License Agreement dated December 30, 2017 by and between Level Brands, Inc. and Isodiol International, Inc

 

1.1 License Grant. Upon the terms and conditions set forth herein, Licensor hereby grants to Licensee the non-exclusive, non-transferable right, license, and privilege, of using the Licensed Marks solely for the sale, marketing and distribution of those Cannabidiol (CBD) related products of Licensee which are approved in writing by Licensor (“Licensed Products”), through the channels of distribution in the Territory (as defined below) during the Term (as defined below), and the non-exclusive, non-transferable right, license, and privilege of using the Licensed Marks solely upon and in connection with the manufacture of Licensed Products in the Territory. All proposed channels of distribution and distribution outlets must be submitted in advance to Licensor and shall be subject to Licensor’s prior written approval. For clarity and the avoidance of doubt, Licensee agrees that the Licensed Products will be Cannabidiol (CBD) related products only (e.g. CBD oils); the license grant in this Section 1.1 does not permit any use of the Licensed Marks in connection with Tetrahydrocannabinol (THC) related products.

 

1.2 Term. The term of this Agreement shall commence on the Effective Date as set forth above and end on the fifth anniversary of the date hereof, plus any extensions or renewals (the “Term”); provided, that after such five (5) year anniversary or any extension or renewal, the Term shall be automatically extended for additional two (2) year periods unless terminated by either Party by providing notice to the other Party not less than ninety (90) days prior to the expiration of any such term, extension or renewal.

 

1.3 Go/No-Go Conference. Prior to January 31, 2018, the Parties shall confer and mutually decide in good faith whether to move forward with the transactions contemplated in this Agreement. If the Parties decide to not move forward with the transactions contemplated in this Agreement, then either Party may terminate this Agreement upon written notice thereof to the other Party.

 

1.4 Territory. The territory shall be all jurisdictions in the United States of America and Canada in which Licensee is in compliance with all applicable jurisdictional laws (“Territory”).

 

1.5 No Sub-License. Licensee shall not assign or sub-license the use of the Licensed Marks to any third party without prior written approval by Licensor, and such right is expressly withheld from this Agreement. In the event Licensor approves a sub-license to a third party, the Parties shall mutually agree upon the terms and conditions of said sub-license, including without limitation the royalty rate, in a separate writing signed by the Parties.

1.6 Competing Brands. Licensee will not be permitted to enter into any other branded relationship with respect to the Licensed Products without the express prior written approval of Licensor, except to the extent that (i) there are any preexisting branded relationships or (ii) there are any branded relationships or endorsements by licensed medical professionals.

 

1.7 Licensee Obligations. During the Term, the Licensee agrees to (a) comply with the Code of Conduct attached hereto as Exhibit A and incorporated herein by reference, and (b) fully adopt, as well as meaningfully contribute to, the following Millennium Development Goal(s) (all of which are attached hereto as Exhibit C and incorporated herein by reference): __________________ (“Licensee Millennium Development Goal(s)”); provided, however, that (i) the Licensee Millennium Development Goals shall be a right that is personal and exclusive to Licensor, (ii) no resultant beneficiary of the Licensee Millennium Development Goals shall be an intended third-party beneficiary, and (iii) Licensee shall have no liability for any reason whatsoever to any Licensee Millennium Development Goal beneficiary arising out of this Agreement. Licensee agrees to become a member and utilize Salesforce.com, Dependable Solutions a product approval and royalty reports service, ireland pay, a credit card process service or any similar web platform as may be utilized by Licensor from time to time as a means of conducting Brand business and coordinating with Licensor and other licensees (each a “Preferred Provider”); provided, however, that (i) such services and Preferred Providers must be capable and legally authorized to conduct such activities and (ii) Licensee shall not be obligated to discontinue the use of any preexisting vendors as of the Effective Date in favor of any Preferred Provider. In the event that there is no such eligible or legally authorized Preferred Provider at the time a service is required, Licensee shall be free to select its own vendor throughout the remainder of the Term. In the event that a Preferred Provider has an interruption of service to Licensee (i) lasting longer than twenty-four (24) hours or (ii) occurring more than once during any calendar month during the Term, Licensee shall be free to select its own vendor throughout the remainder of the Term . Licensee agrees to become a member of Send Out Cards within 30 days of the execution of this agreement. Licensee will use Send Out Cards as a powerful marketing tool to help communicate our partnership and promote sales.

