Exhibit 99.4(ix)
Distribution Agreement - Bid-Com International Inc.
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 or 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 licences 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.
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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 100,000 Players and
100,000 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
(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 licences 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. $2.50 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 higher or less favourable 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 50,000 SoundCards for each order of
SoundCards, (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 30% 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.
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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
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 introduces
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, licences, 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 60 days 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)(c);
(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 60 days of the date of
the receipt of the notice by the order party, or
(b) immediately, if the other party is declared bankrupt or insolvent or files
for voluntary bankruptcy, insolvency or similar creditor protection or otherwise
ceases to carry on its business.
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9. Intellectual Property
(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 fulfil 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.
(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 party; (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 becomes 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
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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:
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
000 Xxxx Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
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IN WITNESS WHEREOF the parties have executed this agreement as of the day and
year first written above.
MICRA SOUNDCARDS INC.
Per: (signed) "Xxxxxx Xxxxxxxxxx"
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Xxxxxx Xxxxxxxxxx
XXX.XXX INTERNATIONAL INC.
Per: (signed) "Xxxx Xxxxxxxxx"
---------------------------------------
Xxxx Xxxxxxxxx
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SCHEDULE "A"
PRICING GUIDELINES AND TECHNICAL
--------------------------------
Specifications for Soundcards
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($ in U.S. funds and for 12 second message only)
Quantity: 2,500 5,000 10,000 25,000 50,000 100,000
Masking: $ 3,500 $ 3,500 $ 3,500 $ 3,500 0 0
Cost/card: 7.26 3.81 1.59 1.41 $ 1.19 $ 1.15
Packaging: .35 .35 .35 .35 .35 .35
Royalties: 2.25 2.00 1.75 1.50 1.00 1.00
---------- ----------- ----------- ----------- --------- ---------
Cost to XXX.XXX $ 9.86 $ 6.16 $ 3.69 $ 3.26 $ 2.72 $ 2.50
Players cost $2.50 each, including batteries.
Set forth below are the parameters if XXX.XXX wishes to produce its own licensed
SoundCards.
Required materials:
. Art on Mac Illustrator 6.0
. Film on CD Disc or Zip, 150-line screen. (Die lines and crop marks will
be supplied by MICRA).
. Bleed or borders are not subject to increases or discounts.
Timing:
. DAT tape: E-Prom available within 7 to 10 days.
. The voice chips take at least 35 days; production is at 300,000 a week,
building to 1 million per week in January 1999.
Other Specifications:
. Cards measure 2.5 x 3.5 inches.
. Caliper for stand-alone card: 3 mm; for player card: 2 mm.
. Weight: cards: 0.05 lbs.; player: 0.20 lbs.
. All product is F.O.B. Toronto and bulk packed, unless otherwise
requested:
- cards are in 1.5 mill poly bags.
- players are bubble packed.
. Terms are 30% with order and irrevocable and transferable LC for
balance, payable 30% when goods clear North American customs and 40% upon
delivery to XXX.XXX's warehouse.
