DISTRIBUTOR AGREEMENT
THIS AGREEMENT, made and entered into this 26th day of June, 1992, by and
between ACTIVE ANKLE SYSTEMS, INC. ("Manufacturer"), and XXXXXX PRODUCTS, INC.,
a Kansas Corporation ("Distributor"),
WITNESSETH:
In consideration of these presents and the mutual promises set out herein,
the parties hereto agree as follows:
1. RECITALS. Manufacturer is engaged in the manufacture of ankle braces
further identified as set forth on Exhibit A attached hereto and made a part
hereof (such products, together with any improvements hereafter made thereto by
Manufacturer, called the "Product") and owns those patents, patent applications,
and trademark, trade name, logo and copyright registrations and applications for
registration, if any, listed on Exhibit B attached hereto (such existing
applications and registrations, together with any other trademarks, tradenames,
logos and copyrights used with respect to the product, called the "Proprietary
Rights"). Distributor is engaged in the marketing and sale of sporting goods as
a wholesaler in the United States and overseas.
2. RIGHTS TO DISTRIBUTE. Manufacturer hereby grants to distributor the
exclusive and nontransferable right to market and sell the Product to
educational entities; or through sales to team dealers who resell to educational
entities. The Territory covered by this Agreement is defined as the Continental
United States, plus the states of Hawaii and Alaska. In the event Manufacturer
should hereafter manufacture products other than the Product, Manufacturer shall
not grant to any third party the right to market or sell such other products
unless Manufacturer first offers in writing to Distributor the exclusive right
to market and sell such other products in the Markets and the Territory. If the
Distributor fails to accept such offer within 60 days after receipt,
Manufacturer may thereafter grant to any other third party the right to market
or sell such other products, but only on terms no more favorable to such third
party than the terms offered to Distributor. Nothing in this agreement shall
restrict or prohibit Distributor from marketing and selling products not
manufactured by Manufacturer, including distributor's own ankle braces, which
may compete with the product.
(a). UNSOLICITED ORDERS RECEIVED BY MANUFACTURER. If during the term of
this agreement, Manufacturer, on an unsolicited basis, receives Product orders,
from educational and/or athletic entities, Manufacturer is authorized to sell
direct to these entities subject to the following conditions.
1. The sale price shall be the "team dealer" price, if applicable,
otherwise the Xxxxxx "school" price to the education entities.
2. Manufacturer assumes all risk and responsibility for sale,
collection, and delivery of Product.
3. Manufacturer will furnish Xxxxxx a copy of its invoice for each
unsolicited sale. The invoice shall contain all information normally present in
an accounts receivable invoice.
4. On the 15th of each month, Manufacturer shall deliver to
Distributor:
(i) Copies of unsolicited sales invoices for the preceding
month.
(ii) Payment to Distributor of an amount equal to 60% of the
difference between the Product invoiced net price and
the Manufacturer's selling price to Distributor.
5. Manufacturer intends to refer all unsolicited calls from
educational and/or athletic entities to Distributor, or call in these orders to
Distributor by the end of six months of the date of this agreement.
(b) PRODUCT RESEARCH. For the purpose of conducting continuing Product
research, Manufacturer maintains the right to sell direct to selected
educational and athletic entities. (Exhibit C.)
3. PURCHASE AND DELIVERIES.
(a.) Distributor shall purchase all of the Distributor's requirements for
the Product from Manufacturer and Manufacturer agrees to supply such
requirements. Distributor's orders for the Product shall be made in writing to
Manufacturer, and Manufacturer shall fill and deliver distributor's orders on a
timely basis, subject only to delays described under paragraph 13. Distributor
shall not cancel all or any part of any order except to the extent Manufacturer
shall not have filled and delivered such order within 45 days after
Manufacturer's receipt of such order.
(b.) Distributor shall order, purchase and pay for a minimum of 6,000
Product units (a unit being one ankle brace) during the period commencing on the
date of this Agreement and ending on December 31, 1993 (the "initial period").
