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EXHIBIT 10.42
Agreement with Berghaus Limited dated September 10, 0000
XXXXXXXX LIMITED
and
X XXXX.XXX INC.
DISTRIBUTION AGREEMENT
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Table of Contents
1. Definitions and Interpretation ................ 1
2. Commencement .................................. 5
3. Grant ......................................... 5
4. Term .......................................... 6
5. Royalties ..................................... 6
6 Targets ....................................... 7
7. Purchase and Sale of Products ................. 8
8. Marketing of the Products ..................... 9
9. Indemnity and Insurance ....................... 13
10. Books and Records ............................. 14
11. Report and Remittance Forms ................... 15
12. Packaging and Advertising of Products ......... 16
13. Quality Control ............................... 18
14. Confidential Information ...................... 18
15. Sufficient Use of Trade Marks ................. 19
16. Benefit of Use of Trade Marks ................. 20
17. Rights not to be challenged ................... 20
18 Infringements ................................. 21
19. Sales Outside the Territory ................... 22
20. Sales by the Company in the Territory ......... 23
21. Sale of Competitive Products .................. 23
22. Termination ................................... 24
23. Rights and Obligations on Termination ......... 26
24. Representations and Warranties ................ 29
25. Agency Relationship ........................... 30
26. Notices ....................................... 31
27. Assignments ................................... 32
28. Legal and Ethical Requirements ................ 33
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29. Local Law Compliance .......................... 34
30. Governing Law ................................. 35
31. Force Majeure ................................. 35
32. Whole Agreement ............................... 36
33. Agreement Severable ........................... 36
34. Agreement to Co-operate ....................... 37
35. Waiver and Variation .......................... 37
36. Execution in Counterpart ...................... 37
Schedule 1 ................................................ 39
Schedule 2 ................................................ 40
Schedule 3 ................................................ 41
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THIS AGREEMENT is made on 10th September 1999 between the following parties:
1. BERGHAUS LIMITED (Registration No: 871405) (incorporated in England & Wales)
whose registered office is at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx Xxxx,
Xxxxxxxx, X0 0XX, Xxxxxxx ("the Company"); and
2. X XXXX.XXX INC incorporated in Nevada whose registered office is at 527,
Marquette Avenue, Suite 2130, Xxxxxxxxxxx, Xxxxxxxxx 00000, Xxxxxx Xxxxxx of
America ("the Distributor").
RECITALS:
A. The Company is the owner of the Trade Marks in the Territory.
B. The Company has agreed to grant to the Distributor the right to import,
market, distribute and sell certain products under the Trade Marks on the terms
and conditions set out in this Agreement.
IT IS AGREED, as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 "ADVERTISING PERCENTAGE" means ten percent (10%)
"ANNIVERSARY DATE" means I January 2001 and each I January thereafter
during the term of this Agreement.
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"CHANGE OF CONTROL" means the acquisition by any person together with its
affiliates of more than 50% of the stock of the Distributor or stock
holding more than 50% of the voting rights in the Distributor.
"CONFIDENTIAL INFORMATION" means and includes all advice, information and
knowhow including (without limitation) any designs, processes,
developments, improvements, inventions, concepts, graphics and styling
relating to the Products and trade secrets relating to the Products or the
business of the Company or any associated company, whether tangible or
intangible, provided by the Company to the Distributor.
"CONSUMER PRICE INDEX" means the index of retail prices published by the
Government of the United States of America or, if for any reason such index
is not published, any similar index (whether or not published in the
Territory) specified by the Company.
"CONTRACT YEAR" means the period commencing with the Effective Date and
ending on 31 December 2000 for the first Contract Year, and each successive
twelve (12) month period commencing on an Anniversary Date.
"Effective Date" means 10th September 1999.
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"FOB PURCHASES" means the purchase price of Products invoiced to the
Distributor by the Company or its nominated suppliers calculated on an FOB
basis (as defined in Incoterms from time to time).
"INTELLECTUAL PROPERTY RIGHTS" means the Trade Marks and any patents,
copyright, registered or unregistered designs or any applications or rights
to apply for any of the foregoing which are owned or used by the Company.
"MANUAL" means the Company's brand manual together with its Strategic
Marketing Plan (as amended from time to time).
"NET SALES" means the total sum invoiced by the Distributor, plus the fair
market value in the case of transactions otherwise than at arm's length,
for sales of Products after deduction of
(i) taxes of the nature of sales, excise, value added or other similar tax
charged upon and included in the invoice price to the purchaser; and
(ii) where applicable, the usual discounts, allowances, rebates or refunds
actually and in good faith made or given by the Distributor to its
customers with respect to such sales other than all discounts,
allowances, rebates or refunds for or in respect of payment in cash or
payment within a particular time or given for promotional purposes.
"PERCENTAGE ROYALTY" means the following percentage, dependent on the
period in which such purchases are made.
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PERIOD PERCENTAGE
------ ----------
10th September 1999 to 31 December 2000 10
1 January 2001 to 31 December 2001 12
1 January 2002 to 31 December 2002 14
1 January 2003 to 31 December 2003 16
1 January 2004 to 31 December 2004 16
"PRODUCTS" means such products as are purchased by the Distributor from the
Company (or any other source approved under clause 7. 1 (b)).
"QUARTER" means each of the three (3) month periods ending on 31 March, 30
June, 30 September and 31 December in each Contract Year. The first Quarter
shall be deemed to be from the Effective Date until 31 December 1999.
"TARGET" means the sale and/or purchase obligations of the Distributor
under clause 6.
"TERRITORY" means the country or countries listed in Schedule 2.
"TRADE MARKS" means the trade marks which are registered (or the subject of
pending applications for registration) in the Territory listed in Schedule
3, together with all other trade marks, trade names, service marks, style
names, trade dress, logos and other trade symbols which are under the
control or proprietorship of the Company and which the Company stipulates
are to be used by the Distributor from time to time in relation to the
Products.
1.2 In this Agreement, unless the context otherwise requires:
(a) headings and underlines are for convenience only and do not affect the
interpretation of this Agreement;
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(b) words importing the singular include the plural and vice versa;
(c) an expression importing a natural person includes any company,
partnership, joint venture, association, corporation or other body
corporate and any governmental agency or authority;
(d) a reference to any thing includes a part of that thing;
(e) references to clauses, parties and schedules are references to
clauses, parties and schedules to, this Agreement.
