International Distribution Agreement - Japan

EXHIBIT 10.19


INTERNATIONAL DISTRIBUTION AGREEMENT
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THIS AGREEMENT is made and entered into as of January 1, 1997, by and between Morrow Snowboards, Inc., (hereinafter referred to as "Manufacturer"), an Oregon corporation having its offices in Salem, Oregon, United States, and K.K. Morrow Japan, a corporation organized under the laws of Japan and having its offices in Osaka, Japan (hereinafter referred to as "Distributor").


RECITALS:


A. Manufacturer presently offers a line of snowboards and snowboard equipment, apparel and accessories for sale under the "Morrow(R)" brand ("Product" or "Products") and desires to continue to market such products in Japan.


B. Distributor currently markets winter recreation products in Japan and has substantial resources, personnel and experience which would enable Distributor to market these products for manufacturer in Japan.


C. Distributor has previously purchased and distributed the Products in Japan.


D. Manufacturer and Distributor would like to enter into an agreement whereby Distributor would use its existing resources, personnel and experience to market certain of the Products in Japan.


WITNESSETH:


In consideration of the mutual covenants and conditions herein contained, and intending to be legally bound hereby, the parties mutually agree as follows:


1. Products and Territory
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(a) Manufacturer hereby appoints Distributor on an exclusive basis as its sole distributor for the sale of the Products described in Exhibit A during the term of this Agreement.


Distributor shall not place orders for Products in a calendar year in amounts greater than Distributor reasonably believes can be sold in the season beginning in the current year and shall orderly liquidate any overstock of prior season's Products. Manufacturer reserves the right to add or delete specific products from the Products covered by this Agreement and to change the design or specification of Products, to delete Product models or lines, and to add Product models and lines in the Manufacturer's sole discretion.


Distributor shall use its best efforts to promote and sell the Products to the maximum number of responsible customers in the Territory.


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(b) Manufacturer is appointing Distributor hereunder with respect to the resale of Products to any purchasers whose principal place of business is located in the following described territory (the "Territory"): Japan.


(c) Distributor shall not solicit orders for any Product from any prospective purchaser with its principal place of business located outside the Territory. If Distributor receives an order for any Product from a prospective purchaser whose principal place of business is located outside the Territory, Distributor shall immediately refer that order to Manufacturer. Distributor shall not accept any such orders. Distributor may not deliver or tender (or cause to be delivered or tendered) any Product outside of the Territory. Distributor shall not sell any Product to a purchaser if Distributor knows or has or should have reason to believe that such purchaser intends to remove that Product from the Territory.


(d) Manufacturer reserves the right, in its sole discretion, at any time upon thirty (30) days' prior written notice to Distributor, to expand or reduce in any manner the Products which are covered by this Agreement.


2. Prices and Payment.
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(a) Distributor shall order Products from Manufacturer by submitting a written purchase order using the Manufacturer's purchase order form and identifying the Products ordered, requested delivery date(s) and any export/import information required to enable Manufacturer to fill the order. All orders for Products are subject to acceptance or rejection by Manufacturer's V.P. Sales/International at Manufacturer's office at 2600 Pringle Road SE, Salem in Manufacturer's sole discretion. Manufacturer shall have no liability to Distributor with respect to purchase orders which are not accepted; provided, however, that Manufacturer
-------- ------- will not unreasonably reject any purchase order for Products which do not require any modifications or additions in order to meet the specifications of Distributor or its customers. All purchase orders for initial sales for each calendar year must be placed by March 1st each year, provided such order may be increased up to April 15th each year. Manufacturer may accept reorders in its sole discretion thereafter. Manufacturer may allocate production among Distributor, other distributors, dealers and others as the Manufacturer deems appropriate in its sole discretion if orders exceed scheduled production and scale shipments over several months.


(b) If a purchase order is accepted in accordance with Section 2(a) above, the prices for Products covered by such purchase order shall be Manufacturer's net distributor prices ex works the shipment location for export sales in comparable quantities, which are in effect on the date of Manufacturer's acceptance. Manufacturer may from time to time change those prices, such change being effective immediately upon Distributor's receipt of notice thereof; provided,
-------- however, that no price change shall affect purchase orders offered by - ------- Distributor and accepted by Manufacturer prior to the date such price change becomes effective.


(c) Distributor shall be free to establish its own pricing for Products which it sells. Distributor shall notify Manufacturer of its pricing, as in effect from time to time.


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(d) The ultimate shipment of orders to Distributor shall be subject to the right and ability of Manufacturer to make such sales, and obtain required licenses and permits, under all decrees, statutes, rules and regulations of the government of the United States and agencies or instrumentalities thereof presently in effect or which may be in effect hereafter. Any order which has been accepted by Manufacturer but which cannot be fulfilled due to such decrees, statutes, rules and regulations shall be considered to have been rejected when submitted to Manufacturer for acceptance or rejection.


(e) Distributor hereby agrees: (i) to assist Manufacturer in obtaining any such required licenses or permits by supplying such documentation or information as may be requested by Manufacturer; (ii) to comply with such decrees, statutes, rules and regulations of the government of the United States and agencies or instrumentalities thereof; (iii) to maintain the necessary records to comply with such decrees, statutes, rules and regulations (iv) not to export any Products except in compliance with such decrees, statutes, rules and regulations (v) to obtain all governmental approvals and licenses necessary to import the Products into the Territory; (vi) not to sell, transfer or otherwise dispose of Products in violation of the export laws of the United States; and (vii) to indemnify and hold harmless Manufacturer from any and all fines, damages, losses, costs and expenses (including reasonable attorneys' fees) incurred by Manufacturer as a result of any breach of this subsection (e) by Distributor or any of Distributor's customers.


