FORWARD'S
TERRITORY OTHER THAN SPORT RELATED OR LIFESTYLE STORES THAT LACK IT FOCUS.
THIS INCLUDES THE RIGHT TO SELL TO SUB-DISTRIBUTORS, WHOLESALERS AND
RESELLERS THAT ARE PART OF FORWARD'S DISTRIBUTION CHANNEL.
9.
FORWARD WILL NOT SELL PRODUCTS INCORPORATING ANY OTHER EXTREME PROTECTION
TECHNOLOGY DURING THE TERM OF THE AGREEMENT WITHOUT THE CONSENT OF G-FORM.
THIS INCLUDES THINGS SUCH AS ZOOMBANG AND D30 OR ANY OTHER MATERIAL KNOWN
FOR EXTREME IMPACT PROTECTION.
NO OTHER EXTREME IMPACT PROTECTION
TECHNOLOGY CAN BE NOTED OR FEATURED ON FORWARD PRODUCTS DURING THE TERM OF
THE AGREEMENT.
G-FORM WILL ALSO MAKE AVAILABLE TO FORWARD WHATEVER
RELEVANT AGREEMENTS AND EXCLUSIVES THAT G-FORM CURRENTLY HAS OR MAY OBTAIN
IN THE FUTURE (DURING THE TERM OF THE AGREEMENT) FROM POLYWORKS, ROGERS
CORPORATION OR ANY OTHER ENTITY AS THEY PERTAIN TO THE PROTECTION OF
ELECTRONIC DEVICES.
FURTHER, G-FORM WILL REPRESENT AND WARRANTY TO FORWARD
THAT IT HAS EXCLUSIVE RIGHTS, ACCESS, AND INTELLECTUAL PROPERTY ASSOCIATED
WITH THE TECHNOLOGY.
10. FORWARD WILL PAY TO G-FORM A ROYALTY EQUAL TO [*] OF THE NET SALES PRICE
(DEFINED AS GROSS SALES LESS; CO-OP ADVERTISING PROGRAMS AND OTHER CASH
INCENTIVES, CASH DISCOUNTS, RETURNS AND WARRANTIES, AND ALLOWANCES FOR
DAMAGES OR MISSING GOODS) OF ANY FORWARD-BRANDED PRODUCT SALES
INCORPORATING THE TECHNOLOGY.
THE FIRST TWELVE-MONTH ROYALTY PERIOD SHALL
COMMENCE WHEN FORWARD SHIPS ITS FIRST LICENSED PRODUCT ("INITIAL SHIP
DATE").
11. UPON EXECUTION OF THIS MEMORANDUM OF UNDERSTANDING, FORWARD WILL PAY AN
ADVANCE AGAINST ROYALTIES IN THE AMOUNT OF $500,000, WHICH SHALL BE
CREDITED TOWARDS THE FIRST YEAR'S ROYALTY PAYMENTS.
UNLESS FORWARD MAKES
PAYMENT IN ANOTHER FORM, UPON EXECUTION OF THIS MEMORANDUM OF UNDERSTANDING
A CREDIT BY G-FORM OF THE $500,000 ROYALTY ADVANCE WILL BE TAKEN AGAINST
THE OUTSTANDING SHORT TERM PROMISSORY NOTES CURRENTLY IN PLACE BETWEEN THE
COMPANIES TOTALING $490,000 AND ANY ROYALTY ADVANCE BALANCE DUE THEREAFTER
WILL BE PAID WITHIN 30 DAYS.
IF FORWARD DOES NOT MEET ANY YEAR'S MINIMUM
SALES LEVEL, IT MAY SUPPLEMENT ITS ROYALTY PAYMENTS TO REACH REQUIRED
LEVELS THAT WOULD HAVE BEEN DUE AT THE SALES LEVEL TO MAINTAIN
EXCLUSIVITY.
THE FOLLOWING ARE THE MINIMUM NET WHOLESALE LEVELS THAT
FORWARD NEEDS TO REACH IN ORDER TO MAINTAIN EXCLUSIVITY AND THE G-FORM
LICENSE:
[*] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission.
Confidential treatment has been
requested with respect to the omitted portions.
2
a. [*] during the first 12 months from Initial Ship Date
b. [*] during the second 12 months from Initial Ship Date
c. [*] during the third 12 months from Initial Ship Date
12. G-FORM WILL SUPPLY PARTS CONTAINING THE TECHNOLOGY TO FORWARD AT G-FORM'S
COST FROM POLYWORKS, ROGERS CORPORATION OR ANY OTHER G-FORM SUPPLIER.
FORWARD WILL PAY G-FORM'S INVOICES FOR THESE PARTS IN 15 DAYS FROM INVOICE
DATE.
G-FORM WILL ACQUIRE FORWARD'S PARTS ON THE SAME COST BASIS AS IT
ACQUIRES ITS OWN.
13. FORWARD WILL BEAR THE COSTS FOR DEVELOPMENT OF FORWARD BRAND PRODUCTS.
IMMEDIATELY UPON EXECUTION OF THIS MEMORANDUM OF UNDERSTANDING, FORWARD MAY
DRAW ON G-FORM'S