2. COMMENCEMENT
This Agreement shall commence and be deemed effective as of the Effective
Date notwithstanding that it may be executed after that date.
3. GRANT
3.1 Subject to the terms of this Agreement, the Company grants to the
Distributor the exclusive right to:
a) import the Products into the Territory; and
b) use the Trade Marks in relation to the Products in the Territory.
3.2 The rights granted under clause 3.1 shall not include sales over the
internet outside the Territory.
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3.3 Without limiting its other obligations, the Distributor shall comply with
the terms of the Manual.
4. TERM
This Agreement shall commence on the Effective Date and continue until 31st
December 2004 (subject to earlier termination as provided under this
Agreement).
5. ROYALTIES
5.1 The Distributor shall pay to the Company a royalty equal to the product of
the Percentage Royalty and the amount of FOB Purchases of Products invoiced
to the Distributor.
5.2 The Distributor shall make payment of the royalties referred to in clause
5.1 in US Dollars (or any other currency stipulated a reasonable time in
advance by the Company) by telegraphic transfer to the Company at such
place as may be nominated from time to time by the Company, within thirty
(30) days after the date of the FOB Purchase invoice giving rise to the
obligation to pay such royalty. The Distributor may deduct from such
payment such amount as it is required to deduct on account of any taxation
liability of the Company in the Territory. The Distributor shall obtain an
official receipt for any amount so paid and forward this immediately to the
Company together with a written explanation as to why such deduction is
necessary. The Distributor will also provide such assistance and sign such
documentation as may be available in order to enable such royalty to be
paid without any deduction.
5.3 The Distributor shall convert the royalties payable at the bank telegraphic
transfer selling rate prevailing for the currency so stipulated on the day
of each payment.
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5.4 The Distributor will provide each Quarter a statement as to the calculation
of the royalty certified as correct by a senior executive of the
Distributor approved by the Company.
5.5 The Distributor will also provide to the Company by 31 March in each
Contract Year a calculation of the royalty paid for the previous Contract
Year confirmed as correct by its auditors and the Distributor will also
provide to the Company each Quarter such other reports, statements,
accounts and records as are referred to in sub-clause 11.1.
6. TARGETS
6.1 The Distributor undertakes that the Net Sales of Products by the
Distributor in the following periods shall be not less than:
PERIOD (CONTRACT YEAR) NET SALES TARGETS (US DOLLARS 000'S)
----------------------
USA CANADA MEXICO
--- ------ ------
2000 5,811 0 0
2001 13,957 0 0
2002 25,735 260 0
2003 46,208 944 0
2004 68,645 2,140 713
6.2 The Distributor undertakes that the FOB Purchases by the Distributor in the
following periods shall be not less than:
PERIOD (CONTRACT YEAR) FOB PURCHASES (US DOLLARS 000'S)
2000 3,823
2001 7,873
2002 15,046
2003 27,431
2004 40,671
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6.3 The Company will be entitled to terminate this Agreement by notice in
writing to the Distributor in the event that the Distributor fails to
achieve:
(a) the aggregate Net Sales Target for any country for any calendar year;
or
(b) the FOB Purchase Target for any calendar year.
7. PURCHASE AND SALE OF PRODUCTS
7.1 The Distributor will purchase the Products ready packaged only from:
(a) the Company; or
(b) from such supplier as may be authorised from time to time in writing
by the Company
and the Distributor will not repackage any Products nor alter, amend or
modify any packaging in which any Products are supplied nor remove, deface,
obscure, alter or modify any Trade Marks, brand names, logos, graphics or
wording applied to any of the Products on their packaging without the prior
written consent of the Company.
7.2 All prices for the Products quoted by the Company or its suppliers shall
(unless otherwise agreed in writing) be for payment by irrevocable Letter
of Credit 30 days from shipment in US Dollars or in such other currency as
may be as specified by the Company or such supplier.
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7.3 Products shall be sold subject to the conditions of sale of the Company or
other authorised supplier as shall be notified to the Distributor from time
to time. If there is any conflict between the provisions of such conditions
of sale and the provisions of this Agreement, the latter shall prevail.
7.4 Neither the Distributor's standard conditions of purchase nor any terms or
conditions in any order forms or other documents prepared by the
Distributor shall apply to the sale of the Products by the Company or other
authorised supplier to the Distributor.
7.5 Title to the Products will pass to the Distributor at the point specified
in the purchase order and the confirmation thereof or at the point
specified in the conditions of sale of the Company or other authorised
supplier.
7.6 The responsibility for all operations, costs and expenses from the point
specified in the said conditions of sale or purchase order and the
confirmation thereof (including transportation, insurance, custom duties)
will be paid by the Distributor.
7.7 The Distributor shall maintain at all times a full range of stock of the
Products to meet all reasonable expectations of business including periods
of expected peak demand PROVIDED THAT the Distributor shall maintain at all
times a stock of Products in an amount necessary to accommodate sales for
45-60 days based on a reasonable sales estimate.
8. MARKETING OF THE PRODUCTS
8.1 The Distributor shall use its best endeavors to create, meet and expand
demand in the Territory for the Products.
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8.2 At the commencement of this Agreement, and for each Contract Year
thereafter the Distributor will provide to the Company a marketing plan for
the distribution of the Products within the Territory which marketing plan
is to be approved by the Company. The marketing plan for each Contract Year
of this Agreement other than the first Contract Year is to be agreed upon
three (3) months prior to each Anniversary Date and will be reviewed on a
Quarterly basis. The marketing plan will specify objectives and strategies
with respect to the following and any related matters which are consistent
with the Distributor's obligations under sub-clause 8. 1. The Company will
not unreasonably withhold its approval of or agreement to any marketing
plan presented by the Distributor.
(a) product lines and new product plans;
(b) pricing and margin structure;
(c) distribution channels;
(d) sales and distribution targets on a product by product basis;
(e) accumulation of market data including assessment of total market size
and segmentation in units and value (which will be updated on a six monthly
basis);
(f) overview of trading for the current year and objectives and strategies
for the following year;
(g) assessment of competition;
(h) advertising and promotional expenses; and
(i) overall advertising and promotional strategy including in particular
the use and cost of promotions, public relations, sponsorship, exhibitions,
point of sale and other in-store merchandising.
