EXCLUSIVE DISTRIBUTION AND LICENSE AGREEMENT
Throwdown industries HOLDINGS, LLC
EXCLUSIVE DISTRIBUTION AND LICENSE AGREEMENT
This Exclusive Distribution and License Agreement (“Agreement”) is made effective this 10th day of April 2014 (“Effective Date”) by and between Throwdown Industries Holdings, LLC, a Delaware limited liability company and its affiliates and or assigns (collectively the "Throwdown") and Partner Business Importação e Exportação LTDA, a corporation formed in Brazil ("Licensee"). Corporation and Licensee are individually referred to as “Party” and collectively as the “Parties”.
WHEREAS, Throwdown is the sole owner of all rights, title, and interest to the Throwdown trademarks, trade names, copyrights, and intellectual property listed in Exhibit A, attached hereto and made a part hereof (the “Trademarks”);
WHEREAS, Throwdown desires to license to Licensee and Licensee desires to license from Throwdown the Trademarks for the use and application to, the sale of, the manufacturing of, and the marketing of (the “Licensed Rights”) only those Products listed in Exhibit B attached hereto and made a part hereof (the “Licensed Products”); and
WHEREAS, Licensee desires to acquire the exclusive right to distribute Licensed Products within Brazil, which shall be defined as the “Territory” for the purposes of this Agreement.
NOW, IT IS THEREFORE AGREED, in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Parties, the Parties hereto mutually agree as follows:
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4. Royalty And Minimum Royalties.
| 1. | The Minimum Royalty for 2014 shall be $100,000.00 paid as follows: Licensee shall pay Throwdown $40,000.00 upon the execution of this Agreement, $10,000 to be paid on or before April 10th 2014 and $50,000.00 on or before August 11, 2014. |
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| 2. | The Minimum Royalty for 2015 shall be $250,000.00 paid as follows: Licensee shall pay Throwdown $62,500.00 or before April 1, 2015, $62,500.00 on or before July 1, 2015, $62,500.00 on or before October 1, 2015, and $62,500.00 on or before January 6, 2016. |
| 3. | The Minimum Royalty for years after the Initial Term shall be no less than 10% increase of prior year and agreed upon in writing between the Parties prior to the start of the First Extended Term. |
| 4. | Licensee may satisfy its obligation to reach the Minimum Royalty in each Contract Year with sales of the Licensed Products in the Territory only. |
D. In case of occurrence of strikes in the contract period or customs issues arising from state acts, the deadlines for payments of Royalties of those respective Licensed Products will be automatically extended for equal periods to which the Licensed Products are retained without impact on other terms and conditions of this Agreement.
By Throwdown. In the event Throwdown believes Licensee is in material breach of this Agreement, Throwdown may send a notice of termination to Licensee specifying the nature of the breach and demanding cure of such breach (“Notice of Termination”). If Licensee has not cured or taken reasonable steps leading to the cure of such breach within thirty (30) days of receiving the Notice of Termination, then Throwdown shall have the right to terminate this Agreement immediately
i. becomes insolvent; or
ii. files a petition in bankruptcy or is adjudicated a bankrupt, or if a petition in bankruptcy is filed against Licensee and not dismissed within thirty (30) days, or Licensee makes an assignment for the benefit of its creditors or an arrangement pursuant to any bankruptcy law; or
iii. discontinues its business without approval of Throwdown; or
iv. or any person who owns interest in Licensee commits any act or makes any statement that materially disparages Throwdown or any affiliates thereof; or
v. challenges the validity or the entitlement of Throwdown to use or license the use of any of the Licensed Rights;
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vi. causes or suffers a receiver to be appointed for it or its business and such receiver has not been discharged within thirty (30) days after the date of appointment thereof; or
vii. enters into an unapproved sublicense or assignment of this Agreement; or is in violation of Section 13 below; or
viii. is in violation of Section 9G of this Agreement
i. becomes insolvent; or
ii. files a petition in bankruptcy or is adjudicated a bankrupt, or if a petition in bankruptcy is filed against Throwdown and not dismissed within thirty (30) days, or Throwdown makes an assignment for the benefit of its creditors or an arrangement pursuant to any bankruptcy law; or
iii. discontinues its business; or
iv. or any person who owns interest in Throwdown commits any act or makes any statement that materially disparages Licensee or any affiliates thereof; or
v. Licensee shall remain liable for all Royalties and other payments due under this Agreement through the effective date of events in detailed in sub-sections i-iv above.