 

1.8 Licensor Promotional Obligations. During the Term, Licensor agrees to use commercially reasonable efforts to perform the promotional obligations set forth in Exhibit D, the terms of which are incorporated herein by reference.

 

 

2.1 Licensing Fee. Licensee shall pay Licensor a licensing fee equal to One Hundred and Twenty-Five Thousand US Dollars (US $125,000), payable as follows: (a) upon execution hereof, Sixty-Two Thousand Five Hundred US Dollars (US $62,500), and (b) on June 30, 2018, Sixty Two Thousand Five Hundred US Dollars (US $62,500). In the event this Agreement is terminated, the terms of this Section 2.1 shall survive the termination of this Agreement.

 

2.2 Share Issuances. Licensee shall issue to Licensor shares of Licensee’s common stock (the “Shares”) as follows: (a) upon execution hereof, the number of Shares equal to Two Million US Dollars (US $2,000,000) as of the Effective Date, and (b) on the last day of each calendar quarter commencing March 31, 2018 during the Term (to be prorated for any partial calendar quarter upon termination), the number of Shares equal to Seven Hundred Fifty Thousand US Dollars (US $750,000) as of the last day of the relevant calendar quarter (Shares issued to Licensor, collectively, the “Subject Shares”). The price of Shares for purposes of calculating Shares issuance pursuant to this Section 2.2 will be calculated on the Canadian Stock Market and will be based on the closing price of the Shares on the last business day in each calendar quarter. In addition, Licensor agrees not to sell the Subject Shares in an amount which exceeds the Subject Share Lockup Amount (as defined below). In the event this Agreement is terminated with Subject Shares included in the Subject Share Lockup Amount, the terms of Section 2.2 shall survive the termination of this Agreement.

 

 

 

2.3 Royalty. Commencing on the Effective Date, Licensee shall pay the Licensor royalties in U.S. Dollars (based on the Canadian Dollar to United States Dollar conversion rate published in the Wall Street Journal), in an amount equal to three percent (3%) of one hundred percent (100%) the Gross Licensed Marks Sales (as defined below) (the “Royalty”). The term “Gross Licensed Marks Sales” shall mean the gross amount billed for all Licensed Products sold under the Licensed Marks (exclusive of any refunds, return allowances, sales, use or value added tax (VAT)) or under any other trademark or brand owned or licensed by Licensor. No other costs incurred in the manufacturing, selling, advertising, and/or distribution shall be deducted from Gross Licensed Marks Sales, and both shall be determined in accordance with generally accepted accounting principles established and maintained by the U.S. Financial Accounting Standards Board.

 

 

2.4 Royalty Payments. Within fifteen (15) days after the end of each month, Licensee shall furnish to Licensor a complete sales and royalty report certified to be accurate by the Chief Financial Officer of Licensee or by some other authorized designee of Licensee showing the number, description, and gross sales price of the Licensed Products distributed and/or sold by Licensee during the preceding month, as well as the number of Licensed Products in inventory at the beginning and end of the month along with payment of the royalties due which shall be sent by wire transfer to the following account:

 

2.5 Royalty Report; Late Fees. For this purpose, Licensee shall use a sales and royalty report form acceptable to Licensee. Such report shall be furnished to Licensor whether or not any of the Licensed Products have been sold during the preceding month, and shall specifically include what contributions have been made during such period to the Licensee Millennium Development Goal(s), the form of such contribution and, with respect to financial contributions, the basis upon which it was determined. Licensee shall tender the report of the sales and royalty report in Excel spreadsheet format to Licensor, separated by each Licensed Product and sent to Level Brands, Inc., 4521 Sharon Rd., Ste. 450, Charlotte, NC 28211, with a copy to: ***@***. Any amounts not paid to Licensor when due under this Agreement shall bear a late payment charge on the unpaid balance at the rate of 1.5% per month, compounded, or the maximum amount permitted by law, whichever is less.