8.3 In addition to its obligations under clause 8.2 the Distributor at the
commencement of this Agreement and prior to each Contract Year thereafter
shall supply a Business Plan for the
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remaining term of the Agreement which is to be agreed by the Company not
less than three months prior to the beginning of each Contract Year. The
Business Plan shall be in a format reasonably specified by the Company and
will in particular include Key Success Factors and Key Performance
Indicators in the areas of distribution, marketing, operations and
corporate citizenship. The Company and the Distributor will review progress
against such plan on a Quarterly basis.
8.4 The Distributor shall:
(a) develop and agree with the Company as set out in clause 8.2 a legally
supportable distribution policy for the Products;
(b) promote and enhance the reputation and the recognition and awareness of
the Trade Marks in the Territory;
(c) develop a sales, marketing and merchandising facility for the Products
in the Territory;
(d) engage such key staff as the Company shall specify, such appointments
to be approved by the Company before implementation;
(e) offer a complete stock and refill service to all retailers;
(f) achieve distribution throughout all agreed trading channels;
(g) establish speciality shops within appropriate and agreed stores in the
Territory; establish Berghaus Centres (speciality stores) as requested by
the Company, provided that the Company shall not require any stores to be
established within the first 18 months from. the date of this Agreement and
thereafter any such request shall be on 9 months' notice in writing to the
Distributor;
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(i) establish the Company's signage where possible within agreed retail
stores in the Territory; and
(j) position the Berghaus Visual Merchandising System within agreed retail
outlets as stated within the annual marketing plan referred to in clause
8.2.
8.5 The Distributor will use its best endeavors to ensure that the Products are
distributed only through such specialist outdoor outlets, genuine outdoor
departments in department or sports stores and footwear or sports stores as
are approved in writing by the Company. In all cases, such stores should
have a clientele of medium to high quality. The Distributor shall not
distribute the Products in any circumstances through market stalls or
stores of low quality and image. The Distributor shall procure that
wherever possible, retailers who stock the Products shall use the fittings,
display units, advertisements and point of sale material provided by the
Company. The Distributor shall be permitted to distribute the Products
through mail order or over the internet, subject to the Company's written
approval but may not sell Products through either such channels to
purchasers outside the Territory.
8.6 In each Contract Year the Distributor must spend a minimum of the
Advertising Percentage of Net Sales (or in the first Contract Year the
Target) of Products for that year on consumer advertising and promotion in
the Territory. Within 30 days following the end of each Contract Year the
Distributor shall submit a statement to the Company, certified as true and
correct by a senior executive of the Distributor approved by the Company
detailing the amounts spent and how the money was spent.
8.7 The Distributor will at its own expense participate twice a year in the
Company's international meetings and four times a year in product
development meetings.
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8.8 The Company grants to the Distributor the non-exclusive right to
enter into preliminary negotiations for sponsorship or promotional
agreements relating to the Trade Marks directly with athletes, clubs,
federations, committees or similar organizations within the Territory
approved in writing by the Company. The Distributor shall have no
power to conclude any such agreement or enter into any such agreement
on the Company's behalf. Any proposed agreement shall be presented to
the Company for approval and, (unless the Company and the Distributor
otherwise agree), shall be entered into directly between the Company
and the relevant athlete, club, federation, committee or
organization. Fees or payments to be made under such agreements shall
be borne as between the Company and the Distributor in such
proportion as they may from time to time agree.
9. INDEMNITY AND INSURANCE
9.1 The Distributor shall, at its expense, carry comprehensive general
liability insurance and product liability insurance covering the
Products marketed or sold in connection with the Trade Marks under
this Agreement issued by a responsible insurer approved in advance by
the Company providing coverage approved in advance by the Company and
otherwise in terms approved in advance by the Company. Unless
otherwise agreed such insurance shall:
9.1.1 include insurance coverage for the Distributor's obligation to
indemnify the Company in accordance with clause 9.3.
9.1.2 be for the benefit of the Distributor but shall name the Company as
co-insured and payee.
9.1.3 remain in effect for the initial and any subsequent term of this
Agreement so long thereafter as the Distributor may continue to use
any of the Trade Marks.
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9.1.4 provide that 30 days written notice be furnished to the Company prior
to cancellation, or prior to any material modification or change.
9.2 Upon the execution of this Agreement, the Distributor shall promptly
furnish the Company with a certificate evidencing that insurance has
been effected in accordance with the provisions of this clause.
9.3 Subject to the provisions of clause 18, the Distributor agrees to
defend, indemnify and hold harmless the Company and the Proprietor,
including all subsidiaries, affiliates and assignees of the Company
and the Proprietor against all claims, judgements, actions, debts or
rights of action, of whatever kind, and all costs, including
reasonable legal fees, arising out of the promotion, marketing,
distribution or sale of the Products by the Distributor under this
Agreement.
10. BOOKS AND RECORDS
10.1 The Distributor shall keep full and correct records and accounts
showing details of the Products imported, distributed, bartered and
sold by it pursuant to this Agreement and otherwise containing such
information as may be necessary to enable the Company to monitor
compliance with this Agreement.
10.2 The Distributor shall throughout the continuance of this Agreement
give access to its records and accounts at all reasonable times (and
in any event within 48 hours of request) to the Company or any agent
or accountant authoriauthorized by the Company. Such person may take
extracts from or copies of any such records or accounts.
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10.3 In the event that this Agreement is terminated for any reason the
Distributor shall provide the same access to its records and accounts
for a period of one year thereafter.
10.4 Throughout this Agreement the Distributor agrees to provide to the
Company not later than one (1) calendar month after its preparation a
copy of the Distributor's most recent year-end financial accounts
(including balance sheet and profit and loss accounts) certified by an
independent chartered accountant (or the equivalent in the Territory).
11. REPORT AND REMITTANCE FORMS
11.1 Within forty five (45) days of the end of each Quarter the Distributor
shall provide to the Company a report showing:
(a) details of all sales of each of the Products made during that Quarter
to include the quantities of each type of the Products sold and a
breakdown of such sales by country and distribution channel together
with details of the computation from gross sales to net sales;
(b) estimates of anticipated sales of each of the Products for such period
as the Company may request;
(c) details of the quantity and value of all Quarter.