If Distributor shall fail to order purchase and pay for a minimum of 6,000
Product units during the initial period, and an additional 6,000 units during
the twelve month period ending on December 31, 1994; and a minimum of 6,000
units each calendar year subsequent; and provided that Manufacturer shall have
complied with the terms and conditions of this Agreement, then Manufacturer
shall have the right to terminate this Agreement by written notice to
Distributor given within 60 days after the end of any December 31 calendar year
in which Distributor fails to order, purchase and pay for the minimum number of
Product units specified above; provided, however, that in no event shall the
failure of Distributor to order, purchase or pay for the minimum number of
Product units specified above constitute a breach of this Agreement or obligate
Distributor to pay Manufacturer any compensation in addition to the amount which
Manufacturer will otherwise be entitled on orders actually made by Distributor.
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(c.) Manufacturer shall deliver Distributor's Product orders to Distributor
f.o.b. Louisville, Kentucky or f.o.b. such other locations as Manufacturer and
Distributor shall from time to time agree.
(d.) Each Product unit delivered to Distributor shall be prepackaged, boxed
or bagged pursuant to Distributor's instructions, by Manufacturer.
4. PRICE AND PAYMENT.
(a.) Manufacturer may from time to time change the price of each Product
unit ordered after such date, by giving Distributor 60 days notice of each
such price change. Distributor shall pay Manufacturer such changed price for
each Product unit ordered after such 60-day notice period. All Distributor
orders received by Manufacturer prior to the effective date of the price
increase shall be entitled to the price in effect before the effective date
of the price increase for which the 60-day notice was given. Delivery of
each Product ordered by Distributor shall be accepted or rejected by
Distributor within 10 days of the date the Product is delivered.
(b.) Distributor shall pay the full price of each Product unit delivered to
Distributor pursuant to subparagraph 3c hereof accepted by Distributor in cash
or equivalent within 30 days after each such delivery.
5. DISTRIBUTOR'S RESALE. Distributor shall use efforts reasonably
consistent with its resources to market and sell the Product to "team dealers"
and athletic training markets and to promote the Product to educational and
athletic entities, and other groups and institutions which include or sponsor
athletic programs, and to the team dealers which sell to these markets.
Distributor shall establish the price for all sales of the Product and shall be
solely responsible to its customers with respect to the delivery of the Product
to them, the collection of the purchase price from them, and the other terms of
such sales.
6. TERM. The initial term of this Agreement shall begin on the date
hereof and shall end, if not sooner terminated pursuant to this agreement, after
the initial term on December 31, 1995. This Agreement shall automatically renew
for successive three-year periods thereafter unless either party hereto shall by
written notice to the other party not less than 60 days prior to the end of such
initial term or any succeeding three-year term, give notice of termination of
this Agreement at the end of such initial term or three-year term, or is
terminated at any time by mutual consent of both parties.
7. PROPRIETARY RIGHTS.
(a.) Manufacturer hereby grants to Distributor the non-exclusive and
nontransferable right to use all present and future Proprietary Rights in
Distributor's promotion and sale of the Product pursuant to this Agreement;
provided, Distributor shall not knowingly alter any
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Proprietary Right without prior written consent. Distributor acknowledges that
all good will associated with Distributor's use of Proprietary Rights shall
inure to Manufacturer's benefit.
(b.) Manufacturer represents and warrants to Distributor that (i) the
Proprietary Rights do not infringe on any rights to any person and, to
Manufacturer's knowledge, no person has infringed on or challenged the
Proprietary Rights, and (ii) Manufacturer is the sole legal and equitable owner
of the Proprietary Rights, subject only to Manufacturer's grants to others of
the right to use such Proprietary Rights in the promotion and sale of the
Product outside of the markets or the Territory. Distributor shall promptly
notify Manufacturer of any third party's apparent infringement of or challenge
to the proprietary rights known to Distributor. Manufacturer, at his expense,
shall defend and indemnify Distributor against any claim, loss, cost and expense
(including attorney's fees) arising out of or relating to actions, claims or
suits by any third party against Distributor with respect to Distributor's use
of the Proprietary Rights pursuant to this Agreement. Manufacturer shall
maintain all registrations relating to the Proprietary Rights, and shall not
abandon or use the Proprietary Rights in any manner that would cause them to
cease to be protected.
8. PUBLIC REQUIREMENTS. Distributor and Manufacturer shall each conduct
its business with respect to the Product and Proprietary Rights in compliance
with all laws, ordinances, regulations, orders, guidelines and other
requirements of federal, state and local governments, agencies and political
subdivisions.
9. NO AGENCY RELATIONSHIP. This agreement shall not constitute either
Manufacturer or Distributor as the agent or legal representative of the other
for any purpose. Neither Manufacturer nor Distributor shall have the right to,
and each agrees that it will not attempt to, act for or bind or obligate the
other in any manner.