 

2.6 Subcontracting and Delegation. Licensor may subcontract, delegate or assign any of its rights or subcontract or delegate any of its duties or obligations hereunder to any entity with which it is affiliated, related or shares common ownership (a “Delegated Entity”), and Licensee agrees to allocate or pay any compensation owed or accrued to Licensor under Section 2 to any Delegated Entity as directed by Licensor. No such subcontract, delegation or assignment to any Delegated Entity shall relieve Licensor of responsibility for the due and full performance hereof. Licensor shall be liable to Licensee for all acts and omissions of any Delegated Entity in performing any duties hereunder.

 

4.1 Quality of Licensed Products. The quality of the Licensed Products shall be consistent with or exceed the average of similar products manufactured, distributed, and/or sold by Licensee, shall serve to enhance brand recognition of the Licensed Products to the mutual benefit of the Parties, and shall be suitable for the use for which they are intended. Licensee agrees to provide a reasonable number of samples of the Licensed Product to Licensor at no cost upon request for quality assurance, and provide Licensed Products to Licensor at cost for promotional purposes (not for resale).

4.2 Licensor Approval. All Licensed Products developed, manufactured and sold hereunder, and all labels, hang tags, packaging, catalogs, brochures, publications, printed matter, advertising, signs, promotional displays, websites, webpages, video and sound recordings, online social media pages and other forms of publicity material for the Licensed Products, shall be in English and subject to Licensor’s written approval in advance of use, distribution, marketing or sale; provided, however, all such materials may also be translated to such foreign languages as may be necessary for reasonable marketing purposes and to conform with applicable law.

 

5.1 IP Notices. Licensee agrees that it will cause to appear on each Licensed Product manufactured, sold, and/or distributed under this Agreement and on or within all advertising, marketing, promotional, or display material bearing the Licensed Marks, the appropriate trademark and copyright notices, markings or designations requested by Licensor. In the event any Licensed Product is distributed and/or sold in a carton, container, packing or wrapping material bearing the Licensed Marks, such notices shall also appear upon the said carton, container, packing or wrapping material. Licensee agrees to remove any product for sale, regardless of location, which so fails to include the proper notices under this Section 5.1 and such failure shall be deemed a material breach hereof.

 

5.2 Promotions. No advertising, marketing, promotional, and display materials, or other artwork depicting the Licensed Marks or Licensed Product shall be used without prior written approval by Licensor, which approval shall be given or rejected with detailed comments for such rejection within forty-eight (48) hours of each written notice therefor or be deemed approved. Licensee agrees that it will only run full page advertisements in trade publications to ensure retail recognition for the Brand. Licensee will use its best efforts to convey to the market that it is a licensee of the Brand, including but not limited to placing signage depicting the Brand prominently at Licensee's corporate offices and showrooms, and on Licensee's corporate stationery, point of sale, marketing and other materials. The Parties further agree that all artwork and designs involving the Licensed Marks shall be produced under appropriate “work for hire” provisions, or are hereby assigned to and shall become the property of the party commissioning the work, and any such parties creating such materials will execute the necessary valid agreements to convey the ownership and copyrights to these items to the party commissioning the work.

 

 

 

7.1 Proprietary to Licensor. Licensee agrees that during the term of this Agreement, or thereafter, it will not register or attempt to register any of the Licensed Marks, nor will Licensee form or incorporate any entity under a name that includes the Licensed Marks. Licensee will not attack the title or any rights of Licensor in and to the Licensed Marks. Licensee further agrees to cooperate fully and in good faith with Licensor for the purpose of securing and preserving Licensor’s rights in and to the Licensed Marks. Licensee acknowledges that Licensor has sole and exclusive ownership of all right, title, and interest in and to the Licensed Marks and any registrations that have been issued or may be issued thereon. Nothing contained in this Agreement shall give Licensee any right, title or interest in or to the Licensed Marks except for the rights expressly licensed by this Agreement, and subject to its terms and conditions. Adaptations and modifications of Licensed Marks prepared under this Agreement shall be included as part of the Licensed Marks, including, without limitation, Licensor’s ownership thereof. Any goodwill derived from the use by Licensee of any Licensed Marks shall inure to the sole benefit of Licensor and/or its licensors. If Licensee acquires any rights in any Licensed Marks, in whole or in part, by operation of law, or otherwise, such rights will be deemed and are hereby irrevocably assigned to Licensor without further action by any of the Parties.

