Exhibit 10.1
LICENSE AGREEMENT
This
License Agreement ("Agreement"), which includes Schedules A-G,
hereto,
is effective
as of February
1, 2007 ("Effective Date") and is entered into
between (a) Cragar Industries, Inc., a Delaware corporation having
its principal
place of business
at 4909 East
McDowell Road Suite 104, Phoenix, Arizona
(hereafter "LICENSOR"), and (b) Accubuilt Inc. a Delaware
corporation having its
principal place of business at 2550 Central Point Pkwy, Lima Ohio
("LICENSEE").
Licensor and Licensee are referred to herein as the "Parties."
WHEREAS, Licensor is the owner of certain rights defined
herein.
WHEREAS, it is the
intent of this
Agreement for the parties to enter into
an arrangement whereby
Licensor shall provide
its Licensed Rights
and certain
automobile components
to Licensee and Licensee shall utilize same in the
manufacture and sale of Products in accordance with Licensor's
standards.
NOW,
THEREFORE,
in consideration of the premises, the mutual covenants
contained herein,
and other good and
valuable
consideration, the
receipt and
sufficiency of which
are hereby
acknowledged,
the parties hereby agree as
follows:
1. DEFINITIONS.
1.1.
"CONFIDENTIAL
INFORMATION" means all information including, but not
limited to, business
or technical information, products, product designs,
marketing,
market
potential,
quotations,
designs,
concepts,
product
formulations, sales,
sales volume, costs,
profits, requirements, documents,
specifications,
suppliers, prototypes, and processes, disclosed by one party (a
"DISCLOSING PARTY") in
any manner to the other party (the "RECEIVING PARTY")
that (a) the Disclosing Party has clearly marked as confidential or
proprietary,
or (b) the Disclosing Party identifies as confidential at the time
of disclosure
with written
confirmation within
ten (10) days of
disclosure to the Receiving
Party.
1.2.
"DESIGN" means the Design as displayed in the image of the Product
attached hereto as
Schedule B and in any
subsequent writing
that is signed by
duly authorized
representatives of the
Parties. The Parties
shall jointly own
all right,
title and interest in and to the Design without any duty of
accounting, or any
obligation
to, or consent
required from, the
other Party,
unless Licensor purchases the tooling for the Design Components
from Licensee in
accordance with
Section 13.8.1,
in which case
Licensor shall solely own the
Design. The Design and
any related
intellectual property
or other proprietary
rights apply solely to the Ford F150 design and no other vehicle
unless added to
this Agreement by both Parties.
1.3.
"DESIGN COMPONENTS" means those components of the Product that
are
supplied by Licensee, and includes, but is not limited to, the
components listed
in SCHEDULE F attached hereto.
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1.4
"FIELD OF USE" means the entire United States, Canada and Mexico and
all potential
purchasers
of Products,
including but not limited to all Ford
dealers.
1.5.
"IMPROVEMENT" or
"IMPROVEMENTS" means any modification in the Design,
or to the structure or
design of a Product
created or developed by Licensor or
Licensee as described in Section 9.1, whether patentable or
unpatentable,
which
changes the effectiveness, appearance or manufacturability of a
Design Component
or Product.
1.6.
"KIT" or "KITS"
means a package of
components
sold by Licensor to
Licensee, whether sold, shipped or billed together or separately.
Each Kit shall
contain at least the components listed in SCHEDULE D.
1.7.
"TECHNOLOGY
RIGHTS" means (a) the Kits, (b) any and all writings,
computer disks,
computer tapes, and
electronic records,
design and
technical
information,
engineering or production data, drawings, plans, specifications,
techniques, methods,
processes, trade secrets, reports, models, market research
data, customer lists, and any and all other material or matter (i)
used by or in
possession of Licensor (ii) provided or otherwise made available to
Licensee and
(iii) applicable to the design, manufacture, assembly, marketing, service, or
sale of Products, and (c) Licensor's general and specific
knowledge, experience,
and information, not
in written or printed form, (i) provided or otherwise made
available to Licensee and (ii) applicable to the design,
manufacture,
assembly,
marketing, service, or sale of Products.
1.8.
