EXHIBIT 10.2
EXCLUSIVE FIELD OF USE LICENSE AGREEMENT
This Agreement, and any Exhibits, Schedules, and Appendices
(collectively, the "AGREEMENT"), effective as of ______________, 1999, is
entered into between Cragar Industries, Inc., a Delaware corporation having
its principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter "LICENSOR"), and Carlisle Tire & Wheel Co., (defined to
include any of subsidiaries, affiliates, partnerships, shareholders, or other
related parties), a Delaware corporation having its principal place of
business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter "LICENSEE").
WHEREAS, Licensor is the owner of the various trademark and/or
servicemark rights listed on the attached SCHEDULE A (hereinafter the
"TRADEMARK RIGHTS");
WHEREAS, Licensor is the owner of the various patent rights listed
on the attached SCHEDULE B (hereinafter the "PATENT RIGHTS");
WHEREAS, Licensee and Licensor have entered into a certain Agreement
of Sale and Purchase of Assets, dated as of October 15, 1999; and
WHEREAS, Licensee desires to obtain an exclusive license, in the
field of use designated herein, under the Trademark Rights, the Patent
Rights, and other intangible rights owned by Licensor.
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. "PATENTED PRODUCT" means any device or system covered by a
claim of any currently issued patent contained in the Patent Rights, or any
patent that issues from a currently pending patent application contained in
the Patent Rights.
1.2. "LICENSED PRODUCTS" means the products listed on the attached
SCHEDULE C, ALL TRADE DRESS RIGHTS EMBODIED THEREIN and any Patented Product.
1.3. "LICENSED FIELD" means vehicle wheels, other than motorcycle
wheels, having either pierced or non-pierced steel outer rims, and related
accessories.
1.4. "IMPROVEMENT" means any modification in the structure or design
of the Licensed Products, whether patentable or unpatentable, which depends
upon a Licensed Product for its use or effectiveness or which increases the
effectiveness or manufacturability of a Licensed Product, including, without
limitation, any modification of a part, component, or process or apparatus
for the manufacture thereof.
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1.5. "INTANGIBLE RIGHTS" means (i) any and all documents in whatever
form, including but not limited to writings, computer disks, computer tapes,
and electronic records, containing 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 used by or in
possession of Licensor and applicable to the design, manufacture, assembly,
service, and sale of the Licensed Products, (ii) Licensor's general and
specific knowledge, experience, and information, not in written or printed
form, applicable to the design, manufacture, assembly, service, and sale of
the Licensed Products, and (iii) any other trade secret information, and
proprietary information that may be applicable to the design, manufacture,
assembly, service, and sale of the Licensed Products.
1.6. "LICENSED RIGHTS" means one or more of any of the Trademark
Rights, the Patent Rights, and the Intangible Rights.
2. LICENSE GRANT
2.1. Trademarks. Licensor grants to Licensee a worldwide exclusive
license in the Licensed Field to use the Trademark Rights in connection with
the marketing and sale of the Licensed Products, subject to the terms of this
Agreement.
2.1.1. The parties agree that 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 whatsoever to
the Trademark Rights except as specifically set forth herein. Licensee
agrees to not use the Trademark Rights, or any simulation or variant
thereof, or any ▇▇▇▇, name, logo, design, likeness, or other
representation confusingly similar to any of the marks included in the
Trademark Rights, except as specifically set forth herein.
2.1.2. Licensee shall not at any time do or cause to be done
any act or thing contesting or in any way impairing or tending to
impair any part of Licensor's right, title, and interest respecting the
Trademark Rights. Licensee shall not in any manner 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.
2.2. LICENSED PRODUCTS. Licensor grants to Licensee a worldwide
exclusive license in the Licensed Field to make, use, sell, import and offer
for sale the Licensed Products, subject to the terms of this Agreement. In
connection with this grant, Licensor grants to Licensee a worldwide exclusive
license in the Licensed Field to use the Patent Rights and the Intangible
Rights to manufacture the Licensed Products.
2.2.1. Licensor makes no warranty related to the validity or
enforceability of any of the issued patents included in the Patent
Rights.
