LICENSE AGREEMENT

LICENSE AGREEMENT

BETWEEN

MOTOROLA, INC.

AND

FORWARD INDUSTRIES, INC.

TABLE OF CONTENTS
 

EXHIBITS

A,         Products, Territory, Rates and Term

B.         Trademarks

C.        Trademark Use Guidelines

D.        Specifications

E.         Sample Manufacturer’s Agreement

F.         Product Warranty

G.        Licensor Exclusive Accounts

H.         Compliance with Laws and Ethical Standards

LICENSE AGREEMENT

THIS AGREEMENT is made between:

(1)        MOTOROLA, INC., a Delaware corporation, having its principal office at 1303 East Algonquin Road, Schaumburg, Illinois 60196, USA (including its subsidiaries and affiliates, " Motorola " or "Licensor" ); and

(2)        FORWARD INDUSTRIES, INC., a New York corporation, having its principal office at 1801 Green Road, Pompano Beach, Florida 33064, (" Licensee ").                                                                                                                                                                                                                                                                                                           

with reference to the following recitals:

,A.        Motorola is the owner of certain Trademarks, including MOTOROLA and the Stylized M logo. The Trademarks constitute valuable rights owned and used by  Motorola in conducting its business and designating the origin or sponsorship of distinctive branded products by Motorola;

B.         Motorola wishes to license certain Trademarks for use in connection with accessories for cellular telephones;

C.         Licensee wishes to use the Trademarks upon and in connection with the manufacture, sale, marketing, and distribution of certain accessories for cellular telephones; 

D.         Motorola desires to protect the integrity of its Trademarks and to preserve its right to label its products with its Trademarks so as to avoid consumer confusion and to distinguish its products from those of its competitors;

E.         Motorola and Licensee are parties to a license agreement entered into as of October 1, 2004, that expired by its terms December 31, 2007 (the "Prior Agreement"); and

F.         Licensee and Motorola agree that certain restrictions on Licensee’s use of the Trademarks are necessary to ensure that the Trademarks are not diluted or subjected to disrepute in the course of Licensee’s use of the Trademarks, that Motorola’s reputation is not subjected to disrepute, and that Motorola’s rights in the Trademarks and ownership of the Trademarks are preserved.

NOW, THEREFORE, in consideration of the mutual promises of this Agreement, the parties agree as follows:

1.         DEFINITIONS

1.1              In this Agreement:

"Affiliates" means affiliated, associated or subsidiary companies of Motorola or Licensee (as applicable) or persons or other entities with a common ownership, common management, or interest in or interlocking directorate with, Licensee or Motorola.

" Approved Sample " means Product or Product Materials which have been delivered to and approved in writing by Motorola’s Representative as provided in Section 3 of this Agreement.

" Approved Manufacturer " means a contract manufacturer or supplier to Licensee of the Product or Product Materials that has been approved by Motorola and that has executed a Manufacturer’s Agreement incorporating all of the terms of the Manufacturer’s Agreement set forth in Exhibit E.

" Business Day " means a day that is not a Saturday or Sunday or a legal holiday and on which banks are not required or permitted by law or other governmental action to close in Illinois or Florida.

" Days " means calendar days.

" Derivative Works " means any computer program, work, industrial design, ornamental design, product, service, improvement, supplement, modification, alteration, addition, revision, enhancement, new version, new edition, remake, sequel, translation, adaptation, design, plot, theme, character, story line, concept, scene, audio-visual display, interface element or aspect, in any medium, format, use or form whatsoever, whether interactive or linear and whether now known or unknown (including but not limited to sound recordings, phonorecords, computer-assisted media, games, books, magazines, periodicals, merchandise, animation, home videos, radio, motion pictures, cable and television), that is derived directly or indirectly, from any Motorola Intellectual Property, or any part or aspect of any thereof, or that uses or incorporates any of the Motorola Intellectual Property, or any part or aspect of any thereof.

" Effective Date " means January 1, 2008.

" Gross Sales " means the total amount billed by Licensee for Products sold to its customers, other than Motorola, its subsidiaries and its affiliates.