"PRODUCTS" means
customized, two-wheel
drive Ford F-150 trucks which
embodies the Design and/or an Improvement and incorporates the Kit and/or the
Design Components,
the current version of which is generally shown on the
attached SCHEDULE B, any other customized vehicles that the parties
agree to add
to Products in accordance with Section 10, and spare or
replacement parts
sold
by Licensee for said
vehicles. "PRODUCT"
means any one of the
Products. Each
Product shall be marketed under one or more of the Trademark
Rights in a manner
approved by Licensor in accordance with Section 7 below.
1.9.
"LICENSED RIGHTS" means the Trademark Rights and the Technology
Rights
Improvements.
1.10. "PROMOTION
COMMITMENT" means any amount spent by Licensee to promote
all Products
for sale to accepted
dealers and to the
general public, which
amount will be determined by Licensee in its sole discretion.
1.11. "PROTOTYPE" means a fully constructed version of the Product.
Cragar
shall inspect and have
the right to accept or reject the Prototype as set forth
in Section 6.
1.12. "TRADEMARK
RIGHTS" means Licensor's trademarks, trade names and/or
service marks,
including those listed
on the attached
SCHEDULE A, and further
includes the style
associated
with such trademarks, trade names or service
marks, and trade dress and Licensor's copyrights associated with any Products.
Trademark Rights
includes the Design and all modifications (including
Improvements) thereto.
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2. LICENSE GRANT.
Licensor grants to Licensee, for the term of this Agreement and
subject to
the terms and conditions of this Agreement, an exclusive (except as otherwise
set forth in Section 4.2.2.), non-assignable, non-sublicensable, except as set
forth herein,
non-transferable,
royalty-bearing (in
accordance
with Section
4.2), license under
the Licensed Rights
within the Field of Use to (i) display
and use the Trademark
Rights in connection with the manufacture, sale and
marketing of Products;
(ii) reproduce, modify (including the right to make
derivative works
of) and otherwise use the Technology Rights solely in
connection with the manufacture, sale and marketing of Licensed
Products; (iii)
distribute copies of
and publicly
display the Technology Rights solely as
embodied in the Licensed Products; and (iii) make, have made, use, sell, have
sold, offer
for sale, import and have imported Licensed Products which
incorporate or
otherwise embody the
Licensed Rights.
The rights and
licenses
granted to
Licensee under this Section 2 shall include, without separate
compensation to Licensee, the right to grant, sublicenses through
multiple tiers
of sublicensees
for the sole
purpose of
manufacturing
and selling
Licensed
Products and Design Components on behalf of Licensee.
3. LICENSOR'S TRADEMARK RIGHTS.
3.1.
Licensee acknowledges that Licensor has valuable
goodwill and other
rights in the
Trademark Rights and
Licensee shall ensure that its use of
the
Trademark Rights does not impair same. Licensee's use of the Trademark
Rights,
including the
goodwill arising from such use, shall inure to the benefit of
Licensor, and Licensee shall have no right to the Trademark Rights
except to use
them as specifically set forth herein.
3.2.
Licensee agrees (a) not to use the Trademark Rights, or any
simulation
or variant
thereof, or any mark, word, name, logo, design, trade dress,
likeness, or other
representation
that is confusingly similar to any of the
Trademark Rights,
except as specifically set forth herein, (b) not to challenge
Licensor's ownership
of any of the Trademark Rights, and (c) not to challenge
the validity of any of the Trademark Rights.
3.3.
Licensee shall not represent that it has any ownership in the
Trademark Rights, and Licensee acknowledges that its use of the
Trademark Rights
shall not create in Licensee's favor any right, title, or interest in or to
the
Trademark Rights.
3.4.
Licensee shall not seek to register, or assist or cause any other
third party to register, any of the Trademark Rights or any trademark, trade
dress, service mark,
trade name, corporate
name, business name,
domain name,
design or the like
(collectively, "Mark")
that is confusingly similar thereto.
In the event that Licensee either directly or indirectly
applies to register
or
registers such a Mark,
Licensee shall
immediately
and without
remuneration,
execute any and all
documents as requested
by Licensor to assign the rights in
such Mark to Licensor.
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4. LICENSEE'S RESPONSIBILITIES.
4.1.
GENERAL.
4.1.1. Licensee
shall have
manufactured
and pay for the
tooling to
produce the Design Components and shall own the tooling,
although Licensor
has
the right to purchase the tooling in accordance with Section 13.8.1
and
Schedule E if this Agreement is terminated.