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2.2.2 Licensee may only disclose the Intangible Rights to
third parties if such disclosure is necessary for Licensee to perform
its obligations under this Agreement, PROVIDED, that no disclosure of
the Intangible Rights shall be made by Licensee unless Licensee has
obtained from the third party a signed nondisclosure agreement that
affords Licensor at least the same protection as set forth in PARAGRAPH
8 herein.
2.3. No Transfer. The rights granted under this PARAGRAPH 2 may not be
sublicensed or transferred, except to Licensees affiliate (defined as any
parent, subsidiary, subsidiary of a parent, or other entity in which Licensor
owns at least fifty percent of the voting interest therein), without the express
prior written consent of Licensor, which shall not be unreasonably withheld.
3. ROYALTIES AND PAYMENT TERMS
3.1. Licensee shall pay to Licensor the royalty on Net Sales of
Licensed Products as specified in the attached SCHEDULE D. Licensee's obligation
to pay royalties under this Agreement will be triggered by the invoice date or
the shipping date of the Licensed Products, whichever occurs first. Royalty
payments are due thirty (30) days after the end of each calendar quarter.
3.2. Licensee shall keep accurate and complete records containing all
information required for the computation and verification of the payments due
under Paragraph 3.1. Licensee shall keep records for a period of at least three
years. On a quarterly basis and upon five days advance written notice, Licensor
shall have the right to inspect such records during Licensee's ordinary business
hours to verify the accuracy of any royalty payments made under this Agreement.
If an audit by Licensor uncovers a deficiency in any royalty payment exceeding
twenty-five percent (25%) of the payments due under Paragraph 3.1, Licensee must
pay the cost of such audit. If an audit by Licensor uncovers a deficiency in any
royalty payment Licensee must immediately remit the amount due, including a two
percent (2.0%) per month finance charge.
3.3. Any past due royalty payments will carry an interest rate of two
percent (2.0%) per month commencing on the due date and compounding every thirty
(30) days thereafter.
3.4. Within thirty (30) days after the end of each calendar quarter,
Licensee will have paid to Licensor at least the following cumulative royalty
payment amounts:
First Quarter: 20% of the total minimum annual royalty for that year.
Second Quarter: 40% of the total minimum annual royalty for that year.
Third Quarter: 60% of the total minimum annual royalty for that year.
Fourth Quarter: 100% of the total minimum annual royalty for that year.
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If any of the above cumulative royalty payment amounts is not met by
Licensee, or if Licensee is late for any quarterly royalty payment, Licensee
will be deemed to have defaulted. Upon written notice of such default,
Licensee shall have ninety (90) days to cure such default, otherwise Licensor
may immediately terminate this Agreement. Termination of this Agreement is
the sole remedy available to Licensor.
4. QUALITY CONTROL
4.1. Licensee shall use the Trademark Rights in connection with the
Licensed Products only upon employing quality standards that meet or exceed
each of the following: (a) the current standards under which such products
have in the past been manufactured by Licensor; and (b) the standards
recognized by the industry as acceptable for such products.
4.2. Licensee agrees that Licensor has the right to control the
quality of all Licensed Products manufactured, sold, and marketed by Licensee
under the Trademark Rights. If Licensor determines, in Licensor's sole
reasonable discretion, that the quality of the Licensed Products fail to meet
the quality control standards set forth herein, then such failure shall
constitute a material breach of this Agreement, permitting Licensor to
terminate this Agreement upon ninety (90) days' written notice to Licensee,
unless such breach is cured.
4.3. Licensee shall permit Licensor or Licensor's appointed agent to
inspect and to monitor Licensee's use of the Trademark Rights including,
without limitation, (a) allowing Licensor or Licensor's appointed agent, at
reasonable times, to review Licensee's advertisements and other materials
using the Trademark Rights, and (b) with reasonable advance notice, to enter
the premises of Licensee, or any premises under the control of Licensee,
where any Licensed Product is manufactured or sold, to inspect the Licensed
Products and the manner in which the Licensed Products are marketed. Licensee
shall also provide, upon request of Licensor, representative samples of the
Licensed Products and any advertising therefor.