" Intellectual Property Rights " means any and all (by whatever name or term known or designated) tangible and intangible and now known or hereafter existing: (i) rights associated with works of authorship throughout the universe, including but not limited to copyrights (including without limitation the sole and exclusive right to prepare Derivative Works of copyrighted works and to copy, manufacture, reproduce, lend, distribute copies of, modify, publicly perform and publicly display the copyrighted work and all derivative works thereof), moral rights (including without limitation any right to identification of authorship and any limitation on subsequent modification) and mask-works; (ii) rights in and relating to the protection of trademarks, service marks, trade names, goodwill, rights in packaging, rights of publicity, merchandising rights, advertising rights and similar rights; (iii) rights in and relating to the protection of trade secrets and confidential information; (iv) patents, designs, algorithms and other industrial property rights and rights associated therewith; (v) other intellectual and industrial property and proprietary rights (of every kind and nature throughout the universe and however designated) relating to intangible property that are analogous to any of the foregoing rights (including without limitation logos, character rights, "rental" rights and rights to remuneration), whether arising by operation of law, contract, license or otherwise; (vi) registrations, applications, renewals, extensions, continuations, divisions or reissues thereof now or hereafter in force throughout the universe (including without limitation rights in any of the foregoing); and (vii) rights in and relating to the sole and exclusive possession, ownership and use of any of the foregoing throughout the universe, including without limitation the right to license and sublicense, franchise, assign, pledge, mortgage, sell, transfer, convey, grant, gift over, divide, partition and use (or not use) in any way any of the foregoing now or hereafter (including without limitation any claims and causes of action of any kind with respect to, and any other rights relating to the enforcement of, any of the foregoing).

" Laws " mean any and all applicable published laws, rules, regulations, including, but not limited to, local and national laws, rules and regulations, treaties, ministerial guidance or guidelines, generally accepted voluntary industry standards, association laws, codes, etc. pertaining to any activities of Motorola or any third party engaged by Motorola in connection with the performance of the obligations arising under this Agreement.

" Manufacturer’s Agreement " means an agreement among Motorola, Licensee and a manufacturer or supplier of the Product or Product Materials incorporating all of the terms of the Manufacturer’s Agreement set forth in Exhibit E.

" Net Sales " means Gross Sales, less refunds, credits and allowances actually allowed to customers for returned Products.

" Product " or " Products " means specific products or product categories as established in Exhibit A for which the Licensee is authorized under this Agreement and which have been approved by Motorola as provided in this Agreement and which bear the Trademarks.

" Product Materials " means to the extent required by this Agreement, warranty statement, user guide, packaging and marketing materials, including but not limited to point-of-sale materials, publicity, advertising, signs, catalogs, product brochures and other in-box materials relating to the Products.

"Promptly" means a reasonable effort to perform within 10-15 business days.

"Sales Year" or "Sales Years" means a period of time that is twelve months or less in time, as defined in Exhibit A, during which sales of Products are measured.

"Specifications " means the Cosmetic Specifications and Materials and Methods Specifications attached hereto as Exhibit D.

" Territory " means the authorized counties referred to in Exhibit A subject to the restrictions in Section 13.

" Trademarks " means one or more of the trademarks, trade names, logos, trade dress,  and service marks referred to in Exhibit B.

"Trademark Use Guidelines" shall be those Motorola guidelines for use of the Trademarks, as provided in Exhibit C.

2.          GRANT OF LICENSE

2.1       Motorola grants to Licensee, subject to the terms and conditions of this Agreement, the non-exclusive right to use the Trademarks upon the Products and in connection with the manufacture, sale, marketing and distribution of the Products in the Territory.

2.2              Licensee may manufacture Products or have Products manufactured for it anywhere in the world subject to the terms of this Agreement including the restrictions and obligations of Sections 3, 13 and 19 of this Agreement.

2.3              Licensee is further authorized to use in the Territory the Trademarks in Product Materials directly related to Products including in publicity, advertising, signs, catalogs, product brochures, packaging, point-of-sale materials and other forms of advertising, subject to the terms and conditions of this Agreement.

3.           SAMPLES; QUALITY CONTROL

3.1       Motorola shall provide Licensee with artistic renderings of the Trademarks and with Trademark Use Guidelines identified in Exhibit C.  Licensee shall use the Trademarks only as provided in the artistic renderings provided by Motorola and shall comply with the Trademark Use Guidelines provided by Motorola.

3.2       Motorola will attend a quarterly meeting with Licensee to provide information and strategize regarding the future planned launch of Motorola mobile phones and accessories for which Licensee might plan to make compatible Products. 

3.3       Samples .  Licensee shall produce and submit to Motorola samples of any Product(s) it proposes to market or sell under this Agreement.    Motorola agrees to Promptly review the sample(s) and notify Licensee of its decision in writing to designate the sample(s) as approved or not approved. Motorola may approve or disapprove any sample in its sole discretion.

3.4        Technical Specifications .    All products must comply with the Materials and Methods and Cosmetic Specifications ("Specifications") attached hereto as Exhibit D.