11.2 Within ninety (90) days of the end of each Contract Year the
Distributor shall provide to the Company a report showing a summary of
the data set out in clause 11. 1 for the relevant Contract Year.
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11.3 If so requested by the Company, any report provided under sub clauses
11. 1 or 11.2 shall be provided on forms furnished by the Company and
shall be confirmed as correct by a senior executive of the Distributor
approved by the Company.
11.4 The rendering of any report or the payment of any royalty shall not
prejudice any right of the Company to recover any additional amount
that may be found to be due in respect of royalties or otherwise and
no such right shall be deemed to have been waived by the lapse of time
or any act or omission on the part of the Company.
12. PACKAGING AND ADVERTISING OF PRODUCTS
12.1 The Distributor shall ensure that all the Products are marked with
such of the Trade Marks as may be appropriate and as prescribed in
writing by the Company from time to time.
12.2 The Distributor will imprint irremovably, legibly and prominently on
the Products and on any packaging, labelling and advertising or
promotional materials used in connection therewith, or otherwise, any
notice of trade marks and/or copyright together also with such
designation of ownership, registration and/or licence as shall
reasonably be requested by the Company including without limitation
the following:
(a) the symbol (R) in the upper right-hand xxxxx next to the Trade Marks
which are registered with the appropriate patent and/or trade xxxx
body in the Territory; and
(b) the symbol (TM) in the upper right-hand xxxxx next to the Trade Marks
which are not registered with the- appropriate patent and trademark
body in the Territory.
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12.3 No other marks or wording shall appear on any of the Products,
packaging, labelling, advertising or promotional materials unless the
Distributor first obtains the written consent of the Company PROVIDED
THAT the Distributor may continue to use the Distributor's name and
xxxx on hang tags, packaging materials and in advertising and on
promotional materials in accordance with the directions of the
Company.
12.4 The Distributor shall, at its expense, furnish to the Company;
(a) at the earliest opportunity, mock ups of all matter which is proposed
to be used by the Distributor containing or displaying any of the
Trade Marks including, without limiting the generality of the
foregoing, any label, brochure, packaging, business card, stationery,
letterhead, advertisement, point-of-sale and other publicity
materials, telephone or other directory entry, sign, decal and prior
to release final copies of all Display Material.
(b) In the event that the Company does not raise any questions relating to
the nature, quality or workmanship of such samples within twenty-eight
(28) days of receipt by the Company of such samples, the samples shall
be deemed satisfactory for the use pursuant to this Agreement. The
Distributor's obligations hereunder shall extend to all matters made
or used by its agents or sub-contractors appointed in accordance with
this Agreement. Wherever possible Display Material will be based on or
incorporate Display Material provided by the Company in order to
ensure that the brand image projected by the Products is in conformity
with the Company's world wide brand profile and image.
12.5 The Distributor shall not use any of the Trade Marks as part of its
corporate, business or trading name.
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12.6 The Distributor shall use the Trade Marks only in accordance with the
policies and guidelines and/or instructions laid down by the Company
or its agent from time to time.
13. QUALITY CONTROL
13.1 The Distributor shall ensure that all uses of the Trade Marks are
consistent with the high quality, character and image of the Trade
Marks and shall comply with any direction reasonably made by the
Company relating to the quality of the Products and/or their packaging
and/or any related promotional or advertising material.
13.2 The Distributor shall store and transport the Products in conditions
that will preserve the Products and their packaging in good condition
and shall comply with any reasonable requests from the Company in such
regard.
13.3 If requested, the Distributor shall, give all reasonable assistance in
locating and recovering any defective Products and, in particular,
shall comply (and procure so far as it is able that its customers
comply) with any product recall procedure adopted by the Company.
14. CONFIDENTIAL INFORMATION
14.1 All Confidential Information shall be used only for the performance of
this Agreement and shall be kept confidential by the Distributor and
shall be revealed to directors, officers, employees and agents of the
Distributor only to the extent necessary to enable the Distributor to
fulfil its obligations and responsibilities pursuant to this
Agreement. The Distributor shall impose upon all such directors,
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officers, employees and agents to whom any Confidential Information is
revealed obligations of confidentiality and restrictions on use in
respect thereof identical to these herein contained and shall be
responsible for any breach of any of such obligations by any of such
directors, officers, employees or agents. This provision shall not
apply to any Confidential Information which is in the public domain or
to the extent to which it may be required to be disclosed by law or
which is obtained by the Distributor in good faith from a third party
with the right to disclose it. In the event that the Distributor is
required to make any Confidential Information public as a result of
the requirements of any law or regulatory authority (including any
stock exchange) the Distributor will inform the Company beforehand and
use its best endeavours to ensure that any such disclosure is carried
out in a manner which the Company believes causes as little harm as
possible to the Company's reasonable commercial interests.
14.2 The Company makes no warranty as to the accuracy, sufficiency and
suitability for use by the Distributor of advice, information,
technical assistance or know-how provided by the Company for use by
the Distributor in the marketing of any Products and assumes no
responsibility or liability, including liability for direct, indirect
or consequential damages of any nature which arise out of or in
connection with the Distributor's use thereof.
15. SUFFICIENT USE OF TRADE MARKS
In order to preserve the Company's ownership of the Trade Marks in the
Territory, the Distributor will take all steps reasonably required to
ensure that sufficient use of the Trade Marks is made to avoid abandonment
by reason of non-use.
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16. BENEFIT OF USE OF TRADE MARKS
The Distributor acknowledges that
(i) all use of the Trade Marks in any form and for any class of goods or
services shall accrue without cost to the Company to the benefit of the
Company; and
(ii) except as otherwise provided in this Agreement it has no right in any
Intellectual Property Rights or any associated goodwill nor any right to
use any Intellectual Property Rights.
17. RIGHTS NOT TO BE CHALLENGED
17.1 The Distributor acknowledges the validity of the Intellectual Property
Rights and shall not at any time during the continuance of this
Agreement or thereafter directly or indirectly, by itself or through
its directors, officers, employers, agents or any person in which the
Distributor holds any issued share capital or controls, whether
directly or indirectly, the composition of its board of directors or
any of its voting power, contest or assist any other person in
contesting the validity of the Intellectual Property Rights or the
right, title and interest of the Company to the Intellectual Property
Rights.