4.4. Licensee agrees not to use the Trademark Rights in connection
with any Licensed Products where the character, appearance, quality, or
suitability thereof is disapproved by Licensor. The Licensed Products sold
and manufactured under the Trademark Rights shall be in compliance with all
applicable national, state, and local laws and regulations governing the
Licensed Products.
4.5. LEVERAGING OF THE TRADEMARK RIGHTS
4.5.1. Subject to approval of Licensor and subject to the
quality control standards set forth herein, Licensee may utilize the
Trademark Rights in conjunction with any marks owned or created by
Licensee, but only to the extent that such use of the Trademark Rights
is reasonably intended to promote the Licensed Products, and only to
the extent that such use does not dilute any of the Trademark Rights.
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4.5.2. Subject to approval of Licensor and subject to the
quality control standards set forth herein, Licensee shall use the word
▇▇▇▇ ▇▇▇▇▇▇ to create new trademark or service ▇▇▇▇ designs on behalf
of Licensor (hereinafter "NEW MARKS"). Such New Marks are only to be
used in connection with the sales, promotion, or marketing of the
Licensed Products and such New Marks must be distinctive over all other
New Marks that are created by additional Licensees of Licensor under
similar terms. The parties agree that Licensee's use of such New Marks,
including the goodwill arising from such use, shall inure to the
benefit of Licensor, and Licensee shall have no right whatsoever to the
New Marks except as specifically set forth herein. Licensee agrees to
not use the New Marks, or any simulation or variant thereof, or any
▇▇▇▇, name, logo, design, likeness, or other representation confusingly
similar to any of the New Marks, except as specifically set forth
herein.
4.5.3 Licensee agrees to use the New Marks whenever the Cragar
name or logo is used.
4.5.4. Licensee's right to use the Trademark Rights, any marks
derived from or including any of the Trademark Rights, and any New
Marks, as contemplated by this PARAGRAPH 4.5, shall immediately cease
upon termination of this Agreement for any reason.
5. MARKINGS
5.1. [Intentionally Left Blank]
5.2. Licensee shall place the trademark registration symbol "-R-"
immediately following each use of a federally registered trademark included in
the Trademark Rights. Licensee shall place the trademark symbol "TM" immediately
following each use of a non-federally-registered trademark included in the
Trademark Rights.
5.3. Licensee shall ▇▇▇▇ each Licensed Product it manufactures with the
actual manufacturing date of such Licensed Product, along with any other
government-mandated, statutory, or other regulatory markings that may be
required. Licensee shall be fully responsible for, and agrees to indemnify
Licensor for, any and all product liability and product warranty claims (and any
associated costs and damages) caused by Licensee's failure to properly ▇▇▇▇ the
Licensed Products under this Paragraph 5.3.
6. IMPROVEMENTS
6.1. If Licensee develops an Improvement, Licensee shall immediately
disclose such Improvements to Licensor prior to incorporation or implementation
of such Improvement into any Licensed Product. Licensee shall obtain written
approval from Licensor, which shall not be unreasonably denied by Licensor,
before any such Improvement is incorporated or implemented into any Licensed
Product.
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6.2. Upon termination of this Agreement, Licensee shall grant to
Licensor a non-exclusive and royalty-free license to make, use, sell, offer
for sale, and import products that embody or utilize any Improvement
developed by Licensor.
6.3. Licensor shall retain all rights in and to any Improvement
developed or acquired by Licensor. Licensor agrees to grant to Licensee
licenses of the scope specified in Paragraph 2 herein for any Improvements
developed by Licensor, and the terms of this Agreement shall also apply to
such Improvements. No additional royalty shall be due for such additional
licenses for such Improvements. Licensee agrees to cooperate with Licensor,
without further consideration, during the preparation and prosecution of any
patent applications filed in connection with Improvements developed by
Licensor.
7. BEST EFFORTS
7.1. Licensee shall use its best efforts to promote the sale of the
Licensed Products, including making commercially reasonable advertising and
marketing expenditures, prospecting and contacting customers and potential
customers of the Licensed Products, and striving to achieve a cost-efficient
manufacturing process while maintaining a high quality of Licensed Products.