3.5        Final Production Samples . Licensee must also obtain Motorola’s written approval of final production samples of each Product and all Product Materials, prior to the sale, publication, distribution or use of such Product and/or Product Materials. Licensee shall furnish, at no cost to Motorola, three final production samples of each Product and corresponding Product Materials to Motorola’s Representative who may retain such final samples at Motorola’s discretion.   Licensee acknowledges that Motorola may perform SAR tests on the production samples and that no production sample will be approved unless it passes SAR testing.  Motorola agrees to Promptly after submission of Product samples notify Licensee in writing if it approves of such final production samples of each Product and final production samples of Product Materials.  If such Product and/or Product Materials are not approved, Motorola will in such notice advise Licensee of the reasons, including corrections required by Motorola.  Licensee shall make all such corrections at its expense, or withdraw the proposed Product and/or Product Materials from consideration.  Any review and/or approval by Motorola shall not relieve Licensee from its obligations provided in this Agreement.  Sections 3.2 and 3.4 shall not apply to Products sold in the Territory pursuant to the Prior Agreement and which have not been modified by Licensee or at Motorola’s direction subsequent to their final approval for production and sale under that license.  Licensee shall not manufacture any Product until it has received written approval from Motorola.

3.6    Licensee agrees that, once approved, it will not make any changes to an approved Product or Product Materials without seeking new approval from Motorola.  Individual Approved Products may not be bundled together without separate approval of the bundle and its Product Materials. .  Each Product and the Product Materials shall at all times: (i) conform to the terms of this Agreement; (ii) conform to the Trademark Use Guidelines and the Specifications and (iii) be the same in appearance, form, fit, function, quality and regulatory compliance to the Approved Sample of the Product or Product Materials.    If at any time the Product and/or Product Materials fail to meet these requirements, Licensee shall Promptly, but in no event later than thirty (30) days of becoming aware of such failure, make all changes necessary to bring such Product and/or Product Materials into conformance, or cease using the Trademarks on a nonconforming Product and/or Product Materials, or cease selling the Product. In addition, Licensee may be required by Motorola within ten (10) business days after becoming aware of such nonconformance, take steps to withdraw any nonconforming Products and/or Product Materials from the market if reasonably determined by Motorola to be a nonconformance creating significant safety, quality, customer satisfaction or negative brand impact issues.

3.7       If requested by Motorola due to reasonable concerns over nonconformance with the Approved Samples, Licensee shall, at its own expense, submit to Motorola’s  Representative the results of inspections and tests that have been performed by an independent testing laboratory approved by Motorola on randomly selected samples of each Product to show conformance. In addition, Motorola may require Licensee, at Licensee’s own expense, to perform tests at an independent laboratory approved by Motorola to show conformance of the Product with the Approved Samples. At its sole discretion, Motorola may purchase the Product, at its own expense, from retail outlets or from distributors and review the Product and Product Materials to ensure that they conform in appearance, form, fit, function, quality and regulatory compliance to the Approved Samples, the Specifications and the Trademark Use Guidelines.

3.8       Upon five (5) business days’ notice to Licensee, Motorola shall have the right to conduct or have conducted, during regular business hours, an examination of Products manufactured by or for Licensee (including those assembled or tested) at Licensee’s facilities to determine compliance of such Products with the Approved Sample(s) and the Trademark Use Guidelines and the Specifications.

3.9       Costs.  Motorola and Licensee shall each bear their own costs, including, but not limited to, reasonable and necessary travel and inspection services associated with the inspection and testing of Products for conformance with the requirements of this Section 3 , except that Licensee alone shall bear any costs associated with the inspection and testing of Products that are conducted by an independent testing laboratory as referenced in Section 3.7 and shall bear the cost of the samples referenced in this Agreement.

4.         APPROVED MANUFACTURERS

4.1       Licensee must obtain Motorola’s written consent prior to using any third party to manufacture or to supply Licensee with any Product. Licensee shall forward to Motorola a written list of proposed manufacturers or suppliers and the Products that each is to manufacture or supply and the location(s) where such Products shall be manufactured. Motorola may request any additional business or credit information regarding the proposed manufacturer or supplier it deems necessary to make a determination.  Motorola agrees to Promptly review the list and to notify Licensee of its decision, and, if not approved, to advise Licensee, in writing stating the reasons why such manufacturer or supplier is not acceptable.  A manufacturer or supplier who is so approved is an Approved Manufacturer for only that Product for which it is approved and only after executing a Manufacturer’s Agreement. 

4.2       Prior to manufacturing any Product or using any manufacturer to manufacture any Product, Licensee shall have the proposed manufacturer execute a Manufacturer’s Agreement that has terms that are legally enforceable in the jurisdiction in which the Products  are manufactured or supplied and includes at least the same terms and conditions as those set out in the Manufacturer’s Agreement in Exhibit E.  Licensee may include additional terms in the Manufacturer’s Agreement provided they do not result, in the opinion of Motorola, in a reduction in the protections and remedies available to Motorola under the terms in Exhibit E. A copy of the executed Manufacturer’s Agreement shall be delivered to Motorola before the Licensee or any Approved Manufacturer may commence the manufacture or supply of any Product.

4.3       Should either party become aware of any applicable published laws or regulations in any jurisdiction in the Territory that are inconsistent with the provisions and intent of the Manufacturer’s Agreement, it shall notify the other party within five (5) days of becoming aware of such inconsistency.