4.1.2. Licensee
shall manufacture and ship Products and shall be
responsible for all related sales, billing, collection, marketing,
customer
service and
product return functions and shall use all commercially
reasonable efforts to market the Products consistent with the
parameters of
this
Agreement.
4.1.3. Licensee
shall purchase a Kit from Licensor for
each Product
and
each Product shall
include the components
from a Kit. The price
of a
Kit
and payment terms for
same are included in
Schedule D. Payments
for
Kits
are independent
and in addition
to the royalty
payments of
Section
4.2.
4.1.4. Licensee
shall provide Licensor with a launch plan that
includes (a) an
initial order(s)
for Kits by
Licensee, which Licensee
anticipates to be used
during the first ninety (90) days of sales of
Products, and (b) a
forecast for the number of Kits to be ordered by
Licensee within one (1) year from the Effective Date.
4.2.
ROYALTY PAYMENTS BY LICENSEE.
4.2.1. ROYALTY FEES ON
SALES OF PRODUCTS.
"Actual Royalty" is a flat
fee
to be paid by Licensee to Licensor for the sale of each Product, as
the
term
"sale" is determined
in accordance with
Section 4.2.3,
and "Actual
Royalties" means the
total of flat fees paid to Licensor by Licensee based
on
such sales of multiple
Products. Actual
Royalty will be equal to the
amount set forth in Schedule G, which may be adjusted upward upon mutual
agreement of
the Parties as evidenced by a writing signed by duly
authorized representatives of each of the Parties.
4.2.2. MINIMUM ANNUAL
Sales. The minimum annual sales of Products are
set
forth in SCHEDULE C. Licensee shall pay the Actual Royalties
corresponding to such
sales, but if Licensee does not meet the minimum
annual sales in 2008,
such failure shall not be deemed a breach of
this
Agreement by Licensee, however, Licensor shall then have a
one-month option
to
be exercised
by the end of January of 2009 to either convert the
Licensed Rights to a non-exclusive License Grant or, upon mutual
consent of
the
Parties, terminate or attempt to modify this
Agreement pursuant to
Section 13.5. Further,
if Licensee does meet
the minimum annual
sales in
2010, such
failure shall not be deemed a breach
of this Agreement by
Licensee, however,
Licensor shall then have a one-month option to be
exercised by the end
of January of 2011 to
either convert
the Licensed
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<PAGE>
Rights to a
non-exclusive License
Grant or, upon
mutual consent of the
Parties, terminate or
attempt to modify this Agreement pursuant to Section
13.5.
4.2.3. ROYALTY
PAYMENT DATES. The sale of a Product shall be
considered to have occurred on the latest of the following:
shipment of the
Product by Licensee or invoicing for payment for the Product by
Licensee to
a
third party. Royalty
payments shall be made
to Licensor within one
(1)
month after the end of each calendar month of each year, with the payment
being for sales of Products that occurred during the preceding
month. For
example, Licensee
must make the
royalty payment for sales of Products
during each
period of January 1
-31 by the last day of
February of that
same
calendar year.
4.2.4. For
each review period Licensee shall provide Licensor
documentation to show total Products sold, and such documentation
shall be
considered Licensee's Confidential Information.
4.2.5. In addition to the royalty payments, Licensee shall pay
Licensor for Kits in accordance with SCHEDULE D.
4.3.
INSPECTION
OF RECORDS
RELATED TO ROYALTIES. Licensee shall keep
accurate and
complete records containing all information required for the
computation and
verification of the royalty payments due under this Section
4.
Licensee shall keep complete records of its (a) purchases of Design
Components,
and (b) sales of
Products by model,
quantity and entity to which each of
the
Products was sold. Licensee shall keep all such records for a
period of at least
three years, or for
the duration of any dispute concerning or relating to this
Agreement, if such
period is longer. No
more than two times
annually and upon
fifteen (15) days advance written notice, Licensor shall have the right, at
Licensor's expense,
to have an independent
auditor inspect such records during
regular business
hours at Licensee's offices and in such a manner as not to
interfere unreasonably
with Licensee's normal business activities, solely for
the purpose of verifying the accuracy of any royalty
payments made under this
Agreement. Prior
to commencing any such inspection and audit, any such
independent auditor
shall have entered into an agreement with Licensor which
prohibits the disclosure of any information relating to Licensee to any
party,
including Licensor, except that such auditor may issue a report to
Licensor, the
sole purpose of which
shall be to report to
Licensor whether Licensee is in
compliance with the payment provisions of this Agreement, including
a summary of
and sufficient detail
regarding the scope,
quality, and methodology of such
compliance or lack thereof. If an audit by Licensor uncovers a
deficiency in any
royalty payment due
hereunder,
Licensee must
promptly remit the amount due,
including a ten
percent (10.0%) per annum finance charge, on such fees,
compounded monthly.