7.2. Licensor may request Licensee to prepare a written quarterly
summary of promotional, marketing, and sales activity related to the Licensed
Products.
7.3. If, for any reason, Licensee ceases to actively market and
promote the Licensed Products for any continuous ninety (90) day period,
Licensee shall promptly notify Licensor and Licensor shall have the right to
immediately terminate this Agreement.
8. CONFIDENTIALITY
8.1. During the term of this Agreement, one party (the "DISCLOSING
PARTY") may disclose to another party (the "RECEIVING PARTY") confidential
information, proprietary information, trade secret information, marketing data,
and the like (hereinafter "CONFIDENTIAL INFORMATION"). The Receiving Party shall
not use or disclose any Confidential Information, except for the purpose of
complying with its obligations under this Agreement.
8.2. The Receiving Party agrees to keep all Confidential Information
strictly confidential, subject to the limited disclosure to a selected number of
employees as may be reasonably necessary to enable the Receiving Party to comply
with its obligations under this Agreement.
8.3. Upon termination of this Agreement, the Receiving Party shall
return (or destroy if requested by the Disclosing Party) all Confidential
Information in its
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possession. Notwithstanding the foregoing, the confidentiality provisions set
forth herein shall survive any termination of this Agreement.
9. INFRINGEMENT
9.1. If either party discovers an infringing use of any of the
Licensed Rights by any third party, the discovering party shall promptly
notify the other party. If Licensor elects to institute an action to end such
third party infringement, Licensee shall provide all reasonable assistance to
Licensor in connection with such action. If Licensor elects to not institute
such an action, Licensee may initiate such action, and Licensor agrees to
provide reasonable assistance to Licensee in connection with such action.
9.2 Any lawsuit or action initiated pursuant to Paragraph 9.1 shall
be prosecuted at the sole expense of the party bringing suit and all sums
recovered shall be divided equally between the parties after deduction of all
reasonable expenses and attorney fees.
10. TERM AND TERMINATION
10.1. This Agreement shall have a term of ten (10) years from its
effective date, with perpetual renewal rights. Any renewal of this Agreement
shall have a term of ten (10) years.
10.2. At least three hundred sixty (360) days prior to the termination
date of the original Agreement or any subsequently renewed Agreement, Licensee
shall provide written notice to Licensor of Licensee's intent to terminate or
renew the current Agreement.
10.3. If Licensee fails to comply with any of the material terms of
this Agreement, then Licensee will be deemed to have defaulted. Upon written
notice of such default, unless otherwise specified herein, Licensee shall have
ninety (90) days to cure such default, otherwise Licensor may immediately
terminate this Agreement.
10.4. In the event of failure, receivership, or seizure of Licensee,
this Agreement shall terminate immediately.
10.5. If this Agreement is terminated for any reason, Licensee shall
not be relieved of any duties or obligations owing as of the date of
termination, including without limitation, accounting for any outstanding
royalties, responsibility for product warranties and product liability for any
Licensed Products, and the duty to maintain confidentiality in accordance with
Paragraph 8 herein. Any royalty payments due upon termination of this Agreement
must be paid by Licensee within sixty (60) days of the termination date.
10.6. Upon termination of this Agreement for any reason, Licensee shall
immediately cease and desist from any use whatsoever of the Licensed Rights.
Licensee,
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its primary lender or another party responsible for liquidating the
Licensee's inventory may, however, liquidate all remaining inventory in its
possession at time of termination, provided that (i) Licensor shall be given
the right of first refusal to purchase any or all of the inventory upon the
same terms as Licensee offers to third parties, (ii) royalties shall be
payable to Licensor on all liquidated inventory. Further, upon termination of
this Agreement for any reason, Licensee shall immediately transfer to
Licensor or destroy, at Licensor's election, any and all documents and things
bearing any ▇▇▇▇ included within the Trademark Rights.
11. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement,
or its breach, shall be settled by binding arbitration in accordance with the
rules of the American Arbitration Association with all proceedings conducted in
Phoenix, Arizona. Judgement upon the award rendered by the arbitrator(s) may be
entered in any court having competent jurisdiction.
12. MISCELLANEOUS TERMS
12.1. Licensor may assign its rights under this Agreement to any third
party, with prior written consent of Licensee, which shall not be unreasonably
withheld.
12.2. Licensee agrees to indemnify and hold Licensor and its officers,
directors, representatives, agents, and employees harmless from and against any
and all liability, damage, loss, or expense, which Licensor may sustain or incur
in any action brought or claim made by any person, organization, or governmental
entity or agency (including Licensee), to the extent such liability relates to
acts or omissions of acts by Licensee with respect to making, using, selling,
importing and offering for sale the Licensed Products, following the Closing
Date.
12.3. EXCEPT AS EXPRESSLY SET FORTH HEREIN, LICENSOR, AND ANY RELATED
ENTITIES INCLUDING LICENSOR'S DIRECTORS, OFFICERS, EMPLOYEES, AND AFFILIATES
MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESSED
OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, VALIDITY OF ISSUED OR PENDING PATENT CLAIMS, IN THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE. NOTHING IN THIS
AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY
LICENSOR THAT THE PRACTICE BY LICENSEE OF THE LICENSES GRANTED HEREUNDER SHALL
NOT INFRINGE THE PATENT OR TRADEMARK RIGHTS OF ANY THIRD PARTY. IN NO EVENT
SHALL LICENSOR, ITS DIRECTORS, OFFICERS, EMPLOYEES, OR AFFILIATES BE LIABLE FOR
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR
INJURY TO PROPERTY OR LOST PROFITS, REGARDLESS OF
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WHETHER LICENSOR SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT
SHALL KNOW OF THE POSSIBILITY.
12.4. Subject to PARAGRAPH 2.3 herein, this Agreement shall be
binding upon the successors, assigns, and legal representatives of the
parties.
12.5. Any payment, notice, or other communication required or
permitted to be made or given to either party pursuant to this Agreement
shall be sufficiently made or given upon actual receipt if hand-delivered or
by telecopy, or three days after the date of mailing if sent by certified or
registered mail, postage prepaid, addressed to such party at its address set
forth above or to any other address as it shall designate by written notice
to the other party.
12.6. The parties agree that if any part, term, or provision of this
Agreement is found to be illegal, invalid, or unenforceable, the validity of
the remaining provisions shall not be affected thereby.
12.7. This Agreement shall be governed by, construed, and
interpreted in accordance with the laws of the State of Arizona, without
regard to its conflict of laws rules.
12.8. The failure of any party to exercise any right, power, or
remedy hereunder shall not constitute a waiver thereof, nor shall any single
or partial exercise of any right, power, or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right, power,
or remedy.
12.9. This Agreement constitutes the entire understanding between
the parties as to the subject matter hereof. No amendments to this Agreement
shall be effective unless in writing and signed by the parties.
12.10 Licensor represents and warrants to Licensee that Licensor has
good and marketable title to and owns or exclusively holds all rights to use,
free and clear of all liens, claims, restrictions and infringements, other
than those disclosed to Licensee, the Licensed Rights. To the best of the
Licensor's knowledge there is no current infringement or other adverse claim
pending against any of the Licensed Rights. Licensor has received no notice
or has any knowledge that Licensor is currently infringing upon the right or
claim right of any person under or with respect to any of the Licensed Rights.
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LICENSOR: CRAGAR INDUSTRIES, INC.
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
LICENSEE: CARLISLE TIRE & WHEEL CO.
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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SCHEDULE A - LICENSOR'S TRADEMARK RIGHTS
THIS SCHEDULE A ACCOMPANIES THE EXCLUSIVE FIELD OF USE LICENSE
AGREEMENT, EFFECTIVE __________________________, BETWEEN CRAGAR INDUSTRIES,
INC. ("LICENSOR") AND CARLISLE TIRE & WHEEL CO. ("LICENSEE"). THE PARTIES
AGREE THAT THIS SCHEDULE A MAY NOT BE AMENDED UNLESS SUCH AMENDMENT IS IN
WRITING AND IS SIGNED BY BOTH PARTIES.