4.4       If Motorola determines that an Approved Manufacturer has breached any Manufacturer’s Agreement in any material respect, Motorola shall advise the Licensee of the breach in reasonable detail and, instruct Licensee to enforce the Manufacturer’s Agreement against the breaching Approved Manufacturer. If Licensee determines that an Approved Manufacturer has breached any Manufacturer’s Agreement in any material respect, Licensee shall immediately give notice to Motorola of such breach.  In either case Licensee will use commercially reasonable efforts to enforce the Manufacturer’s Agreement against the breaching Approved Manufacturer by obtaining a cure of the breach or terminating the Manufacturer’s Agreement within thirty (30) days. If the Licensee or the Approved Manufacturer fails within this thirty (30) day period to (i) cure such breach to the satisfaction of Motorola or (ii) to suspend the manufacture of Products under the Manufacturer’s Agreement pending cure of such breach to the satisfaction of Motorola, all rights to manufacture Product under this Agreement are immediately terminated and that Approved Manufacturer shall immediately be terminated as an Approved Manufacturer.

4.5       Licensee acknowledges that any failure by Licensee to enforce or terminate any Manufacturer’s Agreement against a breaching Approved Manufacturer in accordance with this Article 4 is a material breach of this Agreement, and that such failure will cause irreparable harm and damages to Motorola.

4.6       If Licensee fails or refuses to immediately comply with or enforce the Manufacturer’s Agreement against the breaching Approved Manufacturer in accordance with Section 4.4, Motorola shall have the right commencing three business days after written notice to Licensee to enforce the provisions of the Manufacturer’s Agreement against the Licensee or the breaching Approved Manufacturer. In such cases, the cost of enforcing the Manufacturer’s Agreement, including but not limited to attorneys fees, shall be paid by Licensee, whether the Manufacturer’s Agreement is enforced by Motorola or Licensee. Licensee agrees to cooperate fully with Motorola, at Licensee’s own expense, in all actions to enforce a Manufacturing Agreement.

4.7       Upon seven (7) business days’ notice to the Approved Manufacturer, Motorola shall have the right to inspect or have inspected, at Motorola’s expense, the manufacturing facilities of the Approved Manufacturer during regular business hours to determine compliance with the terms of the Manufacturer’s Agreement and compliance of the Products and the Product Materials with the Approved Samples, the Specifications and the Trademark Use Guidelines. If at any time the Products and/or Product Materials fail to conform to the Trademark Use Guidelines, or the Specifications or are not the same in appearance, form, fit, function, quality and regulatory compliance to the Approved Sample(s), Motorola or its authorized representative shall so notify Licensee. Upon such notification, Licensee shall Promptly, but in no event later than thirty (30) business days, work with the Approved Manufacturer to make all changes necessary to bring such Products and/or Product Materials into conformance, or cease using the Trademarks on such nonconforming Products and/or Product Materials, or cease selling such Products.   In addition, Licensee may be required by Motorola within ten (10) business days after becoming aware of such nonconformance, take steps to withdraw any nonconforming Products and/or Product Materials from the market if reasonably determined by Motorola to be a nonconformance creating significant safety, quality, customer satisfaction or negative brand impact issues.

5.         APPEARANCE OF TRADEMARKS; TRADEMARK NOTICES

5.1       All products and Product materials shall comply with the Trademark use Guidelines.  Motorola may change the Trademarks Use Guidelines regarding the style, appearance and manner of use of the Trademarks as necessary, in its sole discretion.  If Motorola requires Licensee to implement such changes, it shall give written notice to Licensee of any such change(s). Licensee shall Promptly implement the revised Trademarks Use Guidelines on a running change basis, but in no event later than one hundred twenty (120) business days of Licensee’s receipt of Motorola’s notification of any change in the Trademarks Use Guidelines. Licensee shall be permitted in accordance with the terms of this Agreement, to sell, in the ordinary course of business, Product inventory that exists at the time of receipt of such notice.

5.2       Motorola may require, where practicable, that the following notices, all or in part, be used on the Products and/or Product Materials to identify the licensed use under the Agreement and the proprietary rights of Motorola:

Motorola TM attribution statement for Licensee packaging :

Manufactured, distributed or sold by "FORWARD INDUSTRIES, INC.", official licensee for this product.  Motorola, the Stylized M Logo, and other Motorola trademarks and trade dress are owned by Motorola, Inc. and are used under license from Motorola, Inc.  MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners.   © Motorola, Inc. 200X.  (with X being the date of publication). All rights reserved.

Please contact customer service at 800-872-3935  for questions/comments, warranty, support or service related to this product.

Motorola TM attribution statement for Licensee Collateral :

Motorola, the Stylized M Logo, and other Motorola trademarks and trade dress are owned by Motorola, Inc. and are used under license from Motorola, Inc.  MOTOROLA and the Stylized M Logo are registered in the U.S. Patent & Trademark Office.  All other products or service names are the property of their respective owners. © Motorola, Inc. 200X. (with X being the date of publication) All rights reserved.