 

7.2 Pre-Existing Intellectual Property. Each Party shall continue to own all rights, title and interest (including, without limitation, all copyrights, trade secrets, patents, trademarks, and any other intellectual property or proprietary rights) relating to its business that existed prior to the Effective Date (“Pre-Existing IP”). No right, title, or interest in or to any of Pre-Existing IP of a Party is transferred or assigned to the other Party. Except for the limited license granted in Section 1, neither Party grants to the other Party any licenses, by implication or otherwise, to any of its Pre-Existing IP.

 

7.3 Not an Exclusive License. Nothing in this Agreement shall be construed to prevent Licensor from granting any other license for the use of the Licensed Marks or from utilizing the Licensed Marks in any manner whatsoever; provided, however, that Licensor shall not license or independently utilize the Licensed Marks in connection with any Cannabidiol (CBD) related products during the Term of this Agreement. Licensee agrees that rights not specifically granted to Licensee are reserved by Licensor and may be freely exploited by Licensor without limitation.

 

7.4 Registrations. All registrations for intellectual property, Internet domain names and social media user/screen names in the Licensed Marks are to be applied for and obtained exclusively in Licensor’s name. Licensee shall not file or register any intellectual property applications or seek any Internet domain name and/or social media user/screen name registration in the Licensed Marks, Licensed Products or any derivations, improvements, variations or modification thereof, without Licensor’s prior written approval. Licensee shall notify Licensor, or its designated representative, prior to entering into any agreement with any individual, company or business, for sales outside the United States of any Licensed Product, to permit the timely filing of foreign and/or international trademark and copyright applications, or other intellectual property protection, covering the Licensed Marks, in Licensor’s sole discretion. Licensee agrees to cooperate fully and in good faith with Licensor for the purpose of securing and preserving Licensor’s rights in and to the Licensed Marks. In the event there has not been a previous registration of any Licensed Mark and/or any material relating thereto for a particular Licensed Product, Licensor may register and maintain, at Licensee’s expense if for a Licensed Product, trademarks and/or service marks in the appropriate class(es) and/or copyrights in the name of Licensor. Licensee is not permitted to register any copyright, trademark, and/or service mark on behalf of Licensor. It is further agreed that nothing contained in this Agreement, and no act or omission by Licensor and/or by Licensee shall be construed as an assignment or grant to Licensee of any right, title, or interest in or to the Licensed Marks, it being understood that all rights relating thereto are reserved by Licensor, except for the license hereunder to Licensee of the right to use and utilize the Licensed Marks only as specifically and expressly provided in this Agreement.

 

8.1 Licensor Indemnification. Licensor shall defend, indemnify, and hold Licensee and its affiliates, and their officers, directors, employees, managers, owners, agents and representatives harmless against any and all claims or suits, demands, losses, injuries, liabilities costs, judgments, arbitration awards, license fees, settlement, damages and expenses (including reasonable attorneys’ fees and costs, whether or not any legal proceeding is commenced) (“Losses”) incurred, claimed, obtained, or sustained, including without limitation attorneys’ fees and costs, of any nature whatsoever, whether in law or in equity, for trademark infringement arising solely out of the validity of the rights to the Licensed Marks and from Licensee’s use of the Licensed Marks as granted herein, provided that prompt written notice is given to Licensor within ten (10) days of any such claim or suit, and provided, further, that Licensor shall have the option to undertake and conduct the defense of any suit so brought, and no settlement of any such claim or suit is made without the prior written consent of Licensor. Licensor’s indemnification under this Section 8.1 shall be apportioned and limited to only the portion of, and extent that, such Losses are, or are claimed to be, proximately caused by or attributable specifically to Licensee’s use of Licensed Marks in a manner permitted by this Agreement. It is further agreed that Licensor reserves the right, in its sole discretion, to select counsel to defend any such claims. For purposes of this Section 8, the term “Licensor” shall mean Licensor and, without limitation, any of its agents, employees, servants, representatives, parents, subsidiaries, affiliates, officials, directors, officers, shareholders, owners, attorneys, divisions, branches, units, affiliated organizations, successors, predecessors, contractors, assigns, and all persons acting on their behalf, past or present. Notwithstanding the foregoing, if Licensor undertakes to defend any claim, Licensor agrees to consult with Licensee and reasonably avoid any defaults, settlements, or other decisions that would adversely affect Licensee’s rights in the Licensed Marks or the commercial viability of the Licensed Products.