A LIST ALL APPLICABLE STATE, FEDERAL, AND FOREIGN REGISTERED TRADEMARKS AND
SERVICE MARKS, INCLUDING THE REGISTRATION NUMBERS AND APPROPRIATE EXHIBITS
SHOWING DESIGN MARKS ARE ATTACHED.
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SCHEDULE A
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TRADEMARK NUMBER TRADEMARK DESCRIPTION
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1478604 Trademark - Cragar America's Choice & design
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819800 Trademark - Cragar
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964061 Trademark - Super Trick
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70444 Trademark - S/S (State of California)
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1031812 Trademark - S/S
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252027 Trademark - CRAGAR in Class 19 Mexican
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354546 Trademark - CRAGAR Mexican
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1870609 Trademark - CRAGAR Japanese
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297264 Trademark - S/S CRAGAR Taiwanese
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297263 Trademark - CRAGAR Taiwanese
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295028 Trademark - CRAGAR Taiwanese
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A233367 Trademark - CRAGAR Australia
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A299886 Trademark - CRAGAR Australia
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161878 Trademark - CRAGAR Canadian
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DMS 16273-000532903 Trademark - European Commercial
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------------------------------------------------------------------------------
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SCHEDULE B - LICENSOR'S PATENT RIGHTS
THIS SCHEDULE B ACCOMPANIES THE EXCLUSIVE FIELD OF USE LICENSE
AGREEMENT, EFFECTIVE ____________________________, BETWEEN CRAGAR INDUSTRIES,
INC. ("LICENSOR") AND CARLISLE TIRE & WHEEL CO. ("LICENSEE"). THE PARTIES AGREE
THAT THIS SCHEDULE B MAY NOT BE AMENDED UNLESS SUCH AMENDMENT IS IN WRITING AND
IS SIGNED BY BOTH PARTIES.
NONE.
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SCHEDULE C - LICENSED PRODUCTS
THIS SCHEDULE C ACCOMPANIES THE EXCLUSIVE FIELD OF USE LICENSE
AGREEMENT, EFFECTIVE ________________________________, BETWEEN CRAGAR
INDUSTRIES, INC. ("LICENSOR") AND CARLISLE TIRE & WHEEL CO. ("LICENSEE"). THE
PARTIES AGREE THAT THIS SCHEDULE C MAY NOT BE AMENDED UNLESS SUCH AMENDMENT IS
IN WRITING AND IS SIGNED BY BOTH PARTIES.
The Licensed Products for the License Agreement shall be as follows:
1. Any wheel having steel or aluminum spokes attached to a
pierced steel outer rim and hub, and related accessories
whether or not marketed, distributed or sold under any of the
Trademark Rights ("Wire Wheels");
2. Any wheel having a non-steel center disk attached to a
non-pierced steel outer rim, and related accessories,
marketed, distributed or sold under any of the Trademark
Rights ("Composite Wheels")
3. Any wheel having a multi-piece center disk attached to a
non-pierced steel outer rim, and related accessories,
marketed, distributed or sold under any of the Trademark
Rights ("Legacy Wheels")
4. Any other wheel within the Licensed Field other than
Licensor's Line, Wire Wheels or Composite Wheels, and related
accessories, marketed, distributed or sold under any of the
Trademark Rights ("Commodity Steel Wheels").
5. Licensor's line of wheels, and related accessories with wheel
series identification numbers contained in the Cragar
Industries, Inc. Warehouse Distributor Workbook dated January
1, 1999 ("Licensor's Line") as set forth below:
1. 08/61 (Legacy S/S) (L);
2. 32 (Keystone Klassic) (L);
3. 54 (SS/T) (L);
4. 103 (Street Pro) (L);
5. 310 (Nomad) (C);
6. 311 (Black Race Wheel) (C);
7. 315 (Nomad II)(C);
8. 316 (Star Spoke) (C);
9. 320 (Quick Trick I) (C);
10. 330 (Super Spoke) (C);
11. ▇▇▇ (▇▇▇▇▇▇ ▇▇▇▇) (▇);
▇▇. ▇▇▇ (▇▇▇▇▇▇ ▇▇▇▇) (▇);