5.3       Motorola may require through written notice and a reasonable time for implementation that Licensee adopt and use different Trademarks and/or Product Materials specifications for different countries in the Territory, and Licensee agrees to be bound by such requirements of Motorola.

6.           PROTECTION OF TRADEMARKS

6.1       Licensee acknowledges that Motorola is the exclusive owner of the Trademarks and any trademark incorporating all or any part of the Trademarks. Without limiting the foregoing, Licensee hereby assigns to Motorola all right, title and interest in the Trademarks, together with the goodwill attaching thereto that may inure to Licensee in connection with this Agreement or from its use of the Trademarks hereunder.  Licensee agrees to execute and deliver such documents as necessary for Motorola to register Licensee as registered user or permitted user in any country, or to withdraw Licensee as a registered user or permitted user, of the Trademarks.  All use of the Trademarks by Licensee shall inure to the sole benefit of Motorola.  Licensee shall cooperate and shall execute all papers reasonably requested by Motorola to affect further registration, maintenance and renewal of the Trademarks at the sole expense of Motorola.

6.2       Licensee will not encourage or assist a third party to register, or attempt in any country to register the copyright, or to register as a trademark, service mark, design patent or industrial design, any portion of the Motorola Intellectual Property Rights or derivations or adaptations thereof, or any work, symbol or design that is so similar thereto as to suggest association with or sponsorship by Motorola.  In the event of any breach of the foregoing, Licensee agrees to terminate the unauthorized registration activity and to execute and deliver, or cause to be delivered, to Motorola such assignments and other documents as Motorola may require to transfer to Motorola all rights to the registrations, patents or applications involved.  Licensee will not, nor will it encourage or assist a third party to, challenge the validity or ownership of any patent, copyright, trademark, or other Intellectual Property Rights or registrations of Motorola.

6.3       If Licensee learns of any infringement of the Trademarks or of the existence, use or promotion of any mark or design similar to the Trademarks, Licensee shall Promptly notify Motorola. Motorola shall have the sole right and discretion to decide what legal proceedings or other action, if any, shall be taken, by whom, how such proceedings or other action shall be conducted. Any legal proceedings instituted pursuant to this Section 6.3 shall be for the sole benefit of Motorola.  Licensee shall, at the request of Motorola, cooperate and assist Motorola in any such suit or action, provided that Motorola will reimburse Licensee for all documented reasonable costs, including attorneys’ fees.

6.4       In the performance of this Agreement, Licensee shall comply with applicable laws and regulations, and those laws and regulations particularly pertaining to the proper use and designation of trademarks in the countries of the Territory. Should Licensee be or become aware of any applicable laws or regulations that are inconsistent with the provisions of this Agreement, Licensee shall Promptly notify Motorola of such inconsistency. The parties then, shall in good faith, negotiate a modification to this Agreement such that it complies with applicable law and regulations or Motorola may terminate the license and rights granted hereunder in that jurisdiction, and the Territory set forth in Exhibit B shall be appropriately amended.

7.           PRODUCT WARRANTY AND SUPPORT

7.1       Licensee shall provide a warranty and support service plan for the Products.  Licensee must obtain Motorola’s written approval of the warranty and support service plan prior to the manufacture of any Product for each country in the Territory. Such warranty shall, at a minimum, provide a one-year warranty period and comply with the requirements set forth in Exhibit F, unless otherwise approved in writing by Motorola. Motorola agrees to Promptly notify Licensee if it approves the warranty and support plan or, if not approved, Motorola will advise the Licensee of corrections required by Motorola for the warranty and support service to be approved. Once the warranty and support service plan is approved, Licensee may use it with all Products.  However, if Licensee makes any modifications to the warranty and support service plan, it must re-submit the plan to Motorola for a new approval. Any approval by Motorola shall not relieve Licensee from its obligations set forth in this Agreement, including but not limited to complying with local laws on warranties in the Territories where the Products are sold.

7.2       Licensee will be fully responsible for all end user support service and warranty costs, including but not limited to the following (if applicable): transportation costs, Product replacements, service labor, field repair, refunds, returns, and other customer concessions to ensure each customer’s satisfaction for the duration of the applicable warranty period. Motorola may require Licensee to halt sales or to recall Product in whole or in part or to take other corrective actions where Motorola reasonably determines customer satisfaction, quality, safety, returns or compliance problem(s) exist.