17.2 Except as provided in this Agreement, the Distributor shall not use or
register whether during the continuance of this Agreement or
thereafter, any business or trade name, licensor name, trade xxxx or
labelling or packaging design which incorporates or which is
substantially identical with or deceptively or confusingly similar to
any of the Trade Marks or other Intellectual Property Rights.
17.3 The Distributor shall not supplement or interfere with or obliterate
the Trade Marks applied to the Products.
17.4 The Distributor shall take due care not to do or cause to be done any
action or thing which affects the validity of the Intellectual
Property Rights or the Company's ownership thereof or
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jeopardises the maintenance thereof, either during the continuance of
this Agreement or thereafter In the event that the validity or the
maintenance of the registration of any of the Trade Marks or other
Intellectual Property Rights is in jeopardy than the Distributor, if
reasonably requested by the Company, will cease distribution of such
of the Products as are affected by such potential invalidity.
17.5 Nothing contained in this Agreement, whether express or implied, shall
give to the Distributor any claim, right, title or interest in the
Confidential Information, and the Distributor acknowledges and agrees
that all rights in such Confidential Information belong to and are the
exclusive property of the Company and that, during and after any
termination of this Agreement, the Distributor will not claim any
rights in or to such Confidential Information nor dispute or assist
others to dispute the Company's ownership thereof.
18. INFRINGEMENTS
18.1 (a) If any suspected or actual infringement or illegal use of the
Intellectual Property Rights or any wrongful use of the
Confidential Information by any person in the Territory or
elsewhere shall come to the attention of the Distributor, the
Distributor shall immediately give notice thereof in writing to
the Company. The Company shall, at its absolute discretion, take
whatever action it deems appropriate at its own expense and shall
have the sole conduct of any such action. If requested, the
Distributor will provide such assistance as may be reasonably
required in any suit or action subject to the payment by the
Company of the Distributor's direct expenses in the provision of
such assistance.
(b) If the Company initiates any action respect of any such conduct, all
compensation recovered whether at trial or by way of settlement shall
belong entirely to the Company.
18.2 (a) If the Distributor receives any notice, claim or proceedings
alleging trade xxxx infringement, passing off, copyright
infringement, patent infringement, or related
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causes of action arising out of the Distributor's use of the
Intellectual Property Rights or the Confidential Information the
Distributor shall notify the Company forthwith and shall not make
any admissions or take any substantive steps in connection
therewith without the prior written consent of the Company.
(b) If such legal action referred to in 18.2(a) above relates to use by
the Distributor in accordance with the terms of this Agreement then
the Company shall defend or assist in the defence of such litigation,
and shall bear all costs and expenses of such defence. If any damages
or awards are assessed against the Distributor in such litigation and
provided that the Distributor has in fact complied with the relevant
terms of this Agreement they shall be satisfied and paid by the
Company.
(c) If such legal action referred to in 18.2(a) above relates to use
otherwise than in accordance with the terms of this Agreement, the
Company, in its sole discretion shall choose whether to defend or
assist in the defence of such action. If the Company chooses not to
defend or assist in the defence of such an action, the Distributor
shall bear all of its own costs and expenses and shall be responsible
for any awards against it or the cost of any settlement or compromise.
If the Company chooses to defend or assist in the defense the
Distributor shall reimburse the Company for all direct expenses
incurred by the Company and for all costs and damages awarded against
the Company.
19. SALES OUTSIDE THE TERRITORY
19.1 The Distributor will not sell or cause or permit to be sold any
Products outside the Territory, nor will the Distributor, directly or
indirectly, sell or cause or permit to be sold Products in the
Territory where, to its knowledge, such Products are intended for
re-sale or distribution outside the Territory. In particular the
Distributor shall not engage in advertising by reference to the Trade
Marks aimed at any place outside the Territory or use any branch or
distribution depot outside the Territory for the sale or marketing of
the Products and in the case of proposed sales over the internet will
specifically state that Products are only
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available in the Territory. The Distributor will use its best
endeavours lawfully to prevent any person from distributing or selling
the Products from the Territory.
19.2 During this Agreement the Company shall refer all enquiries received
by it relating to sales of the Products in the Territory to the
Distributor. During this Agreement the Distributor shall refer to the
Company all enquiries it receives for the Products for sales outside
or export from the Territory.
20. SALES BY THE COMPANY IN THE TERRITORY
20.1 The Company will not sell or cause or authorise to be sold in the
Territory any products similar to the Products and bearing the Trade
Marks provided that the Company and its authorised licensees and/or
distributors may sell to retailers operating both inside and outside
the Territory who may purchase Products outside the Territory all or
some of which are to be sold in the Territory at retail level whether
themselves or through an affiliate.
20.2 Nothing contained in this Agreement shall preclude the Company
manufacturing or authorising the manufacture of Products or other
goods in the Territory for sale to the Distributor or for export.
21. SALE OF COMPETITIVE PRODUCTS
Unless specifically authorised in writing so to do by the Company, the
Distributor will not, directly or indirectly, by itself or through its
directors, officers employees, agents or any person in which the
Distributor holds any issued share capital or controls whether directly or
indirectly the composition of its board of directors or any of its voting
power, sell or distribute any products in the Territory or procure the sale
or distribution of any products for sale in the Territory which are in
direct competition with the Products. If the Distributor proposes to, sell
any other products (which are not in direct competition), the Distributor
shall give the Company at least 60 days prior written notice of its
intention to sell such products. If the Company believes that the products
are in direct competition with
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the Products, it shall notify the Distributor whereupon the Chief
Executives of the Company and the Distributor shall meet and discuss in
good faith whether the products are directly competitive or not.
