purchase
30,000 shares of Company's Common Stock pursuant to Company's stock option plan,
which shares shall vest over 4 years. Twenty-five percent (25%) of the total
shares will vest at the end of one year, and 1/48 of the total shares will vest
each subsequent month for the remaining 3 years of the vesting period, provided,
however, that vesting, shall cease on termination or expiration of this
Agreement. The per-share exercise price will be $0.075 as specified by the
Company's Board. The options must be exercised by the earlier of (i) seven (7)
years from the date of this Agreement or (ii) the date of Company's initial
public offering of its stock.
In addition, Company will grant to each of Xxxxxxxxx and Childress,
respectively, stock options to purchase 20,000 shares of Company's Common Stock
pursuant to Company's stock option plan, which shares shall be fully vested upon
the execution of this Agreement. The per-share exercise price will be $0.075 as
specified by the Company's Board. The options must be exercised by the earlier
of (i) seven (7) years from the date of this Agreement or (ii) the date of
Company's initial public offering of its stock.
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