 

8.2 Licensee Indemnification. Licensee shall defend, indemnify, and hold Licensor and its affiliates, and their officers, directors, employees, managers, owners, agents and representatives harmless against any and all Losses incurred, claimed, obtained, or sustained, including without limitation attorneys’ fees and costs, of any nature whatsoever, whether in law or in equity, including without limitation claims relating to or allegedly relating to the design, manufacture, sale, purchase, use, advertising, marketing, and/or distribution of any Licensed Products, whether for personal injury, product liability, intellectual property infringement, dilution, misappropriation, violation of law, or otherwise. Licensor reserves the right to select counsel to defend and/or bring any such claims, and Licensee shall solely be responsible for any and all attorneys’ fees, costs, and expenses relating to any and all such actions. Licensee shall provide Licensor with prompt written notice of any lawsuits or threatened lawsuits, or other significant developments, investigations, claims, or final refusals in which Licensee is or may be named as a party or for which Licensee is obligated or has agreed to indemnify any party, and Licensee shall thereafter provide Licensor with periodic written updates concerning relevant developments in any such lawsuits as they arise.

 

8.3 Licensed Products. Licensor makes no representations or warranties with respect to the design, manufacture, sale, purchase, use, marketing, and/or distribution of any Licensed Product manufactured, sold, and/or distributed by Licensee and disclaims any liability arising out of the design, manufacture, sale, purchase, use, marketing, and/or distribution of any Licensed Product, and any such express or implied warranties are hereby disclaimed and Section 8.2 shall apply.

8.4 Licensee Representations and Warranties. Licensee represents and warrants to Licensor that: (i) Licensee has the full power and authority to enter into this Agreement on behalf of Licensee and to perform all Licensee’s material obligations pursuant to this Agreement, and that the Licensed Products manufactured, sold, and/or distributed by Licensee under this Agreement shall be suitable for the purpose for which they are intended to be used and shall comply with all applicable State and local laws, and industry standards, (ii) Licensee will not harm or misuse the Licensed Products or bring the Licensed Marks into disrepute, (iii) except as specifically provided in this Agreement, Licensee will not create any expenses chargeable to Licensor or Ms. Ireland without the express prior written approval of Licensor, (iv) all Licensed Products (and the content contained or used in the Licensed Products) designed, developed, marketed, distributed, published, performed or sold by Licensee pursuant to this Agreement do not, and will not, infringe any intellectual property right or any personal right of any third party, and (v) Licensee will not knowingly permit, do or commit any act or thing that would degrade, tarnish or deprecate or disparage the Licensed Products or Licensor’s or Ms. Ireland’s public image in society or standing in the community, or prejudice Licensor or Ms. Ireland and that it will terminate such activities promptly upon written notice, and failure to do so constitutes a material breach of this Agreement. Licensee acknowledges and agrees that there are no warranties, guarantees, conditions, covenants, or representations by Licensor as to marketability, fitness for a particular purpose, or other attributes of the Licensed Products, whether express or implied (in law or in fact), oral or written.

 

8.5 Licensor Representations and Warranties. Licensor represents and warrants to Licensee that: (i) Licensor has the full power and authority to enter into this Agreement on behalf of Licensor and to perform all Licensor’s material obligations pursuant to this Agreement, and that Licensor is duly authorized to license the Licensed Marks to Licensee, (ii) Licensor will not harm or misuse the Licensed Products or bring the Licensed Marks into disrepute, (iii) except as specifically provided in this Agreement, Licensor will not create any expenses chargeable to Licensee without the express prior written approval of Licensee, (iv) all Licensed Marks (and the content contained or used in the Licensed Marks) designed, developed, marketed, distributed, published, performed or sold by Licensor pursuant to this Agreement do not, and will not, infringe any intellectual property right or any personal right of any third party, and (v) Licensor will not knowingly permit, do or commit any act or thing that would degrade, tarnish or deprecate or disparage the Licensed Products, Licensed Marks, or Licensee’s public image in society or standing in the community, or prejudice Licensee and that it will terminate such activities promptly upon written notice, and failure to do so constitutes a material breach of this Agreement. Licensor acknowledges and agrees that there are no warranties, guarantees, conditions, covenants, or representations by Licensee as to marketability, fitness for a particular purpose, or other attributes of the Licensed Products, whether express or implied (in law or in fact), oral or written.