13. 470/471/477/479 (Star Wire) (L); and
14. T80 (W).
Legacy are denoted with "L"
Commodity Steel Wheels are denoted with "C"
Wire Wheels are denoted with "W"
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SCHEDULE D - ROYALTY PAYMENTS
This Schedule D accompanies the Exclusive Field of Use License
Agreement, effective ________________________________, between Cragar
Industries, Inc. ("Licensor") and Carlisle Tire & Wheel Co. ("Licensee"). The
parties agree that this Schedule D may not be amended unless such amendment is
in writing and is signed by both parties.
1. Licensee shall pay to Licensor a royalty of five percent (5.0%) of
the Net Sales for all Licensed Products defined as Legacy or Composite
Wheels, where "Net Sales" means the total gross sales price for all
Legacy and Composite Wheel Licensed Products sold by Licensee less the
total gross sales price for all Legacy and Composite Wheel Licensed
Products returned to Licensee during the relevant time period,
except that the total gross sales price for all returned Legacy and
Composite Wheel Licensed Products shall not be deducted in the case
where the Licensor is wholly responsible for the returned Legacy
and Composite Wheel Licensed Product.
2. Licensee shall pay to Licensor a royalty of three percent (3.0%) of
the Net Sales for all Licensed Products defined as Wire Wheels, where
"Net Sales" means the total gross sales price for all Wire Wheel
Licensed Products sold by Licensee less the total gross sales price
for all Wire Wheel Licensed Products returned to Licensee during the
relevant time period, except that the total gross sales price for
all returned Wire Wheel Licensed Products shall not be deducted in
the case where the Licensor is wholly responsible for the returned
Wire Wheel Licensed Product.
3. Licensee shall pay to Licensor a royalty of two percent (2.0%) of
the Net Sales for all Licensed Products defined as Commodity Steel
Wheels, where "Net Sales" means the total gross sales price for all
Commodity Steel Wheel Licensed Products sold by Licensee less the
total gross sales price for all Commodity Steel Wheel Licensed
Products returned to Licensee during the relevant time period, except
that the total gross sales price for all returned Commodity Steel
Wheel Licensed Products shall not be deducted in the case where the
Licensor is wholly responsible for the returned Commodity Steel
Wheel Licensed Product.
4. During the calendar year, should Net Sales for all Licensed
Products exceed ten million dollars ($10,000,000), for the purpose
of calculating additional royalty payments due, the royalty
percentages in (1), (2) and (3), above, shall be reduced by
twenty-five percent (25%) for all Net Sales above ten million
($10,000,000) dollars and equal to or below fifteen million dollars
($15,000,000) for such calendar year.
5. During the calendar year, should Net Sales for all Licensed
Products exceed fifteen million dollars ($15,000,000), for the
purpose of calculating additional royalty payments due, the royalty
percentages in (1), (2) and (3), above, shall be reduced by fifty
percent (50%) for all Net Sales above fifteen million dollars
($15,000,000) and equal to or below twenty million dollars
($20,000,000) for such calendar year.
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6. During the calendar year, should Net Sales for all Licensed
Products exceed twenty million dollars ($20,000,000), for the purpose
of calculating additional royalty payments due, the royalty
percentages in (1), (2) and (3), above, shall all be reduced to one
percent (1.0%) for all Net Sales above twenty million dollars
($20,000,000) for such calendar year.
7. Licensee agrees to pay Licensor a minimum royalty of two hundred,
fifty thousand dollars ($250,000) per year for each of the years 2000
and beyond.
8. On the effective date of the License Agreement, Licensee shall
pay to Licensor a royalty prepayment of one hundred, seventy-five
thousand dollars ($175,000), which is to be applied to future royalty
payments due to Licensor. Payment will be made in a combination
of cash and the application of amounts due Licensee by Licensor based
on the outstanding Accounts Payable Balance.
15