22. TERMINATION
22.1 The Company may (without prejudice to any other rights of termination
available to it) terminate this Agreement forthwith by giving notice
of termination to the Distributor in the circumstances set out in
clause 6 or upon any of the following events:
(a) if any sum payable to the Company or to any authorised supplier of any
Products hereunder is not paid by the due date for payment;
(b) if the Distributor commits any other breach of any of its obligations
hereunder and fails to remedy the same (if capable of remedy) within
thirty (30) days of the date of service by the Company of a notice
specifying the breach in question and requiring it to be remedied;
(c) if the Distributor is unable to pay its debts as they fall due or
suspends payment of any of its debts or enters into any arrangement
with creditors for the payment of any of its debts;
(d) if an administrator, receiver, manager or liquidator is appointed in
respect of the Distributor or any of its assets;
(e) if a winding up resolution is passed or a winding up or bankruptcy
order is made in respect of the Distributor or the Distributor goes
into liquidation;
(f) if there is any Change of Control;
(g) if any event or act occurs or is done by or in relation to the
Distributor which is equivalent or analogous to any of those described
in any of sub-clauses 22. 1 (c), (d) and (e);
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(h) if the Distributor shall at any time directly or indirectly contest or
assist any other licensee or person in contesting the validity of the
Intellectual Property Rights or the right title and interest of the
Company;
(i) if any marketing plan referred to in sub-clause 8.2 is not agreed at
the time referred to in sub-clause 8.2;
22.2 Where the Company is entitled to terminate this Agreement under
sub-clause 22.1 then the Company shall as an alternative to
termination have the right to amend the Agreement in all or any of the
following ways:
(a) by converting some or all of the rights granted under sub-clause 3.1
from exclusive rights to non-exclusive rights; and/or
(b) by removing any trade marks, trade names, service marks, style names,
trade dress, logos and/or other trade symbols from the definition of
"Trade Marks"; and/or
(c) by removing any products from the definition of "Products"; and/or
(d) by removing any country or countries or any part or parts of any
country or countries from the definition of "Territory".
Any such amendment shall be made by means of a notice served on the
Distributor and shall take effect from the date on which such notice is served
or such later date as may be specified in the notice.
22.3 The Distributor may (without prejudice to any other rights of
termination available to it) terminate this Agreement forthwith by giving notice
of termination to the Company upon any of the following events:
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(a) if the Company commits any breach of any of its obligations hereunder
and fails to remedy the same (if capable of remedy) within thirty (30)
days of the date of service by the Distributor of a notice specifying
the breach in question and requiring it to be remedied;
(b) if the Company is unable to pay its debts as they fall due or suspends
payment of any of its debts or enters into any arrangement with
creditors for the payment of any of its debts;
(c) if an administrator, receiver, manager or liquidator is appointed in
respect of the Company or any of its assets;
(d) if a winding up resolution is passed or a winding up or bankruptcy
order is made in respect of the Company or the Company goes into
liquidation;
(e) if any event or act occurs or is done by or in relation to the Company
which is equivalent or analogous to any of those described in any of
sub-clauses 22.3 (b), (c) and (d).
22.4 Any exercise by either party of any of its rights under this clause 22
shall be without prejudice to any accrued rights of either party under
this Agreement.
22.5 Without prejudice to the rights, powers and remedies of the Company
otherwise under this Agreement the Distributor will pay to the Company
interest at a rate three per cent (3%) per annum. above the Midland
Bank p1c, England, Base Rate for the time being in force on any monies
due but unpaid for fourteen (14) days by the Distributor on any
account whatsoever pursuant to this Agreement, such interest to be
calculated from the date upon which such monies become due and payable
until payment of such monies in full. Such interest will be compounded
monthly and if not paid shall itself bear interest.
23. RIGHTS AND OBLIGATIONS ON TERMINATION
23.1 Upon the termination of this Agreement, the Distributor shall promptly
return all Confidential Information together with any copies and shall
not thereafter make any use of
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such Confidential Information except insofar as the Distributor may
have been specifically released by the Company from its obligations of
confidentiality hereunder.
23.2 The Company or its nominee may, by giving the Distributor written
notice within thirty (30) days following termination of this
Agreement, purchase from the Distributor any part or all of the
Products not previously sold by the Distributor. The price payable for
such Products (or materials) shall be the Distributor's purchase cost
(including duties, taxes and delivery charges) or the net realisable
market value of such Products in the Territory whichever is the lower.
23.3 Should the Company fail to purchase the Products pursuant to clause
23.2, then notwithstanding such termination:
(a) the Distributor shall have the right for a reasonable period up to but
not exceeding six (6) calendar months after termination to sell the
Products manufactured or imported by it prior to termination in the
Territory under the Trade Marks in accordance with the terms of this
Agreement provided that the price charged for the Products shall be at
least sixty-five (65) per cent of the price prevailing immediately
prior to termination;
(b) After termination of the above sell-off period the Distributor shall
immediately destroy in the presence of the Company or its
representative any of the Products which are not then sold;
(c) all other provisions, terms and conditions of this Agreement shall
continue to apply during the period referred to in clause 23.3(a)
except that the Company shall be at liberty to appoint another person
as the distributor of the Products or the licensee of the Trade Marks
or both; and
(d) the six month period referred to in sub-clause 23.3(a) will not be
extended by an event of force majeure.
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23.4 After termination of this Agreement (but subject to clause 23.3) the
Distributor:
(a) shall cease using the Trade Marks and other Intellectual Property
Rights in the Territory and shall not thereafter use or register any
words or marks that incorporate or are substantially identical with or
deceptively similar to or so closely resemble any one or more of the
Trade Marks so as to be likely to cause confusion;
(b) shall execute any and all necessary documents with respect to the
cancellation of the Distributor as registered user of the Trade Marks;
and
(c) shall not knowingly do any act or thing that would have the effect of
causing another person in the Territory to believe that the
Distributor is still associated or connected with the Company.
23.5 Notwithstanding the termination of this Agreement:
(a) the provisions of clause 14 shall not terminate but shall continue to
remain in full force and effect;
(b) the Distributor shall continue to pay any royalties or other
applicable payments due hereunder and shall continue to provide access
to its records and accounts and furnish information and reports in
accordance with provisions of clauses 5, 10 and 11;
(c) the Company and the Distributor shall continue to have rights and
remedies with respect to damages and any other relief for breach of
this Agreement on the part of the other occurring prior thereto; and
(d) any provisions of this Agreement necessary to enable the parties to
enforce their respective rights and obligations hereunder shall remain
in full force and effect.