 

8.6 Definition of “Licensor”. For purposes of this Section 8, the term “Licensor” shall mean Licensor and, without limitation, any of its agents, employees, servants, representatives, parents, subsidiaries, affiliates, officials, directors, officers, shareholders, attorneys, divisions, branches, units, affiliated organizations, successors, predecessors, contractors, assigns, and all persons acting by, through, under, or in concert with them, past or present, specifically including Ms. Ireland, kathy ireland Worldwide, any Delegated Entity, kathy ireland LLC, Sterling/Winters Company, ACDC, LLC, Jardin du Jour, LLC, Moretz Marketing, LLC, Level Brands, Inc., their executives and employees.

 

 

9.1 Product Liability Insurance. Licensee represents that it has obtained, and agrees to maintain, at its own expense, in full force and effect at all times during which the Licensed Products are being manufactured, sold, and distributed, insurance for bodily injury, advertising injury, property damage, and product liability from a recognized insurance company approved by Licensor, which is qualified to do business in the State of California, providing protection at least in the amount of $5,000,000 per occurrence and $5,000,000 in the aggregate for Licensor and for Licensee against any actions, claims, demands, lawsuits, loss, costs, attorneys’ fees, damages, judgments, and liabilities of any nature whatsoever relating to the Licensed Products. As proof of such insurance, a fully paid certificate of insurance naming Licensor as Licensee shall submit an insured party to Licensor for Licensor’s prior written approval before any Licensed Product is manufactured, sold, or distributed. Any proposed change in certificates of insurance shall be submitted to Licensor for its prior written approval. Licensor shall be entitled to a copy of the prevailing certificate of insurance, which shall be furnished to Licensor by Licensee. The certificate(s) shall substantially and materially conform to the language requirements set out in Exhibit B attached hereto.

 

11.1 Material Breach. Except as otherwise provided herein, in the event either party materially breaches this Agreement, the non-breaching party shall have the right to terminate this Agreement upon thirty (30) days’ notice in writing, and such notice of termination shall become effective unless the breaching party shall remedy the breach within the thirty (30) day period to the reasonable satisfaction of the non-breaching party. Failure to pay any amounts owed hereunder shall be deemed a material breach hereof.

11.2 Morals. Ms. Ireland shall, during the Term, conduct herself with due regard to the public conventions and morals and shall not conduct herself in a manner that is materially different from her past conduct. Licensor (and its executive leadership team) shall, during the Term, conduct themselves with due regard to the public conventions and morals and shall not conduct themselves in a manner that is materially different from their past conduct. Licensee (and its executive leadership team) shall, during the Term, conduct themselves with due regard to the public conventions and morals and shall not conduct themselves in a manner that is materially different from their past conduct. A breach of this Section 11.2 by either party shall be deemed a material breach of this Agreement.

 

11.3 Effect of Termination. Termination of this Agreement shall be without prejudice to any rights that Licensor may otherwise have against Licensee, and all amounts owed hereunder prior to the termination hereof shall become immediately due and payable, and all rights and licenses granted hereunder shall cease and revert to Licensor. Upon termination, Licensee shall immediately cease and desist from using the Licensed Marks in any way and return any confidential information to Licensor. Notwithstanding any termination pursuant to Section 10 or 11, Licensee and Licensee’s wholesalers, distributors, and retailers shall have the right to sell or otherwise liquidate all inventory of Licensed Products for a period of six (6) months from the date of termination.

 

11.4 Force Majeure. The Parties shall be released from their obligations hereunder, and this Agreement shall terminate in the event governmental regulations or state or national emergency or war or causes beyond the control of the Parties render performance impossible for a period extending longer than thirty (30) days, and one Party so informs the other in writing of such causes and its desire to be so released. In such event, all royalties on sales and all other monies due, theretofore made shall become immediately due and payable to Licensor.