7.3       All Product packaging shall include a conspicuous use of the telephone number and address for Licensee’s customer service department or customer service representative so that any questions regarding support service for the Products including warranty can be directed by the consumer or by Motorola to Licensee. At its sole discretion and when feasible, Motorola may also require the Licensee to affix a sticker on each Product indicating the telephone number of Licensee’s customer service department. Licensee shall provide the telephone number and address for customer service to Motorola for each Product before the initial sale of such Product. If Motorola determines that the number of questions regarding any Product that are directed by the consumer to Motorola exceed 1% of the number of such Products sold, Motorola and the Licensee shall mutually agree on a corrective action. If a reasonable corrective action cannot be agreed to, Motorola may require Licensee to withdraw such Product from the market or require Licensee to pay Motorola for future costs incurred related to such questions.

7.4       Throughout the period during which the warranty for any Product is in effect, Licensee shall provide a well-manned toll-free (where available) telephone service number for receipt of service calls for the Products. At a minimum, such telephone service number shall operate manned with live personnel during regular business hours for all time zones in which the Products are sold. At all other times, such telephone service number shall have, at a minimum, an automated message specifying the times during which the service number shall be manned with live personnel.

7.5       Licensee will collect, prepare reports or, maintain and, upon request, deliver to Motorola, all applicable data and records relating to Product warranty and warranty service rendered.  In addition, within thirty (30) days after the end of each quarterly period, Licensee shall furnish to Motorola‘s Representative a statement summarizing all significant problems and quality issues reported to Licensee’s customer service department for each Product in the preceding quarter.

8.           ROYALTIES AND REPORTS

8.1       Licensee agrees to pay Motorola a Royalty equal to the percentage shown in Exhibit A for each Product, of all Net Sales for the Products ("Royalty").  Licensee shall pay the Royalties in quarterly periods ending on the last day of March, June, September and December during the Sales Year.  The Royalty obligation shall accrue upon the sale of the Products regardless of the time of collection by Licensee.  For purposes of this agreement, Products shall be considered "sold" on the date when such Products are billed, invoiced, shipped or paid for, whichever event occurs first.  No deductions shall be made for uncollectible accounts.  Royalties will be paid in US dollars.  If the gross sale price is expressed in any currency other than United States Dollars, the royalty rate shall be applied to that currency converted to United States Dollars based upon the exchange rate that appears in the "Currency Trading" section of the United States Eastern Edition of The Wall Street Journal on the last day of the quarterly period in which the royalties become due.

8.3       On or before the fifteenth (15 ^th ) day following each calendar quarter during the Sales Year, as set forth in Exhibit A, Licensee shall make a quarterly payment to Motorola which shall be calculated as follows:  The greater of the year-to-date Minimum Royalty due or the year-to-date Royalties due, minus the actual Royalty payments made for the Sales Year.  The Minimum Royalty due in each quarter shall be the Minimum set forth in Exhibit A.  Neither the expiration nor the termination of this Agreement shall relieve Licensee from its Royalty and Minimum Royalty payment obligations.

8.2       Fifteen (15) days after the close of each month, Licensee will also furnish to Motorola, on forms provided or approved by Motorola, a statement of Net Sales and number of units of all Products sold (whether or not subject to a royalty) during the immediately preceding month and statements of other information as the forms may require.  Such statements will be certified true and correct by a duly authorized officer of Licensee if Licensee is a corporation or by a principal of Licensee if Licensee is a partnership or sole proprietor.  Licensee shall send all payments required by this Section to Motorola at the address in Section 8.4 and statements required by this Section to the Category Manager at the address in Section 23. 

8.3       Credits for Products for which royalties were previously paid shall be made against royalties in the quarter the Product returns are received and credited to Licensee’s customers.

8.4      All payments shall be electronically transferred to Motorola with all electronic transfer fees to be paid by Licensee at:

WIRE TRANSFERS:

Bank of America

100 West 33 ^rd Street

New York, NY 10001

ABA#026009593

SWIFT Code: BOFAUS3N

Account Name: MOTOROLA INC

Account Number: 4426499628

8.5       During the term of this Agreement and for at least three (3) years following the termination or expiration of this Agreement, Licensee and its Affiliates shall maintain at Licensee’s or its Affiliate’s principal office such books and records including but not limited to production, inventory and sales records (collectively "Books and Records") as are necessary to substantiate that (i) all statements submitted to Motorola hereunder were true, complete and accurate, (ii) all royalties and other payments due Motorola hereunder shall have been paid to Motorola in accordance with the provisions of this Agreement, and (iii) no payments have been made, directly or indirectly, by or on behalf of Licensee to or for the benefit of any Motorola employee or agent who may reasonably be expected to influence Motorola’s decision to enter this Agreement or the amount to be paid by Licensee under this Agreement.  (As used in this Section, "payment" shall include money, property, services, and all other forms of consideration.)  All Books and Records shall be maintained in accordance with generally accepted accounting principles consistently applied.  During the term of, and for three (3) years after the termination or expiration of this Agreement, the Books and Records shall be open to inspection, audit, and copy by or on behalf of Motorola during business hours.

