THIS LICENSE AGREEMENT (this "Agreement"), dated as of April 28, 2005 is by and between Execute
Sports, Inc., a Nevada corporation, (hereinafter referred to as "Licensee") and EagleRider, Inc. a California
corporation (hereafter referred to as "Licensor").
WHEREAS, Licensor is the legal and equitable owner, or licensee (with right to sublicense) of all rights identified
on Schedule A, attached hereto and incorporated herein, including, without limitation, the name and logos owned
by Licensor and any additional logos which may be developed by the parties hereto and appended to Schedule
A from time to time (hereinafter referred to as the "Property"); and
WHEREAS, Licensee desires to utilize the Property upon and in connection with the exclusive and non-exclusive
manufacture, sale, distribution and promotion of the products listed on Schedule B, attached hereto and
incorporated herein (each collectively hereinafter referred to as the "Licensed Article(s)").
NOW THEREFORE, in consideration of the foregoing recitals (which are made a part of this Agreement), the
mutual promises herein contained other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
a. Grant of License. Subject to the terms and conditions set forth herein. Licensor hereby grants to Licensee an
exclusive license and right to utilize the Property in association with the manufacture, advertising, distribution and
sale of Licensed Articles Worldwide (hereinafter referred to as the "Territory").
b. b. Right to Sublicense. Licensee may, subject to consent of Licensor, which shall not be reasonably refused,
have the right to sublicense any portion of the manufacture, advertising or sale to any third party, the rights
granted to Licensee hereunder. However, any approved sublicense shall be subject to the terms of this
Agreement, and Licensee shall remain liable for the full and timely performance of the obligation hereunder by all
approved sub licensees.
c. Distribution. Licensee may, subject to consent of Licensor, establish and determine any and all distribution
channels for the Licensed Articles, which may include retail store sales, Internet sales, print catalogue sales, mail
order sales, wholesale sales, tour programs established in connection with Licensor and/or its independent
retailers or franchisees, mom & pop stores and all other sales outlets.
a. Term of License. The initial term of this Agreement and the license granted hereunder (the "Initial Term") shall
commence on the date first above written and, unless sooner terminated in accordance with the provisions hereof,
shall remain in full force and effect until April 28, 2007. At the end of the Initial Term, if Licensee is not then in
default under this Agreement, this Agreement may at the option of Licensee and Licensor be renewed for up to
two additional two-year terms (each, a "Renewal Term"), upon written notice by Licensee prior to the expiration
of any such term.
b. Termination in Bankruptcy. Notwithstanding any provision herein to the contrary, if a petition in bankruptcy is
filed by or against Licensee, or if Licensee becomes insolvent, or makes an assignment for the benefit of its
creditors or any arrangement pursuant to any bankruptcy law, or if Licensee discontinues its business or if a
receiver is appointed for it or its business, then, to the fullest extent permitted by law at the time of the
occurrence, this Agreement and the license hereby granted shall automatically and
immediately terminate, without any notice or further action by either party being necessary. In the event this
Agreement is terminated by operation of this Section 2(b) Licensee and its receivers, representatives, trustees,
agents, administrators, successors and/or assigns shall have no right to further manufacture any Licensed Articles
or any carton, container, packing or wrapping material, advertising, promotional or display material pertaining
thereto, except upon the separate written consent and instruction of Licensor. Notwithstanding the above, any
and all Licensed Articles or related goods in inventory and/or unfinished goods and packaging materials for which
production is already underway at such time, may be completed and sold by, or on behalf of Licensee, subject to
all other terms of this Agreement.
c. Early Termination, This Agreement may be terminated at any time (i) by mutual written consent of Licensor and
Licensee; (ii) at any time by Licensee upon thirty (30) days written notice to Licensor; or
(iii) by either party for cause. For purpose of this Section 2, 'cause" shall be defined as any material breach by the
other party of any of the terms or conditions of this Agreement, or any representations contained herein including,
without limitation, failure by Licensee to timely make Royalty payments as required under Section 4 of this
Agreement or failure by Licensee to obtain or maintain product liability insurance as required under Section 12(b)
of this Agreement, which breach remains uncured thirty (30) days after written notice thereof to the breaching
party. In the event Licensee elects to cease marketing Licensed Articles, Licensee shall immediately notify
Licensor in writing of such election. This Agreement and the license granted hereunder shall automatically
terminate thirty (30) days following the date on which Licensee notifies Licensor of its election to cease marketing
d. Effect of Termination. Upon the termination of this Agreement, for any reason, the license granted under
Section 1 shall terminate. In such event, Licensee shall cease using the Property and shall cease manufacturing,
selling, distributing and advertising Licensed , Articles, except that, in the event this Agreement is terminated other
than by Licensor for cause or by operation of Section 2(b) above, for a period of ninety (90) days following such
termination, Licensee may continue using the Property solely for the purpose of disposing of Licensed Articles
that were on hand or in the process of manufacture on the date Licensee received notice of such termination,
subject to Licensee's timely payment of Royalties for such Licensed Articles. Upon the expiration of such ninety
(90) day period, Licensee shall destroy all Licensed Articles not disposed of in accordance with this Section 2
(d). In addition, Licensee shall provide Licensor with a statement, signed by, a duly authorized officer of
Licensee, verifying that Licensee has complied with the requirements of this Section 2(d). The termination of this
Agreement shall not affect any obligation accruing or arising prior to the effective date of the termination.
3. Approval of Licensed Articles and Advertising Materials.
a. Pre-Production Submittal Approvals. Licensee shall submit to Licensor, at no additional cost to Licensor, four
(4) pre-production samples of each proposed Licensed Article, together with the promotional or packaging
material proposed by Licensee to be used with such Licensed Articles. Licensee shall not manufacture, advertise,
market, sell, use or distribute any Licensed Articles or any promotional or marketing materials relating to the
Licensed Articles before obtaining Licensor's written approval of all required pre-production submittals for each
such item. Licensor agrees in good faith not to unreasonably withhold any such approval, and further agrees that
in the event that it disapproves of any pre-production material, that it will promptly provide Licensee with written
notice detailing any and all reasons for withholding such approval. In the event Licensor disapproves of any pre-
production submittal, Licensee shall promptly work to modify such submittal to conform to the requirements of
Licensor and shall re-submit such pre-production submittal to Licensor for review and approval, as set forth
above. On the other hand, if Licensor fails to provide to Licensee of its written approval or disapproval of any
pre-production submittal within twenty (20) days following Licensor's receipt thereof, such failure shall constitute
a disapproval of the pre-production submittal.
b. Production Submital Approval. Following Licensor's acceptance of all pre-production submittals, Licensee
shall submit to Licensor, at no additional cost to Licensor, four (4) production samples of the Licensed Article as
soon as such samples are reasonably available, for Licensor's approval. Licensee may manufacture, advertise,
market, sell, use, and distribute Licensed Articles after submitting to Licensor production samples of such License
Articles, provided that, upon Licensor's timely demand, Licensee shall immediately cease all manufacture,
advertisement, marketing, sales, use and distribution of such Licensed Articles if Licensor disapproves the
production samples. If Licensor fails to notify Licensee in writing of its disapproval of any production samples
within twenty (20) days following Licensor's receipt thereof, such failure shall constitute a disapproval of the
c. Advertising Submittal Approvals. Licensee shall submit to Licensor, at no additional cost to Licensor, three (3)
samples or "mock-ups" of any advertising materials proposed to be used in connection with the Licensed Articles
or using any of the Property. Licensee shall not display, reproduce, use or distribute any such proposed
advertising materials before obtaining Licensor's approval of such materials. If Licensor fails to notify Licensee of
its written approval or disapproval of any proposed advertising materials within twenty (20) days following
Licensor's receipt thereof, such failure shall constitute a disapproval of any such advertising materials.
4. License Fee and Royalties
a. License Fee. Licensee shall pay to Licensor a one-time, non-refundable license fee of one thousand dollars
$1,000 (the "License Fee"). The License fee shall be in addition to, and not in lieu of, the amounts payable as
Royalties (as defined below) and shall not becredited toward such Royalties.
b. Calculation of Royalty. In consideration of the license granted hereunder, Licensee shall pay Licensor a royalty
(the "Royalty") in an amount of twelve percent (12%) of Licensee's Net Wholesale Sales Price for each Licensed
Article sold to any third party. For purposes of this Agreement, "Net Wholesale Sales" shall mean the gross sales
by Licensee and its affiliates of all Licensed Articles, sold pursuant to the Wholesale Price Lists for the Licensed
Articles as determined by the Parties hereto, less trade discounts, actual returns and allowances. No costs
incurred in the manufacture, sale, distribution or promotion of Licensed Articles shall be added, or deducted from
any Royalty payable by Licensee. However, should Licensee derive any "handling profits" from the shipping and
handling of Licensed Articles to third parties, then Licensee agrees to pay Licensor an additional royalty in the
amount of 12% of such "handling profits." Furthermore, no deduction or adjustment shall be made in the
computation of Net Sales for Licensee's uncollectible accounts. c. Licensor's Direct Purchase of Licensed
Articles. Licensor shall have the right, from time to time, to purchase the Licensed Articles directly from Licensee
for the purpose of resale through its own company-owned stores. Licensor may purchase any such Licensed
Articles at the current listed price. Royalty for use of trademarks will be calculated and paid on any such
purchase made by Licensor. Licensee will pay these royalties.
d. Wholesale Price Lists. Prior to the sale of any Licensed Articles, and, at regular proposed Wholesale Price
Lists pertaining to the Licensed Articles which shall be used for purposes of calculating the royalties due
hereunder. Licensee shall not manufacture, advertise, market, sell, use or distribute any Licensed Articles before
obtaining Licensor's written approval of such Wholesale Price Lists, which shall not be unreasonably withheld by
Licensor. Licensor further agrees that in the event that it disapproves of any Wholesale Price List or otherwise
disputes the proposed wholesale price of any Licensed Article stated thereon, that it will promptly provide
Licensee with, written notice detailing any and all reasons for withholding such approval.
e. Timing of Royalty Payments. The Royalty shall be calculated on Net Sales accruing to Licensee during each
calendar quarter and shall be paid to Licensor within forty-five (45) days following the end of each calendar
quarter during the Term of this Agreement. The Royalty shall be paid in U.S. dollars. Licensee's taxes, if any,
including but not limited to sales, use, inventory, income and value added taxes on sales of Licensed Articles, shall
be payable by Licensee and shall not be deducted from any Royalties due hereunder.
f. Statements of Account. Within forty-five (45) days following the end of each calendar quarter, Licensee shall
furnish Licensor with a complete and accurate statement showing the number, description, and wholesale sales
price, permitted deductions from the wholesale sales price of each and every Licensed Article distributed and/or
sold by Licensee, together with any returns made during such period. Such statements shall be furnished to
Licensor whether or not any Licensed Articles were sold by Licensee during the previous calendar quarter. The
receipt or acceptance by Licensor of any of the
statements furnished pursuant to this Agreement or of any Royalty payment hereunder (or the cashing of any
Royalty checks paid hereunder) shall not preclude Licensor from questioning the correctness thereof at any time,
and in the event that any inconsistencies or mistakes are discovered in such statements or payments, they shall
rectified and appropriate payments made by Licensee within sixty (60) days thereafter. In the event Licensee
mistakenly pays Licensor more than is due, Licensee may deduct its overpayment from any future Royalty
5. Obligation to Maintain Records and Periodic Audits. During the Term of this Agreementand for a period of
five (5) years thereafter, Licensee shall keep and maintain full, true and accurate books of account and other
records containing specific information relating to Licensee's manufacture, use, distribution and sale of Licensed
Articles, including any and all Wholesale Price Lists for the Licensed Articles all with sufficient particularity to
permit the computation and verification of the amounts to be paid as Royalties hereunder. During the Term of this
Agreement and for a period of five (5) years thereafter, Licensor or an agent or representative Licensor shall be
permitted, upon prior written notice to Licensee of at least five (5) days, to audit, inspect and copy such books
and records at Licensee's premises during normal business hours, to verify the accuracy of the Royalties paid to
Licensor. Each such audit or inspection shall be at Licensor's expense, unless such audit or inspection reveals a
deficiency of more than five percent (5%) in the payment of any Royalty, in which case Licensee shall reimburse
Licensor for all expenses incurred by Licensor in connection with the audit or inspection (including but not limited
to reasonable attorney's or accountants' fees), in addition to the amount of the deficiency.
6. Quality Control Matters.
a. Production Quality in General. Licensee shall at all times maintain the same quality in the Licensed Article and
promotional and packaging materials relating thereto as produced in the examples approved by Licensor. The
Licensed Articles shall conform to manufacturing standards previously agreed upon by Licensee and Licensor or
established by Licensor from time to time.
b. Quality Control Testing and Spot Checks. The Licensed Articles manufactured by Licensee pursuant to this
Agreement shall be subject to such quality control testing procedures as have previously been delivered to
Licensee or approved in writing by Licensor or may be delivered to Licensee by Licensor from time to time
during the Term of this Agreement. In this connection, Licensee expressly covenants and agrees that it shall not
ship any Licensed Article to any destination if any such Licensed Article fails the quality control testing
procedures required hereunder. In addition, upon Licensor's reasonable request and at no additional cost to
Licensor, Licensee shall supply Licensor with reasonable quantities of additional samples of the Licensed Articles
and related promotional and packaging materials for off-site quality control inspection. c. Notification of Quality
Control Problems. In the event that any Licensed Articles do not, in Licensor's reasonable discretion, meet the
quality standards set forth in this Agreement or otherwise established by Licensor, in writing during the Term
hereof, Licensor shall notify Licensee in writing of any such deficiencies, and Licensee shall immediately make its
best efforts to repair or change such Licensed Articles to conform to such quality standards. If such conformity is
not or cannot be reasonably attained, Licensee shall not permit further such Licensed Articles to be manufactured
in such condition.
d. Changes. If during the Term of this Agreement there is to be any changes in the Licensed Articles or the
promotional or packaging material relating thereto after approval of production samples by Licensor, Licensee
must comply with the procedures set forth in
Section 3 above for such changed item before the item's manufacture, advertisement, marketing, sale, use or
7. Promotional Uses by Licensor. Provided that such Articles are purchased or otherwise obtained directly from
Licensee, Licensor shall have and retain the right to distribute or utilize all of the Licensed Articles in connection
with any sale, premium, giveaway or promotional arrangement, which retained right may be exercised by
Licensor concurrently with the rights licensed to Licensee hereunder.
8. Acknowledgment of Ownership Rights. Licensee acknowledges that the Licensor's claim to the Property is
valid and that Licensor and/or its licensors shall own all right, title and interest in the Property and any additional
properties developed between these parties which are listed on Attachment "A" hereto or any subsequent
addenda thereto. Licensee shall not directly or indirectly contest the validity of the Property either during the
Term of this Agreement or after its termination or expiration. Licensee recognizes the great value of the publicity
and goodwill associated with the Property and acknowledges that such goodwill exclusively belongs to Licensor
and/or its franchisees, as the case may be. Licensee agrees to cooperate full and in good faith with Licensor for
the purpose of securing and preserving Licensor's (or any grantor of Licensor's) rights in and to the Property.
Nothing contained in this Agreement shall be construed as an assignment or grant to Licensee of any right, title, or
interest in or to the Property. In the event Licensee acquires any rights to any of the Property (other than as
expressly granted under this Agreement), Licensee agrees to assign, and hereby assigns, all such rights to
Licensor, and Licensee agrees to execute any instruments requested by Licensor to accomplish or confirm the
foregoing. Any such assignment, transfer or conveyance shall be without additional consideration other than the
mutual covenants and consideration set forth in this Agreement.
9. Representations and Warranties of Licensor.
a. Ownership of Licensed Rights. Licensor owns, or has the right to license the Property. Licensor has all
requisite power and authority to grant the license to Licensee pursuant to this Agreement.
b. No Known Infringement. There is no pending or, to the knowledge of Licensor, threatened claim or litigation
against Licensor (nor, to the knowledge of Licensor, does there exist any basis therefor) contesting Licensor's
ownership in, or right to use or license any of the Property in connection with the manufacture, distribution, use or
sale the Licensed Articles.
c. Binding Agreement. This Agreement, when executed and delivered by Licensor, shall constitute a valid and
binding agreement, in accordance with its terms, except as limited by(i) bankruptcy, reorganization, insolvency
and other laws affecting the enforcement of creditors' rights or contractual obligations generally and (ii) general
principles of equity (whether the enforceability, of this Agreement is considered n a proceeding in equity or at
d. No Violation. Neither the execution and delivery by Licensor of this Agreement nor the consummation of the
transactions contemplated hereby is an event which, of itself or with the giving of notice or the passage of time or
both, constitutes a violation of or will conflict with or result in any material breach of the terms, conditions or
provisions of any judgment, law or regulation to which Licensor is subject; or of any agreement or instrument to
which Licensor is a party or by which it is bound.
10. Representations and Warranties of Licensee.
a. Binding Agreement. This Agreement, when executed and delivered by Licensee, shall constitute a valid and
binding agreement, enforceable upon Licensee in accordance with its terms, except as limited by (i) bankruptcy,
reorganization, insolvency and other laws affecting the enforcement of creditors' rights or contractual obligations
generally and (ii) general principles of equity (whether the enforceability of this Agreement is considered in a
proceeding in equity or at law).
b. No Violation. Neither the execution and delivery by Licensee of this Agreement nor the Consumption of the
transactions contemplated hereby is an event which of itself or with the giving of notice or the passage of time or
both constitutes a violation of or will conflict with or result in an material breach of the terms, conditions or
provisions of any judgment, law or regulation to which Licensee is subject, or of any agreement or instrument to
which Licensee is a party or by which it is bound.
