Exhibit 3.22
DISTRIBUTION AGREEMENT
THIS AGREEMENT made as of the 17th day of November, 1998 between Micra
Soundcards Inc., a corporation incorporated under the laws of' the Province of
Ontario ("MICRA"), and Xxx.Xxx International Inc., a corporation incorporated
under the laws of the Province of Ontario ("XXX.XXX").
WHEREAS MICRA has developed a card (the "SoundCard") which will carry (i)
an image of an athlete or other notable person, and (ii) an audio of video
recording concerning that person. MICRA has also developed a playback unit (the
"Player") with the ability to play back the audio recording on the SoundCard;
AND WHEREAS through the registration of patents and other means of
protecting intellectual property, MICRA has taken such steps as it has deemed
necessary to ensure that (i) it has all necessary intellectual property rights
to make and distribute the SoundCard and Player, and (ii) the SoundCard and
Player do not offend or infringe any other person's intellectual property
rights;
AND WHEREAS MICRA will use its commercially reasonable efforts to ensure
that all licenses and rights it deems necessary are obtained for the use of the
intellectual and proprietary property embodied in all SoundCards distributed
pursuant to this agreement.
NOW THEREFORE IN CONSIDERATION of the premises and mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Distributorship
MICRA grants to XXX.XXX:
(a) the exclusive, world-wide right to market, distribute and sell
the Player (or any other player using technology owned or controlled by MICRA)
through the Internet and any other form of computer-assisted electronic
commerce, whether via cable, satellite and other means through televisions,
computers and other receivers (collectively, "Electronic Distribution");
(b) the exclusive, world-wide right to market, distribute and sell
selected SoundCards through Electronic Distribution (the parties intend to
jointly agree on the series and individual SoundCards most likely to be
successful for the. purposes of this provision); and
(c) the right of first opportunity to negotiate, on a case by case
basis, the non-exclusive, world-wide right to market, distribute and sell the
Player (or any other player using technology owned or controlled by MICRA) and
selected SoundCards manufactured by MICRA through means of trade or distribution
other than Electronic Distribution; provided that, for greater certainty, this
paragraph (c) shall not impact, limit, restrict or otherwise affect
MICRA's ability to consummate any marketing, distribution or sales arrangements
or agreements entered into or being pursued by MICRA as of the date hereof.
Subject to the terms of this agreement, MICRA will offer for sale to
XXX.XXX all SoundCards which are available for distribution or sale except
certain "proprietary" SoundCards manufactured for the exclusive use of specific
customers of MICRA for the purpose of promoting their products or services and
XXX.XXX hereby acknowledges and agrees that such SoundCards will not be offered
to it for sale.
2. No Rights of Ownership
The grant of the right to market, distribute and sell the Player and
SoundCards contemplated by Section 1 shall not include or create any right or
interest of XXX.XXX in the Player or SoundCards or give XXX.XXX the right to
modify or make alterations or improvements thereto or otherwise reverse engineer
or disassemble the Player or SoundCards.
3. Term of Agreement
Subject to the provisions of Section 8 of this agreement, the rights
granted to XXX.XXX under this agreement will continue until December 31, 2001.
This agreement shall be automatically renewed for consecutive terms of two years
subject to notice of intention not to renew given by either party at least six
months prior to the expiration of the original or any renewal term.
4. Purchase by XXX.XXX
(1) XXX.XXX will:
(a) within 30 days of receipt of notification from MICRA that such
SoundCards have been approved for distribution, purchase at least [Confidential
Information filed separately with the SEC] Players and [Confidential Information
filed separately with the SEC] SoundCards, with the image of and a recording
about Xxxxxxx Xxxxxx;
(b) place orders for additional Players and other SoundCards at the
earliest appropriate opportunity following the completion by MICRA of
arrangements necessary to manufacture and market those SoundCards;
(c) meet with MICRA every three months during the first year of the
initial term of this agreement and every six months thereafter to determine and
establish commercially reasonable quarterly sales targets;
(d) not remove or allow any employee or agent of XXX.XXX to remove
any of MICRA's product identifications or copyright, trademark or patent
notifications;
(e) give prominence to the MICRA trademark notice on all marketing
materials it produces as part of its promotional efforts; and
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(f) not market, distribute or sell or offer to market, distribute or
sell any other "talking trading card" or product reasonably similar to or
competitive with the SoundCards.
