EXHIBIT 10.4
LICENSING TERM SHEET
PURPOSE: To enter into a licensing agreement for the purpose
of exploiting the "Antik Denim" trademark in the
footwear category.
PARTIES: Antik Denim, a California limited liability company
("Licensor")
Titan Industries, Inc., a California corporation
("Licensee")
PRODUCTS: Footwear for men and women bearing the "Antik Denim"
trademark (Licensor shall warrant ownership of
intellectual property and promise to maintain
integrity thereof)
TERRITORY: United States, its possessions and territories,
Canada and Mexico (right of first refusal on Europe
and South America).
TERM: Three years, with the first year containing 18
months, provided, however, that after the first
eighteen months, Licensee in its sole discretion
shall have the right to cancel this agreement if its
sales are not satisfactory.
RENEWAL OPTION: One five year renewal option, provided no defaults
remain uncured at the time of the exercise of the
option.
ROYALTY: 6% of Net Sales defined to mean the gross invoice
price of footwear sold at wholesale less sales taxes,
freight and insurance, the amount of credits allowed
for returns and normal trade discounts and sales and
markdown allowances actually granted.
MIN. NET SALES
GUARANTY: Year One $ 1.5 million
Year Two $ 2.0 million
Year Three $ 2.5 million
Year Four The greater of (a) 75% of the
Net Sales of Year Three, or
(b) $ 5 million
Year Five $15 million
Year Six $15 million
Notwithstanding to foregoing, if the gross sales for Antik Denim, LLC are less
than 20 million dollars for year two and any succeeding year, then the royalties
shall be reduced
proportionately on a percentage basis for each such year. For example, if Antik
Denim, LLC's sales are 25% below $20 million dollars ($15 million), the royalty
would be reduced by the same percentage basis for that year, and the same
reduction would be applied for any succeeding year that sales are below $20
million.
ADVERTISING
ROYALTY: 2% of the Minimum Net Sales Guaranty for each year
shall be spent on advertising, exclusive of
participation in trade shows Licensee shall be
responsible for all footwear advertising, in its sole
discretion.
ADVANCE AGAINST
ROYALTIES: Licensee shall pay the sum of $22,500 upon the
signing of the License Agreement as an advance
against royalties due for the first year of the
Agreement. Thereafter, all royalties shall be payable
30 days after the close of the each calendar quarter.
MARKETING/
DISTRIBUTION: Licensee shall sell the Licensed Products through
Licensee's showrooms located in New York City, NY and
Huntington Beach, CA. Licensee shall maintain the
high image and prestige of the trademark and shall
offer only high quality goods. Licensee shall select
its customers for distribution in accordance with the
foregoing requirement.
DESIGN: Licensor shall have commercially reasonable, subject
to time constraints and other conditions, approval
rights over all concepts and pre-production samples
and production. Licensee and Licensor shall work
together to ensure that the Licensed Products are
consistent with the apparel lines designed by
Licensor on a seasonal basis.
BINDING EFFECT: The parties intend this Term Sheet to have a binding
effect and agree that upon execution hereof each
party will be fully bound. The parties further agree
that upon execution hereof, Licensor shall issue
mutually acceptable press releases announcing this
agreement. Licensee shall issue no press releases on
its own accord without the prior written approval of
Licensor.
DOCUMENTATION: Within 30 days from the date of execution of this
Term Sheet the parties agree to execute a formal
license agreement initially drafted by counsel for
Licensor containing standard licensing terms and
conditions. If for any reason a formal license
agreement is not executed, this letter of intent
shall be deemed to be a binding
licensing agreement and all missing terms shall be
deemed to be those which are usual and customary in
the industry.
DISPUTE RESOLUTION/
VENUE/
FORUM SELECTION: All disputes will be settled by binding arbitration
before a retired judge, in Los Angeles, California.
Attorneys fees/costs shall be awarded to the
prevailing party.
AGREED AND ACCEPTED:
LICENSOR: ANTIK DENIM, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇, Manager
Date: September 8, 2005
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LICENSEE: TITAN INDUSTRIES, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇, [title]
Date: September 8, 2005
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