11. Infringement Actions.
a. Defense of Third-Party Claims. In the event any third party asserts any demand, claim or cause of action
against Licensee alleging that Licensee's use of any of the Property in accordance with the terms of this
Agreement infringes the rights of such third party or otherwise constitutes an act of unfair competition against such
third party, Licensee shall promptly, and in any event no later than fifteen (15) days following Licensee's receipt
of such demand, claim or cause of action, notify Licensor of the demand, claim or cause of
action. Upon receipt of the above-described notice from Licensee, Licensor shall defend Licensee against the
demand, claim or cause of action asserted by the third party. In connection therewith, Licensee shall assist and
cooperate with Licensor the defense of any such action; provided, however. Licensor will bear all damages, costs
and expenses. Including attorneys' fees, arising from all such legal proceedings, and shall reimburse Licensee for
all damages, costs and expenses, other than attorneys' fees, incurred by Licensee in providing such assistance to
b. Pursuit of Third-Party Infringers. In the event Licensee believes that a third party is infringing the Property or is
committing acts of unfair competition relating to any of the Property, Licensee shall promptly and in any event no
later than fifteen (15) days following Licensee's discovery of such acts of infringement or unfair competition, notify
Licensor of such infringement or acts of unfair competition. Licensor shall have the option, in its sole discretion, to
take such action as such Licensor deems appropriate to stop such infringement or acts of unfair competition,
including, but not limited to, filing a civil action against the party engaging in such infringement or unfair
competition. Licensee shall cooperate with Licensor in any action or proceeding commenced by Licensor relating
to any third party act of infringement or unfair competition and shall, at the request and expense of Licensor, join
any such proceeding as a party. Licensee acknowledges that Licensor, in its sole discretion may settle or dismiss
any such proceeding at any time. All damages, costs or other amounts recovered by Licensor as a result of any
such action, claim or settlement shall be the sole property of Licensor.
c. Effect of Infringement Actions on Royalty Obligations. The institution of any infringement action by or against
Licensee with respect to the Property shall not affect Licensee's obligations to pay Royalties and to make
quarterly reports to Licensor under
Section 4 hereof.
a. Indemnification of Licensor. Licensee shall indemnify and hold harmless Licensor, its officers, employees and
representatives (the "Licensor Indemnities"), and hereby indemnifies and holds harmless such Licensor
Indemnities, from and against all damages, claims, losses, expenses, costs, obligations and liabilities, including,
without limitation, liabilities for attorneys' fees such items being hereinafter collectively reflected to as "Loss and
Expense") suffered or incurred by a Licensor Indemnity directly or indirectly as a result of (i) an injury to or death
of any person or persons directly or indirectly arising out of or resulting from any goods or services manufactured,
finished, distributed, sold or offered by Licensee, its employees, agents or representatives, (ii) any damage to or
loss of any property directly or indirectly arising out of or resulting from any goods or services manufactured,
finished, distributed, sold or offered by Licensee, its employee, agents or representatives, (iii) any breach of any
representation or warranty made by Licensee under this Agreement, or (iv) any failure by Licensee to perform or
fulfill any of its covenants or agreements set forth in this Agreement or any agreement executed in connection
b. Indemnification of Licensee. Licensor shall indemnify and hold harmless Licensee, its officers, employees and
representatives (the "Licensee Indemnities"), and hereby indemnifies and holds harmless such Licensee
Indemnities, from and against all damages, claims, losses, expenses, costs, obligations and liabilities, including,
without limitation, liabilities for attorneys' fees such items being hereinafter collectively reflected to as "Loss and
Expense") suffered or incurred by a Licensee Indemnity directly or indirectly as a result of (i) any alleged
infringement of any copyright, trademark, trade secret or other intellectual property right held by any third party,
directly or indirectly arising out of or resulting from any goods or services manufactured, finished, distributed, sold
or offered by Licensee, its employees, agents or representatives,
(ii) any breach of any representation or warranty made by Licensor under this Agreement, or (iv) any failure by
Licensor to perform or fulfill any of its covenants or agreements set forth in this Agreement or any agreement
executed in connection herewith.
c. Liability Insurance. In support of its obligations under this Agreement, Licensee shall, during the Term of this
Agreement and for period of six (6) months thereafter, maintain general liability insurance (which shall include
product liability) underwritten by a Best A-rated insurer, which insurance shall have coverage limits of not less
than one million U.S. dollars ($1,000,000) per occurrence for death or personal injury, one million U.S. dollars
($1,000,000) per occurrence for property damage, and two million U.S. dollars ($2,000,000) aggregate liability
per year. Within thirty (30) days following the execution of this Agreement, also within 30 days of the annual
renewal term, and within thirty (30) days prior to the
beginning of each calendar year during the Term of this Agreement, Licensee will provide Licensor with a copy of
its certificate(s) of insurance verifying the existence of the liability insurance required hereunder and of Licensee's
compliance with the terms of this Section 13(c).
13. Compliance with Applicable Laws.
Licensee agrees that the Licensed Articles will be manufactured, sold, distributed, and promoted in accordance
with all applicable Federal, State and local laws and that the policy of manufacture, sale, distribution and/or
promotion by Licensee shall be of high standard and to the best advantage of the Property and that the same shall
in no manner reflect adversely upon the good name or reputation of Licensor or the Property.
14. Government Clearance and Export Matters.
a. Government Clearance. Licensee shall, at its own expense, obtain any required governmental consents,
approvals or clearances (including, without limitation, export and import licenses) required to make, have made,
use, market, sell or distribute the Licensed Articles. Licensor agrees to cooperate with and to assist Licensee in
any reasonable manner in applying for, obtaining or maintaining any such consents, approvals or clearances, all at
b. Limitations on Export. This Agreement and the License shall be subject to all of the statutes and regulations of
the United States controlling or relating to the export of products and other commodities.
15. Proprietary Rights Notices.
Licensee agrees that where commercially practicable, each Licensed Article and all packaging, advertising
promotional or display materials employing the Property shall bear an appropriate trademark and/or copyright
notice and any other legal notices Licensor may prescribe from time to time during the Term of this Agreement. If
such notice cannot be placed directly on the Licensed Articles, then Licensee shall place such notice on all
packaging, advertising and display materials used in connection with the Licensed Article.
16. Additional Limitations on Sale of Licensed Articles.
a. Agreement to Actively Sell Articles. Licensee agrees to diligently and continuously manufacture, sell, distribute
and promote Licensed Articles and to make and maintain adequate arrangement for the distribution of the
Licensed Articles. Licensee agrees to print and distribute at its own expense 30,000 EagleRider catalogues to
licensors customers within the first 12 months of this agreement. In addition to all other remedies available to it
hereunder, upon ninety (90) days written notice to Licensee, Licensor may remove from this Agreement any
Property that is not diligently and continuously used by Licensee in the manufacture, sale, distribution and
promotion of the Licensed Articles or class or category of Licensed Articles that is not diligently and continuously
manufactured, sold, distributed and promoted by Licensee for a period of at least five (5) consecutive months.
Licensor has the right to terminate this agreement at any time if Licensee is unable to supply franchises or
Licensor with an adequate supply of merchandise within the trademark class 025 in a reasonable amount of time.
b. Sales to Licensor. Licensee agrees to sell to Licensor such quantities of Licensed Articles as Licensor shall
request at as low a price on as good terms as Licensee sells similar quantities of the Licensed Articles to the
a. Entire Agreement. This Agreement, together with the Attachments hereto, constitutes the entire Agreement
between the parties and supersedes and cancels any and all prior agreements, written or oral, between them
relating. to the subject matter hereof; this Agreement may not be amended except in a writing signed by both of
the parties hereto. Assignment. This Agreement may not be assigned without the prior written consent of
b. Assignment. This Agreement may not be assigned without the prior written consent of each of the parties. c.
Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
d. Survival. The provisions of Sections 2(d), 4, 5, 6, 7, 8, 11, 12 and 15 shall survive the termination or
expiration of this Agreement for any reason.
e. Notices. Unless otherwise specified herein, all notices, demands and other communications that may be or are
required to be given hereunder or with respect hereto shall be in writing and shall be given either by personal
delivery, by overnight delivery service or by certified mail, return receipt requested, postage prepaid and shall be
deemed to have been given or made when personally delivered, the next business day following the date such
notice was sent by overnight delivery service, or three (3) days after the date such notice was deposited in the
mail, as the case may be, and shall be addressed as follows:
If to Licensor:
11860 South La Cienega Blvd
Hawthorne, CA 90250
Attention: Chris McIntyre and/or Jeff Brown Phone: (310) 536-6777
If to Licensee:
Execute Sports, Inc.
1284 Puerta Del Sol, Ste 150 San Clemente, CA 92673
Attention: Don Dallape
Phone: (949) 498-5990
Any party may change its address for purposes of notice pursuant to the Agreement by notifying the other parties
of such change of address in the manner set forth above.
f. Law Governing. This Agreement shall be governed by, construed and enforced in accordance with the laws of
the State of California, without regard to the conflicts of law rules of such State.
g. Arbitration of Disputes. In the event of any dispute or controversy arising out of, or relating to, this Agreement,
the parties hereto agree to submit such dispute or controversy to binding arbitration. The sole arbitrator shall be
selected from the list by the American Arbitration Association ("AAA") following written request by any party
hereto. If the parties hereto after notification of the other party(ies) to such dispute cannot agree upon an
arbitrator within thirty (30) days following receipt of the list by all parties to such arbitration, then either party may
request, in writing, AAA, appoint an arbitrator within ten (10) days following receipt of such request (the
"Arbitrator"). The arbitration shall take place in the County of Los Angeles, California, at a place and time
mutually agreeable to the parties or if no such agreement is reached within ten (10) days following notice from the
Arbitrator, at a place and time determined by the Arbitrator. Such arbitration shall be conducted in accordance
with the Streamlined Arbitration Rules and Procedures of AAA. Each party hereby waives any right it may have
to assert the doctrine of forum non conveniens or similar doctrine or to object to venue with respect to any
proceeding brought in accordance with this Section, and stipulates that the Arbitrator shall have in personam
jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy, or proceeding
arising out of or related to this Agreement. Each party hereby authorizes and accepts service of process sufficient
for personal jurisdiction in any action against it as contemplated by this
Section by registered or certified mail, return receipt requested, postage prepaid, to its address for the giving of
notices as set forth in this Agreement. The decision of the Arbitrator shall be
final and binding on all the parties to the arbitration, shall be non-appealable and may be enforced by a court of
competent jurisdiction. In addition to its reasonable attorneys' fees, the prevailing party shall also be entitled to
recover from the non-prevailing party its reasonable costs and expenses. The Arbitrator may grant any remedy
appropriate including, without limitation, injunctive relief or specific performance. All applicable rules of California
law and Civil Procedure shall govern and in the event that any discovery dispute arises, either party may seek
resolution and/or enforcement thereof by the Superior Court within the County where the Arbitration is
conducted. Prior to the appointment of the Arbitrator, any party may seek a temporary restraining order or a
preliminary injunction from the Orange County Superior Court, which shall be effective until the Arbitrator
renders a final decision.
h. Waiver of Provisions. The terms, covenants and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at any time or times to require
performance of any provision of the Agreement shall in no manner affect the right at a later date to enforce the
same or to enforce any future compliance with or performance of any of the provisions hereof. No waiver by any
party of any condition or other breach of any provision, term or covenant this Agreement whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of
any such condition or the breach of any other provision, term or covenant of this Agreement.
i. Captions. The captions of Sections of this Agreement are for convenience of reference only and shall not
control or affect the meaning or construction of the provisions of this Agreement.
j. Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or
future law effective during the Term hereof, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof, and
the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid
or unenforceable provision or by its severance here from. Further, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a provision as similar in its terms to such
illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
k. Further Assurances. From time to time after the date hereof, Licensee and Licensors shall execute all such
additional instruments, licenses and certificates and shall take all such other actions as Licensee or Licensors, as
the case may be, may reasonably request in connection with the consummation of this Agreement and effecting
the intent and purpose hereof.
l. Relationship of Parties. Nothing in this Agreement, its provisions, or the transactions, obligations and
relationships contemplated hereby shall, in and of itself, constitute any party to this Agreement as the agent,
employee or legal representative for any other party hereto for any purpose what ever, nor shall any party to this
Agreement hold itself out as such. This Agreement does not create and shall not be deemed to create a
relationship of partners, joint ventures, associates or principal and agent between the parties hereto. Each of the
parties acknowledges that it is acting as a principal hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
EagleRider Inc. Execute Sports, Inc.
By Chris McIntyre By: Don Dallape
TRADEMARK LICENSE AGREEMENT
THIS AGREEMENT is made this 18th day of March, 2003 by and between YAMAHA MOTOR
CORPORATION, U.S.A., a California corporation, whose principal place of business is located at 6555
Katella Avenue, Cypress, California 90630 (hereinafter referred to as "YMUS") and YAMAHA MOTOR
COMPANY, LTD., 2500 Shingai, Iwata, Shizuoka 4388501, Japan (hereinafter referred to as "YMC")
(YMUS and YMC may be collectively referred to as "YAMAHA") and Padova International U.S.A. (d.b.a.
Execute Sports) a Nevada corporation whose principal place of business is located at 23121 Arroyo Vista Ste.
B, Rancho Santa Margarita, California 92688 (hereinafter referred to as "Licensee").
WHEREAS, YMC owns or is authorized to grant, for the purposes of this Agreement, the rights in and to the
trademark described in Schedule A, attached hereto, as well as, names, titles, symbols, designs, copyrights,
trademarks, artwork, and elements embodied in or derived from the property (hereinafter collectively referred to
as the "Property"); and
WHEREAS, Licensee desires to obtain from YMC the right to use the Property on and in connection with the
manufacture, sales, distribution and promotion of the articles described below, and YMC is willing to grant such
right based upon the terms and conditions set forth below;
WHEREAS, YMUS is a wholly-owned subsidiary of YMC and YMC desires that YMUS manage and maintain
the Trademark License Agreement with those Licensee's that will market the Licensed Product in North
WHEREAS, YMUS desires to manage and maintain the North America Trademark License Agreements for
NOW, THEREFORE, in consideration of the mutual promises and undertaking herein contained, it is hereby
1) GRANTS OF LICENSE
(a) Grant: YMC hereby grants to Licensee a non-exclusive, non-transferable license, for the term of this
Agreement and subject to its terms and conditions, the non-exclusive right, license and privilege to use the
Property in the manner described herein in association with the Articles listed in Schedule B, attached hereto
except as provided in Paragraph's 14 hereof.
(b) Articles: For purposes of this Agreement, Articles shall be those products listed in Schedule B attached
hereto which bear the Property.
(c) Territory: The license hereby granted extends only to the Territory described in Schedule C, attached hereto.
(d) Term: Unless sooner terminated in accordance with the provisions hereof, the initial term of the license hereby
granted and the renewal terms, if any are to be provided hereunder, shall extend for the periods set forth in
Schedule D, attached hereto.
(e) Net Sales: Shall mean all gross sales of all Licensee's Articles, no deduction shall be made for cash or other
discounts or uncollectible accounts.
(f) Sold: Shall mean when Articles are billed out, delivered or shipped by or on behalf of Licensee, whichever
shall first occur.
(g) Affiliates: An entity shall be related to or affiliated with a party hereto if one of them is a subsidiary of the other
or both are subsidiaries of the same body corporate or each of them is controlled by the same person. If two
bodies corporate are affiliated with the same body corporate at the same time, they shall be deemed to be
affiliated with or related to each other.
2. TERMS OF PAYMENT
(a) Rate: Licensee agrees to pay to YMC as its royalty a sum equal to the percentage set forth in Schedule E,
attached hereto, of all Net Sales by Licensee or its Affiliates. No costs incurred in the manufacture, sale,
distribution or promotion of the Articles or in the payment by Licensee of taxes of any nature shall be deducted
from any royalty payable by Licensee.
(b) Minimum Royalties: Licensee agrees to pay to YMC a minimum royalty consisting of an advance payment to
be applied against a minimum guarantee against which royalty payments shall be credited for each annual period
in the initial term hereof and in any renewal term hereunder, in the amounts and in the manner specified in
Schedule F, attached hereto. All royalty payments, advance payments and minimum guarantee payments shall be
made payable to YMC and sent to YMC with a copy to YMUS, in accordance with Paragraph 19, Schedule J.
No part of any such minimum royalty shall in any event be repayable to Licensee. Royalty payments which
exceed any annual period's minimum royalty guarantee in the initial term or any renewal term(s) shall not be
credited toward the minimum royalty guarantee of any succeeding annual period in either the initial or renewal
(c) Periodic Statements: Within thirty (30) days after the close of the calendar quarter in which the initial shipment
of articles covered by this Agreement is made, and thereafter within thirty (30) days after the close of each
calendar quarter, Licensee shall furnish to YMC and YMUS, in the form attached hereto as Exhibit B, signed by
Licensee and certified as accurate indicating all of the following information by month:
(1) Total invoice price of all licensed Articles Sold by Licensee or its Affiliates during the period covered by such
percentage royalty payment.
(2) Computation of the amount of percentage royalty payable hereunder for said period.
(3) Identification of the customers and the licenses Articles including SKU, description and quantity that they
Such statements shall be furnished to YMUS and YMC, whether or not any of the Articles have been Sold
during said period. All information shall be shown separately for each country within the territory. Licensee agrees
that royalty reports will indicate clearly (by name of character or similar description) the Articles Sold and will be
given in sufficient detail to YAMAHA to separate royalties by Article. It is understood that timely rendering of all
statement required hereunder is essential under the terms of this Agreement, and failure to render such statements
in a timely fashion shall be deemed to be a breach of the Agreement immediately after the deadline has gone by,
regardless of whether YMUS gives Licensee notice to this effect.
(d) Records and Audits: Licensee shall keep and maintain complete and accurate records of the transactions
underlying the accounting statements to be furnished hereunder, and shall allow representatives of YMUS during
office hours and upon reasonable notice to Licensee to inspect and make extracts or copies of such records for
the purpose of ascertaining the correctness of such statements. If any such examination or audit shall reveal a
deficiency of Royalty Payments due YMC, Licensee shall send payment to YMC with copy to YMUS, within
ten (10) days of receipt of notice to cure the deficiency to YMC of any deficiency plus interest from the date
when such deficiency should have been paid at 2% above the prime rate as quoted by the Chase Manhattan
Bank in New York for the period of such deficiency. Furthermore, in the event such examination or audit reveals
any deficiency of five percent (5%) or more, Licensee shall pay, in addition to such deficiency, the cost of such
examination and audit. Upon demand of YMUS, but not more than twice in any twelve (12) month period,
Licensee shall at its own expense furnish to YMC and YMUS a detailed statement prepared by an independent
certified public accountant showing the style number, sales of each respective style number, description, gross
sales price, itemized deductions from gross sales price, Net Sales of the Articles covered by this Agreement
distributed and/or Sold by Licensee to the date of YMC and YMUS' demand. All books of account and records
shall be kept available for at least five (5) years after the termination of this license.