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A. Licensee shall submit a Purchase Order for the Direct Sourced Products to Throwdown using a purchase order form in a format approved by the Parties.
B. Within two (2) business days of Throwdown’s receipt of the purchase order, Throwdown will advise Licensee of Throwdown’s approval or disapproval of the purchase order at Throwdown’s sole discretion.
C. Within five (5) business days following an approved purchase order, Licensee shall pay to Throwdown any required pre-production deposit of 35% of the approved purchase order, unless otherwise agreed to or and previously informed to licensee required by third party suppliers.
D. Within five (5) business days following Licensee’s receipt of notice from Throwdown that the Direct Sourced Products are ready for to ship, Licensee shall pay Throwdown the balance of the invoice for the purchase order plus shipping costs. Licensee shall be deemed to have received the Direct Sourced Products once shipped and Licensee shall bear all risk of loss for those Direct Sourced Products.
E. The Parties acknowledge and agree that if Licensee does not make a timely pre-production deposit following a receipt of an approved Purchase Order, the approved purchase order shall be null and void.
F. The Parties acknowledge and agree that if Licensee does not make a timely payment of the balance of the invoice plus shipping costs of an approved purchase order, Licensee shall still be responsible for the balance of the invoice and Throwdown shall have to option to terminate this Agreement immediately.
i. The quantity, description and sales price of all Licensed Products sold by Licensee by segment including direct to consumers, to retailers etc., during the prior Quarter and for the Contract Year to date, specifically listing sales to consumers and sales to wholesale accounts; and
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ii. The dollar amount of all pending orders or Licensed Products as of the end of the prior Quarter; and
iii. The information disclosed on such reports shall be reasonably detailed and must be presented in a clear and understandable manner.
iv. A reconciliation against any prepaid royalties and a summary of the royalties due. Royalties are payable no later than the fifteenth (15th) day of the first month following the end of the Quarter of the term.
8. Licensed Products Approval.
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9. Licensee Obligations. Licensee agrees as follows:
A. That it shall spend at least three percent (3%) of its Gross Sales derived from sales of Licensed Products on Throwdown brand marketing in the Territory, which marketing plan and advertising materials shall be approved in advance and in writing by Throwdown; and
B. That it shall comply with all of its obligations under this Agreement and will pay for all approved purchase orders in accordance with Section 6 by wire in full and in advance of processing and shipping; and
C. That it shall not alter the Trademarks or Licensed Products or Direct Sourced Products in any manner and that all Licensed Products and Direct Sourced Products shall stay within the Territory unless Licensee receives prior written consent from Throwdown to do otherwise; and
D. That it shall maintain sufficient inventory to meet retail customer demand, a qualified, competent workforce and staff, and proper vehicles to enable Licensee to properly perform all obligations under this Agreement; and
E. That it will communicate on a regular basis with Throwdown representatives to review sales reports and market conditions, to review the current retail customer list and establish ongoing forecasts; and
F. That it will maintain pricing of the Licensed Products to be consistent with the image and integrity of Throwdown and the Trademarks; and
G. That during the calendar year 2015 and each year thereafter during the license, Licensee shall promptly reimburse Throwdown for all expenses associated with two (2) trips per year by one (1) Throwdown executive to the Territory; and
H. That it shall comply with all legal, tax, and tariff requirements relating to the purchase, sale and distribution of the Licensed Products and Direct Sourced Products, and shall maintain all governmental permits or licenses required to operate its business including, without limitation all requirements relating to deposits on bottles (if any) for the Licensed Products and Direct Sourced Products; and
I. That it shall establish procedures to initiate and affect a market withdrawal or recall in accordance with applicable laws and regulations. Licensee shall promptly inform Throwdown of all complaints relating to the Licensed Products and or Direct Sourced Products or any allegations, or other circumstances giving rise to or indicating a need for a recall in connection with any Licensed Product or Direct Sourced Products or its materials or ingredients; and
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J. That it shall maintain automobile, worker's compensation, product liability and comprehensive general liability insurance for injury to or death of any person and for damage to property in such amounts as are customary and reasonable for Licensee’s operations and as is required by law to protect Throwdown from claims arising from Licensee’s operations or obligations under this Agreement. Licensee will provide certificates of insurance evidencing such coverage to Throwdown and shall list Throwdown as an additional insured upon request; and
10. Throwdown Obligations. Throwdown agrees as follows:
A. To discuss regularly with Licensee the sales of the Licensed Products and Direct Sourced Products, provide support with local marketing initiatives, demo programs, review retail customer lists, sales priorities and forecasts; and
B. To maintain accurate financial records on the Licensed Products and Direct Sourced Products; and
C. That it shall obtain and maintain, and will continue to maintain at all times during the term of this Agreement, at its own expense, comprehensive general liability insurance and product liability insurance to cover the product manufactured by Throwdown in an amount not less than $1,000,000.00 US per occurrence in respect of bodily injury and $1,000,000.00 US per occurrence in respect of property damage. Throwdown will provide certificates of insurance evidencing such coverage to Licensee upon request: and
D. That it will incur the expense of airfare to and lodging in the Territory for one (1) trip in calendar year 2014 for up to three (3) persons designated by Throwdown to support the launch of the Licensed Rights Licensor will incur the expense of travel to Territory of 1 trip per quarter in 2014 to support the launch of the territory license. This initial trip will include 3 key Throwdown executives. All of the travel related expenses of Throwdown associated with its travel during 2014 are the responsibility of Throwdown; and
E. Will arrange and provide product lines observing the market needs served by Licensee by sending new Designs and Graphics to Licensee every time there is a change in product lines abroad, ensuring Licensee always has updated product lines resold within the Territory.
A. Acknowledgments. Licensee hereby acknowledges that:
i. Great value is placed on the Trademarks, and the goodwill associated therewith, in the Territory and elsewhere, and the Trademarks and all rights therein and goodwill pertaining thereto, belong exclusively to Throwdown; and
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ii. The consuming public and the industry associate the Trademarks with products of consistently high quality; and
iii. The conditions, terms, restrictions, covenants and limitations of this Agreement are necessary, equitable, reasonable and essential to assure the consuming public that all goods sold under the Trademarks are of the same consistently high quality as sold by Throwdown or others who are or may hereafter be licensed to sell any products using the Trademarks.
i. Licensee agrees that it will not use or permit the use, for its employees, partners or representatives, of the Trademarks for any purpose or use other than those connected with the design, manufacture and sale (including advertising and promotion) of the Licensed Products in the Territory in the manner prescribed in this Agreement. Except as otherwise provided herein, Licensee shall not use, cause or permit the Trademarks, or any confusingly similar trade xxxx or name to be used by Licensee, any of its divisions, any affiliate, agent, or subsidiary, or other person in Licensee's business or the business of any person, corporation or entity either controlled by Licensee or in which Licensee has an interest, either within the Territory or elsewhere in the world.
ii. Licensee agrees that it shall not, at any time, apply for any copyright or Trademarks which would or could affect Throwdown's rights in and to the Trademarks, or any of Throwdown's copyrights, or other proprietary rights, nor file any document with any government authority, or take any action which would or could affect Throwdown's ownership of the Trademarks or Throwdown's copyrights or other proprietary rights, and Licensee shall not aid or abet anyone else in doing so, in the Territory or anywhere in the world.
i. Licensee acknowledges and agrees that it does not acquire any ownership or proprietary rights of any nature in the Trademarks as a result of this Agreement (except the rights to use the Trademarks expressly granted herein).
ii. Licensee further acknowledges and agrees that all designs created for the Licensed Products (whether by Licensee or Throwdown) shall be used only in connection with the manufacture and sale of Licensed Products pursuant to this Agreement.
i. The license granted hereunder is conditioned upon Licensee's complete compliance with the provisions of the Trademarks laws of the Territory and all laws, rules and regulations of each autonomous or semi-autonomous authority therein.
ii. Licensee agrees to cooperate with Throwdown in protecting and defending the Trademarks in the Territory, including protection against counterfeiting and other acts of infringement by third parties. In the event that Licensee becomes aware of any claim or dispute involving the Trademarks, or of any counterfeiting or other acts of Trademarks infringement in the Territory, Licensee shall promptly give Throwdown notice of the nature and extent of same. Throwdown has no obligation to take any action whatsoever with respect to any such matter, unless Licensee's rights to use the Trademarks pursuant to this Agreement are jeopardized, in which case Throwdown will take all action and expense reasonably necessary to protect the rights granted to Licensee hereunder. In all other events, Throwdown may act as it deems appropriate in its sole and absolute discretion with respect to any such matter, including, without limitation, instituting appropriate legal action. Alternatively, Throwdown may authorize Licensee to take action with respect to any such matter, subject however, to any conditions imposed upon Licensee (including, but not limited to, an agreement by Licensee to pay all costs associated therewith).