10. PROMOTION OF PRODUCT BY DISTRIBUTOR. Distributor will advertise and
promote and product through the following means, on a basis generally comparable
to that for other products sold by Distributor and consistent with paragraph 5:
- Trade advertising
- Display and promotion at major sporting goods shows at which
distributor exhibits products
- Articles and advertising in publications which may be produced from
time to time by Distributor (e.g. currently "The First Aider")
- Inclusion in the Distributor's product catalog
- New product publicity
- Incorporation in Distributor's training workshops' curriculums
Promotional material produced by Distributor relating to Manufacturer's
products shall receive prior approval by Manufacturer. Written approval by FAX
will be provided to Distributor within three days of receipt by Manufacturer.
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11. PRODUCT QUALITY. All Product purchased by Distributor shall be
manufactured in a good and work-man-like manner from sound materials and shall
be free from defects. Manufacturer agrees to defend and indemnify Distributor
against any claim, loss, cost and expense (including attorney's fees) arising
out of or relating to the actual or alleged failure of the product to satisfy
the standards set forth herein or any actual or alleged defect in the design or
manufacture of the product.
12. RESPONSIBILITY OF MANUFACTURER FROM MARKETING. Manufacturer shall use
its best efforts, whenever requested by Distributor, to provide marketing
information, product knowledge, or any other information Distributor may need to
adequately market and promote the Product.
13. FORCE MAJEURE. It is mutually agreed by the parties hereto that
neither party shall be held responsible for any losses resulting if the
fulfillment of any terms or provisions hereof shall be delayed or prevented by
revolution or other disorders, wars, acts of enemies, strikes, floods, acts of
God, or without limiting the foregoing, by any other cause not within control of
the party whose performance is interfered with, and which by the exercise of
reasonable diligence said party is unable to prevent, whether of the class of
causes above enumerated or not.
14. TERMINATION.
(a.) Either Manufacturer or Distributor may terminate this agreement by
giving written notice to the other party of the occurrence of any one of the
following events, provided that only Distributor may terminate this agreement if
an event described in clause (iii) occurs:
(i) The notified party shall fail to perform any agreement
made by it in this Agreement, and such agreement is not
performed or cured within 30 days after the other party
shall notify the notified party of such failure;
(ii) A petition shall be filed against the notified party
under any bankruptcy, reorganization or insolvency law
(which petition is not dismissed within 60 days of
filing) or a receiver or trustee shall be appointed to
take possession of the notified party's assets;
(iii) Any portion of the Proprietary Rights shall become the
subject and any levy, seizure, assignment, application
or sale by any court, creditor or government agency,
and such levy, seizure, assignment, application or sale
is not adjudicated or set aside within 60 days of
initial action; or
(iv) The notified party shall voluntarily petition or
otherwise voluntarily institute proceedings under any
bankruptcy or other law for the relief of debtors.
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(b.) Upon termination of this Agreement, Distributor shall cease to use all
Proprietary Rights (except that Distributor may continue to use for twelve
months its current ad for the Product in its current catalog); may sell all
Product owned by it on the termination date in the ordinary course of its
business; and shall have the right to receive C.O.D. all Product ordered prior
to termination.
15. NOTICE. Any notice or other communication which either party may be
required or shall desire to give under this Agreement shall be deemed to be
fully given when mailed by certified or registered mail, postage prepaid, to the
address indicated below or such other address as either party hereinafter may
designate to the other party in writing:
If to Manufacturer: President
Active Ankle Systems, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
If to Distributor: President
Xxxxxx Products, Inc.
000 X. Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxx 00000
16. SUBLICENSES. Notwithstanding the provisions of paragraphs 2 and 7,
Manufacturer hereby acknowledges and agrees that Distributor may from time to
time engage independent sales representatives to market and sell the Product
pursuant to this Agreement and to use the Proprietary Rights in connection
therewith. Manufacturer hereby consents to such arrangements and to the grant
by Distributor of sublicenses of the Proprietary Rights to such representatives
for such purposes.
17. ASSIGNMENT, SUCCESSORS, AND ASSIGNS. This Agreement shall not be
assigned by either party hereto without the prior written consent of the non
assigning party; each party agrees, however, that such consent shall not be
unreasonably withheld. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
subject to the foregoing provisions with respect to the assignment of this
Agreement.