(2) MICRA will:
(a) Ensure that all licenses and rights as it deems necessary are
obtained for the manufacture and marketing of the Players and SoundCards;
(b) provide a minimum one year replacement or full refund warranty
on all SoundCards and Players;
(c) make the necessary arrangements to ensure the availability of
the SoundCards and Players in sufficient quantities to meet XXX.XXX's orders
promptly;
(d) sell Players to XXX.XXX at U.S. [Confidential Information filed
separately with the SEC] per unit and sell SoundCards at commercially reasonable
prices to be negotiated between XXX.XXX and MICRA in good faith based on the
guidelines set forth. in the attached Schedule "A"; and
(e) not sell or offer to sell the Players and SoundCards to other
purchasers at prices and on terms that are materially lower or more favorable
than the price and terms offered to XXX.XXX for the same products and similar
quantities thereby resulting in a competitive disadvantage.
The quantities ordered by XXX.XXX will be in commercially reasonable
amounts given the methods of marketing used by it. XXX.XXX understand that (i)
there will be a minimum order quantity of [Confidential Information filed
separately with the SEC] SoundCards for each order of SoundCards, unless
mutually agreed as per Schedule "A" attached (ii) delivery and payment will be
F.O.B. MICRA's Toronto facility or such other location as XXX.XXX may reasonably
request, and (iii) payment shall be made as to [Confidential Information filed
separately with the SEC] of the purchase price, by cash, certified cheque, bank
draft or money order, and as to the balance, by irrevocable, transferable letter
of credit, in each case delivered with the order.
5. XXX.XXX Promotion
XXX.XXX will actively market and promote the sale of the Players and the
SoundCards in a commercially reasonable fashion with a view to maximizing the
profit earned by XXX.XXX on the sale of Players and SoundCards and maximizing
the volume of Players and SoundCards ordered from MICRA, subject to XXX.XXX's
merchandising, inventory control and promotional techniques. XXX.XXX shall
consult with and advise MICRA of its proposed pricing policy and any changes
thereto.
6. MICRA
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Notwithstanding any other provision of this agreement, nothing herein shall
restrict, impair or otherwise limit MICRA's right and ability to market,
distribute and sell the Players and SoundCards to any customer which markets,
distributes or sells or intends to market, distribute or sell its products and
services through Electronic Distribution, provided that:
(a) such customer is not engaged primarily in the business of
marketing, distributing and selling products and services through Electronic
Distribution;
(b) MICRA advises such customers of the rights held by XXX.XXX and
uses its reasonable commercial best efforts to introduce XXX.XXX to such
customers to facilitate negotiations by XXX.XXX of exclusive sales by way of
Electronic Distribution; and
(c) MICRA takes all action it reasonably deems necessary to prevent
an infringement of the rights held by XXX.XXX by any of MICRA's customers.
7. Rights of Other Parties
Except in respect of any SoundCards which may be manufactured from time to
time at the specific request of XXX.XXX, MICRA shall be responsible for
obtaining all consents, licenses, rights or permits required to manufacture and
to sell the SoundCards and the Players throughout the world and shall ensure
that all royalties, fees and any other expenses are accounted for and paid.
MICRA's aggregate liability for costs or damages under this agreement shall be
limited to the purchase price for the Players and SoundCards purchased
hereunder. MICRA shall not be liable for any indirect, incidental, special or
consequential damages in connection with or arising out of the sale or use of
the Player and SoundCards.
8. Termination
Either MICRA or XXX.XXX (the "Terminating Party") may terminate this agreement:
(a) on [Confidential Information filed separately with the SEC]
written notice provided that:
(i) the other party has committed a material breach of its
obligations under this agreement including, for greater certainty, the failure
to satisfy any sales targets established by MICRA and XXX.XXX pursuant to
subsection 4(1)(e);
(ii) the Terminating Party has given written notice to the other
party of the material breach together with sufficient information about the
breach to permit the other party to respond to the notice; and
(iii) the other party has not cured the breach within
[Confidential Information filed separately with the SEC] of the date of the
receipt of the notice by the order party, or
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(b) immediately, if the other party is declared bankrupt or
insolvent or files for voluntary bankruptcy, insolvency or similar creditor
protection or otherwise causes to carry on its business.
9. Intellectual Party
(a) All patents, trade secrets, copyright, trademarks, trade names,
service marks, quality designations and other proprietary words, symbols and
technology of MICRA (collectively, "Intellectual Property") are and remain. the
exclusive property of MICRA, whether or not specifically registered or
recognized under applicable law. XXX.XXX will not take any action that
jeopardizes MICRA's rights in, or acquire any right to, the Intellectual
Property except the limited rights specified below in paragraph 9(b).
(b) XXX.XXX may use the trademarks, tradenames, service marks and
quality designations (collectively, the "Trademarks") exclusively to advertise
and promote the Player and Soundcards. All advertisements and promotional
materials shall (i) clearly identify MICRA as the owner of the Trademarks, (ii)
conform to MICRA's current trademark and logo type guidelines, and (iii)
otherwise comply with any applicable notice or marking requirement.