(e) Royalty Payments: Licensee shall remit to YMC with copy to YMUS, the royalties due in excess of any
previously paid advance sum for each calendar quarter within thirty (30) days after the close of each calendar
quarter, and payment shall be made with the statement rendered for that quarter. Payment shall be in U.S. funds
payable to YMC. The receipt or acceptance by YMC of any of the statements hereunder, or any royalties paid
hereunder, or the cashing of any royalty check paid hereunder, shall not preclude YMC or YMUS from
questioning the correctness thereof at any time, and in the event that any inconsistencies or mistakes are
discovered in such statements or payments, they shall be immediately rectified with the appropriate payment
made by Licensee in accordance with the terms stated in Paragraph 2(d).
3) LICENSOR'S RIGHTS
Licensee recognizes all of YMC's rights and interest in and to the Property and that all use of the Property
licensed hereunder inures to the benefit of YMC. No right, title, or interest, except the license interest granted by
Paragraph 1 hereof, is transferred by this Agreement to Licensee. Licensee agrees that it shall not claim any title
to or right to use the Property except pursuant to this Agreement, and it shall not at any time attack or challenge
the right of YMC in and to the Property, regardless of the nature or basis or forum of such attack or challenge,
and regardless of whether it relates to title or validity. Licensee hereby agrees that at the termination or expiration
of this Agreement, Licensee will be deemed to have assigned, transferred and conveyed to YMC all rights in the
Property which may have been obtained by Licensee or which may have vested in Licensee as a result of its
activities under this Agreement, and Licensee will execute any reasonable instruments requested by YMUS to
accomplish or confirm such assignment, transfer and conveyance. No consideration other than the mutual
covenants and considerations of this Agreement shall be necessary for any such assignement, transfer or
(a) Licensee agrees not to advertise or publicize any of the Articles licensed hereunder in any medium without the
prior written approval of YMUS, which approval shall not be unreasonably withheld.. All advertising and
promotional materials including, but not limited to, artwork, displays, and copy, shall be submitted by Licensee to
YMUS for written approval prior to the use of any such advertising or promotional materials.
(b) YAMAHA shall use the Property and shall have the right to use Licensee's name so as to give the Property,
Licensee, YAMAHA, and any other production in any medium, which may be based upon the Property, full and
favorable prominence and publicity. YAMAHA shall not be under any obligation whatsoever to advertise,
broadcast, exhibit or use the Property or any person, character, symbol, design or likeness or visual
representation thereof in any medium.
5) QUALITY OF MERCHANDISE
(a) Licensee agrees that the Articles covered by this Agreement at all times shall be of high standard and of such
style, appearance and quality as to protect and enhance the Property and the good will pertaining thereto, shall
meet YAMAHA'S quality standards and specifications, and shall be manufactured, Sold, distributed and
promoted in accordance with all applicable Federal, State and local laws. Before selling or distributing any of the
Articles, Licensee shall furnish to YMUS free of cost, for its written approval, the following in the order listed:
1) Sketches (when applicable)
2) Finished artwork and final proofs (when applicable)
3) Pre-production samples or strike offs.
4) Finished products, including packaged samples.
5) All other finished displays, labels, packing and wrapping material.
The quality and style of such Articles as well as of any finished displays, labels, packing or wrapping material shall
be subject to the approval of YMUS. Any item submitted to YMUS shall not be deemed approved unless and
until the same shall be approved by YMUS in writing. After samples have been approved pursuant to this
paragraph, Licensee shall not depart there from in any material respect without YMUS' prior written consent, and
Licensor shall not withdraw its approval of the approved samples except on sixty (60) days prior written notice
to Licensee. In the event YMUS does withdraw its prior written approval, Licensee has one hundred and eighty
(180) days to sell off any of its Articles on hand or in process at the time, with any of the prior approved artwork.
Before Licensee has commenced selling any such Articles covered by this Agreement, Licensee shall furnish to
YMUS without cost twelve (12) samples of each such Article, together with any displays, labels, packing and
wrapping material used in connection therewith. Thereafter, YMUS may request from time to time, individual
random samples of each Article and its related material as herein before described, being manufactured and Sold
by Licensee hereunder.
(b) YAMAHA shall have the right to take samples at random from production runs twice a year but that, if
quality problems are encountered as a result of the examination of samples, YAMAHA shall have the right to
take such samples more frequently in an effort to assure that proper quality control has been established.
YAMAHA shall also have the right to have its representatives visit the plant or plants where the Articles covered
by this Agreement are made and where the displays, packaging material and the like are printed or produced in
order to determine whether or not proper quality controls are being exercised.
Licensee shall cause to appear on or within each Article Sold by Licensee under the terms of this Agreement, and
on or within all advertising, promotional or display material and on all packaging, wrappers, labels, tags, and any
other printed material employing the Property, the copyright notice as specified in Schedule G, attached hereto,
or other notice or notices as may reasonably be specified by YMUS, to the extent that this may be feasible in
light of the size and nature of the Articles and associated materials. Licensee shall cause to appear on all Articles
Sold by Licensee under the terms of this Agreement and on all advertising, promotional and display material, and
on all packaging, wrappers, labels, tags, and other printed material used on or in connection with the Articles
employing the Property, appropriate trademark or service mark notices, approved by YMUS, which, in case of
goods sold in the United States under registered trademarks and service marks, shall be (R) (or "Registered in
the United States Patent and Trademark Office" or "Reg. U.S. Pat. & TM. Off"). Each and every tag, label,
wrapping, and packaging containing any such notice and all advertising, promotional or display material bearing
the Property shall be submitted by Licensee to YMUS for its written approval prior to use by Licensee.
Approval by Licensor shall not constitute waiver of Yamaha's rights or Licensee's duties under any provisions of
7) APPROVALS BY YAMAHA
Any such request for approval shall be submitted to YMUS on the two page form attached hereto as Exhibit A.
With respect to all written approvals by YMUS required under Paragraphs 5(a), 6(a), and 7 of this Agreement,
each item submitted by Licensee shall be deemed disapproved if Licensee has not received written approval from
YMUS of the items in questions within fifteen (15) business days after its submission by Licensee to YMUS.
Nothing herein, however, shall be deemed to obligate YMUS to respond to any such submission prior to the
expiration of the fifteen (15) business day period provided hereunder.
8) YAMAHA'S WARRANTY AND INDEMNIFICATION
(a) YMC represents and warrants that it holds all such rights and interest in the Property as are required to permit
YMC and YMUS to enter into this Agreement and this it is authorized to enter into and perform this Agreement.
Furthermore, YMC represents and warrants that the Property is valid and subsisting and that it shall, at its own
expense, maintain same in good standing including effecting any requisite registrations and renewals thereof.
(b) YMC and YMUS represents and warrants that use of the Property in connection with the manufacture,
distribution, sale and promotion of the Articles will not violate or infringe the right of any third party.
(c) YAMAHA represents and warrants that any products that have been or will be licensed by YAMAHA to
other licensees do not and will not violate any of the rights that YAMAHA has granted to Licensee under the
terms of this Agreement. YAMAHA also represents and warrants that the Property licensed to Licensee for use
on the Articles under the terms of this Agreement does not violate any of the rights that the YAMAHA has
granted or will grant to other licensees. YAMAHA hereby represents, warrants and indemnifies Licensee against
and undertakes to hold it harmless from all actions, claims or suits brought against Licensee arising out of the use
of the Property by Licensee that relate to Licensor's possession of right, title and interest in the Property and/or to
YAMAHA's entitlement to grant this license for the use of the Property on and in connection with the
manufacture, sale, distribution and promotion of the Articles set forth in Schedule B. Licensee agrees that:
1) Licensee shall provide YMUS with prompt notice of any such action, claim or suit;
2) YMUS shall have the sole right and option to undertake and conduct the defense of any action, claim or suit
3) If Licensee with the authorization from YMUS, undertakes and conducts the defense of any such action, claim
or suit, Licensee shall not make or execute any settlement of any action, claim or suit without the prior written
consent, of YMUS; and
4) Licensee shall reasonably cooperate with YMUS in any action, claim or suit undertaken and conducted by
(d) YAMAHA shall indemnify and hold Licensee harmless from and against any and all damages, liabilities, costs
(including reasonable attorneys' fees) and expenses incurred by Licensee as a result of any temporary or final
legal judgment or settlement arising out of or resulting from any alleged breach by YAMAHA of the
representations and warranties contained in Paragraph 9(a), 9(b) and 9(c) to the extent such judgment(s) and
settlement(s) relate(s) to aspects of the licensed Articles covered by this Agreement.
(e) Licensee shall give YMUS thirty (30) days notice to correct any alleged breach by YAMAHA, and Licensee
will not commence any action against YAMAHA or any other licensees of the Property without giving Licensor
(30) days prior notice of such suit, nor will it in any such action seek preliminary injunctive relief or a temporary
restraining order against use of the Property without giving YAMAHA fifteen (15) days notice of motion. It is
expressly agreed that a breach of the terms of this subsection shall be adequate grounds for termination of this
license, which termination shall be effective forthwith upon YMUS' mailing a notice to Licensee in accordance
with the notice provision of Paragraph 20. Termination of this Agreement pursuant to this subsection shall be
without prejudice to any rights that Licensee may otherwise have against YAMAHA.
9) PROTECTION OF YAMAHA'S RIGHTS
Licensee agrees to use its best efforts to assist YAMAHA to the extent necessary to protect YAMAHA's rights
to the Property. YAMAHA may commence or prosecute any actions, claims or suits in its own name or in the
name of Licensee, or join Licensee as a party thereto. Licensee shall notify YMUS in writing of any infringements
or imitations of the Property on Articles similar to those covered by this Agreement which may come to
Licensee's attention, and YMUS shall have the sole right to determine whether or not any action shall be taken on
account of any such infringements or imitations. Licensee shall not institute any suit or take any action on account
of any such infringements or imitations without first obtaining the written consent of the YMUS to do so.
10) INDEMNIFICATION BY LICENSEE AND INSURANCE
(a) Licensee shall defend and indemnify both YMUS and YMC, its officers, directors, agents and employees,
against all costs, expenses and losses (including reasonable attorneys' fees) incurred through claims of third
parties against YMUS and/or YMC based on the manufacture or sale of the Licensed Products including, but not
limited to, a result of temporary or final legal judgment arising out of any alleged unauthorized use of any patent,
copyright, design, mark, process, idea, method or device by Licensee in connection with the Articles covered by
this Agreement (except for claims that the Property infringes any copyright, design, patent, mark or idea) or any
other alleged act or omission by Licensee and from all claims, suits, loss or damages arising out of alleged defects
in the Articles, or any alleged failure adequately to perform any agreement or render any service in respect of the
Articles, or any injury resulting from the use of the licensed Articles or the rendering of any services in respect of
the Articles. The provisions of this subsection (a) shall survive the termination of this Agreement.
(b) Prior to the first offer for sale of any Licensed Article and during this Agreement and for three (3) years after
its expiration or termination, Licensee will obtain, at it's own expense, general liability insurance, including product
liability, complete operations liability, contractual liability, and advertising injury insurance for the Licensed
Articles, related trade dress, containers, and advertising and promotional materials from a recognized insurance
company that is licensed to do business in any state within the United States, providing adequate protection for
YMUS and YMC (as well as for Licensee) as set forth in Schedule I, attached hereto. Licensee further agrees
that YAMAHA will have the annual right to require Licensee to cause such insurance policy or policies limits to
be increased by a reasonable amount or modified form and content in reasonable way. Such policy shall provide
protection against any and all claims, suits, loss, causes of action or damage arising directly or indirectly from or
out of the design, testing, manufacture, sale, distribution, advertisement, labeling, safety, use, misuse, or out of any
alleged defects or failure to perform in the Articles or any material used in connection therewith or any use
thereof, with such policy naming Yamaha Motor Corporation, U.S.A. and Yamaha Motor Co., Ltd. and its
employees as an "Additional Insured". Such insurance policy shall provide that it cannot be canceled without
thirty (30) days prior written notice to YMUS. As proof of such insurance, a fully paid certificate of insurance
naming YAMAHA, its employees as an "Additional Insured" party shall be submitted to YMUS by Licensee for
YMUS' prior approval before any Article is distributed or Sold hereunder, and no later than thirty (30) days after
the commencement of the initial term of this Agreement. Any proposed change in certificates of insurance shall be
submitted to YMUS for its prior approval. YMUS shall be entitled to a copy of the ten prevailing certificate of
insurance, which shall be furnished to YMUS by Licensee.
(c) For purposes of this paragraph, "YAMAHA, YMUS, YMC" shall also include the grantor(s), officers,
directors, agents and employees of YAMAHA, YMUS, YMC its Affiliates, and any other product in any
medium, which may be based upon the Property, the producers of said products, any sponsor of said products
and its advertising agencies, and their respective officers, directors, agents and employees.
11) ARTWORK AND PROMOTIONAL MATERIAL
In all cases where Licensee desires artwork and related material in connection with its use and promotion of the
Property, the cost of same and the time for production thereof shall be borne by Licensee. All such artwork and
related material incorporating the Property or any production thereof, notwithstanding their invention, creation or
use by Licensee, shall be and remain the property of YMUS; and YMUS shall be entitled to use the same and to
license the use of same by others provided such use does not conflict or compete with or impair or diminish
Licensee's use thereof during the term of this Agreement.
12) YAMAHA's REPUTATION
Licensee agrees that it will not do any act or thing which may in the reasonable opinion of YAMAHA bring
YAMAHA or its products into contempt, serious disrepute or ridicule or portray any of these in a manner which
is or can be reasonably construed as being grossly offensive or unsafe (e.g., encouraging reckless and unsafe
riding or racing on an open public roadway); include any material in the Licensed Product which is lewd, grossly
obscene or defamatory under the law of any country in which the Licensed Product is officially distributed (e.g.,
obscene language, nudity); and do any act which, in the reasonable opinion of YAMAHA, damages or tarnishes
the goodwill, image, or reputation of YAMAHA, and their respective products and trademarks.
(a) During the term of this Agreement, Licensee will diligently and continuously manufacture, offer to sell,
distribute and promote the Articles covered by this Agreement and will make every effort to maintain adequate
arrangements for the efficient distribution of the Articles. In this respect Licensee shall offer for sale by the
marketing date specified in Schedule H, attached hereto, with delivery within a reasonable time thereafter, at least
one of the Articles in each of the categories listed in Schedule B. If at any time thereafter Licensee for a period of
three (3) consecutive months has failed to offer to sell and to manufacture and distribute any of the Articles (or
any class or category of the Articles) covered hereunder, YAMAHA, in addition to all other remedies available
to it hereunder, may terminate this Agreement with respect to such Articles or class or category thereof which
have not been so offered for sale and manufactured and distributed during such period by giving notice of
termination to such effect to Licensee in accordance with the notice provision of Paragraph 19. Without limiting
the foregoing, or any other obligations of Licensee under this Agreement, but on the condition that YMUS
provides prior written notice in accordance with the notice provision of Paragraph 19.
(b) Licensee shall not knowingly sell or distribute the Articles to jobbers, wholesalers, distributors, retail stores,
merchants or any other third party whose sales or distribution are or will be made for publicity or promotional tie-
in purposes, combination sales, premiums, giveaways or similar methods of merchandising without prior approval.
(c) In the event any sale is made at a special price to any of Licensee's Affiliates or to any other person, firm, or
corporation related in any manner to Licensee or its officers, directors or major stockholders, Licensee shall pay
a royalty on such sales based upon the price generally charged the trade by Licensee.
(d) Licensee agrees to keep YMUS, at its request, advised of the wholesale and suggested retail prices at which
Licensee sells the Articles covered hereunder.
(e) Licensee will sell to YAMAHA such quantities of the Articles as YMUS shall request at as low a rate on as
good terms as Licensee sells similar quantities of the Articles to the general trade.
14) DEFAULT & TERMINATION
The following termination rights are in addition to the termination rights provided elsewhere in the Agreement.
(a) Immediate Right of Termination. YAMAHA shall have the right to immediately terminate this Agreement by
giving written notice to Licensee in the event that Licensee does any of the following:
1) unless otherwise prohibited by law, if a petition in bankruptcy is filed by or against Licensee and such petition
is not vacated within sixty (60) days, or if Licensee becomes insolvent, or makes an assignment for the benefit of
its creditors or an arrangement pursuant to any bankruptcy law, or if Licensee discontinues its business or if a
receiver is appointed for it or its business, to the fullest extent permitted by law at the time of the occurrence, the
license hereby granted shall automatically terminate forthwith without any notice whatsoever being necessary. In
the event this Agreement is terminated as a result of the bankruptcy or insolvency of Licensee, Licensee, its
receivers, agents, representatives, trustees, administrators, successors, and/or assignees shall have no right to sell,
exploit or in any way deal with or in any Articles covered by this Agreement or any carton, container, packing, or
wrapping material, advertising, promotional or display material pertaining thereto, except with and under the
special consent and instructions of Licensor in writing, which they shall be obligated to follow;
2) after having commenced sale of the License Articles, fails to continuously sell Licensed Products for three
(3) consecutive Royalty Periods;
3) fails, after receipt of written notice from YAMAHA, to immediately discontinue the distribution or sale of the
Licensed Articles or the use of any packaging or promotional material which does not contain the requisite legal
4) fails to make timely payment of Royalties when two or more times during any twelve-month period.
(a) If either party has materially breached or failed to perform any of its respective obligations under the terms of
this Agreement, the other (nonbreaching) party shall have the right to terminate the license hereby executed upon
thirty (30) days notice in writing, in accordance with the notice provision of Paragraph 19, unless the breaching
party shall completely remedy the breach within the thirty (30) day period, and satisfy the other (nonbreaching)
party that the failure or breach has been remedied. Termination of the license under the provisions of this
subsection (a) shall be without prejudice to any rights, which either party may otherwise have against the other
party. Upon termination of this license, if such termination is a result of breach by Licensee, all guaranteed
royalties on sales therefore made shall become immediately due and payable; no advances against royalties shall
be repayable; and the balance of any minimum royalty guarantees shall become immediately due and payable.
(b) Furthermore, in the event that litigation of any nature with respect to the performance by YAMAHA or
Licensee of their obligations hereunder is initiated, costs and expenses shall be payable in accordance with any
order of the court or arbitration panel presiding over such ruling.
15) FINAL STATEMENT UPON TERMINATION OR EXPIRATION
Sixty (60) days before the expiration of this license and, in the event of its termination, ten (10) days after receipt
of notice of termination or the happening of the event which terminates this Agreement where no notice is
required, a statement showing the number and description of Articles covered by this Agreement on hand or in
process shall be furnished by Licensee to YMUS. YMUS shall have the right to take a physical inventory to
ascertain or verify such inventory and statement, and refusal by Licensee to submit to such a physical inventory by
YMUS shall forfeit Licensee's right to dispose of such inventory, with YMUS retaining all other legal and
equitable rights Licensor may have in the circumstances.