 

11.5 Change of Control. In the event Licensee or any of its subsidiaries incurs or enters into any agreement pursuant to which a Change of Control (as defined below) would occur, Licensee shall provide Licensor notice of such Change of Control. Following such notice, at the option of Licensor and upon written notice to Licensee provided within 30 days following Licensee’s provision of notice of the Change of Control to Licensor (the “Change of Control Termination Notice”), this Agreement, together with the Royalty paid to Licensor under Section 3 shall immediately terminate and Licensor shall be paid, in lieu thereof, a one-time, lump sum aggregate payment equal to the cumulative Royalties paid to Licensor over the previous trailing 12-month period. The lump sum payment shall be paid to Licensor within 30 days of the occurrence of the Change of Control. For purposes hereof, “Change of Control” means (a) any consolidation or merger of such entity in which the entity is not the continuing or surviving entity, or pursuant to which the shares are converted to cash, other securities or other property, other than a consolidation or merger of the entity in which the holders of the entities shares immediately prior to the consolidation or merger hold more than 50% of the voting securities of the continuing or surviving entity immediately after the consolidation or merger, or (b) any sale, lease, exchange or other transfer (in one transaction or in a series of transactions and not in the ordinary course of business) of all or substantially all of the entities assets, (c) a sale of fifty percent (50%) or more of the then outstanding voting securities of the entity to one party, or (d) any other event, pursuant to which the members of the Board of Directors (or similar governing body) who were elected prior to the occurrence no longer constitute a majority of the members of such governing body. Notwithstanding the above, any conveyance, transfer or grant of security title to or a security interest in any goods, accounts, inventory, general intangibles or other assets of such entity to secure the obligations of the entity or any of its subsidiaries, or the exercise of any rights or remedies by such entity after a default of indebtedness, shall not constitute a “Change of Control” as used herein.

 

13.1 Independent Contractor. Licensee is an independent contractor with respect to Licensor. Nothing contained herein shall be deemed to create an agency, joint venture, franchise, or partnership relation between the Parties, and neither Party shall so hold itself out. Licensor shall bear all income tax obligations applicable to Licensor that may arise out of this Agreement.

13.2 Assignability. This Agreement shall not be assignable by either Party without the prior written consent of the other.

13.3 Amendment. Except as otherwise provided herein, no agreement or understanding purporting to add to or to modify the terms and conditions of this Agreement shall be binding unless agreed to by the Parties in writing. Any terms and conditions set forth in any forms used by the Parties, which are in conflict with the terms and conditions of this Agreement, shall be void and have no effect.

13.4 Waiver. It is agreed that no waiver by either Party hereto or any breach or default of any of the provisions set forth herein shall be deemed a waiver as to any subsequent and/or similar breach or default.

13.5 Governing Law. This Agreement shall be construed in accordance with and the laws of the State of California which shall govern all disputes relating hereto without giving effect to any conflicts of law provisions. The Parties agree that any and all disputes, controversies or claims arising out of, regarding, or in any way relating to the interpretation, application, or enforcement of this Agreement, or any matter reasonably related thereto, shall be handled by way or arbitration and administered by and in accordance with the JAMS streamlined Arbitration Rules and Regulations (the ''JAMS Rules '') of the Judicial Arbitration and Mediation Service in effect at the time of any such proceedings. Such arbitration shall be the sole, exclusive, and final remedy for resolving any such claims and disputes. Judgment on the final award rendered by the arbitrator may be entered into in any court of competent jurisdiction and shall be final and binding upon the Parties. In the event the Parties cannot agree on an arbitrator within ten (10) days, the arbitrator shall be appointed by the Parties in the following manner JAMS, and/or another alternative dispute resolution provider agreed upon by the Parties, shall furnish the Parties with a list of potential qualified arbitrators. For purposes of this Section, a ''qualified arbitrator, shall mean a retired judge of a superior or appellate court or an experienced attorney agreed upon by the Parties. If any Party objects to all the names on the list. AAA and/ or another alternative dispute resolution provider agreed upon by the Parties shall provide the Parties with an alternative list of potential qualified arbitrators; provided, however, that each Party shall be entitled to so object only once. Once the Parties have agreed upon a particular list, or a list is furnished pursuant to the preceding sentence the Parties shall alternately eliminate unacceptable arbitrators until only one name remains. The remaining person shall be appointed arbitrator. The Parties agree to draw lots to decide which Party shall remove the first name from the list of arbitrators. Should a Party whose turn it is to eliminate any unacceptable arbitrator fail to do so within twenty-four (24) business hours of the written request of the other Party, then the choice of the other Party of an arbitrator then remaining on such list shall be binding on the Parties. All costs of the arbitration, including the cost of any record or transcript of the arbitration proceedings, all administrative fees, the fee of the arbitrator, and all other fees and costs shall initially be borne equally by the Parties, provided, however, that the arbitrator shall award the prevailing Party its reasonable attorneys' fees, expenses and costs, including all costs of arbitration. The arbitrator shall not extend, modify, or suspend any of the terms of this Agreement. The arbitration and all proceedings related thereto shall be deemed private and confidential and, subject to the provisions of paragraph 29.1, shall not be disclosed to the public by either the arbitrator or the Parties to the arbitration. If the rules of AAA, JAMS or another agreed upon alternative dispute resolution provider differ from those of this Section, the provisions of this Section shall control. Notwithstanding the foregoing, the Parties may seek provisional relief, including a preliminary injunction or temporary restraining order, in any federal or state court of competent jurisdiction located in Los Angeles, California, without prejudice to the above described arbitration procedures, if in that Parties sole judgment such provisional relief is necessary to avoid a irreparable injury or to preserve the status quo. Never the less, the arbitration procedure set forth in this section is intended to be the sole and exclusive method of resolving any claims arising out of, relating to, or regarding this agreement.

