LICENSING BUSINESS PLAN

1. REGISTRATION OF TRADEMARKS AND LOGOS

Prepare a trademark status report and send it to victor@mizrachi.com.

2. DURATION OF AGREEMENT.

Licensees based in the Colon Free Zone of Panama will have rights to market and sell the products in Central America, Colombia, Venezuela, Ecuador and the Caribbean and require time to develop these markets. Thus, all agreements negotiated by Latin Licensing, LLC to date have been 5 years with an automatic 5 year renewal term.

3. DESCRIPTION OF PRODUCTS.

Please define the products with as much specificity as possible (e.g., mens and womens jeans made of denim, corduroy, twill and sheeting). Some categories of apparel are (i) accesories, (ii) activewear, (iii) belts, (iv) big and tall, (v) caps and hats, (vi) casual pants; (vii) dress shirts; (viii) formalwear, (ix) hosiery, (x) jeans, (xi) jewelry, (xii) knit shirts, (xiii) leather, (xiv) loungewear, (xv)outerwear, (xvi) perfumes, (xvii) shorts, (xviii) slacks, (xvix) sportshirts, (xx) sportswear, (xxi) sweaters, (xxii) swimwear, (xxiii) t-shirts, (xxiv) tailored clothing and (xxv) underwear, to name a few. The product description will be included in the license agreement.

4. TERRITORY.

What are the countries available for licensing? These can be countries in which the trademarks and logos have not yet been registered or where there are third party registrations: these countries can be included in a license agreement subject to the assignment of the applicable trademarks by third parties or the courts (the assignment of the trademark is contingent on the registered owner´s or court´s transfer, which, while not assured, should be contemplated in any agreement).

5. DISTRIBUTION OF PRODUCTS; STAND-ALONE STORES; PANAMA FREE TRADE ZONE.

Can the licensee appoint distributors in the territory granted or must the licensee sell directly to retailers? Are there prohibitions against sales of first quality goods to certain types of retailers, such as mass merchandisers or outlets? What are the minimun standards of acceptable retailers?

Can the licensee open stand-alone stores using the trademark as the store name or is a separate agreement (such as a store franchise) required? If the licensee can open stand-alone stores using the trademark as the store name, do you want approval rights as to location of each store, the appearance of the stores, in-store merchandising, etc.? How much time does the licensee have to change the store name after termination or expiration of the agreement?

Are you familiar with the Panama Free Zone? Do you understand the benefits of operating out of the Panama Free Zone? The Panama Free Zone is the second largest free zone in the world (after Hong Kong) and it is the principal distribution point for merchandise to Central America, Colombia, Venezuela, Ecuador and the Caribbean. Almost all the major apparel companies have licensees or distributors who operate out of the Panama Free Zone.

6. TARGET MARKET AND SUGGESTED RETAIL PRICING.

Who are the consumers of your products (e.g., men, women, children, infants, big and tall, maternity, etc.)? What is the U.S. suggested retail prices for your basics and fashion lines? For example, “The company is predominately a jeanswear company based in New York City with sales throughout the U.S.A. Our product lines include denim jeans and khakis for men, women and children. The average U.S. suggested retail price for mens or womens basic jeans is $48.00 and $54.00 for khakis. The U.S. suggested retail price for childrens jeans is $28.00 and $34.00 for khakis.” The foregoing information will allow us to identify the market segment you serve, determine its size in particular markets, determine the suggested retail prices in particular markets (taking into account freight, insurance and import duties), and the type of prospective licensee who could best exploit these markets (e.g., low end, high end, dress, causal, etc.).

7. FINANCIAL COVENANTS IN THE LICENSE AGREEMENT.

What is the percentage royalty and the percentage advertising fee on wholesale sales? Are royalties paid in advance or in arrears? How often? How will “net sales” be defined (i.e., gross sales minus what)? Will the licensee be entitled to spend the advertising fee or must the licensee remit, in whole or in part, the fee to your company? If licensee remits the advertising fee to your company, how will you spend the fee back in the countries where the licensee does business? What are the minimum sales you expect per country or region per year?

8. ADVERTISING.

How will you help the licensee to advertise your products within the territory? Will you provide camera ready materials? Will you assist in the preparation of bill board advertising, print media, etc.? Can the licensee develop its own advertising materials? If so, what are the approval turn-around times and costs (if any) for such approvals?