8.6       If any examination reveals that Licensee has underpaid the royalty, Licensee shall pay the shortfall to Motorola within ten (10) days of being notified of the shortfall. Motorola shall bear the costs and expenses of conducting each examination. However, if the examination reveals that Licensee has underpaid the royalty by more than five percent (5%) of the actual amount due, Licensee shall reimburse Motorola for all costs and expenses incurred in conducting the examination.

8.7       Licensee shall pay any tax (and any related interest and penalties), however designated, imposed solely as a result of the existence or operation of this Agreement including any tax that Licensee is required to withhold or deduct from payments to Motorola, except (i) any such tax constituting an income tax imposed upon Motorola (including its subsidiaries and Affiliates) by any governmental entity within the United States proper (the fifty (50) states and the District of Columbia); and (ii), if the aforesaid office of Licensee is located in or relocated to a jurisdiction outside of the United States proper, any foreign tax imposed on Motorola or any of its subsidiaries if such tax is allowable as a credit against U.S. income taxes of any of such companies. In the case of taxes imposed pursuant to sub-section ii of this Section, Licensee shall furnish Motorola with any evidence required by United States taxing authorities to establish that such tax has been paid.

8.8       Interest .  Any payment or underpayment under this Agreement that is delayed beyond the due date shall be subject to an interest charge, calculated on the due date and monthly thereafter, of four percent (4%) over the United States prime rate (as reported by the Wall Street Journal on the due date and monthly thereafter) per annum, compounded monthly until paid, on the unpaid balance, payable in United States dollars.  If the amount of such interest exceeds the maximum interest rate permitted by law, such fee shall be reduced to such maximum.

9 .          SALES AND MARKETING

9.1       Licensee shall provide Motorola with written descriptions in such detail as may be requested from time to time by Motorola of Licensee’s marketing and distribution program before the program’s implementation or modification.  Licensee shall not proceed with the implementation of the initial program or any modification of its marketing and distribution program without obtaining Motorola’s prior approval. 

9.2       Licensee agrees to attend an Annual Review and Planning Meeting with Motorola to review the current year’s performance in comparison with previously projected goals and objectives and to adopt goals and objectives for the coming year.  Licensee agrees to develop and present a detailed sales marketing plan with projected goals and objectives for the coming year.  The sales marketing plans shall be structured with Motorola.   At least sixty (60) days prior to the annual meeting, each party agrees to provide the other party with a list of relevant issues and questions to be addressed, and the other party agrees to address the issues and questions at the Annual Review and Planning Meeting.  At the discretion of Motorola, Licensee agrees to attend semi-annual or other required performance review meetings with Motorola at a mutually agreed upon location.

9.3       Throughout the term of this Agreement, Licensee agrees to promote the sales of Products in retail outlets and distributors in the Territory.  In order to preserve the value and integrity of the Trademarks, the parties agree that the Products will be sold only in channels where the suitability of the trading premises, the customer service and the competence of the resellers are of sufficient quality and reliability and are appropriate for the resale of the Products consistent with Motorola’s brand image.  For the avoidance of doubt, the following channels would satisfy such requirements:  department stores, chain consumer electronics stores, boutique consumer electronics stores, and mass merchants. Motorola reserves the right to disapprove or withdraw approval of any specific retailer if, in Motorola’s reasonable belief, that retailer does not provide suitable service or competence or maintain a suitable trading premises, or may otherwise subject the Trademarks to devaluation or disrepute in any way.

9.4        Licensee agrees not to offer, without prior written approval from Motorola, branded products that are identical in function and in appearance to Products, except for the Trademarks, in the same retail outlets or distributors with the Products. Motorola acknowledges that the foregoing restriction is intended only to prohibit Licensee from offering items that are identical to the Products under a different brand name, and is not intended to prohibit Licensee from offering non-Trademarks branded products generally. In the event the parties mutually agree to customizations that differentiate the Products by including in appearance elements that create an identity associated with the Products, Licensee agrees to use and limit such customizations to the Products unless Motorola agrees in writing to their use for other products. Neither party assigns to the other party any rights in its industrial designs, Product designs, technology, and/or intellectual property in and associated with the Products unless specifically agreed to in writing by the owner.

9.5        Advertising Reserve .  Licensee agrees to reserve a minimum of 2% of wholesale price and use it for advertising, merchandising and promotion of the Product.  Licensee will provide a report at the Annual Review and Planning meeting detailing how the advertising reserve was used.  If Licensee fails to provide a detailed report demonstrating that the advertising reserve was used for advertising, merchandising and promotion activities related directly to the Product(s), Licensee shall pay the amount of the reserve to Licensor as a penalty. 

10.        TERM AND TERMINATION

10.1     Unless sooner terminated in accordance with this Agreement, the license and rights granted under this Agreement shall commence on the Effective Date of the Agreement, and shall continue in effect until March 31 ^st , 2009.  The parties may renew or extend the Term of this Agreement by mutual consent.

