DISTRIBUTOR AGREEMENT
THIS AGREEMENT, made and entered into this 4th day of January, 1993, by and
between ACTIVE ANKLE SYSTEMS, INC. ("Manufacturer"), and THE VOLLEYBALL
CONNECTION, INC., a Kentucky 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 retail
sporting goods departments within retail outlets, with the exception that Xxxxxx
Products, Inc. has the exclusive right to market and sell the Products to
educational entities, or to team dealers and catalog operations who resell to
educational entities. The exclusive right granted to The Volleyball Connection
pertains to product packaged in a clamshell designed for resale in retail
sporting goods outlets, or sporting goods departments within retail outlets.
The exclusive right granted to Xxxxxx Products, Inc., pertains to product
packaged in a box or plastic bag designed for resale to educational entities.
Active Ankle Systems, Inc. has the sole right to grant or withhold distribution
rights to any market or customer and its responsible for mediating disputes
between Xxxxxx and TVC relative to distribution rights. The Territory covered
by this Agreement is defined as the Continental United States, plus the states
of Hawaii and Alaska, and U.S. Possessions. 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 and
Possessions. 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.
(a). Manufacturer intends to refer all unsolicited calls from retail
dealers as defined in paragraph (2) for sale at retail to Distributor.
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 the prescribed ordering
period requested by the customer.
(b.)
(c.) Manufacturer shall deliver Distributor's Product orders to
Distributor's customers 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
pursuant to Distributor's instructions, by Manufacturer.
(e.) Manufacturer shall ship units deemed to be shorted on any order at
no additional charge and replace braces failing within the warranty periods
outlined in the Manufactures warranty policy. (See fitting instructions and
paragraph 11.)
(f.) Product returned to Manufacturer for any reason requires a return
authorization number, to be obtained from Manufacturer in advance by calling
0-000-000-0000.
4. PRICE AND PAYMENT.
(a.)
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(b.)
5. DISTRIBUTOR'S RESALE. Distributor shall use efforts reasonably
consistent with its resources to market and sell the Product to retail sporting
goods dealers and to promote the Product. 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 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
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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 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 promote the
product through the various means, on a basis generally comparable to that for
other products sold by Distributor and consistent with paragraph 5 ie:
- Trade advertising
- Display and promotion at major sporting goods shows at which
distributor exhibits products and sponsored Volleyball matches
- Articles and advertising in publications which may be produced from
time to time by Distributor
- 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.
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. Manufacturer agrees to replace parts or product
failing due to faulty materials or workmanship during the warranty period
through normal use at no cost to Distributor.
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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.
(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.
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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
The Volleyball Connection, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 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 Kentucky 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
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 or Exhibit C
which provides a detailed list of each parties intended responsibilities. This
Agreement may be
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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"
THE VOLLEYBALL CONNECTION, INC.
BY:
---------------------------------------
Xxxx Xxxxx
President
"Distributor"
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EXHIBIT A
January 1993
ACTIVE ANKLE SYSTEMS PRODUCT LIST
WHITE BLACK
Active Ankle "Trainer" X-Small RTD110 RTD310
Active Ankle "Trainer" Small RTD120 RTD320
Active Ankle "Trainer" Medium RTD130 RTD330
Active Ankle "Trainer" Large RTD140 RTD340
Neoprene "Trainer" Pads pair RTD70
Active Heel Cushion pair RTD90
Overhaul Kit "Trainer" RTD100 RTD300
EXHIBIT B
January 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
16. Maintain a United Parcel Service log book at the distribution center under
The Volleyball Connection name.
17. Make alternative freight arrangements per customer request and prepay all
freight.
18. Receive all shipping information from the fulfillment center.
19. Invoice customers.
20. Collect all receivables and litigate as needed.
21. Pay all sales representatives commissions.
22. Issue return authorizations and credit customers accounts and debit sales
representative's commissions.
23. Provide monthly reports detailing:
a. Sales volume
b. Orders to be shipped
c. Items to be shipped per item (within any specified window)
24. Provide order forms for the sales representatives (3 part).
25. Provide picking tickets for orders to be shipped (2 part).
26. Provide invoices (4 part).
27. Provide credit applications.
ACTIVE ANKLE WILL PROVIDE:
1. Adequate levels of advertising as agreed to between the parties.
2. Point of purchase displayed for the retail customer. A scale will be
provided for quantity of order and type of display given.
3. Continued work in the area of new products.
4. Training for the staff of The Volleyball Connection relating to the Active
Ankle products.
5. Line sheets, price sheets, and other support materials to be part of the
sale package.
6. Assistance with any National Promotions or arrangement of pricing structure
for major retails as agreed to by both parties prior to any commitments.
7. Rental of booth space and display of products at retail sportswear shows
other than those attended by The Volleyball Connection, Inc. (such as the
NSGA show and the SUPER SHOW), as agreed to by both parties prior to any
commitments.
8. Forward all leads and listing of current customers to The Volleyball
Connection as defined in paragraph 2(a) of the agreement.
9. Listing of The Volleyball Connection, Inc. as an additionally insured on
Active Ankle's insurance.
10. Direct mail to current and potential retail customers at least twice a
year.
11. Develop and maintain a competitive pricing structure with Xxxxxx products.
12. An adequate return policy and acceptance of defective merchandise. Also,
credit The Volleyball Connection for all returned merchandise.
13. Maintain adequate production levels.
14. Assure that orders will be shipped within the given window.
15. Provide a contact person at Active Ankle Systems, Inc. to answer questions
as needed.
16. Sell samples to The Volleyball Connection for use by sales representatives
at an agreed upon discounted rate $7.00 each.
17. Invoice The Volleyball Connection for orders shipped and maintained
accurate records of sales.
AMENDMENT TO DISTRIBUTOR AGREEMENT
This Agreement, made and entered into this 13th day of March, 1995, by and
between Active Ankle Systems, Inc. ("Manufacturer") and The Volleyball
Connection, Inc., a Kentucky Corporation ("Distributor") amends the Distributor
Agreement ("Prior Agreement") entered into by Manufacturer and Distributor on
January 4, 1993,
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. The Volleyball Connection, Inc.
By: By:
------------------------------- ---------------------------------
Xxxx X. Xxxxxxxx, President Xxxx Xxxxx, President
"Manufacturer" "Distributor"
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