9. SERVICES TO BE PROVIDED TO LICENSEES; PRODUCTION; FIXTURES.

What support will you provide to licensees? Will you provide design boards and design calendars on a seasonal basis? Will you provide production specifications or just samples? Will you provide fixtures or specifications thereof? Do you have a “shop-in-shop” design consisting of flooring, fixtures, lighting, paint, and point of sale materials? Do you have a soft shop design (a soft shop excludes flooring, lighting, and paint, but includes stand-alone fixtures and point of sale materials)? What point of sale materials do you offer and must they be purchased or will they be supplied for free? Will you require prior approval of each garment style and color or will you approve the style once and allow the licensee to run different colors in that style without pre-approval? Can licensee submit its own designs for approval? If yes, what is the approval turn-around time and costs (if any) for such approvals? Must the products be sold in packaging (e.g., underwear wrapped in plastic or in boxes)?

There are many other service related issues pertaining to a licensing agreement. Please prepare a list of all the services you will provide to licensees and whether they are included in the price of the license agreement or whether the licensees are charged separately for some of the services. If charged, for what services and at what cost?

10. MANUFACTURING.

What are your requirements with respect to factories chosen by a licensee? What oversight and pre-approval rights do you want with respect to each factory and/or the quality of goods manufactured by such factories? Can licensees tag on to your production (e.g., for some items which the licensee does not want to run in large quantities)? If so, at what prices and on what terms (please include shipping terms, such as FOB Factory, FOB US warehouse, etc.)? Will you provide licensees with lists of your manufacturers and trim suppliers worldwide? If the licensee uses such factories, does it avoid the pre-approval process for garments produced at such factories?

11. TRADEMARK INFRINGEMENT AND ANTI-COUNTERFEITING ACTIONS.

Who is responsible for taking actions against alleged trademark infringement (normally, it’s the trademark owner)? Who is responsible for taking anti-counterfeiting actions? If the licensee is responsible for anti-counterfeiting enforcement, what assistance (including financial) will you provide to the licensee? Will your company grant special powers of attorney to your licensee to undertake proceedings against counterfeiters of your products in Latin America and the Caribbean in your name? Will the powers of attorney grant authority for both criminal and civil proceedings? If not, why not? If civil proceedings can be brought against alleged counterfeiters and damages are obtained, can the licensee keep the damages awarded? If you are not willing to grant special powers of attorney to the licensee, or its attorney, are you prepared to take legal actions against counterfeiters and, if so, who bears the cost? Are you aware of counterfeiting of your products in the region where you want to license your trademarks? If yes, what actions have you taken against alleged counterfeiters?

12. ISSUES RELATED TO EXPIRATION OR EARLY TERMINATION.

What happens to the inventory licensee has on hand at termination? Does the licensee have a sell-off period? If so, how long is this period (e.g., 6 months)? What channels of distribution can licensee use during the sell-off period? Are royalties and advertising fees due during the sell-off period? Is pre-payment of such royalties and advertising fees a precondition to the selloff period commencing? What about continued advertising during the sell-off period? What happens to the remaining inventory after the sell-off period? If there is a good faith dispute as to who is in breach of contract, are you willing to continue your performance of the agreement while the dispute is resolved by binding arbitration or do you want the right to unilaterally terminate (in which case you could be liable for damages for wrongful termination)?

13. QUALIFICATIONS OF LICENSEE.

What are the qualifications which a prospective licensee must meet (e.g., experience in mens apparel, minimum financial strength, minimum infrastructure requirements, etc.)? What type of investment do you expect the licensee to make (e.g., open one or more showrooms, open stand-alone stores, advertising, etc.)? Can your products be displayed in a showroom with other brands or must your products be displayed in a showroom exclusive to your products?

14. CURRENT SALES TO LATIN AMERICA OR THE CARIBBEAN.

Do you currently sell products into Latin America or the Caribbean? If so, to what countries? Are sales consistent (i.e., do you have an established client base in one or more countries)? Are you aware of any companies in the U.S. which sell your products into Latin America or the Caribbean? If yes, what efforts will you take to impede diversion of your products into Latin America and the Caribbean by your customers?