16) DISPOSAL OF STOCK UPON TERMINATION OR EXPIRATION
After termination or expiration of the license under the provisions hereof, Licensee, except as otherwise provided
in this Agreement, may dispose of Articles covered by this Agreement which are on hand or in process at the
time notice of termination is received or upon the expiration date, whatever the case may be, for a period of sixty
(60) days thereafter, on a nonexclusive basis, provided advance and royalty payments are up to date for the
current period and statements are furnished for that period in accordance with Paragraph 2. All applicable
royalties which are to be paid on Articles on hand or in process at the time of termination shall be paid within
twenty (20) days from the time the termination notice is received. The sell off period can not commence until
sender has received from Licensee, the applicable prepaid royalty, with a copy to YMUS, for all of the Articles
that are on hand or in process at the time of termination. Notwithstanding anything to the contrary herein,
Licensee shall not manufacture, sell or dispose of any Articles covered by this license after its expiration or its
termination based on the failure of Licensee to affix notice of copyright, patent, trademark or service mark
registration or any other notice to the Articles, cartons, containers or packing or wrapping material or advertising,
promotional or display material, or because of the departure by Licensee from the quality and style approved by
17) EFFECT OF TERMINATION OR EXPIRATION
(a) Upon and after the expiration or termination of this license Agreement, all rights granted to Licensee
hereunder shall revert to YAMAHA, who shall be free to license others to use the Property in connection with
the manufacture, sale, distribution and promotion of the Articles covered hereby, and Licensee will refrain from
further use of the Property or any further reference to it, in connection with the manufacture, sale, distribution or
promotion of any product, except as provided in Paragraph (1 8). It shall not be a violation of any right of
Licensee if YAMAHA should, at any time during the term hereof, enter into negotiations with another to license
the use of the Property with respect to the Articles listed in Schedule B, attached hereto, within the Territory,
provided that it is contemplated that such prospective license agreement shall commence after the termination of
(b) Throughout and after the term of this Agreement, Licensee will not manufacture, distribute, sell or promote
any products with similar name, symbol, logo or trademark to that of the Property. In the event that the Licensee
does manufacture, sell, distribute or promote any such products, the same shall be governed by the terms of this
Agreement, including without limitation, the obligation to pay royalties in accordance with Paragraph 2 hereof.
18) LICENSOR'S REMEDIES
(a) Licensee acknowledges that its failure to commence in good faith to offer to sell, manufacture, distribute and
promote the Articles listed in Schedule B within the period specified in Paragraph 13, and to continue during the
term hereof to use its best efforts to offer to sell, manufacture, distribute and promote the Articles covered by this
Agreement will result in immediate and irreparable damage to Licensor.
(b) Licensee acknowledges that its failure (except as otherwise provided herein) to cease the manufacture, sale,
distribution or promotion of the Articles covered by this Agreement at the termination or expiration of this
Agreement or any portion thereof will result in immediate and irreparable damage to Licensor and to the rights of
subsequent licensee. Licensee acknowledges and admits that there is no adequate remedy at law for such failure
to cease manufacture, sale, distribution or promotion, and Licensee agrees that in the event of such failure,
YAMAHA shall be entitled to terminate this Agreement and to equitable relief by way of temporary and
permanent injunctions and such other and further relief as any court of competent jurisdiction may deem just and
All notices and statements required under this Agreement shall be in writing addressed to the parties as set forth
in Schedule J attached hereto, unless notification of a change of address is given in writing. All such notices and
statements shall be sent Certified Mail or Registered Mail, Return Receipt Requested or by a reputable
Commercial Air Express service (such as Fedex). The date of mailing shall be deemed the date the notice or
statement is received by either party and such receipt is certified or registered with the post office or commercial
air express service.
20) RELATIONSHIP BETWEEN THE PARTIES
Except as otherwise provided in this Agreement, Licensee shall not represent itself as the agent or legal
representative of YAMAHA for any purpose whatsoever, and shall have no right to create or assume any
obligation of any kind, express or implied, for or on behalf of YAMAHA in any way whatsoever. This
Agreement shall not create or be deemed to create any agency, partnership or joint venture between the Licensee
21) NO ASSIGNMENT OR SUBLICENSE
None of Licensee's benefits or obligations under this Agreement shall be transferred by assignment, merger,
operation of law or any other means, nor shall Licensee delegate any of said benefits or obligations by
sublicensing or any other means, except with the prior written consent of YMUS which consent shall not be
unreasonably withheld. Any transfer or delegation of any of Licensee's rights in violation of the preceding
sentences shall be null and void. Any or all of YAMAHA's rights may be transferred or delegated by YAMAHA
without restriction of any kind. Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns.
22) CONFIDENTIAL INFORMATION AND NON-DISCLOSURE
Licensee acknowledges that, in the course of the performance of this Agreement, Licensee may obtain
confidential information or materials from YAMAHA including, without limitation, the following items related to
the Property, YAMAHA materials and/or Licensed Property: underlying literary material, creative elements, style
guides, research material and data, specifications, processes, technological developments, or other proprietary
materials. Licensee shall, at all times both during the Term and thereafter, keep all of such confidential information
in confidence and trust. Licensee shall not use such confidential information other than as expressly permitted
herein or by Approval. Licensee agrees to return to YMUS any written, printed or other materials embodying
such confidential information and/or materials, including all copies or excerpts thereof, given to or acquired by
Licensee in connection with this Agreement. Licensee shall not directly or indirectly disclose to the public or to
any non-essential person and/or entity any of the terms of this Agreement without the prior written approval of
YMUS, unless otherwise required to do so by any law established by any government with applicable
jurisdiction. Licensee acknowledges that any breach of the foregoing will cause irreparable injury to YAMAHA
not readily measurable in monetary amounts; consequently, YAMAHA shall, without waiving any other rights or
remedies, be entitled to injunctive and/or declaratory relief in connection with any breach or threatened breach
23) ENTIRE AGREEMENT
This Agreement and the Schedules attached hereto, is intended by the parties as a final and complete expression
of their agreement, and supersedes any and all prior and contemporaneous agreements and understandings
related to it.
24) MODIFICATION AND WAIVER
This Agreement may not be modified and none of its terms may be waived, except in writing signed by all parties.
The failure of any party to enforce, or the delay by any party in enforcing, any of its rights shall not be deemed a
continuing waiver or a modification of this Agreement.
25) ACT OF GOD
Neither party shall be responsible for or liable for failing to perform any part of this Agreement or indirectly
resulting from or contributed to by any foreign or domestic embargoes, seizures, acts of God, insurrections, wars
and/or continuance of war; acts of terrorism or the adoption or enactment of any law, ordinance, regulation, ruling
or order directly or indirectly interfering with the performance under this Agreement; or lack of the usual means of
transportation, fires, floods, explosion, strikes, earthquakes; or other events or contingencies beyond its control,
either of the foregoing nature or of any kind.
25) PARAGRAPH HEADINGS
The headings of the paragraphs are for convenience only and in no way limit or affect the provisions hereof.
26) AGREEMENT COUNTERPARTS
This Agreement may be executed in any number of counterparts and all of these counterparts shall for all
purposes constitute one Agreement binding on the Parties and be deemed originals for all purposes
notwithstanding that all parties are not signatory to the same counterpart.
27) SPECIAL PROVISIONS
Licensee shall comply with the obligations set forth in Schedule B(x) attached hereto. 28)
This Agreement shall be governed and construed and all disputes arising hereunder shall be adjudicated, by
application of the laws of the State of California, and no other laws of any other jurisdiction, foreign or domestic,
shall apply. In the event that one or more provisions shall at any time be found to be invalid or otherwise rendered
unenforceable, such provision or provisions shall be severable from this Agreement, so that the validity or
enforceability of the remaining provisions of this Agreement shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed as of the day and
year first above written.
YAMAHA MOTOR CORPORATION, U.S.A.
and YAMAHA MOTOR COMPANY, LTD.
By: /s/ S. Kato
Date: May 28, 2003
Padova International (dba Execute Sports)
By: /s/ Don Dallape
Name: Donald Dallape
Date Signed: 3/18/03
RENNER, OTTO, BOISSELLE & SKLAR, LLP
1621 EUCLID AVENUE. NINETEENTH FLOOR
CLEVELAND, OHIO 44115-2191
TEL: (216) 621-1113 FAX: (216) 621-6165
March 25, 2003
Ms. Cheryl Gardner
Padova International USA
23121 Arroyo Vista, Suite B
Rancho Santa Margarita, CA 92688
Re: License Agreement with KTM Sportmotorcycle, USA Our File:
Dear Ms. Gardner:
Lowell Anderson of KTM forwarded your request for a license agreement to me because I handle the trademark
matters for KTM. KTM has a standard license agreement, and a copy ready for your president's signature is
attached. Please look this agreement over and let me know if you have any questions.
The agreement was drafted for licensees who were already making KTM branded products. It therefor calls for
samples of existing products and a catalog. If you do not yet have a sample of each different material on which
you intend to use the KTM mark, you may send us a sample of the material with someone else's mark on it. Our
purpose is to get one tee shirt, one decal, and/or one of each different material on which the KTM logo is going
to be used for quality control purposes. If you do not have designs yet established, the license agreement allows
for this by requiring you to submit new designs to us. Between the material samples and the product designs
which we approve, we will be ale to monitor quality which is a requirement for a trademark owner.
The license agreement also requires a sign-up fee of $1,500. This is not an advance against royalties, but a fee for
entering the license agreement. In addition, you will need to send us a certificate of insurance showing KTM
Sportmotorcycle USA, Inc. as an additional insured in the amount of $1 million.
If you have any questions concerning the license please feel free to call me or e-mail me. My e-mail address is
firstname.lastname@example.org. I look forward to hearing from you.\
Very truly yours, Gordon D. Kinder
THIS AGREEMENT is between KTM Sportmotorcycle USA, Inc., a corporation of Ohio, having a place of
business at 1119 Milan Avenue, Amherst, OH 44001 (hereinafter called LICENSOR), and Padova International
U.S.A., Inc., a Nevada corporation, dba Execute Sports, having its principal place of business at 23121 Arroyo
Vista Suite B, Rancho Santa Margarita, CA 92688, (hereinafter called "LICENSEE").
WHEREAS, LICENSOR is the owner of the mark KTM as applied to motorcycles (the KTM MARK) and of
U.S. Trademark Registration No. 1,664,945 for that mark, a true and correct copy of the Trademark
Registration being attached hereto, marked Exhibit "A", and made a part hereof.
Whereas LICENSEE is in the business of manufacturing and selling motorcycle accessories including motorcycle
seat covers and graphics kits, using the KTM MARK, or a substantially similar mark for sale on its products to
WHEREAS, LICENSEE has requested a license to use the KTM MARK in connection with motorcycle seat
covers and graphics kits, and LICENSOR has agreed to grant LICENSEE such a license under certain terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the sum of $1500.00 to be paid to LICENSOR on or before the
Effective Date of this Agreement (hereinafter defined), in consideration of the royalty payments specified below,
the above Recitals and for other good and valuable consideration, including the mutual covenants herein
expressed, the parties hereto agree as follows:
LICENSOR hereby grants LICENSEE a non-exclusive license to use the KTM MARK in accordance with the
provisions of this Agreement in connection with motorcycle seat covers and graphics kits (LICENSED
PRODUCTS) for a period from January 1, 2003 (the "Effective Date") through December 31, 2003. This
AGREEMENT does not grant LICENSEE the right to use the KTM mark in any manner other than on
LICENSED PRODUCTS and advertisements for or promotions of the sale of LICENSED PRODUCTS.
2. Manner of Use of KTM MARK by LICENSEE and Quality Control.
The LICENSEE expressly recognizes as the essence of this agreement the importance to LICENSOR, to its
reputation and goodwill, and to the public, of maintaining high, uniformly applied standards of quality in
connection with products bearing the KTM MARK. LICENSEE agrees to maintain the quality of the goods
offered under the KTM MARK including the advertising, marketing, and promotion of those goods, and their
cartons, containers, packing and wrapping material, at the same high level that LICENSOR has established for
the goods it sells under the KTM MARK. LICENSOR has the right, upon reasonable notice to visit
LICENSEE's premises where the LICENSEE's goods are manufactured, stored, packaged and/or offered for
sale in order to assure itself that the quality of the goods is being maintained. In addition, LICENSEE agrees to
provide to LICENSOR, at the beginning of the term of this agreement and at the beginning of each calendar year
thereafter for so long as this agreement is in effect, representative samples of the products manufactured and/or
sold by LICENSEE bearing the KTM MARK so that LICENSOR may confirm that LICENSEE is maintaining
the required quality.
LICENSOR has the right to approve the manner of LICENSEE's use of the KTM MARK. LICENSOR
approves the current use of the KTM MARK as reflected in the current catalog of LICENSEE's products,
attached hereto as Exhibit B. Before offering any other LICENSED PRODUCT,
LICENSEE agrees to provide a specimen in the form of a sample, printer's proof, or equivalent to LICENSOR
for LICENSEE's approval. LICENSOR shall have 30 days from receipt of the specimen to approve it as
consistent with the KTM brand and its image, which approval shall not be unreasonably withheld. If no response
from LICENSOR is received by LICENSEE within thirty days of receipt of the specimen, approval shall be
LICENSEE agrees to submit to KTM an advance copy of any proposed advertising or promotional materials for
LICENSED PRODUCTS that include the KTM MARK, regardless of medium, including but not limited to print
media and electronic media, for approval by KTM. Approval of the proposed manner of using the KTM MARK
in the submitted advertising and/or promotional materials shall not be unreasonably withheld and shall be
presumed unless KTM specifically disapproves by notice sent to LICENSEE in a manner calculated to be
received by LICENSEE within two weeks of the day the proposed materials were received by LICENSOR.
LICENSEE agrees to provide at the beginning of the term of this agreement and at the beginning of each calendar
year thereafter for so long as this agreement is in effect a product catalog or other listing showing and describing
all LICENSED PRODUCTS offered for sale by LICENSEE.
LICENSEE agrees that whenever it uses the KTM MARK it shall include the registration symbol, (R), to
provide notice that the KTM MARK is registered.
If LICENSOR determines that the quality of the goods has not been maintained or the registration symbol has not
been used, LICENSOR shall promptly notify LICENSEE in writing and shall specify the claimed defect in
quality. LICENSEE shall have thirty (30) days after receipt of a written notice from LICENSOR to cure the
claimed defect. The parties will use their best efforts to amicably resolve any dispute concerning the existence of a
quality defect. The parties acknowledge that this agreement contains a covenant of good faith and fair dealings.
3. Royalty Payments.
NET INVOICED PRICE shall mean the total invoice amount of all sales by the LICENSEE of LICENSED
PRODUCTS, less trade discounts, returns, insurance, commissions to third parties, and shipping costs (so far as
shipping costs are separately invoiced). LICENSEE shall pay a royalty of three percent (3%) of the NET
INVOICED PRICE on a semi-annual- basis-within-thirty-days (30) of the end of each calendar half. Payments
shall be made by sending a check payable to LICENSOR at the address stated above, unless otherwise
instructed to do so. Each payment shall be accompanied by a report categorizing the LICENSED PRODUCTS
sold by product number or other commercial trade designation and the total of the NET INVOICED PRICE for
4. Trademark Ownership, Use and Protection.
(a) LICENSEE recognizes LICENSOR's ownership of and title in and to the KTM MARK and shall not at any
time do or permit to be done any act or thing which will in any way impair the rights of LICENSOR in and to the
KTM MARK and shall not at any time claim any right or interest in or to the KTM MARK except as expressly
(b) LICENSEE further agrees that during the term of this Agreement and after its termination, however occurring,
LICENSEE shall not:
(i) use the KTM MARK or any other marks confusingly similar thereto in connection with any goods, products,
or services not covered by this Agreement; or
(ii) apply for or seek registration anywhere at any time of the KTM MARK or any other marks confusingly
similar thereto; or
(iii) use the KTM MARK or any other marks confusingly similar thereto in any corporate or trade name; or
(iv) do anything or commit any act which might prejudice or adversely affect the validity of the KTM MARK or
LICENSOR's ownership thereof.
(c) Upon termination of this Agreement, however occurring, LICENSEE shall forthwith cease to use the KTM
MARK and shall thereafter not use as a trade name, trademark or service mark any marks or names consisting
of or containing the mark KTM or any other names or marks which are confusingly similar to the KTM MARK.
(a) LICENSEE agrees to keep complete and accurate books and records reflecting the number of LICENSED
PRODUCTS manufactured and sold and the NET INVOICED PRICE so that the royalties due hereunder may
be accurately computed.
(b) LICENSEE agrees to permit LICENSOR or its authorized agent to inspect once per year all books and
records of LICENSEE that reasonably relate to enforcement of this agreement, upon at least 72 hours advance
notice and during regular business hours, for the purpose of inspecting and copying such records specifically
relating to the manufacture, use, or sale of LICENSED PRODUCTS as defined herein in order to verify the
amount of royalties payable under this Agreement. The cost of any such inspection shall be borne by
LICENSOR. LICENSOR acknowledges the confidential nature of the documents and information that are/will
be entrusted to it by LICENSEE upon execution of this Agreement. LICENSEE agrees, for itself, its agents or
assigns not to use, provide or allow all or any part of this information to be provided to anyone for any purpose
other than this agreement without prior written authorization of the LICENSEE, and undertakes to take all
necessary measures to insure that this confidentiality is maintained.
LICENSEE hereby indemnifies and agrees to hold LICENSOR harmless from and against any and all claims,
liability, loss or damage, cost or expense, including but not limited to attorneys' fees and related costs resulting
from the sale or offer of sale by LICENSEE of any product bearing the KTM MARK. LICENSEE shall assume
full responsibility for, and the expense of, investigation, defense, legal fees and payment of any settlements or
judgments resulting from any complaint, demand, claim or legal action encompassed by the foregoing indemnity
provided LICENSEE is notified promptly in writing of any such complaint, demand, claim or legal action and
LICENSEE is given authority to defend or settle such matter. LICENSEE shall maintain in full force and effect,
with all premiums paid thereon, product liability insurance relating to the LICENSED PRODUCTS sold or
offered for sale by LICENSEE under the KTM MARK, with LICENSOR listed as an additional insured, in the
amount of $1,000,000, for a period of two years from the termination of this agreement. At the beginning of the
term of this agreement and at the beginning of each renewal term LICENSEE shall provide LICENSOR a
certificate of insurance showing LICENSOR as an additional insured.