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B. Non-Disclosure. Each Party shall not:
i. Use, disclose, or make available any Confidential Information of the Other Party, either in whole or in part, in any manner whatsoever, directly or indirectly, to third persons or any persons for purposes unrelated to the objectives of Throwdown or Licensee without prior written authorization of an executive officer of the disclosing Party (Each Party shall promptly notify the to another of any Confidential Information which becomes public without the prior approval or knowledge by other Part); or
ii. Make or permit to be made copies or other reproductions of the Confidential Information; or
iii. Make any commercial use of the Confidential Information.
D. For purposes of this Section 12, the Parties shall be deemed to include its principals, officers, directors, employees, shareholders, members, agents, representatives, successors and assigns and each person or entity that the Parties directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the respective Party.
14. Representations and Warranties.
A. Representations of Licensee. Licensee represents and warrants as to all of the following:
i. Licensee has been duly formed and organized and is validly existing in good standing under the laws of the jurisdiction in which it was formed.
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ii. Licensee is or will be duly qualified to do business in all jurisdictions within the Territory, which require such qualification to conduct the business to be conducted by Licensee under this Agreement.
iii. Licensee has full power and authority to enter into and perform this Agreement.
iv. This Agreement has been duly authorized by all necessary action on the part of Licensee's board of directors (or other governing body) and has been duly executed and delivered by Licensee.
v. Licensee has entered into no other agreement or contract, and is not subject to any order, decree or ruling, which would prohibit Licensee from performing its obligations to sell the Licensed Products under this Agreement.
vi. Licensee has adequate capital to finance the business contemplated by this Agreement and has adequate production resources to fulfill its obligations hereunder.
B. Representations of Throwdown. Throwdown represents and warrants as to all of the following:
i. Throwdown is duly organized and validly existing in good standing under the laws of the jurisdiction in which it was formed.
ii. Throwdown has the power and authority to enter into this Agreement.
iii. This Agreement has been duly authorized by all necessary action on the part of Throwdown's board of directors (or other governing body) and has been duly executed and delivered by Throwdown.
iv. Throwdown is the lawful owner of all Intellectual Property;
v. Throwdown has entered into no other agreement or contract and is not subject to any order, decree or ruling, which would prohibit Throwdown from performing its obligations under this Agreement.
vi. To the best of Throwdown's knowledge, the proper use of the Intellectual Property by Licensee pursuant to this Agreement will not infringe upon the rights of any third party.
A. Throwdown, at its own expense, shall defend, indemnify and hold Licensee, and its officers, directors, shareholders, employees, members, agents, successors and assigns harmless against any and all demands, claims, liabilities, suits, proceedings, damages, losses judgments and settlements and all related costs and expenses including but not limited to reasonable attorneys fees and court costs, arising directly from any allegation that Licensee's use of the Trademarks in accordance with this Agreement and in a reasonable manner infringes a third party's intellectual property rights within the Territory. Licensee shall promptly notify Throwdown of such claim and shall permit Throwdown to have sole control over the defense, investigation, settlement and appeal (if any) of such claim, and Licensee shall provide Throwdown with reasonable assistance, at Throwdown's expense, in the defense and settlement of such claim. Licensee acknowledges that the foregoing is in lieu of any warranties of non-infringement which are hereby disclaimed. The indemnification obligations referenced above shall survive the termination or expiration of this Agreement.