(c) Before publishing or disseminating any advertisement or
promotional material bearing a Trademark, XXX.XXX shall deliver a copy of the
advertisement or promotional materials to MICRA for approval. If MICRA gives
notice within five (5) business days of delivery that the proposed use of its
Trademark is inappropriate, XXX.XXX shall refrain from placing the advertisement
or promotional materials in circulation.
(d) XXX.XXX shall immediately notify MICRA if it learns (i) of any
potential infringement of MICRA's right in and to the Intellectual Property by a
third party, or (ii) the use of Intellectual Property may infringe the
proprietary rights of a third party.
10. Confidentiality
(a) Each party acknowledges that it may disclose to the other, in
connection to the performance of this agreement, data or other information which
is confidential or proprietary, the disclosure of which to or use by any
unauthorized party may be damaging (collectively, the "Confidential
Information"). No Confidential Information of a party shall be disclosed by the
other party to any person, except those of its employees or agents having a need
to know for the purposes contemplated by this agreement. If either party
discloses any of its Confidential Information to the other party, the party
receiving the Confidential Information shall (i) maintain it in confidence; (ii)
use at least the same degree of care in maintaining its secrecy as it uses in
maintaining the secrecy of its own proprietary confidential and trade secret
information, but in no event with less care than is reasonable given the nature
of the information; (iii) use it only to fulfill its obligations under this
agreement unless hereinafter agreed in writing by the other party; and (iv)
return all copies, notes, packages, diagrams, computer memory media and other
materials containing any portion of the Confidential Information to the
disclosing party upon its reasonable request given the rights and obligations of
the parties hereunder.
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(b) Neither party shall have any obligations of non-disclosure
concerning any portion of the Confidential Information of the other party of
which (i) is known or independently developed by the non-disclosing party before
receipt, directly or indirectly, from the disclosing parity; (ii) is lawfully
obtained, directly or indirectly, by the non-disclosing party under no
obligation of confidentiality from a third party acting in good faith; or (iii)
is or become publicly available other than its result to act or failure to act
by the non-disclosing party, its agent or employees.
11. General
(a) This agreement shall be governed by the laws of the Province of
Ontario and the parties hereby irrevocably attorn to the exclusive jurisdiction
of the Courts of the Province of Ontario in respect of the subject matter
hereof.
(b) MICRA and XXX.XXX are independent contractors and neither is the
agent, representative, partner or joint venturer of the other.
(c) If any provision of this agreement is deemed to be invalid or
unenforceable, that provision shall be severed from this agreement and the
remainder of this letter agreement shall remain in full force and effect. If
such severed provision is fundamental to the relationship governed by this
agreement, then either party shall have the right to terminate the
distributorship and related rights as if the severance of such provision was a
material breach of this letter agreement and such termination may only be
effected in accordance with Section 8 above.
(d) This agreement contains the entire understanding between the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous written or oral negotiations and agreements. This agreement may
be amended only in writing signed by both parties.
(e) Neither party may transfer or assign this agreement, or any part
hereof, without the prior written approval of the other, not to be unreasonably
withheld; provided, however, that MICRA may transfer or assign this agreement to
a third party without the prior written consent of XXX.XXX so long as the
assignment or transfer is in connection with the sale or transfer of all or
substantially all of the assets of MICRA and the assignee agrees in writing to
be bound by the terms and conditions of this agreement.
(f) This agreement shall be binding upon and enure to the benefit of
the parties hereto and their respective successors and permitted assigns.
(g) The provisions of Sections 7, 9, 10 and 11(a) shall survive any
termination of this agreement.
(h) Any notice required or permitted hereunder shall be deemed given
when personally delivered or sent by facsimile properly addressed to the party
to receive the notice at the following address or any other address given to the
other party as provided in this paragraph:
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If to XXX.XXX:
Xxx.Xxx International Inc.
0000 Xxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Xxx.Xxx International Inc.
0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
if to MICRA:
Micra Soundcards
135 West Beaver Creek Road
Richmond Hills, Ontario 1AB 1C6
Attention: Xxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
IN WITNESS WHEREOF, the parties have executed this agreement as of the day and
year first written above.
MICRA SOUNDCARDS INC.
Per:
---------------------------------
Xxxxxx Xxxxxxxxxx
XXX.XXX INTERNATIONAL INC.
Per:
---------------------------------
Xxxx Xxxxxxxxx
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SCHEDULE "A"
Pricing Guidelines and Technical
Specifications for Soundcards
-----------------------------
($ in U.S. funds and for 12 second message only)
[Confidential Information filed separately with the SEC].
Set forth below are the parameters if XXX.XXX wishes to produce its own licensed
SoundCards.
Required materials:
[Confidential Information filed separately with the SEC]
Timing:
[Confidential Information filed separately with the SEC]
Other Specifications:
[Confidential Information filed separately with the SEC]
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