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23.6 Upon the expiry or termination of this Agreement for any cause
whatsoever except in accordance with clause 22.2(f) the Distributor
shall if requested supply to the Company a list of the Distributor's
customers for the Products.
23.7 The Distributor acknowledges that no rights whatsoever are extended to
it beyond the expiration or termination of this Agreement other than
as provided in this clause 25 and further acknowledges that it shall
not be entitled to any compensatory payment on the expiration or
termination of this Agreement.
24. REPRESENTATIONS AND WARRANTIES
24.1 The Company represents and warrants that:
(a) it is a corporation duly incorporated and validly existing under the
laws of its jurisdiction of incorporation as set forth on page I of
this Agreement;
(b) it has full corporate power and authority to enter into this Agreement
and to carry out the transactions contemplated hereby;
(c) it is the owner of the Trade Marks.
The Company at its sole discretion may, upon written notice to the
Distributor, add or remove any trade marks to or from Schedule 3.
24.2 The Company does not warrant that the Trade Marks may safely be used
as a trade xxxx or business name in the Territory.
24.3 The Distributor represents and warrants that:
(a) it is a corporation duly incorporated and validly existing under the
laws of its jurisdiction of incorporation as set forth on page I of
this Agreement;
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(b) it has full corporate power and authority to enter into this Agreement
and to carry out the transactions contemplated hereby;
(c) its board of directors has taken all action required by the law of its
jurisdiction of incorporation, its memorandum or articles of
association, by-laws or similar constituent documents or otherwise to
authorise execution of this Agreement and the consummation of the
transactions contemplated hereby;
(d) this Agreement is a valid and binding agreement by it and enforceable
against it in accordance with its terms;
(e) neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will violate any statute or law or
any judgement, decree, order, regulation or rule of any court or
governmental agency or authority in the Territory; and
(f) except for any required approvals of governmental agencies or
authorities which it will use its best efforts to obtain, no consent
of any person is necessary to the consummation of transactions
contemplated hereby. In the event that any required consents are not
obtained or are given on terms not acceptable to the Company, the
Company shall be entitled upon receipt of knowledge thereof forthwith
to terminate this Agreement.
(g)
25. AGENCY RELATIONSHIP
Except as otherwise provided herein, nothing in this Agreement shall render
one party the agent of the other in relation to any rights or obligations
granted under this Agreement or any transaction carried on pursuant to it, and
under no circumstances shall either party pledge or attempt to pledge the credit
of the other or incur any credit on behalf of the other.
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26. NOTICES
Any notice served by one party upon the other shall be in writing in the
English language and shall be delivered personally (including by courier) or be
sent by facsimile. Such notice or document shall be deemed to have been received
in the case of personal delivery when delivered or, if sent by facsimile, on the
day following that on which the facsimile was sent, PROVIDED THAT the party
serving such notice shall send a copy by registered air mail within two (2) days
after sending the notice.
Such notice shall be addressed as follows (or at such other place designated in
writing by the relevant party);
(a) If to the Company:
BERGHAUS LIMITED
1, Xxxxxxxxxx Road,
Xxxxxxxxxx Industrial Estate,
Washington, Tyne & Xxxx, XX00 0XX, XXXXXXX.
Attention: Xxxxx Xxxxx
Telephone: 00 000000 0000
Facsimile: 44 191416 9886
With information copy but not for service to:
PENTLAND GROUP PLC
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxx X0 0XX
England
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Attention: The Legal Department
Telephone: 00 000000 0000
Facsimile: 44 181343 4876
(b) If to the Distributor:
X DOGS-COM INC.
000, Xxxxxxxxx Xxxxxx,
Xxxxx 0000,
Xxxxxxxxxxx, Xxxxxxxxx 00000,
XXXXXX XXXXXX OF AMERICA
Attention: Xxxx Xxxxxxxxx
Telephone: 0000 000 0000
Facsimile: 0000 000 0000
27. ASSIGNMENT
27.1 The Company may assign any of its rights or delegate any of its duties
arising out of or under this Agreement.
27.2 The Distributor may not assign any of its rights or delegate any of
its duties arising out of or under this Agreement without the prior written
consent of the Company which consent may be withheld by the Company in its
absolute discretion.
27.3 In the event of a Change of Control the Distributor shall immediately
notify the Company in writing giving full particulars of such Change of Control.
27.4 Should ownership of the Trade Marks be assigned by the Company then,
upon such assignment, the Company shall assign all of its rights and delegate
all of its duties under this
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Agreement to the assignee of the Trade Marks and the Distributor shall, with
effect from the date of such assignment, release and discharge the Company from
all claims and demands whatsoever in respect of this Agreement relating to the
period after the date of the assignment and shall, from the date of such
assignment, accept the assignee as the owner of the Trade Marks.
27.5 On the request of the Company, the Distributor will execute,
acknowledge and deliver all such documents, deeds, agreements or other
instruments as may be requested by the Company to give effect to clause 27.4.
28. LEGAL AND ETHICAL REQUIREMENTS
28.1 The Distributor shall at its own expense ensure that all local and
national laws, rules, regulations and other requirements and codes of practice
applicable in the Territory and all policies and ethical and other standards
from time to time specified by the Company in respect of the treatment of any
persons involved in the sale of any Products hereunder or otherwise in respect
of any human rights or other issues are complied with in relation to all
activities of the Distributor and/or its authorised subcontractors under this
Agreement.
28.2 The Distributor shall ensure that adequate records are maintained to
demonstrate compliance with the obligations contained in sub-clause 28.1 and
shall as and when requested by the Company:
(a) furnish or cause to be furnished to the Company such proof of
compliance with the obligations contained in sub-clause 28.1 as the
Company may require;
(b) permit the Company or procure the Company to be permitted to undertake
such inspection of any activities of the Distributor as the Company
may require;
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(c) permit the Company or procure the Company to be permitted to inspect
any records required to be maintained under this sub-clause 28.2 and
to take copies thereof
29. LOCAL LAW COMPLIANCE
29.1 The Distributor shall at its own expense comply with all relevant
legislation and other requirements of the Territory in connection with
its activities under this Agreement The Distributor shall furnish
proof of such compliance to the Company when and if the Company
requires.