 

13.6 Confidentiality. The Parties agree that the terms, conditions, and subject matter of this Agreement constitute confidential and proprietary information belonging to Licensor. Licensee agrees not to divulge any confidential and proprietary information pertaining to Licensor or this Agreement to any third party without prior written consent of Licensor, except as required by law. Licensee agrees to keep all such information as confidential. Licensee may disclose such confidential and proprietary information to its officers, directors, employees, agents, and authorized representatives to the extent necessary to enable Licensee to perform its obligations under this Agreement; provided said officers, directors, employees, agents, and/or authorized representatives execute an appropriate confidentiality agreement. Licensee shall be liable for any unauthorized use and disclosure of such confidential information by its officers, directors, employees, agents, and authorized representatives, including without limitation its attorneys and accountants. The Parties further agree that any breach or threatened breach of this Section 13.6 would cause irreparable harm to Licensor, that a remedy at law or in damages would be inadequate, and that the provisions of this Section 13.6 may be enforced by way of injunctive relief in addition to any other rights available to Licensor in law or in equity. For purposes of this Agreement, “confidential” or “proprietary” information includes, but is not limited to, the terms, conditions, and subject matter of this Agreement, and Licensor’s business, including any financial, cost, pricing, and royalty information; product development, business, marketing, promotion, distribution, sales, sales plans, and strategies; information concerning Licensor’s product development and intellectual property; information concerning manufacturing processes relating to the Licensed Products, or trade secrets. The foregoing confidentiality obligations shall not apply to information that: (a) was previously known to the recipient free of any obligation to keep it confidential; (b) was independently developed by recipient; or (c) is or becomes publicly available by means other than the unauthorized disclosure by recipient. In the event any judicial or regulatory authority requests or requires disclosure of any Confidential Information of the other party, the receiving party shall promptly notify the disclosing party of the requested or required disclosure and shall cooperate with the disclosing party in any effort to avoid or limit such disclosure.

13.7 Entire Agreement; Counterparts. This Agreement constitutes the complete understanding between the Parties and supersedes any and makes void all prior agreements, promises, representations, or inducements, no matter their form, concerning the subject matter of this Agreement. The Parties desire that this Agreement represent a single and completely integrated contract expressing the entire agreement of the Parties with respect to the subject matter of this Agreement. This Agreement may be executed in two or more duplicate bond or facsimile counterparts, each of which shall be considered an original, but all of which together shall constitute one and the same instrument, and in pleading or proving any provision of the Agreement, it shall not be necessary to produce more than one such counterpart.

 

13.8 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner to be effective and valid under applicable law. Should any of the provisions or terms of this Agreement be determined illegal, invalid, or unenforceable by any court of competent jurisdiction, validity of the remaining parts, terms, or provisions shall not be affected thereby, and said illegal, invalid, or unenforceable part, term, or provision shall be deemed not to be a part of this Agreement.

13.9 Headings. All recitals are incorporated by reference into this Agreement. Caption and Section headings are used for convenience and reference only, are no part of this Agreement, and shall not be used in interpreting, construing, defining, limiting, extending, or describing the scope of this Agreement, or any provision hereof, in any way.