If the aggregate
amount of payments
owing to Licensor
as
shown by such audit
exceeds five percent (5%) of the aggregate fees paid with
respect to such period audited, Licensee shall also remit to
Licensor Licensor's
reasonable costs and expenses, including reasonable attorney's
fees, associated
with performing the audit.
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5. LICENSOR'S
RESPONSIBILITIES.
5.1.
Licensor shall
manufacture or cause to have manufactured the Kits and
all components related thereto. Licensor warrants to Licensee that
the Kits and
all components
shall be of a quality at least equal to both (a) any
legally-mandated
standards, and
(b) generally accepted industry quality
standards.
5.2.
Licensor shall make commercially reasonable efforts to ship Kits
within one (1) month after receiving a written purchase order for same,
given
reasonable forecasting by Licensee.
5.3.
The price of Kits
and/or of Kit
components
may be increased from
time-to-time based on
the generally
corresponding
increases in price by other
suppliers for
similar components. Licensor shall provide a sixty (60) day
written notice to
Licensee prior to any proposed price increase for the Kits or
any components.
5.4.
Licensor shall be
responsible
for all sales,
billing, collection,
marketing, customer
service and product
return functions
related to Kits
and
components sold to Licensee.
6. DETERMINATION AND USE OF THE PROMOTION COMMITMENT.
Licensor agrees
to spend the Promotion Commitment in a manner to best
promote the Products. Licensee shall provide to Licensor (a) within
three months
after the Effective
Date, and (b) during
January of 2008 and
each subsequent
calendar year in which this Agreement is in effect, a marketing budget and plan
for the Products.
Said plan shall be
consistent with
industry standards for
products that compete
with the Products.
Licensor will place no
unreasonable
burden on Licensee in regards to Promotional Commitment. Licensee shall make
available to Licensor
report(s) detailing
Licensee's
ongoing effort towards
meeting Promotional Commitment.
7. QUALITY CONTROL.
7.1.
Licensee shall use the Trademark Rights in connection with the
Products only
upon employing quality standards that meet or exceed the
performance and aesthetic specifications (the "SPECIFICATIONS") to be
mutually
agreed to by Licensor
and Licensee within sixty (60) days after the date
of
execution of
this Agreement. The quality standards embodied in the
Specifications shall be at least equivalent to all applicable legal
requirements
for Products.
7.2.
As early as possible,
and in any case before commercial production of
any Product, Licensee shall submit to Licensor for Licensor's
review and written
approval photographs
of a Prototype of each Product Licensee shall manufacture.
The photographs
shall show the Prototype in sufficient detail, and from
sufficient angles, in order for Licensor to determine the overall
appearance and
quality of the Prototype. As early as possible and in any case
prior to its use,
Licensee shall submit to Licensor for Licensor's review and written
approval one
copy of artwork for promotional or advertising materials,
packaging, designs
or
decals (collectively,
"Promotional
Materials")
that are to be used
with any
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Products. Once
Licensor grants Licensee written approval with respect to a
Licensed Product
or any Promotional Material, further approvals for each
instance of use shall not be required unless Licensee materially alters such
Licensed Product or Promotional Materials.
7.3.
Licensee acknowledges that Licensor may disapprove any concept,
artwork,
Prototype or
Product because (a) the quality (either from a
performance, safety or aesthetic standpoint) is unacceptable to
Licensor, or (b)
it is not acceptable from the standpoint of protecting, maintaining
or enhancing
the Trademark Rights.
If disapproved, Licensor shall provide Licensee the
reasons for the
disapproval
in writing and
Licensee shall have the right to
provide support to the
contrary, or to modify and resubmit any such
artwork,
Prototype or
Product to Licensor. Approval or disapproval shall lie in
Licensor's discretion,
but may not be
unreasonably withheld or conditioned and
shall be completed
within five (5)
business of the date of receipt by Licensor
or any concept or
artwork, or upon Licensor's inspection