29.2 As soon as possible after the execution of this Agreement the Company
and the Distributor shall if requested by the Company, at the expense
of the Distributor, execute such further documents as may be necessary
to make and make joint application to record for the registration of
the Distributor as a registered or permitted user of the Trade Marks
in respect of such of the Trade Marks as are registered or as become
registered to the extent provided by the law of the Territory.
29.3 The Distributor shall obtain any consents, licences and approvals and
comply with any formalities required for the performance of this
Agreement and payment of royalties. In the event that the Distributor
is unable to obtain any such consent, licence or approval within 3
months of the date of signature of this Agreement the Company shall
have the right to terminate this Agreement by giving thirty (30) days
notice in writing to the Distributor.
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30. GOVERNING LAW
30.1 The formation, construction, validity and performance of this
Agreement shall be governed in accordance with the laws of England and
Wales.
30.2 The parties irrevocably submit to the exclusive jurisdiction of the
courts of England and Wales. Such submission shall not limit the right
of the Company to commence any proceedings arising out of this
Agreement in any jurisdiction it may consider appropriate.
30.3 The Distributor waives any objection to the venue of any legal process
on the basis that the process has been brought in an inconvenient
forum.
31. FORCE MAJEURE
31.1 Neither party shall be liable for delay or failure in the performance
of this Agreement arising from any one or more of the following causes
which shall forthwith be notified to the other upon such delay or
failure:
(a) act of God or public enemy or war (declared or undeclared);
(b) acts of persons engaged in subversive activities or sabotage;
(c) fires, floods, explosions or other catastrophes;
(d) epidemics or quarantine restrictions;
(e) strikes, similar labour disruptions or public demonstrations and
unrest;
(f) freight embargoes;
(g) unusually severe weather;
(h) delays of a supplier of either party due to any of the above causes or
events; any other causes, similar or dissimilar, beyond the reasonable
control of the party); or
(i) (in the case of the Distributor) a failure by the Company to meet
agreed delivery dates for products
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PROVIDED THAT in any case due diligence is exercised to cure such causes
and resume performance and the time for performance by such party shall be
extended by a period of any such delay.
31.2 If one or more causes of force majeure are asserted by either party as
a basis for nonperformance of this Agreement and such non performance
continues for a consecutive period of ninety (90) days the other party
shall have the right to terminate this Agreement forthwith by giving
written notice to that effect.
32. WHOLE AGREEMENT
This Agreement contains the entire agreement and understanding between the
parties hereto with regard to its subject matter and supersedes all prior
agreements whether written or oral.
33. AGREEMENT SEVERABLE
This Agreement is severable and if any provision shall be held invalid,
illegal or which reflects the original intent of the parties shall be
substituted for such invalid or unenforceable provision provided always
that if the reasonable opinion of either party any such severance
materially affects the commercial basis of this Agreement and no agreement
can be reached by the parties as to the means by which such matters can be
resolved, such party shall have the right to terminate this Agreement with
immediate effect upon giving 90 days written notice to the other containing
the reason(s) why the commercial basis has been materially affected.
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34. AGREEMENT TO CO-OPERATE
Each party hereto, upon the reasonable request of the other, will execute,
acknowledge and deliver, or cause to be executed, acknowledged and
delivered, all such further documents, deeds, assignments, licenses,
transfers or conveyances as may be required both to satisfy the requisites
of the law of the Territory and to give full effect to the terms and
conditions of this Agreement.
35. WAIVER AND VARIATION
A provision of or a right created under this Agreement may not be waived or
varied except in writing signed by a duly authorised representative of the
party or parties to be bound. No delay or failure of either party in
exercising or enforcing any of its rights or remedies shall operate as a
waiver thereof nor shall any partial exercise of such right or remedy
preclude any other or further exercise of such right.
36. EXECUTION IN COUNTERPART
This Agreement may be executed in any number of counterparts each of which
shall be deemed an original and all of such counterparts taken together
shall be deemed to constitute one and the same instrument.
EXECUTED by the parties as an agreement the day and year first above
written.
SIGNED on behalf of the Company
-------------------------------
by its authorized representative
in the presence of:
///Signed/// ///Signed///
----------------------------- ------------------------------
Witness Representative
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X. Xxxxxxx P.A. Xxxxx
---------------------------------- ------------------------------
Name Name
Address: Title: President
-------- ------
Berghaus Ltd. Date: 10/09/99
-----
SIGNED ON BEHALF OF THE DISTRIBUTOR
-----------------------------------
by its authorised representative
in the presence of:
/// Signed/// ///Signed///
---------------------------------- ------------------------------
Witness Representative
X.X. Xxxxxxx Xxxx X. Xxxxxxxxx
---------------------------------- ------------------------------
Name Name
Address: Title:
-------- ------
00 X. 0xx Xxxxxx CEO
36th Floor Date:
-----
Mpls., XX 00000 9/10/99
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SCHEDULE 1
PRODUCTS
The following Berghaus ranges are covered by this Agreement:
Footwear: Trekking, Cross Terrain, Freescape
Apparel: Extrem, Performance, Freescape, ACL
Rucsacs: Extrem, Performance, Freescape
Accessories: Socks, hats, gloves, gaiters.
The Company will not grant distribution rights for other Berghaus branded
footwear, apparel, rucsacs or accessories to any third party within the
Territory without prior discussion with the Distributor.
In the case of any other products which would normally be sold mainly through
specialist outdoor retailers the Company may, at its sole discretion, grant to
the Distributor the right to distribute such products and provided that;
(a) the Distributor can satisfy the Company that it will be able to market and
sell the products to best effect; and
(b) the grant of rights to such products does not conflict with the Company's
strategy for sale of such products whether in the Territory or elsewhere.
In the case of other products (not normally sold mainly through specialist
outdoor retailers) the Company may, at its sole discretion, grant to the
Distributor the right to distribute such products but shall not be required to
do so.
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SCHEDULE 2
TERRITORY
United States of America, its territories and possessions.
Canada
Mexico
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Schedule 3
TRADE XXXXX
XXXX NUMBER CLASS
USA
---
Berghaus 75/592487 (pending)18,25
CANADA
------
Berghaus 651778 N/A (equivalent goods to 18, 25)
Berghaus 651778(l) N/A (equivalent goods to 25)
MEXICO
------
Berghaus 169579 18
Berghaus 169587 25
41