18. LAW GOVERNING. This agreement is a Kansas contract and shall be
construed and interpreted in accordance with the laws of that state, except to
the extent the ownership or use of the Proprietary Rights are governed by the
laws of the United States of America.
19. GENERAL PROVISIONS. This Agreement may be modified at any time or
from time to time only by the written agreement of both parties. The failure of
either party to require performance by the other party of any provision hereof,
or to enforce any remedies it may have against the other party, shall in no way
affect the right thereafter to enforce this Agreement and require full
performance by the other party. The waiver by either party of any breach of any
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provision of this agreement shall not constitute a waiver of any succeeding
breach of that provision or of any other provision. This agreement cancels and
supersedes all previous agreements, written or oral, between the parties hereto
relating to the subject matter hereof and constitutes the entire Agreement
between the parties hereto, and there are no understandings, representations or
warranties expressed or implied not specifically set forth herein. This
Agreement may be executed in any number of counterparts which taken together
shall constitute one and the same instrument.
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be duly
executed the day and year first above written.
ACTIVE ANKLE SYSTEMS, INC.
BY:
------------------------------------------
Xxxxxx X. Xxxxxxx
Chief Executive Officer
"Manufacturer"
XXXXXX PRODUCTS, INC.
BY:
------------------------------------------
Xxxxxx X. Xxxxx
President
"Distributor"
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EXHIBIT A
June 1991
ACTIVE ANKLE SYSTEMS PRODUCT LIST
Active Ankle "Acute" X-Small BXS20
Active Ankle "Acute" Small BS30
Active Ankle "Acute" Medium BM40
Active Ankle "Acute" Large BL50
Active Ankle "Acute II" X-Small BXS20
Active Ankle "Acute II" Small BS30
Active Ankle "Acute II" Medium MB40
Active Ankle "Acute II" Large BL50
Active Ankle "Trainer" X-Small TXS20
Active Ankle "Trainer" Small TS30
Active Ankle "Trainer" Medium TM40
Active Ankle "Trainer" Large TL50
Neoprene "Trainer" Pads pair NP130
BubbleFlex "Acute" Pads pair BP120
BubbleFlex "Acute II" Pads pair BP120
Active Heel Cushion pair HP500
Overhaul Kit "Trainer" OK300
Dura*Kold DK200
EXHIBIT B
June 0000
Xxxxxxxx Xxxxxxx
0. Xxxxxx Xxxxxx Patent RE33395
2. United States Patent 5,031,607
Domestic Patent Pending
1. BubbleFlex patent filed February 1991
Domestic Registered Trademarks
1. Active Ankle Logo
2. BubbleFlex
Domestic Trademarks
1. Active Ankle "name"
Foreign Patent Pending
1. European, filed September 1990
France
Italy
United Kingdom
Germany
2. Canadian, filed September 1990
3. Japan, filed September 1990
Foreign Trademarks
1. Xxxxxxxxx
0. Xxxxxx
3. Korea
EXHIBIT C
AMENDMENT TO DISTRIBUTOR AGREEMENT
This Agreement, made and entered into this 10th day of March, 1995, by and
between Active Ankle Systems, Inc. ("Manufacturer") and Xxxxxx Products, Inc., a
Kansas Corporation ("Distributor") amends the Distributor Agreement ("Prior
Agreement") entered into by Manufacturer and Distributor on June 26, 1992,
Witnesseth:
In consideration of these presents and mutual promises set out herein, the
parties hereto agree as follows:
1. Paragraph 2 of the Prior Agreement is amended as follows:
a. Manufacturer hereby grants to Distributor the non exclusive and non
transferable right to sell the Product to team dealers, educational entities,
and retail sporting good entities and catalog operations selling to the
consumer. It is understood that package graphics for each distributor will be
exclusive to that distributor.
b. The territory covered by this Agreement is defined as the Continental
United States, plus the states of Alaska and Hawaii, and U.S. Possessions.