10.2     Without prejudice to any other rights that Motorola may have, Motorola may at any time give notice of termination of this Agreement effective immediately:

10.2.1  If Licensee shall be unable to pay its obligations when due, shall make any assignment for the benefit of creditors, shall file a voluntary petition in bankruptcy, shall be adjudicated bankrupt or insolvent, shall have any receiver or trustee in bankruptcy or insolvency appointed for its business or property, or shall make an assignment for the benefit of creditors;

10.2.2                If Licensee manufactures, sells, markets, or distributes any Products without obtaining Motorola’s approval as provided for by this Agreement or continues to manufacture, sell, market, or distribute any Products after receipt of notice from Motorola disapproving such items in accordance with the terms of this Agreement;

10.2.3        If Licensee breaches any provision of this Agreement relating to the unauthorized assertion of rights in the Trademarks;

10.2.4        If Licensee breaches any provision of this Agreement prohibiting Licensee from directly or indirectly arranging for manufacture by third parties, assigning, transferring, sublicensing, delegating or otherwise encumbering this Agreement or any of its rights or obligations; or

 10.2.5       If reasonable grounds for insecurity arise with respect to Licensee’s performance of this Agreement and Motorola demands adequate assurance of due performance in writing, and Licensee fails to provide such adequate assurance within five (5) days after the date of Motorola’s request therefore or within such other shorter period of time as Motorola may reasonably designate under the then existing circumstances.  The parties further agree that if Motorola has requested adequate assurances, Motorola may suspend its performance of this Agreement until Motorola receives such assurances in writing.

10.2.6        If Licensee shall fail for one hundred and twenty (120) consecutive days to continue the bona fide distribution and sale of the Products in commercially reasonable quantities throughout the Territory;

10.2.7              If the quality in any Products has reached unacceptable levels pursuant to Section 3 referenced herein and a mutually agreeable action plan to remedy the defects has not been established within seven (7) days from notice by Motorola, or if subsequent quality reports reveal that the defect rates have not been reduced to the acceptable standard.

10.2.8        If by May 31 ^st , 2008 Licensee has not begun the bona fide distribution and sale of the Products in commercially reasonable quantities in the locations in the Territory agreed in the current marketing and distribution program adopted pursuant to Section 9 of this Agreement;

10.2.9        If Licensee fails to comply with applicable laws or ethical standards as provided in section 19.2, 22 and Exhibit G or refuses to allow an inspection to determine compliance with laws and ethical standards, as provided in section 19.3.

10.3     Without prejudice to any other rights that Motorola may have, Motorola shall have the right to terminate this agreement for any material breach thirty (30) days after mailing a written notice to Licensee describing the alleged breach in reasonable detail unless the breaches are cured in the reasonable discretion of Motorola within the thirty (30) day period.  Material breaches include but are not limited to the following:

10.3.1        If Licensee distributes or uses any Product Materials without obtaining Motorola’s approval as provided in this agreement;

10.3.2        If Licensee shall fail to make any payment due hereunder or provide any statement required hereunder;

                        10.3.3        If Licensee fails to obtain or maintain insurance as required by the Section 15 of this Agreement;

10.3.4        If Licensee breaches any material provision of this Agreement relating to the Territory including, but not limited to section 13;

10.3.5        If in Motorola’s reasonable determination significant customer satisfaction issues have arisen with any Product; or

10.3.6        Licensee fails to enforce or terminate a Manufacturer’s Agreement against a breaching Approved Manufacturer as required in Section 4.

     10.4 Licensee may terminate this Agreement for convenience at any time, with or without cause, by giving Motorola one-hundred eighty (180)  days prior written notice and upon payment of the Minimum Royalty for the 180-day period plus the remainder of the Minimum Royalty for the quarter in which the end of the 180-day period falls.   License shall also provide royalty reports for the 180 day period as provided in Section 8.

10.5  Without prejudice to any other rights that Licensee may have, including, without limitation, those under Section 22, Licensee shall have the right to terminate this Agreement:

10.5.1 for any material breach of this Agreement by Motorola ninety (90) days after mailing written notice to Motorola that specifies the alleged breach in reasonable detail, unless the breach or breaches are cured in the reasonable determination of Licensee within such ninety-day period;

10.5.2 immediately upon written notice to Motorola if any of the Trademarks is determined by a court of competent jurisdiction to infringe the rights of a third party; or

10.5.3  immediately upon written notice to Motorola if Motorola shall be unable to pay its obligations when due, shall make any assignment for the benefit of creditors, shall file a voluntary petition in bankruptcy, shall be adjudicated bankrupt or insolvent, shall have any receiver or trustee in bankruptcy or insolvency appointed for its business or property, or shall make an assignment for the benefit of creditors.

11.        POST-TERMINATION AND EXPIRATION RIGHTS AND OBLIGATIONS

11.1       If this Agreement is terminated for any cause