LICENSOR shall indemnify and hold harmless LICENSEE, including full responsibility for attorney fees, costs
and payments of any settlements or judgments resulting from any complaint, demand, claim or legal action
brought against LICENSEE concerning the ownership or right to use the KTM MARK, provided LICENSOR is
notified promptly in writing of any such complaint, demand, claim or legal action and LICENSOR is given
authority to defend or settle such matter.
7. New Products.
This agreement covers LICENSED PRODUCTS only. In the event that LICENSEE wants to use the KTM
MARK in association with additional goods, it must submit those goods for approval by LICENSOR and
determination of an appropriate royalty rate for those goods. LICENSOR reserves the right to refuse to approve
any additional goods in its sole discretion.
8. Term of Aqreement.
This Agreement shall take effect on the date last executed by one of the parties and, unless sooner terminated as
provided in paragraph 9 hereafter, shall extend from that day to and including December 31, 2003. This
agreement shall be automatically renewed for additional one year terms, unless terminated according to the terms
of this agreement.
9. Automatic Termination.
This Agreement shall terminate immediately and automatically if any of the following events occur:
(a), LICENSEE is ordered or adjudged bankrupt, is placed in the hands of a receiver, or otherwise commences
to enter into any plan or composition with its creditors or makes any unauthorized assignment for the benefit of its
(b) Any portion of the assets of-LICENSEE are lawfully seized or attached;
(c) Any action is commenced to liquidate or dissolve LICENSEE, except if such liquidation or dissolution follows
a permitted assignment of LICENSEE's rights granted in this Agreement;
(d) LICENSEE fails to maintain product liability insurance as required in paragraph 6 of this Agreement.
If either party to this Agreement materially breaches any of the provisions hereof other than by the actions or
events described in paragraph 9 a, b, c, and/or d, the other-party may give written notice to the party committing
the breach specifying in detail the nature of such breach, and the party given such notice shall have thirty days
following receipt thereof, to remedy such breach. If the breach is not corrected within such thirty-day period,
termination of this Agreement shall become effective immediately thereafter upon such party giving prompt written
notice of termination. Failure of a party to exercise the herein provided right of termination for breach shall not.
constitute a waiver of the right of that party to terminate in the event of a subsequent breach regardless of the
10. Voluntary Termination.
This agreement may be terminated by either party by giving notice to the other party at least thirty (30) days
before the end its term or by mutual written consent of the parties at any time.
11. No Agency
Nothing in this Agreement shall be construed to place either party in the position of a partner, agent, or employee
of the other party, and neither party shall have any power to bind the other party to third parties. Both parties
covenant and agree not to hold each other out as an agent or employee of the other party.
Waiver of any term or breach or series of breaches hereof shall not be construed as a waiver of that or other
terms or subsequent breaches whether or not of the same or similar kind or import.
13. Breach and Remedies.
(a) In the event of any breach by LICENSEE of its obligations to pay royalties, LICENSEE shall have ten (10)
days after delivery of written notice to cure the breach, then if not cured, LICENSOR shall have the right, at its
option, to sue to recover royalties owed (with LICENSEE paying all costs and expenses, including attorneys
fees), and to terminate the Agreement.
(b) In the event of termination of this Agreement LICENSEE shall have three (3) months thereafter to complete
any work in progress and/or sell any existing inventory of LICENSED PRODUCTS, provided any such work in
progress or inventory of LICENSED PRODUCTS complies with the quality standards set forth in this
(c) Any dispute arising under or related to this Agreement-shall be resolved in the State of Ohio, United States of
(d). LICENSOR and LICENSEE hereby agree to the jurisdiction of the courts of the State of Ohio, United
States of America, and agree to be bound by any judgments rendered thereby.
(e) This Agreement shall be interpreted and enforced under the laws of the State of Ohio, in the United States of
America, exclusive of its choice of laws and conflict of laws provisions.
Any notice required or permitted to be given by either party hereto to the other party, including any service of
process, shall be deemed to be sufficient if given in writing and sent by registered or certified mail or by overnight
courier to the other party at the respective address set out above.
Whenever any notice, payment, request for approval, or other communication is required to be sent to
LICENSOR, a copy shall be sent to LICENSOR's counsel at the address below:
Either party may by written notice to the other change the address of such party to which notices may be
15. Severance of Terms.
Any term or provision of this Agreement found to be illegal or unenforceable shall be severed from this
Agreement which shall otherwise remain in full force and effect.
16. Bindinq Effect.
The parties hereto represent that each has the right, power and authority to enter into this Agreement and to
perform all of the obligations hereunder; that the execution, delivery and performance of this Agreement has been
duly authorized by their respective corporations, and that this Agreement constitutes a legal binding contract,
enforceable in accordance with its terms.
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their legal heirs,
successors, and assigns; provided, however, that the rights granted to the LICENSEE under this Agreement
cannot be assigned other than as part of the transfer or sale of substantially the entire business of LICENSEE and
then only with the prior written approval and consent of the LICENSOR, which consent shall not be
unreasonably withheld. However, no assignment of any of LICENSEE's rights hereunder shall be binding and
valid until written notice thereof to LICENSOR and LICENSOR receives full and complete assumption in writing
from the assignee of all of LICENSEE'S obligations under this Agreement, and the assignee also provides
LICENSOR with reasonable evidence that the assignee has in full force and effect, with all premiums paid
thereon, product liability insurance relating to the LICENSED PRODUCTS to be sold or offered for sale by the
assignee under the KTM MARK, with LICENSOR listed as an additional insured, in the amount of $1,000,000,
such product liability insurance to be maintained in effect for the remainder of the term of this Agreement as
provided in paragraph 6(a) above.
18. Entire Agreement.
This Agreement constitutes the full and complete agreement between the parties relating to the licensed KTM
MARK. This Agreement may be modified only by written amendments hereto made subsequently and executed
by proper and duly authorized representatives of the LICENSOR and LICENSEE.
This agreement maybe signed in counter parts.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their duly authorized officers
effective from the Effective Date.
KTM Sportmotorcycle USA, Inc. Padova International USA Inc.
By: , President By: /s/ Don Dallape , President
Dated: Dated: 3/3/03
Redline Sports Marketing, Inc. Agreement #:ESM092704BL Licensee: Execute Sports Marketing
LIMITED LICENSE AGREEMENT FOR BOBBY LABONTE
THIS AGREEMENT, is entered into as of the 27th day of September 2004, by and between REDLINE
SPORTS MARKETING, INC., a North Carolina corporation ("Redline"), and PADOVA INTERNATIONAL
dba EXECUTE SPORTS MARKETING, a corporation under the laws of California ("Licensee").
A. Redline is the owner of, or has rights to, and desires to license certain trademarks which are set forth on the
attached Exhibit A ("Redline Trademarks").
B. Redline has rights in and desires to license certain copyrights in works, which are set forth on the attached
Exhibit B ("Redline Copyright Works").
C. Licensee is engaged in the business of manufacturing and selling the products set forth on Exhibit C ("Licensed
Products") attached hereto and desires to obtain a limited license from Redline to manufacture and sell such
products bearing the Redline Trademarks and Redline Copyright Works as more specifically set forth herein.
D. Redline desires to protect the integrity of their respective trademarks and to protect and preserve the integrity
of and their respective rights in their respective copyright works.
E. Licensee and Redline agree that certain restrictions on Licensee's use of the Redline Trademarks and Redline
Copyright Works are necessary to protect their rights. Redline and Licensee have entered into this Agreement to
set forth their respective rights and obligations.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
Section 1. LICENSE
1.1 Grant of Limited License By Redline. Upon the terms and conditions set forth herein, Redline hereby grants
to Licensee, and Licensee hereby accepts, a LIMITED, NONTRANSFERABLE license and NON-
EXCLUSIVE right to use the Redline Trademarks and the Redline Copyright Works in the Contract Territory
(as defined below) during the Contract Term (as defined below) in connection with the manufacture, packaging,
shipping and sale of the products set forth on Exhibit C bearing the Redline Trademarks and the Redline
Copyright Works (the "Licensed Products"). It is understood and agreed that this license shall pertain only to
Licensed Products and does not extend to any other product or service. The rights granted to Licensee
hereunder shall not include the right of Licensee, or any person or entity purchasing from Licensee other than
Action Performance Companies and their successors or assigns, to sell Licensed Products at race tracks or
souvenir trailers or concessionaires track side at or during any racing event. Licensee shall only have the right to
manufacture or produce Licensed Products in quantities that are reasonably required to meet its customer
1.2 Limitations; No Right to Sublicense. The license and rights granted herein shall be limited to the express terms
set forth herein and shall not include any right of Licensee to do any of the following acts, each of which is
expressly prohibited hereby: (i) manufacture any souvenirs, including the packaging thereof, bearing the Redline
Trademarks, or Redline Copyright Works, or any of them, except for Licensed Products; (ii) grant sublicenses or
assignments in or of the license granted herein or any portion thereof, except as approved in writing by Redline
and where the sublicensed manufacturer has executed a manufacturing agreement satisfactory to Redline; (iii)
produce any Licensed Products under any name other than Licensee's name set forth on Exhibit C; (iv) use or
knowingly permit the use of any of the Redline Trademarks or Redline Copyright Works in any manner or for any
purpose not specifically authorized under this Agreement; (v) change, alter, add to, delete from, augment or
modify the Licensed Products in any way or mix the Redline Trademarks or Redline Copyright Works with any
other unauthorized licensed indicia; or (vi) sell the Licensed Products to any person or entity for incorporation
into another product or souvenir that has not been properly licensed by Redline. No license is granted hereunder
for the manufacture, sale, or distribution of Licensed Products to be used as premiums, for fund raising, as
giveaways, in combination sales, or to be disposed of under similar methods of merchandising or sold for less
than the usual selling price for the purpose of increasing sales. Licensee shall not use any of the Redline
Trademarks or Redline Copyright Works in connection with any sweepstake, lottery, game of chance or any
similar promotional sales device, scheme, or program. In the event Licensee desires to use Licensed Products as
premiums or for promotional purposes, Licensee acknowledges that a separate contractual arrangement must be
made with Redline. Licensee's use of the Redline Trademarks or Redline Copyright Works is for the benefit of
Redline and Licensee shall not acquire any rights whatsoever in the Redline Trademarks or Redline Copyright
Works except as specifically set forth herein. Licensee is prohibited from using the Joe Gibbs Racing trademarks
or any affiliate trademarks in any domain name registration or uniform resource locator (URL) address. It is
agreed and understood that should Licensee desire to use the said trademarks on any Internet site, the request
must be submitted to Joe Gibbs Racing in writing.
Section 2. TERRITORY
2.1 Territory. The limited license granted pursuant to this Agreement shall extend throughout the United States of
America and its territories and possessions and Canada (the "Contract Territory"). Licensee may submit a written
request to Redline to extend the Contract Territory to additional countries. The Contract Territory will be
expanded only upon written approval of Redline. This Agreement grants no right to manufacture, sell, market or
distribute Licensed Products outside the Contract Territory, and this Agreement grants no right to authorize any
person or entity to manufacture, sell, market or distribute Licensed Products outside the Contract Territory.
Licensee agrees not to sell Licensed Products to any person or entity who Licensee knows or has reason to
know intends or is likely to resell Licensed Products outside the Contract Territory.
Section 3. TERM
3.1 Term. The term of this Agreement shall be for a period beginning on the date hereof and ending on December
31, 2005 (the "Contract Period") unless sooner terminated in accordance with the terms hereof. This Agreement
may be renewed by a writing signed by each party hereto.
Section 4. ROYALTY AND COMPENSATION
4.1 Royalty. (a) In consideration of the rights granted by Redline hereunder, Licensee hereby irrevocably agrees
to pay Redline a royalty (the "Royalty") equal to twelve percent (12%) of the Net Sales Price for each Licensed
Product sold (except in prearranged special projects wherein specific royalty rate will be discussed) or otherwise
distributed by Licensee payable in U.S. Dollars payable as set forth below.
(b) "Net Sales Price" shall mean the wholesale list price or top-of-the-line gross invoice sales price, whichever is
greater, less permitted discounts and allowances, not to exceed one percent (1%) of Licensee's Net Sales of
Licensed Product per annual period. No deductions shall be made for uncollectible accounts or for other costs
incurred in the manufacturing, selling, advertising or distribution of the Licensed Products. The royalty obligations
shall accrue on the earliest of shipping or actual invoicing by Licensee regardless of the time of collection by
(c) If Licensee sells any Licensed Products to any party affiliated with Licensee or directly or indirectly related to
or under common control with Licensee, at a price less than the regular price charged to unrelated parties, then
the royalty payable to Redline shall be computed on the basis of the regular price charged to unrelated parties.
(d) Upon expiration or termination of this Agreement, all Royalty obligations, including any unpaid portion of the
Guaranteed Minimum Royalty, shall be accelerated and shall immediately be due and payable, subject only to the
right of sell down.
(e) All of Licensee's obligations under this Section 4 shall be performed without any right of Licensee to invoke
set-offs, deductions and other similar rights.
(f) If Licensee enters any agreement permitting Licensee to use the name and/or likeness of any other NASCAR
team or personality and such agreement provides for a higher royalty percentage than specified herein, Licensee
immediately shall give Redline notice of such agreement and higher royalty percentage. The parties agree that
such notice shall automatically amend the royalty percentage of this Agreement to the royalty percentage of the
notified agreement and that the amended, higher royalty percentage shall be applied retroactively to all sales made
under this Agreement.
4.2 Guaranteed Minimum and Advance Royalties. Licensee agrees that notwithstanding the actual amount of
sales of Licensed Products, it shall be obligated to make certain nonrefundable minimum payments to Redline
("Guaranteed Minimum Royalties") in the amount of $7,000.00 during the Contract Period. The 2004
Guaranteed Minimum Royalty ($1,000.00) is payable as follows: $1,000.00 due upon execution of the
agreement. The 2005 Guaranteed Minimum Royalty ($6,000.00) is payable as follows: $1,500.00 due on or
before March 31, June 30, September 30 and December 31, 2005. All payments of Royalty pursuant to Section
4.1 in each calendar year will be credited against the Guaranteed Minimum Royalty. Once the prepaid minimum
amount is reached, royalty payments will be made in accordance with Section 4.1. Guaranteed Minimum
Royalties in excess of actual sales for any calendar year will not be applied against royalties due in any
subsequent calendar year.
4.3 Payments, Statements and Records. All royalty payments shall be due and payable within twenty (20) days
after the end of each calendar quarter for sales or distributions during the previous quarter. Complete and
accurate royalty reports will be due whether or not there were sales during the previous quarter. Late payments
shall bear interest at a rate equal to 1(1)/2% per month until paid. Licensee shall (i) furnish to Redline in
connection with each royalty payment, a statement of account of all sales activity relating to the Licensed
Products (including a per item breakdown including description of the Licensed Product, number sold or
distributed and Net Sales Price), together with such supporting detail that Redline may require and (ii) keep full,
true, clear and accurate records and books of account with respect to all Licensed Products, such books and
records to be retained for at least three (3) years after expiration of the Contract Period. Redline shall have the
right to inspect any such books and records related to the 4 Licensed Products and the manufacturing facilities of
Licensee or its authorized manufacturer during normal business hours and, where possible, upon advance notice.
The Royalties and Guaranteed Minimum Royalties due hereunder shall be paid to Redline at the address set forth
in Section 10.6 hereof.
In the event that an audit by Redline (or its representatives) determines a payment deficiency for Royalties due
versus Royalties actually paid by Licensee of five percent (5%) or greater, then the cost of the audit shall be paid
by Licensee, together with the Royalty deficiency plus interest thereon at an interest rate of 1(1)/2% per month
until paid in full.
The receipt and/or acceptance by Redline of the statements furnished or royalties paid hereunder or the cashing
of any royalty checks paid hereunder, shall not preclude Redline from questioning the correctness thereof at any
time. In the event that any inconsistencies or mistakes are discovered in such statements or payments, they shall
immediately be rectified by Licensee and the appropriate payment shall be made by Licensee.
Section 5. MANUFACTURE AND QUALITY STANDARDS
5.1 Quality Standards. The Licensed Products shall meet or exceed Redline's standards and shall be of high and
uniform premium quality (including, but not limited to, quality of material and workmanship), in Redline's
reasonable judgment, sufficient to protect and enhance the Licensed Products and the substantial goodwill
pertaining thereto. All Licensed Products shall be consistent with, or superior in quality to, the samples or
prototypes provided to and approved by Redline. Licensee shall manufacture, package, ship and label the
Licensed Products in accordance with (i) all applicable foreign, federal, state and local laws, rules and regulations
and (ii) the manufacturing and packaging specifications and requirements established from time to time by
Redline. Licensee shall furnish to Redline design concepts, artwork and product samples for approval prior to use
by Licensee as set forth in Section 5.2.
5.2 Quality and Approval of Licensed Products. (a) Purpose of Quality Control. In order to maintain the quality
reputation of Redline Trademarks and the rights in the Redline Copyright Works, all Licensed Products and
promotional or packaging material relating to the Licensed Products must receive the approval of Redline. All
approvals in this Section 5.2 shall be in writing.
(b) Pre-Production Submittal Approval. Licensee shall submit at its own cost to Redline for Redline's written
approval three (3) pre-production submittals for any proposed Licensed Products together with all promotional
and packaging material, containers, cartons and wrapping relating to the Licensed Products.
LICENSEE SHALL NOT MANUFACTURE, SELL, MARKET OR DISTRIBUTE ANY LICENSED
PRODUCTS OR ANY PROMOTIONAL OR PACKAGING MATERIAL, CONTAINERS, CARTONS
AND WRAPPING RELATING TO THE LICENSED PRODUCTS BEFORE OBTAINING REDLINE'S
WRITTEN APPROVAL OF ALL REQUIRED PRE-PRODUCTION SUBMITTALS FOR EACH SUCH
ITEM. If Redline fails to give written approval of any preproduction submittal within thirty (30) days after receipt
of Licensee's submission of Redline, such failure shall constitute a disapproval of the pre-production submittal.