Other foreign territories may be added by letter agreement.
c. Manufacturer agrees to sell to Distributor at the best price and terms
offered to any other distributor of the Product and in such packaging, color,
and product features as manufacturer shall offer to any distributor with the
exception that Distributor's package graphics shall be exclusive to that
distributor.
d. Manufacturer agrees to create and supply packaging exclusive to
Distributor. Distributor and Manufacturer agree to share the out of pocket
costs associated with such packaging. Distributor shall have the right to
approve all packaging created for Distributor in advance. If Distributor, at
its option, elects to create and package the Product at its expense,
Manufacturer shall have the right to approve such packaging.
e. Distributor agrees that product packaged in bulk shall be sold only to
catalog distributor or team accounts and should not be sold for resale at
retail. Distributor agrees to exercise its best efforts enforcing this
provision and to direct its sales representatives to enforce this provision as
well.
f. In the event Manufacturer should hereafter manufacturer products other
than the product, Manufacturer shall offer Distributor the non exclusive right
to market such products in the markets and territories covered by this
Agreement. If Distributor fails to accept such offer within 60 days,
Manufacturer shall have the right, in its sole discretion, to grant the right to
market and sell other such products to any third party.
g. Nothing in this agreement shall restrict or prohibit Distributor from
marketing and selling products not manufactured by Manufacturer.
h. Active Ankle Systems, Inc. has the sole right to grant or withhold
distribution rights to any market or customer and shall have sole discretion and
final decision authority on all disputes between distributors.
i. Active Ankle Systems, Inc. is authorized to maintain existing house
accounts and sell direct to other distributors, dealers, retail and catalog
entities, educational entities, and consumers in order to test product
performance and marketing programs. In its direct marketing programs,
Manufacturer will focus on areas and market niches not covered by Distributor or
its representatives in their ordinary course of business.
j. All accounts being sold Active Ankle product as of February 28, 1995,
shall be exclusive to distributor for the duration of this contract. If a
conflict arises between distributors as to the right to an account, distribution
exclusivity to the account shall be determined by:
i. The date on the first invoice where the Active ankle was sold to
that account.
ii. Manufacturer may decide at its sole discretion which distributor
may be permitted to sell to customer.
k. Distributor shall provide periodic reports of retail unit sales volume
by customer and inventory levels of the Distributor and such other reports as
Manufacturer and Distributor shall mutually agree.
l. This Agreement modifies the term of the Prior Agreement. The basic
term of this Agreement shall be for a period of three (3) years from the
effective date of this Agreement or December 31, 1997, if sooner. This
Agreement shall automatically renew for a period of two (2) years unless either
party terminates this Agreement by providing the other party with written notice
at least 120 days in advance, unless terminated by mutual consent. Manufacturer
may terminate this Agreement if Distributor has not ordered any Product for 60
consecutive days.
2. Paragraph 11 of the Prior Agreement is amended to read:
11 (a) LIMITED EXPRESS WARRANTY. If during the term of this
Agreement, Distributor receives a defective product from
Manufacturer, or sells and delivers to a third party a defective
Product from its inventory which is subsequently returned to
Distributor by such third party for replacement within 90 days,
then Distributor shall immediately notify Manufacturer. The
Distributor shall return the defective Product to the
Manufacturer. If Manufacturer shall determinate that the Product
forwarded to it by Distributor is, in fact, defective by reason
of improper workmanship or
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material, the Manufacturer shall, at Manufacturer's option, credit the
Distributors account in an amount equal to the purchase price paid by
Distributor for such Product. Notwithstanding the foregoing, however,
at no time shall Distributor accept or receive from any other third
party, any part taken or removed from a Product for which a claim is
being made under the Manufacturer's product warranty. In the event
Distributor encounters any attempt to return such a part, Distributor
shall notify the returning party to contact the Manufacturer direct
for such part's replacement or repair.
11 (b) DISCLAIMER OF WARRANTY. Aside from the foregoing express
limited warranty contained in paragraph 11(a) above, the Distributor
acknowledges that no warranties with regard to the Products, whether
of merchantability or otherwise are created by the Agreement and the
Manufacturer hereby disclaims and excludes all implied warranties of
merchantability or fitness of a particular purpose. Any warranty
against infringement that may be provided in Section 2-312(3) of the
Uniform Commercial Code and/or any other comparable state statute is
expressly disclaimed.
In witness hereof, the parties have caused this amendment to be duly
executed the day and year first written above.
Active Ankle Systems, Inc. Xxxxxx Products, Inc.
By: By:
------------------------------- -------------------------------
Xxxx X. Xxxxxxxx, President Xxxxxx X. Xxxxx, President
"Manufacturer" "Distributor"
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