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B. Licensee, at its own expense, shall defend, indemnify and hold Throwdown and its affiliates and their respective officers, directors, stockholders, employees, members, agents, successors and assigns harmless from and against any and all demands, claims, liabilities, suits, proceedings, damages, losses, judgments and settlements and all related costs and expenses including, but not limited to, reasonable attorneys' fees and court costs, arising directly or indirectly from or in connection with:
i. the violation of any law, statute, or act of any jurisdiction within the Territory committed by Licensee; or
ii. any act or omission in the course of performance under this Agreement by Licensee. If any action or proceeding shall be brought or asserted against Throwdown in which indemnity from Licensee may be sought under this paragraph, Throwdown shall promptly notify Licensee in writing and Licensee shall assume the defense thereof. Throwdown may, at its own expense, be represented by its own counsel in such action or proceeding. The indemnification obligations referenced above shall survive termination or expiration of this Agreement.
C. Each Party will promptly notify the other of any claims or actions to which the foregoing indemnifications may apply.
| To Throwdown: | Xxxxx X. Xxxxxxx, CEO |
| 18 Goodyear | |
| Xxxxx 000 | |
| Xxxxxx, XX 00000 | |
| Phone: 000-000-0000 | |
| Fax: 0-000-000-0000 | |
| Email: xxxx.xxxxxxx@Xxxxxxxxx.xxx |
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| With a copy to: | Xxxxx X. Quezon, Esq. |
| 000 X. Xxxxxx Xxxxxx | |
| Xxxxx, XX 00000 | |
| 000 000 0000 | |
| Fax 000 000 0000 | |
| To Licensee: | |
| Partner Business Importação e Exportação LTDA | |
| Attn: Xxxxxx Xxxxxxx, CEO | |
| Partner Business - Importacao, | |
| Exportao E Comercial LTDA | |
| Xxx Xxx Xxxxx, 000 Xxxxx 0 Xxxx 603-M_ | |
| 81.200-200 Curitiba, PR | |
| Phone: 00-00-0000-0000 | |
| Email: xxxxxx.xxxxxxx@xxxxxxxxxxxxxxx.xxx.xx |
A. Governing Law; Forum Selection; Venue Selection.
i. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of California, County of Orange in accordance with the laws of California applicable to agreements wholly made and to be performed there, excluding its conflict of laws rule.
ii. Except as expressly provided otherwise in this Agreement, the courts of Orange County, California, shall have exclusive jurisdiction in relation to all disputes arising out of or in connection with this Agreement (including claims for set-off and counterclaims), including disputes arising out of or in connection with: (i) the creation, validity, effect, interpretation, performance or non-performance of, or the legal relationships established by, this Agreement; and (ii) any non-contractual obligations arising out of or in connection with this Agreement. For such purposes each party irrevocably submits to the jurisdiction of the courts of Orange County, California.
iii. Any claim, action, suit or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought exclusively in a court of competent jurisdiction sitting in Orange County, California, and each of the parties hereto hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom in any such claim, action, suit or proceeding) and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any such claim, action, suit or proceeding in any such court or that any such claim, action, suit or proceeding which is brought in any such court has been brought in an inconvenient forum. Notwithstanding the foregoing, Throwdown shall have the right, but not the obligation, to take action in a court of competent jurisdiction in Brazil or any other nation in which Licensee does business, to the extent necessary to protect Throwdown’s rights hereunder, including without limitation its right to seek equitable relief. Subject to applicable law, process in any such claim, action, suit or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing and subject to applicable law, each party agrees that service of process on such party as provided in Section 18 of this Agreement shall be deemed effective service of process on such party. Nothing herein shall affect the right of any party to serve legal process in any other manner permitted by law or at equity. WITH RESPECT TO ANY SUCH CLAIM, ACTION, SUIT OR PROCEEDING IN ANY SUCH COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND RELEASES TO THE OTHER ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY IN ANY SUCH PROCEEDING.
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[Signatures follow]
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| THROWDOWN INDUSTRIES HOLDINGS, LLC | PARTNER BUSINESS IMPORTAÇÃO E EXPORTAÇÃO LTDA | |||
| By: | /s/ Xxxxx X. Xxxxxxx | By: | /s/ Xxxxxx Xxxxxxx | |
| Name: | Xxxxx X. Xxxxxxx, CEO | Name: | Xxxxxx Xxxxxxx, CEO | |
| Dated: | April 10, 2014 | Dated: | April 11, 2014 | |
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Exhibit A
THROWDOWN®
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exhibit B
LICENSED PRODUCTS
(PBIE to provide Business plan with detail per product type)
Cages, Functional Fitness Equipment, Training and Protective Gear, Mouth Guards, Apparel, Headwear and Accessories
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