(c) Production Submittal Approval. Licensee shall submit, at its own cost, to Redline six (6) final production
samples of any Licensed Products from the first production run to be received in Redline's office no later than ten
(10) days following such production and prior to first shipment. Licensee may manufacture, sell, market and
distribute Licensed Products after submitting to Redline production samples of such Licensed Products, provided
that (i) such samples fully conform to the approved pre-production samples; and (ii) upon Redline's demand,
Licensee shall immediately cease all manufacture, sale, marketing and distribution of any Licensed Product if
Redline disapproves its production samples. If Redline fails to give written disapproval of any production sample
submitted by Licensee within thirty (30) days after the date of Redline's receipt of Licensee's submission, such
failure shall constitute an approval of the submission.
(d) Quality Maintenance. Licensee shall maintain the same quality in the Licensed Products and promotional and
packaging material relating to the Licensed Products produced as in the samples approved by Redline. Licensee
agrees to provide upon demand a reasonable number of samples of the Licensed Products and of promotional
and packaging material relating to the Licensed Products at no cost to Redline for periodic quality control
inspection. All such samples shall be excluded from Net Sales.
(e) Changes. If during the term of this Agreement there is to be any change in the Licensed Products or the
promotional or packaging material relating to the Licensed Products after the approval of production samples,
Licensee must comply with the provisions of Section 5.2(b) and Section 5.2(c) for the changed item before the
item's manufacture, sale, marketing or distribution.
(f) Licensee's Production Facilities. Licensee agrees to furnish Redline promptly with the addresses of Licensee's
production facilities for the Licensed Products and the names and addresses of the persons or entities, if any,
which are manufacturing each of the Licensed Products for Licensee. Redline shall have the right upon reasonable
notice to Licensee, during regular business hours, to inspect any production facility where any Licensed Product
is being manufactured to determine whether Licensee is adhering to the requirements of this Agreement relating to
the nature and quality of the Licensed Products and the use of the Redline Trademarks and Redline Copyright
Works in connection therewith.
(g) Damaged, Defective or Non-Approved Items. Licensee shall not sell, market, distribute or use for any
purpose or permit any third party to sell, market, distribute or use for any purpose any Licensed Products or
promotional and packaging material relating to the Licensed Products which are damaged, defective, seconds or
otherwise fail to meet the specifications or quality standards of Redline or the trademark and copyright usage and
notice requirements of this Agreement. If in Redline's opinion any Licensed Products or promotional or packaging
material relating to any Licensed Products are damaged, defective, seconds or otherwise fail to meet the quality
standards reflected in the production samples of the Licensed Products approved hereunder or the trademark or
copyright usage and notice requirements of this Agreement, then, upon Redline's demand, Licensee shall
immediately cease all further manufacture and distribution of such items until the failure is corrected and the party
having made the demand gives written approval of the correction. If requested by Redline, Licensee will recall
any substandard Licensed Products or promotional or packaging material relating to the Licensed Products to
Licensee's warehouse or plant at Licensee's sole expense.
(h) Laboratory Testing. Licensee agrees that upon reasonable demand by Redline, it will undertake and pay for
any pre-production laboratory testing necessary with respect to the Licensed Products. Any such testing shall be
done by a qualified independent laboratory acceptable to Redline. If testing is required, approval for production
will be contingent upon test results satisfactory to Redline.
(i) First Shipment. Licensee agrees to give Redline prompt notice of the first shipment of Licensed Products.
5.3 Advertising and Promotion. (a) All advertising and promotional material prepared by Licensee in connection
with the Licensed Products shall be subject to the prior written approval of Redline. If Redline fails to give written
approval of the advertising or promotional material within thirty (30) days after receipt of Licensee's submission
to Redline, such failure shall constitute a disapproval of the submittal. If the text of the advertising and/or
promotional material has been previously approved in writing by Redline, Licensee may re-use such material
without again obtaining the written approval of Redline unless such approval has been previously withdrawn in
writing by Redline or unless this Agreement has been terminated. All copyrights in such advertising and
promotional material shall bear a copyright notice in the name of Redline.
(b) Licensee shall diligently and continuously market and distribute the Licensed Products in the Contract
Territory and will use its best efforts to make and maintain adequate arrangements for the marketing and
distribution necessary to meet the demand for the Licensed Products in the Contract Territory.
(c) Licensee shall at all times maintain an inventory of the Licensed Products sufficient to supply promptly the
reasonably foreseeable demand for the Licensed Products within the Contract Territory.
5.4 Trademark and Copyright Protection; Intellectual Property. Licensee acknowledges that the manufacture and
sale by it of the Licensed Products shall not vest in Licensee any ownership rights whatsoever in the Redline
Trademarks or Redline Copyright Works. Licensee agrees that its use of the Redline Trademarks or Redline
Copyright Works shall inure to the benefit of Redline, as applicable. Licensee shall cause to appear on all
Licensed Products, and on all materials in connection with which the Redline Trademarks or Redline Copyright
Works are used hereunder, legends, markings, indications and notices in order to give notice of the trademarks,
tradenames, copyrights or other rights therein or pertaining thereto. Licensee shall comply with all practices and
governmental regulations in force or customarily used in the United States (or if applicable, the relevant foreign
jurisdictions) in order to safeguard the rights of Redline to the Redline Trademarks or Redline Copyright Works,
including without limitation imprinting where appropriate, irremovably, legibly and permanently on the Licensed
Products, packaging, labeling and advertising or promotional material used in connection therewith, notice of
trademarks and/or copyrights, including but not limited (i) the symbol "TM" in the upper right-hand corner next to
the mark, for marks which are not yet registered with the United States Patent and Trademark Office, (ii) the
symbol "(R)" in the upper right-hand corner next to the mark, for marks which are registered with the United
States Patent and Trademark Office; (iii) the symbol "(C)200_ Joe Gibbs Racing" for any copyrights of printed
materials, and (iv) an indication that the Licensed Product, whether the mark is registered or unregistered, is
"made under license from Joe Gibbs Racing".
This Agreement shall not be considered as implying any assignment, either partial or temporary, of Redline's
trademark rights, Redline remaining as the sole holders of all rights therein as well as all actions and/or claims in
connection with said marks. All rights in said trademarks and service marks other than those specifically granted
herein are reserved to Redline for its own respective use and benefit. Licensee will at no time use or authorize the
use of any trademark, trade name or other designation identical with or confusingly or colorably similar to
Redline's trademarks or service marks.
Licensee acknowledges that:
(i) The Redline Trademarks and Redline Copyright Works, copyrights, logos and images associated with the
Redline Trademarks and Redline Copyright Works, (the "Property") are unique and original and that Redline, as
applicable, are the owners thereof;
(ii) Redline has acquired substantial and valuable good will in the Property;
(iii) The Property has acquired a secondary meaning as trademarks uniquely associated with the merchandise
authorized by Redline;
(iv) All rights in any additional material, new versions, translations, rearrangements or other changes in the
Licensed Products which may be created by or for Licensee shall, as between Redline and Licensee, be and will
remain the exclusive property of Redline, as applicable, and;
(v) Any copyrights, trademarks and design patents heretofore obtained by Redline or in connection with the
marks are good and valid.
(vi) As between Redline and Licensee, Redline shall be deemed to be the owner of all materials created for the
Licensed Products hereunder, including but not limited to artwork and designs. In connection herewith, Licensee
hereby assigns and transfers to Redline, as applicable, or its designee, all rights, including copyright, title and
interest in and to all such materials and elements free of charge.
This Agreement shall not be considered as implying any assignment, either partial or temporary, of Redline's
copyrights, remaining as the sole holder of said copyrights, as well as of all actions and/or claims in connection
with said copyrights.
Licensee shall not, during the Contract Term or any time thereafter, dispute or contest, nor cause or assist or aid
others in disputing or contesting, Redline's or its licensors, exclusive right and title to the marks or Property, or
any other rights of Redline's in and to the subject matter of this Agreement.
Section 6. FURTHER OBLIGATIONS OF LICENSEE
6.1 Best Efforts. Licensee shall protect and promote the goodwill and reputation of Redline and will avoid activity
detrimental to their interest, reputation and goodwill. Licensee shall exercise its best efforts to promote the
6.2 Insurance. Licensee shall acquire and maintain, at its own expense, in full force and effect throughout the
Contract Term and for a one year period thereafter, products liability, completed operations, advertiser's, and
comprehensive liability insurance policies with respect to the Licensed Products with an insurer with a Moody's
rating of B or higher satisfactory to Redline and shall name Redline as additional insured therein. Such standard
insurance shall provide protection against any and all claims, demands and causes of action arising out of any
defects or failure to perform, alleged or otherwise, of the Licensed Products, or any material used in connection
therewith or any use thereof. Such standard advertiser's liability insurance shall provide protection against any and
all claims, demands and causes of action arising out of errors and omissions in any advertisement that may be
utilized for the Licensed Products. The amount of coverage of each policy should be a minimum of two million
dollars ($2,000,000.00) combined single limit, with deductible not in excess of five thousand dollars ($5,000.00),
for each single occurrence for bodily injury and/or for property damage and a per annum aggregate limitation of
not less than two million dollars ($2,000,000.00). Each policy shall provide for thirty (30) days' notice to Redline
from the insurer by registered or certified mail, return receipt requested, in the event of any modification,
cancellation or termination. Licensee agrees to furnish Redline a Certificate of Insurance evidencing same prior to
manufacture of any Licensed Products and, in no event, shall the Licensee manufacture Licensed Products before
receipt by Redline of such evidence of insurance.
6.3 Manufacturing Agreements. In the case that Licensee utilizes any submanufacturers, Licensee shall negotiate
in good faith any manufacturing agreements that Redline may require in connection with the Licensed Products
prior to manufacture and shall comply with all requirements of any such manufacturing agreement.
6.4 Approvals. Licensee shall undertake to secure from the appropriate authorities, at its own cost and expense,
all permits, concessions or other documents required by law in connection with the manufacture, packing,
shipping, sale or other use of the Licensed Products. Licensee shall be responsible for
(i) all authorizations for the use of, and (ii) the payment of any royalties that may be due and owing to the owners
of any trademarks or tradenames (other than Redline as provided for herein) which may be used in connection
with the Licensed Products.
Section 7. INDEMNIFICATION
7.1 Indemnification. If any person shall make a claim for any damage or injury of any kind or nature whatever,
including death, whether such claim be for breach of warranty, product liability, or for any other alleged type of
damage, and whether such claim be based in negligence, strict liability, or under any other theory, against Redline
and/or any of its affiliates, partners, shareholders, agents, employees, and directors or licensors (collectively, the
"Indemnified Parties") arising out of the Licensed Products or Licensee's actions or inactions in accordance with
this Agreement, Licensee will indemnify and hold harmless Redline and each Indemnified Party from and against
any and all loss, expense, damage, or injury that Redline and any Indemnified Party may sustain as a result of any
such claim, and Licensee will assume on behalf of Redline and such Indemnified Parties the defense of any action
at law or suit in equity or any other proceeding which may be brought against Redline or any Indemnified Party
upon such claim and will pay on behalf of Redline and/or such Indemnified Party upon its demand the amount of
any and all costs, fees, and expenses in connection with such defense, including the fees of Redline and/or such
Indemnified Party's counsel, as well as any judgment, fine, or penalty that may be entered against Redline and/or
such Indemnified Party in any such action, suit, or proceeding. This indemnity shall continue in force
notwithstanding the termination of this Agreement.
Section 8. REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties. Each party represents and warrants to the other that: (i) it has, and will
maintain at all times during this Agreement, all federal, state and local governmental permits and licenses required
in order to conduct its business as contemplated hereunder; (ii) it is duly organized and validly existing under the
laws of the state of its organization; (iii) it has full power and authority to enter into and perform this Agreement
and the person or persons executing this Agreement have been duly authorized to do so; and (iv) the execution,
delivery and performance of this Agreement shall not conflict with, violate or constitute a default under, any other
contracts, agreements or undertakings to which it is a party or by which it is bound. EXCEPT AS SET FORTH
IN SECTION 8.2 BELOW, REDLINE DOES NOT MAKE ANY OTHER REPRESENTATIONS OR
WARRANTIES, EXPRESSED OR IMPLIED.
8.2 Trademark Indemnity by Redline. Redline represents and warrants that it has the rights to grant the licenses in
the Redline Trademarks and Redline Copyright Works granted herein as set forth on Exhibits A and B. In the
event a third party should file within the Contract Territory any claim against Licensee for trademark or trade
dress infringement, for copyright infringement for works supplied to Licensee by Redline or for other similar
intellectual property infringement, occurring within the Contract Territory, solely on account of Licensee's proper
use of the Redline Trademarks, Redline Copyright Works in accordance with the terms hereof, Licensee shall
promptly notify Redline of such claim, and thereafter if such claim arises out of Redline's failure to possess full
right and authority to grant the license in the Redline Trademarks or Redline Copyright Works, as applicable,
evidenced by this Agreement, then Redline shall undertake defense of such claim through counsel of its choosing
and at its expense as to the Redline Trademarks and Redline Copyright Works and shall take whatever steps
they deem necessary or appropriate to defend and finally dispose of such claim. If the claim is disposed of by
agreed or court imposed suspension of distribution of Licensed Products, Licensee, upon notice from Redline
shall suspend its distribution of Licensed Products. EXCEPT FOR DEFENSE OF A CLAIM AND
PAYMENT OF ACCOMPANYING DAMAGES TO THE CLAIMANT, REDLINE SHALL NOT BE
RESPONSIBLE FOR ANY DAMAGES OR EXPENSES SUFFERED BY LICENSEE AS A RESULT OF
SUCH SUSPENSION OR LIMITATION, INCLUDING WITHOUT LIMITATION CONSEQUENTIAL
8.3 Safety. Licensee certifies that all Licensed Products will meet all applicable Consumer Product Safety
Commission (CPSC) and all applicable American Society for Testing and Materials (ASTM) standards as well
as comply with all other applicable federal, state and local laws and regulations.
Section 9. TERMINATION
9.1 Payment and Covenant Default. If Licensee shall fail to make any payment due hereunder and if such default
shall continue uncured for a period of five (5) days thereafter, Redline shall have the right to terminate this
Agreement forthwith. If Licensee shall otherwise fail to perform any of the terms, conditions, agreements or
covenants in this Agreement, and such default shall continue uncured for a period of twenty (20) days after
written notice thereof to Licensee, Redline shall have the right to terminate this Agreement forthwith.
9.2 Insolvency. Either party may by written notice terminate this Agreement immediately without incurring thereby
any liability to the other in the event the other party shall (i) be dissolved, be adjudicated insolvent or bankrupt or
cease operations, admit in writing its inability to pay its debts as they mature or make a general assignment for the
benefit of, or enter into any composition or arrangement with, creditors, or file for relief under any insolvency law;
(ii) apply for, or consent (by admission of material allegations of a petition or otherwise) to the appointment of a
receiver, trustee or liquidator of all or a substantial part of its assets or affairs, or authorize such application or
consent, or suffer any proceedings seeking such appointment to be commenced against it (whether voluntary or
involuntary) which continues undismissed for a period of thirty (30) days; or (iii) be the subject of any other
proceeding not defined above whereby any substantial portion of the property or assets of such party are or may
be distributed among its creditors (or any group of them).
9.3 Change in Control. Redline may immediately terminate this Agreement without liability if Licensee undergoes
any substantial change in its ownership or control.
9.4 Use of Marks. Redline may immediately terminate this Agreement where the team has undergone substantial
change, such as if the sponsor withdraws or changes, if the driver changes teams, if the car number changes or if
the color scheme, logo scheme or make of the car changes.
9.5 Insurance. Redline may terminate this Agreement immediately if Licensee fails to maintain the insurance
9.6 Production. Redline may terminate this Agreement immediately if Licensee does not introduce Licensed
Products to the market within ninety (90) days of execution of this contract or continue to diligently pursue sales
9.7 Quality. Redline may terminate this Agreement immediately if the quality of the Licensed Products is lower
than of the approved samples.
9.8 Approval. Redline may terminate this Agreement immediately if Licensee manufactures, sells, markets,
distributes or uses in any way any Licensed Products or promotional or packaging material relating to the
Licensed Products without having prior written approval of Redline as provided for by the provisions of this
Agreement or continues to manufacture, sell, market, distribute or use in any way any Licensed Products or
promotional or packaging material relating to the Licensed Products after receipt of notice of Redline
disapproving such items. In addition to, or as an alternative, at the sole discretion of Redline, as liquidated
damages, Licensee shall pay to Redline the sum of five thousand dollars ($5,000.00) on demand for failure, per
occurrence, to follow proper approval procedures as set forth herein.
9.9 Rights and Remedies. On the expiration or sooner termination of this Agreement:
(a) The rights and license granted to Licensee herein shall forthwith terminate and automatically revert to Redline.
(b) Licensee shall discontinue all use of the Redline Trademarks and Redline Copyright Works and shall deliver
to Redline all products, packages and other materials in its possession bearing the Redline Trademarks and
Redline Copyright Works and previously paid for by Redline, and shall either (i) destroy all products, packages
and other materials in its possession bearing Redline Trademarks and Redline Copyright Works not previously
sold to Redline and provide satisfactory evidence to Redline of such destruction or (ii) cause all Redline
Trademarks and Redline Copyright Works, to be removed from the Licensed Products and provide Redline with
satisfactory evidence of such removal; provided, however, that if Licensee is not in breach of this Agreement
Licensee shall be entitled to dispose of existing approved Licensed Products within sixty
(60) days after any such termination.
(c) The termination or expiration of this Agreement shall not relieve Licensee of any obligation due to Redline
arising or accrued prior to or as of the date of such termination or expiration, including the obligation to pay
Royalties and Guaranteed Minimum Royalties.
The parties acknowledge that there may not be an adequate remedy at law to redress a breach or threatened
breach of the terms of this Agreement, and therefore agree that either party, or their respective assigns, shall be
entitled to an injunction or other equitable relief against the other to restrain it from such breach, and each party
waives any claim or defense that the other has an adequate remedy at law. The foregoing is in addition to any
remedies at law that either party may have.
Section 10. MISCELLANEOUS
10.1 No Agency Relation. Nothing herein contained shall create or be deemed to create any agency, partnership
or joint venture between the parties hereto, and neither party shall have power or authority to obligate or bind the
other in any manner whatsoever.
10.2 Amendments. No addition to, deletion from or modification of any of the provisions of this Agreement shall
be binding upon the parties unless made in writing and signed by a duly authorized representative of each party.
10.3 Assignment. The rights of Licensee under this Agreement shall not be assigned, sublicensed, or
subcontracted, in whole or in part (whether by operation of law or otherwise) without the prior written consent of
Redline. Any assignment or attempted assignment pursuant to the change of control of Licensee or the sale of the
stock, assets or business of Licensee shall not be effective without the prior written consent of Redline.
10.4 Applicable Law. This Agreement and all purchase orders placed pursuant to this Agreement shall be
governed by and construed and enformced in accordance with the internal laws and judicial decisions of the State
of North Carolina. Any litigation, action or proceeding arising out of or relating to this Agreement shall be
instituted in any State or Federal court in the State of North Carolina, Mecklenburg or Cabarrus Counties.
Licensee hereby waives any objection which it might have now or hereafter to the venue of any such litigation,
action or proceeding, submits to the jurisdiction of any such court and, waives any claim or defense of
inconvenient forum. Licensee consents to service of process by Registered Mail, Return Receipt Requested, at
Licensee's address and expressly waives the benefit of any contrary provision of law.
10.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same document.
10.6 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed duly given when
personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid, or by
facsimile transmission or overnight carrier.
To Redline: Redline Sports Marketing, Inc. 13415 Reese Boulevard West Huntersville, NC 28078
Attn: Dave Alpern (Brooks Busby) Telephone: 704/944-5035 Fax: 704/944-5059
To Licensee: Brent Walker/Don Dallape Padova International dba Execute Sports Marketing 1284 Puerta Del
Sol Suite 150
San Clemente, CA 92673
or to other such address as the person to whom notice is to be given may have previously furnished to the other
in writing in the manner set forth herein, provided that notice of a change of address all be deemed given only
10.7 Purchases by Redline. Redline shall be permitted to purchase Licensed Products from Licensee at the most
favorable prices offered by Licensee to any other person or entity.
10.8 Charity and Promotions. Purchases by Redline. In addition to the samples provided for herein, Licensee
hereby agrees to provide Redline at no charge, upon request, with final packaged production samples of the
Licensed Product for Redline to use to donate for appropriate charity auctions or other charitable purposes or to
use in connection with the Joe Gibbs Racing team, its sponsors, endorsement sponsors, crew members, or other
similar purposes, but not for resale by Redline.
10.9 Entire Agreement. This Agreement embodies the entire agreement and understanding between the parties
hereto and supersedes all prior agreements and understandings, verbal or written, relating to the subject matter
hereof. There are no unwritten oral agreements between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first
PADOVA INTERNATIONAL, dba EXECUTE SPORTS MARKETING, a California corporation
By:/s/ Don Dallape
REDLINE SPORTS MARKETING, INC., a North Carolina corporation
By:/s/ David B. Alpern
David B. Alpern
Title: Vice President of Marketing
Exhibit A to Limited License Agreement Redline Sports Marketing Inc. December 31,2005
Name(s) of Owners of Marks: MARKS
Interstate Batteries "Interstate(R)" and "Interstate(R)
Joe Gibbs Racing, Inc. "Joe Gibbs Racing Inc.(R)" and #18(R)
Bobby Labonte "Bobby Labonte(R)"
[in any combination acceptable to
on any single Licensed Product]
Exhibit B to Limited
Redline Sports Marketing Inc.
REDLINE COPYRIGHT WORKS
Name(a) of Owners of Marks: MARKS
Joe Gibbs Racing, Inc. Likeness of the #18
Joe Gibbs Racing
Nextel Cup Car, including "Interstate
Bobby Labonte Enterprises "Bobby Labonte" (name, likeness,
[in any combination acceptable to
Redline on any single Licensed Product
With approved artwork]
This license agreement (hereinafter "Agreement") is made effective as of the latter of the signature dates below
written (hereinafter the "Effective Date") by and between American Motorcyclist Association, an Ohio
corporation, with its offices at 1315 Yarmouth Drive, Pickerington, Ohio 43147 ("LICENSOR"), and Execute
Sports, with its principal place of business at 23121 Arroyo Vista, Suite B, Rancho Santa Margarita, CA 92688
WHEREAS, LICENSOR is the owner of the trademarks and service marks and associated applications and
registrations thereof ("MARKS") listed in Exhibit A for use in association with a motorcyclist association and
motorcyclist related services.
WHEREAS, LICENSEE desires to obtain from LICENSOR a right and license to use the MARKS in
connection with number plates.
WHEREAS, LICENSOR warrants that LICENSOR has full and exclusive right to grant this license on these
NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the parties hereto
agree as follows:
1. LICENSE GRANT
1.1 License Grant. Subject to the terms, conditions, and restrictions of this Agreement, LICENSOR hereby
grants to LICENSEE a non-exclusive, non-transferable license for the term, to use the MARKS in connection
with number plates.
2.1 LICENSOR Rights. LICENSEE agrees that LICENSOR shall retain all ownership rights in the MARKS,
and LICENSEE agrees that it will not do anything inconsistent with such ownership and that all use of the
MARKS shall inure to the benefit of LICENSOR. Nothing in this Agreement shall be interpreted as giving
LICENSEE any right, title, or interest in the MARKS other than the right to use the MARKS in accordance with
this Agreement. LICENSEE further agrees that it will not challenge the validity of this Agreement or attack the
title of LICENSOR to the MARKS or otherwise disparage the MARKS or contest them in any way. No license
or other interest of any kind in such proprietary rights is directly or indirectly granted to LICENSEE, except as
specifically provided in
Section 1.1 above.
3. QUALITY STANDARDS
3.1 Quality Control. LICENSEE agrees that the nature and quality of all goods sold, and all services rendered by
LICENSEE under the MARKS, and all related advertising and promotional uses of the MARKS, shall conform
to the standards set by, and be under the control of LICENSOR. LICENSOR has approved the use of the
MARKS on the Product to be manufactured, used, and sold by LICENSEE, a sample of which is attached
hereto as Exhibit B.
4. FORM OF USE
4.1 LICENSEE agrees to use the MARKS only in the form and manner and with appropriate legends as
prescribed by LICENSOR.
5.1 Lump Sum and/or Royalty Fee Payments. As consideration for the initial term of the license granted
hereunder, LICENSEE agrees to pay LICENSOR a one-time lump sum payment of $250 and royalty fees of
6% of the LICENSEE's gross sales in excess of $1,000 of products bearing the MARKS either directly or
indirectly, such as on packaging for the products. LICENSOR shall have the right to retain an independent
service to review the financial records of LICENSEE as it relates to use of the MARKS. The royalty fees shall
accrue and be charged throughout the term and shall be paid as follows: Not later than thirty (30) days after the
end of each of LICENSEE's calendar quarter, LICENSEE shall pay to LICENSOR the total amount of royalty
fee due for the quarter just ended.
6. TERM AND TERMINATION
6.1 Term of License. This license shall become effective on the Effective Date of this Agreement, shall continue in
force and effect for one (1) year or until the Agreement between the parties is terminated, whichever is earlier,
and shall not otherwise terminate unless in accordance with the provisions of this section 6.
6.2 Renewal. LICENSOR, in its sole discretion, with or without cause, may refuse to renew the license at the
end of any one (1) year term under the same or different terms, as LICENSOR so desires. Both parties
evidencing intent to renew must sign a renewal notice or no renewal shall have occurred. If no other terms are
adopted upon renewal, then the same terms herein shall apply.
6.3 Termination. Either party may terminate this Agreement upon sixty (60) days prior written notice to the other
party if a Default, as defined below, by the other party has occurred and is continuing. The term "Default" shall
mean any of the following: (a) failure by a party to comply with or perform any provision or condition of this
Agreement and continuance of such failure for thirty (30) days after written notice thereof to such party; or (b) a
party becomes insolvent, is unable to pay its debts as they mature or is the subject of a petition in bankruptcy,
whether voluntary or involuntary, or of any other proceeding under bankruptcy, insolvency or similar laws; or
makes an assignment for the benefit of creditors; or is named in, or its property is subject to a suit for
appointment of a receiver; or is dissolved or liquidated, or (c) LICENSEE commits any act that does or may
bring harm to the MARKS. In the event of such termination, the non-defaulting party shall be entitled to pursue
any remedy provided in law or equity, including injunctive relief and the right to recover any damages it may have
suffered by reason of such Default. Upon termination of this Agreement, LICENSEE shall immediately terminate
all use of the MARKS.
6.4 Ceasing of Operations. In the event that LICENSEE ceases operations, all rights acquired by the
LICENSEE hereunder shall terminate.
6.5 Rights Upon Termination. If this Agreement is terminated, then all of LICENSEE'S rights and licenses with
respect to the MARKS shall terminate and LICENSEE shall immediately discontinue all use of the MARKS and,
at LICENSOR'S sole discretion, shall either destroy or deliver to LICENSOR any unsold inventory of products
bearing the MARKS.
7.1 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the
State of Ohio, without reference to conflict of law principles.
7.2 Partial Invalidity. If any provision in this Agreement shall be found or be held invalid or unenforceable in any
jurisdiction in which this Agreement is being performed, then the meaning of said provision shall be construed, to
the extent feasible, so as to render the provision enforceable, and if no feasible interpretation would save such
provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect. In
such event, the parties shall negotiate, in good faith, a substitute, valid and enforceable provision, which most
nearly effects the parties' intent in entering into this Agreement.
7.3 Modification. Except as otherwise herein stated, no alteration, amendment, waiver, cancellation or any other
change in any term or condition of this Agreement shall be valid or binding on either party unless the same shall
have been mutually assented to in writing by both parties.
7.4 Waiver. The failure of either party to enforce at any time any of the provisions of this Agreement, or the
failure to require at any time the performance by the other party of any of the provisions of this Agreement, shall
in no way be construed as a present or future waiver of such provisions, nor in any way affect the right of either
party to enforce each and every such provision thereafter. The express waiver by either party of any provision,
condition or requirement of this Agreement shall not constitute a waiver of any future obligation to comply with
such provision, condition or requirement.
7.5 Assignment. This Agreement shall be binding upon and inure to the benefit of the 3 parties hereto and their
respective successors and assigns. LICENSEE shall not assign any of its rights, obligations or privileges (by
operation of law or otherwise) hereunder without the prior written consent of LICENSOR, which shall not be
unreasonably withheld. LICENSOR shall have the right to assign its rights, obligations and privileges hereunder to
an assignee that agrees in writing to be bound by the terms and conditions of this Agreement.
7.6 Force Majeure. Notwithstanding anything else in this Agreement, and except for the obligation to pay money,
no default, delay or failure to perform on the part of either party shall be considered a breach of this Agreement if
such default, delay or failure to perform is shown to be due to causes such as strikes, lockouts or other labor
disputes, riots, civil disturbances, actions or inactions of governmental authorities, or epidemics, war, embargoes,
severe weather, fire, earthquakes, acts of God or the public enemy, nuclear disasters, or default of a common
carrier; provided, that for the duration of such force majeure the party charged with such default must continue to
use all reasonable efforts to overcome such force majeure.
7.7 Notices. Any notice required or permitted to be given by either party under this Agreement shall be in writing
and shall be personally delivered or sent by certified or registered letter or by a national overnight courier-
signature upon receipt required, to the other party at its address first set forth above, or such new address as may
from time to time be supplied hereunder by the parties hereto. If mailed, such notices will be deemed effective
three (3) working days after deposit, postage prepaid, in the mail.
7.8 Entire Agreement. The terms, conditions and exhibits herein contained constitute the entire Agreement
between the parties and supersede all previous agreements and understandings, whether oral or written, between
the parties hereto with respect to the subject matter hereof.
7.9 Enforcement. LICENSEE and LICENSOR agree that money damages would be inadequate compensation
to LICENSOR in the event LICENSEE breaches any provision of this Agreement. Accordingly, all the
provisions of this Agreement shall be specifically enforceable against LICENSEE, and LICENSOR shall be
entitled, in addition to other available remedies, to an injunction against LICENSEE for a breach of any provision
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed below by their
respective duly authorized officers or representatives.
"LICENSOR" AMERICAN MOTORCYCLIST "LICENSEE"
By: /s/ Robert Rasor By: /s/ Don Dallape
Print Name: Robert Rasor Print Name: Donald Dallape
Title: President Title: President
Date: March 21, 2003 Date: 03/24/03
U.S. TRADEMARK/SERVICE MARK REGISTRATIONS BEING LICENSED
Mark Registration No. Reg. Date
---- ----------------- ---------
AMA and design 1070002
AMA Pro Racing 2649508,2559805,2002-9976
AMA Motocross 78/103854
FOREIGN TRADEMARKS/SERVICE MARKS REGISTRATIONS BEING
Mark Country Registration Number(s)
AMA and design Japan 4146195, 4119516, 3231091
AMA Pro Racing 2649508, 2559805, 2002-9976
Attach sample use of MARKS here.
[3 PICTURES OMITTED ]
[ MOTORCYCLE LOGO ]
[ AMERICAN MOTORCYCLIST ASSOCIATION LOGO ]
[ AMA PRO RACING LOGO ]
The following people will execute Indemnity Agreements in substantially the same form as the Form of Indemnity
Agreement filed herewith:
1. Don Dallape;
2. Scott Swendener;
3. Gino Apicella;
4. Sheryl Gardner;
5. Todd M. Pitcher; and
6. Craig Washington.
FORM OF INDEMNITY AGREEMENT
This Agreement made and entered into as of this 1st day of May, 2005 by and between Execute Sports, Inc., a
Nevada corporation (the "Company"), and __________________ ("Indemnitee"), who is currently serving the
Company in the capacity of a director and/or officer thereof;
W I T N E S S E T H:
WHEREAS, the Company and Indemnitee recognize that the interpretation of ambiguous statutes, regulations
and court opinions and of the Certificate of Incorporation and Bylaws of the Company, and the vagaries of public
policy, are too uncertain to provide the directors and officers of the Company with adequate or reliable advance
knowledge or guidance with respect to the legal risks and potential liabilities to which they become personally
exposed as a result of performing their duties in good faith for the Company; and
WHEREAS, the Company and the Indemnitee are aware that highly experienced and capable persons are often
reluctant to serve as directors or officers of a corporation unless they are protected to the fullest extent permitted
by law by comprehensive insurance or indemnification, especially since the legal risks and potential liabilities, and
the very threat thereof, associated with lawsuits filed against the officers and directors of a corporation, and the
resultant substantial time, expense, harassment, ridicule, abuse and anxiety spent and endured in defending against
such lawsuits, whether or not meritorious, bear no reasonable or logical relationship to the amount of
compensation received by the directors or officers from the corporation; and
WHEREAS, Section NRS 78.138 of the General Corporation Law of the State of Nevada, which sets forth
certain provisions relating to the mandatory and permissive indemnification of, and advancement of expenses to,
officers and directors (among others) of a Delaware corporation by such corporation, is specifically not exclusive
of other rights to which those indemnified thereunder may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, and, thus, does not by itself limit the extent to which the
Company may indemnify persons serving as its officers and directors (among others); and
WHEREAS, after due consideration and investigation of the terms and provisions of this Agreement and the
various other options available to the Company and the Indemnitee in lieu thereof, the board of directors of the
Company has determined that the following Agreement is not only reasonable and prudent but necessary to
promote and ensure the best interests of the Company and its stockholders; and
WHEREAS, the Company desires to have Indemnitee serve or continue to serve as an officer and/or director of
the Company, free from undue concern for unpredictable, inappropriate or unreasonable legal risks and personal
liabilities by reason of his acting in good faith in the performance of his duty to the Company; and Indemnitee
desires to serve, or to continue to serve (provided that he is furnished the indemnity provided for hereinafter), in
either or both of such capacities;
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company
and Indemnitee, intending to be legally bound, do hereby agree as follows:
1. Agreement to Serve. Indemnitee agrees to serve or continue to serve as director and/or officer of the
Company, at the will of the Company or under separate contract, if such exists, for so long as he is duly elected
or appointed and qualified in accordance with the provisions of the Bylaws of the Company or until such time as
he tenders his resignation in writing.
2. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall mean any action, suit or proceeding whether civil, criminal, administrative,
arbitrative or investigative, any appeal in such an action, suit or proceeding, and any inquiry or investigation that
could lead to such an action, suit or proceeding, except one initiated by Indemnitee to enforce his rights under this
(b) The term "Expenses" includes, without limitation, all reasonable attorneys' fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or
being or preparing to be a witness in a Proceeding.
(c) References to "other enterprise" shall include employee benefit plans; references to "fines" shall include any (i)
excise taxes assessed with respect to any employee benefit plan and (ii) penalties; references to "serving at the
request of the Company" shall include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a person who acts in good faith and in a manner he
reasonably believes to be in the interest of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this
3. Indemnity in Third Party Proceedings. The Company shall indemnify Indemnitee in accordance with the
provisions of this Section 3 if Indemnitee is a party to or is threatened to be made a party to or otherwise
involved in any threatened, pending or completed Proceeding (other than a Proceeding by or in the right of the
Company to procure a judgment in its favor) by reason of the fact that Indemnitee is or was a director and/or
officer of the Company, or is or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other enterprise, against all Expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with such
Proceeding, provided it is determined pursuant to Section 7 of this Agreement or by the court having jurisdiction
in the matter, that Indemnitee acted in good faith and in a manner that he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal Proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any Proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner that he reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal Proceeding, had reasonable cause to believe that
his conduct was unlawful.
4. Indemnity in Proceedings By or In the Right of the Company. The Company shall indemnify Indemnitee in
accordance with the provisions of this Section 4 if Indemnitee is a party to or is threatened to be made a party to
or otherwise involved in any threatened, pending or completed Proceeding by or in the right of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was a director and/or officer of the
Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against all Expenses actually and reasonably
incurred by Indemnitee in connection with the defense, settlement or other disposition of such Proceeding, but
only if he acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best
interests of the Company, except that no indemnification shall be made under this Section 4 in respect of any
claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company unless and
only to the extent that the court in which such Proceeding was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for such Expenses as the court shall deem proper.
5. Indemnification for Expenses of Successful Party. Notwithstanding any other provision of this Agreement to
the contrary, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any
Proceeding referred to in Sections 3 and/or 4 of this Agreement, or in defense of any claim, issue or matter
therein, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by Indemnitee in connection therewith.
6. Advances of Expenses. The Expenses incurred by Indemnitee pursuant to Sections 3 and/or 4 of this
Agreement in connection with any Proceeding shall, at the written request of the Indemnitee, be paid by the
Company in advance of the final disposition of such Proceeding upon receipt by the Company of an undertaking
by or on behalf of Indemnitee ("Indemnitee's Undertaking") to repay such amount to the extent that it is ultimately
determined that Indemnitee is not entitled to be indemnified by the Company. The request for advancement of
Expenses by Indemnitee and the undertaking to repay of Indemnitee, which need not be secured, shall be
substantially in the form of Exhibit A to this Agreement.
7. Right of Indemnitee to Indemnification or Advancement of Expenses Upon Application; Procedure Upon
(a) If required by the terms of this Agreement, indemnification under Sections 3 and/or 4 of this Agreement shall
be made no later than 45 days after receipt by the Company of the written request of Indemnitee. A
determination shall be made within said 45-day period by (i) a majority vote of the directors of the Company
who are not parties to the involved Proceeding, even though less than a quorum, or (ii) independent legal counsel
in a written opinion (which counsel shall be appointed if there are no such directors or if such directors so direct),
as to whether the Indemnitee has met the applicable standards for indemnification set forth in Section 3 or 4, as
the case may be.
(b) Any advancement of Expenses under Section 6 of this Agreement shall be made no later than 10 days after
receipt by the Company of Indemnitee's Undertaking.
(c) In any action to establish or enforce the right of indemnification or to receive advancement of Expenses as
provided in this Agreement, the burden of proving that indemnification or advancement of Expenses is not
appropriate shall be on the Company. Neither the failure of the Company (including its board of directors or
independent legal counsel) to have made a determination prior to the commencement of such action that
indemnification or advancement of Expenses is proper in the circumstances because Indemnitee has met the
applicable standard of conduct, nor an actual determination by the Company (including its board of directors or
independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that Indemnitee has not met the applicable standard of conduct. The Company
shall also indemnify Indemnitee against all Expenses incurred by Indemnitee in connection with successfully
establishing or enforcing his right of indemnification or to receive advancement of Expenses, in whole or in part,
under this Agreement.
8. Indemnification and Advancement of Expenses Under this Agreement Not Exclusive. The rights of
indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may be entitled under the Certificate of Incorporation or Bylaws
of the Company, any other agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Nevada, or otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
9. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification or to
receive advancement by the Company for a portion of the Expenses, judgments, fines or amounts paid in
settlement actually and reasonably incurred by Indemnitee in the investigation, defense, appeal, settlement or
other disposition of any Proceeding but not, however, for the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
10. Rights Continued. The rights of indemnification and to receive advancement of Expenses as provided by this
Agreement shall continue as to Indemnitee even though Indemnitee may have ceased to be a director or officer of
the Company and shall inure to the benefit of Indemnitee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
11. No Construction as an Employment Agreement or Any Other Commitment. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in the employ of the Company or any
of its subsidiaries, if Indemnitee currently serves as an officer of the Company, or to be renominated as a director
of the Company, if Indemnitee currently serves as a director of the Company.
12. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing directors'
and officers' liability insurance, Indemnitee shall be covered by such policy or policies in accordance with its or
their terms, to the maximum extent of the coverage available for any director or officer of the Company under
such policy or policies.
13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment of
amounts otherwise indemnifiable under this Agreement if, and to the extent that, Indemnitee has otherwise actually
received such payment under any contract, agreement or insurance policy, the Certificate of Incorporation or
Bylaws of the Company, or otherwise.
14. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent
of such payment to all the rights of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including without limitation the execution of such
documents as may be necessary to enable the Company effectively to bring suit to enforce such rights.
15. Exceptions. Notwithstanding any other provision in this Agreement, the Company shall not be obligated
pursuant to the terms of this Agreement, to indemnify or advance Expenses to Indemnitee with respect to any
Proceeding, or any claim therein, (i) brought or made by Indemnitee against the Company, or
(ii) in which final judgment is rendered against Indemnitee for an accounting of profits made from the purchase
and sale or the sale and purchase by Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any federal, state or
16. Notices. Any notice or other communication required or permitted to be given or made to the Company or
Indemnitee pursuant to this Agreement shall be given or made in writing by depositing the same in the United
States mail, with postage thereon prepaid, addressed to the person to whom such notice or communication is
directed at the address of such person on the records of the Company, and such notice or communication shall
be deemed given or made at the time when the same shall be so deposited in the United States mail. Any such
notice or communication to the Company shall be addressed to the Secretary of the Company.
17. Contractual Rights. The right to be indemnified or to receive advancement of Expenses under this Agreement
(i) is a contract right based upon good and valuable consideration, pursuant to which Indemnitee may sue, (ii) is
and is intended to be retroactive and shall be available as to events occurring prior to the date of this Agreement
and (iii) shall continue after any rescission or restrictive modification of this Agreement as to events occurring
18. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or
unenforceable for any reason whatsoever, the validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby; and, to the fullest extent possible, the provisions of this
Agreement shall be construed so as to give effect to the intent manifested by the provisions held invalid, illegal or
19. Successors; Binding Agreement. The Company shall require any successor to all or substantially all of the
business and/or assets of the Company (whether direct or indirect, by purchase, merger, consolidation or
otherwise), by agreement in form and substance reasonably satisfactory to Indemnitee, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that the Company would be required
to perform if no such succession had taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that executes and
delivers the agreement provided for in this
Section 19 or that otherwise becomes bound by the terms and provisions of this Agreement by operation of law.
20. Counterparts, Modification, Headings, Gender.
(a) This Agreement may be executed in counterparts, each of which shall constitute one and the same instrument,
and either party hereto may execute this Agreement by signing any such counterpart.
(b) No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by Indemnitee and an appropriate officer of the Company. No waiver
by any party at any time of any breach by any other party of, or compliance with, any condition or provision of
this Agreement to be performed by any other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or at any prior or subsequent time.
(c) Section headings are not to be considered part of this Agreement, are solely for convenience of reference,
and shall not affect the meaning or interpretation of this Agreement or any provision set forth herein.
(d) Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender, and
words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise
21. Assignability. This Agreement shall not be assignable by either party without the consent of the other.
22. Exclusive Jurisdiction; Governing Law. The Company and Indemnitee agree that all disputes in any way
relating to or arising under this Agreement, including, without limitation, any action for advancement of Expenses
or indemnification, shall be litigated, if at all, exclusively in the State of California and, if necessary, the
corresponding appellate courts. This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of California applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws. The Company and Indemnitee expressly submit themselves to
the personal jurisdiction of the State of California.
(a) This Agreement shall terminate upon the mutual agreement of the parties that this Agreement shall terminate or
upon the death of Indemnitee or the resignation, retirement, removal or replacement of Indemnitee from all of his
positions as a director and/or officer of the Company.
(b) The termination of this Agreement shall not terminate:
(i) the Company's liability for claims or actions against Indemnitee arising out of or related to acts, omissions,
occurrences, facts or circumstances occurring or alleged to have occurred prior to such termination; or
(ii) the applicability of the terms and conditions of this Agreement to such claims or actions.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement as of the date and year
first above written.
EXECUTE SPORTS, INC.
The Execute Sports Code of Ethics
Purpose and Scope
This policy establishes our company's requirements regarding personal and professional ethical and legal
standards of conduct and the handling of complaints of violations of those standards. It applies to all Execute
Sports employees, contractors and non-employee directors.
It is the policy of The Execute Sports Company to conduct its business in accordance with applicable laws of the
United States and other jurisdictions in which the Company operates and in accordance with the highest ethical
standards of business conduct. All employees shall adhere strictly to this policy.
While it is the Company's explicit policy to comply with all relevant federal, state and local statutes, our
commitment to ethical conduct in the affairs of our business goes far beyond the prohibitions of any particular
statute. The company's minimum requirements for the conduct of all employees follow.
General Business Ethics
All persons employed by, or associated with the Company are expected to deal honestly, truthfully and fairly with
others in business. False or intentionally misleading statements or omissions of any kind should never be made.
Confidential information, either of Execute Sports or of any other company, must never be misused. Execute
Sports will not countenance any types of deceitful practices.
Company Records and Money
Company records must always be maintained and presented accurately and reliably. No false or intentionally
misleading entries may be made in the Company's books or records. Company money must be accurately
accounted for and may only be spent for lawful, company-related purposes. Employees whose duties involve
verification of expenditures of Company money are responsible for the scrutiny and verification of the legitimacy
of all expenditures.
Relationships with Vendors/Customers
All vendors and customers are to be treated honestly and fairly. No payments, gifts of more than nominal value,
or any form of preferential treatment may be made to obtain or retain business, or to realize a certain price for
Company products. No payments, direct or indirect, including gifts of more than nominal value or any form of
preferential treatment, may be solicited or accepted from any vendor, customer or competitor of the Company.
Money, gifts, repetitive or extensive entertainment and other favors which would imply or incur an obligation must
not be accepted or given by employees or immediate members of their family in connection with transactions
involving the Company. Acceptance of a meal, refreshments or entertainment in the normal course of business
relations is permitted and, to the extent practical, should be reciprocated.
The Company will promptly terminate any employee who offers or receives a bribe or a kickback. Such conduct
is illegal and strictly forbidden.
Conflicts of Interest
All decisions involving the business or non-business activities of the Company must be made solely in the best
interests of the Company. Employees, and directors who are not employees, must not make decisions based on
personal considerations which might affect or appear to affect their judgment. Accordingly, they must not have, or
appear to have, any direct or indirect personal interest, financial or otherwise, in any of the Company's
competitors, suppliers or customers. They may not buy or sell, directly or indirectly, any property, goods or
services from or to the Company for their own benefit or for the benefit of their families or associates. Employees
must not accept from others, directly or indirectly, any form of compensation for work or services relating to their
responsibilities as Execute Sports employees. The ownership, as an investor, of the securities of publicly held
corporations may normally be disregarded.
Any employee with a question about whether a particular situation constitutes a conflict of interest should discuss
it with his or her supervisor.
Important information that has not yet become publicly available about either Execute Sports or publicly traded
companies with which Execute Sports has business dealings is "Inside Information." Execute Sports personnel
who have access to Inside Information may not profit financially by buying or selling or in any other way dealing in
Execute Sports stock or the stock of another publicly traded company about which the person has Inside
Information. Nor may Execute Sports personnel benefit financially or in any other way by passing on Inside
Information to any other person. The use of Inside Information in order to gain personal benefit is illegal
regardless of how small the user's profit from the transaction may be.
An easy way to determine whether information not yet publicly available is Inside Information is to ask whether
the dissemination of the information would be likely to affect the market price of the stock of the company in
question or whether it would be likely to be considered as important information by investors who are considering
purchasing or selling that company's stock. If the information makes you want to buy or sell, it is likely to have the
same effect on others.
If you possess Inside Information, you must refrain from trading the stock of the company concerned, from
advising anyone else to do so or from communicating the Inside Information to anyone else until you know that it
has been disseminated to the public.
Company Trade Secrets
Proprietary information includes data developed or assembled on Company time or at Company expense, that is
unique in the sense that the end result is not readily available generally without a like expenditure of time and
money, even though the basic data is known or observable. Trade secrets include all data unique to the Company
and discoverable only by employees in certain positions in the Company. Information in these categories is the
property of Execute Sports Incorporated, and any misapplication or misappropriation of that property may
prompt legal action by the Company.
No one should share proprietary information or trade secrets of Execute Sports with anyone outside the
Company, or anyone within the Company not authorized to receive that information. Nor should anyone solicit or
accept from anyone outside the Company any proprietary information or trade secrets of another company. The
Company has no interest either in receiving or using any proprietary information or trade secrets of other
companies, because to do so would be unethical and improper.
Further, no one should make any use of materials protected by copyrights, trademarks, or patents without first
bringing the matter to the attention of the Legal Services Department.
Execute Sports has always been, and remains, an ardent supporter of free and fair competition. Execute Sports
forbids any conduct that would unfairly and unlawfully diminish competition in the marketplace. The antitrust laws
protect and promote free and fair competition among businesses. Examples of the types of conduct which are
prohibited under the antitrust laws, and are therefore particularly unacceptable to Execute Sports include but are
not limited to:
- Any agreements among competitors about price, allocation of markets, or allocation of customers.
- Any agreements with customers not to deal with a competitor.
- Restrictions on resale.
- Sales conditioned on agreements to purchase other products.
Environmental, Health and Safety Laws and Regulations
Environmental, Health and Safety laws and regulations are very complex and extremely important. Compliance
with these regulations is essential. In addition, it is essential that any reports or representations made by or on
behalf of the Company to any environmental, health or safety regulatory body be completely accurate and
correct, containing no false statements or material omissions.
Execute Sports complies carefully with all regulations governing campaign contributions in federal, state and local
elections. In addition, employees are free to make, or not to make, any individual political contributions they
desire. The Company shall never reimburse an employee for a political contribution made by the employee.
In some countries, practices which the United States would characterize as criminal or corrupt are accepted or
tolerated as part of the political and commercial culture. In particular, some countries do not condemn bribery the
way the United States does, and permit, or tolerate, payments to public officials to influence their exercise of
discretion. Not only are such practices contrary to Execute Sports' standards, they are illegal in the United States,
even when committed abroad. Execute Sports forbids the offering or receiving of any money or anything of value
to or from a foreign official to influence that person in the performance of official functions.
Governments sometimes seek to advance their own political agendas by pressuring companies with whom they
do business to boycott the companies or products of certain other countries. It is unlawful for any United States
citizen or company to comply with, further or support a boycott against a country which is not itself the object of
any form of boycott pursuant to United States law or regulation. Execute Sports refuses to participate in
furthering any form of illegal boycott.
Execute Sports Incorporated prohibits the sexual harassment of individuals in the workplace. Sexually harassing
behavior which occurs off Execute Sports premises is also prohibited. Furthermore, the Company will not
tolerate retaliation against anyone who rejects sexual advances, makes a report of harassment or provides
information or assistance in the investigation of such a report.
Interference with an Audit
It is unlawful to attempt improperly to persuade an outside auditor to approve false financial statements. Execute
Sports prohibits its officers and directors, and anyone acting under their direction, from coercing, manipulating,
misleading or fraudulently influencing the Company's outside auditor to approve materially misleading financial
Any employee who becomes aware of any illegal activities or any violation of the policies contained in this policy
is required immediately to report the conduct. This reporting is not only encouraged by the Company, it is
required. The Company pledges that it will not retaliate against employees who make such reports and shall not
tolerate retaliation by any other person against an employee who makes such a report.
Employees may report a policy violation to supervisory personnel, directly to the General Counsel. Supervisory
personnel are required to communicate reported violations of law or Company Policy to the General Counsel.
Contact information for the General Counsel is as follows:
City National Bank Building
4275 Executive Square
La Jolla, CA 92037
A full and accurate report made to the General Counsel constitutes compliance with the reporting requirement.
Complaint Investigation Procedures
When the General Counsel receives a complaint of a violation of this policy directly or he/she will, with the help of
the President -- Internal Audit, evaluate the complaint. Complaints alleging questionable accounting, internal
accounting controls and auditing matters will be submitted to the Board of Directors. The Board of Directors may
request the General Counsel to conduct an investigation, or may, in its discretion, retain its own advisors to
evaluate and/or to investigate the complaint. Complaints alleging serious misconduct by senior management will
be referred to the full Board of Directors for evaluation and investigation as appropriate. All other complaints will
be investigated by the General Counsel, as appropriate, and a summary of the complaints and management
follow-up will be reported to the Board of Directors periodically.
Employees who violate the policies set forth in this policy will be subject to discipline. Disciplinary measures will
vary, depending on the seriousness of the violation and the individual circumstances of the employee. Available
disciplinary sanctions include suspension, termination and referral to public law enforcement authorities for
Managers are responsible for ensuring that their exempt employees have read the Company's Code of Ethics and
related Policies. Human Resources is responsible for providing copies of the Policies in the new employee
package for all salaried exempt new hires.
Questionnaire and Disclosure
During the first quarter of each calendar year, the General Counsel will send to certain employees questionnaires
to ascertain compliance with this Policy. These employees will be identified by the responsible senior officers
upon request by the General Counsel.
Employees are expected to respond fully and candidly to the questionnaire. To ensure confidentiality and
consistency in handling, questionnaires will be reviewed by only the General Counsel and by the Chief Executive
If any event or set of circumstances occurs or appears likely to occur that might create a conflict not previously
disclosed or to deviate from the standards described herein, the employee is expected to make the relevant facts
known to the Company and to follow its recommendations. Employees are encouraged to discuss such matters
first with their supervisors, but they may consult either of the officers mentioned above.
Special Responsibilities of the CEO and Senior Financial Officers
The Chief Executive Officer and all senior financial officers, including the Chief Financial Officer, Controller and
Treasurer, are bound by the provisions set forth above relating to ethical conduct, conflicts of interest and
compliance with law. In addition, the Chief Executive Officer and senior financial officers are subject to the
following specific policies:
The Chief Executive Officer and all senior financial officers are responsible for full, fair, accurate, timely and
understandable disclosure in the periodic reports required to be filed by the Company with the Securities and
Exchange Commission, and in all other public communications made by the Company. Accordingly, it is the
responsibility of the Chief Executive Officer and each senior financial officer promptly to bring or cause to be
brought to the attention of the Disclosure Committee any material information of which he or she may become
aware that affects the disclosures made by the Company in its public filings and other public communications or
otherwise assist the Disclosure Committee in fulfilling its responsibilities as specified in the Committee's charter.
The Chief Executive Officer and each senior financial officer shall promptly bring or cause to be brought to the
attention of the General Counsel and to the Board of Directors any information he or she may have concerning
any violation of this policy, including any actual or apparent conflicts of interest between personal and
professional relationships, involving any management or other employees who have a significant role in the
Company's financial reporting, disclosures or internal controls.
The Chief Executive Officer and each senior financial officer shall promptly bring or cause to be brought to the
attention of the General Counsel and to the Board of Directors any information he or she may have concerning
evidence of a material violation of the securities or other laws, rules or regulations applicable to the Company and
the operation if its business, by the Company or any agent thereof, or of violation of this policy.
The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be
taken in the event of violations of this policy by the Chief Executive Officer and the Company's senior financial
officers. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for
adherence to this policy and may include written notices to the individual involved that the Board has determined
that there has been a violation, censure by the Board, demotion or re-assignment of the individual involved,
suspension with or without pay or benefits (as determined by the Board), termination of the individual's
employment and referral to public law enforcement authorities for possible prosecution. In determining what
action is appropriate in a particular case, the Board of Directors or such designee shall take into account all
relevant information, including the nature and severity of the violation, whether the violation was a single
occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent,
whether the individual in question had been advised prior to the violation as to the proper course of action and
whether or not the individual in question had committed other violations in the past.
If you have questions about this policy, contact the office of General Counsel,
(858) 362-1440. This online policy supersedes all other versions of the policy.