(f) Unless Distributor requests otherwise, all Products ordered by Distributor shall be packed for shipment and storage in accordance with Manufacturer's standard commercial practices. It is Distributor's obligation to notify Manufacturer of any special packaging requirements (which shall be at Distributor's expense). Shipment dates shall be those specified in Manufacturer's confirmation of acceptance of Distributor's purchase order, unless otherwise agreed between the parties. Risk of loss and damage to a Product shall pass to Distributor upon the removal of such Products from Manufacturer's facility. Notwithstanding anything contained herein, Manufacturer shall have the right to make partial shipments and each shipment shall be deemed a separate sale. Further, all delivery dates are estimates only. Shipment shall be ex works Manufacturer's Salem, Oregon facility or other facility designated by Manufacturer.


The Manufacturer warrants that the Products are free from defect in materials and workmanship and conform to the Manufacturer's standard product specifications. All claims for non-conforming shipments must be made in writing to Manufacturer within three (3) months of the passing of risk of loss and damage, as described above. Any claims not made within such period shall be deemed waived and released. Distributor is responsible for any damage to Products if the damage occurs after the Products have been delivered ex works from the shipment facility to a carrier.


(g) Distributor shall, within thirty (30) days after receiving notice of Manufacturer's acceptance of a Purchase Order, establish a confirmed Irrevocable Letter of Credit ("ILC") in favor of Manufacturer issued by a bank chartered in the United States acceptable to Manufacturer (the "Bank"), payable in U.S. Dollars, in an amount equal to the total then-current distributor prices ex works Manufacturer's factory at Salem, Oregon, of the Products ordered under such


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Purchase Order. The ILC shall be in a form satisfactory to Manufacturer and shall provide that Manufacturer may draw upon it in full upon presentation to the Bank of two (2) copies of a certificate of Manufacturer that it has tendered such Products at Manufacturer's factory at Salem, Oregon in accordance with Section 2(f) hereof. No part of any amount payable to Manufacturer hereunder may be reduced due to any counterclaim, set-off, adjustment or other right which Distributor might have against Manufacturer, any other party or otherwise.


(h) In the event of any discrepancy between any purchase order accepted by Manufacturer and this Agreement, the terms of this Agreement shall govern.


(i) The Manufacturer may cancel any accepted orders or refuse or delay shipment of any orders if Distributor fails to meet any obligation arising under this Agreement.


3. Other Obligations of Distributor.
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(a) Distributor shall maintain an active sales organization which is knowledgeable with respect to the functional capabilities and uses of the Products.


(b) Distributor shall employ competent and experienced service personnel, provide appropriate service shop facilities, and maintain an adequate stock of spare parts so as to render prompt and adequate service to the users of the Products in the Territory. As part of Distributor's obligations under this Agreement, Distributor agrees to provide, at Distributor's expense, any and all repair or other Product service of the Products after they have been sold or otherwise distributed by Distributor to any customer.


(c) Distributor shall prepare, at Distributor's cost, a reasonable number of catalogs, brochures or other promotional materials which may be reasonably necessary to promote the sale of the Product. Distributor shall translate, at its own expense, all user and technical manuals and advertising and marketing information with respect to the Products into the Japanese language and provide Manufacturer with advance copies (in both English and Japanese) of all such materials for approval by Manufacturer. Copies of any such material shall be approved in advance by Manufacturer with English language translation of any foreign language text. Distributor shall assign all copyrights in such translations to Manufacturer. Distributor shall have a non-exclusive right during the term of this Agreement, in connection with its activities pursuant to this Agreement, (i) to use such translations, and (ii) to incorporate such translations into its own manuals, advertising and marketing information. Manufacturer shall not be liable for translation errors made by Distributor or at Distributor's direction or for the non-conformance of such translated materials with laws and regulations in force from time to time in the Territory. Distributor shall indemnify and hold Manufacturer harmless to the extent that a third party brings claims against Manufacturer based on such errors or non- conformance.


(d) Distributor shall comply with all applicable laws, statutes, regulations and treaties relating to the marketing, sale and distribution of the Products in the Territory and the performance of Distributor's duties and obligations hereunder and obtain all governmental import, product registration, currency (including foreign exchange) and other approvals, licenses or authorizations


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necessary in Japan or necessary for distribution and the performance of Distributor's obligations hereunder.


(e) Distributor shall maintain satisfactory international communication devices and retain one or more members of its staff who is proficient in reading and writing English.


(f) Distributor shall each calendar year undertake the level and type of specific promotional activities Distributor has previously undertaken to promote the Product.


4. Relationship of the Parties.
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(a) Distributor shall be considered to be an independent contractor. The relationship between Manufacturer and Distributor shall not be construed to be that of employer and employee, nor to constitute a partnership, joint venture or agency of any kind.


(b) Distributor shall pay all of its expenses, including without limitation all travel, lodging and entertainment expenses, incurred in connection with its services hereunder. Manufacturer shall not reimburse Distributor for any of those expenses. Distributor's sole compensation for the performance of its duties will arise from its resale of Products.


(c) Distributor shall have no right to enter into any contracts or commitments in the name of, or on behalf of, Manufacturer, or to bind Manufacturer in any respect whatsoever. Neither party shall have the right to represent the other party to a third party. Should either of the parties inflict any losses on the other party because it has acted in the name of or as an agent for the other party, the inflicting party shall hold the damaged party harmless from such losses and expenses incurred thereby.


(d) In addition, Distributor shall not obligate or purport to obligate Manufacturer by issuing or making any affirmations, representations, warranties or guaranties with respect to Products to any third party, other than the warranties described in Exhibit B attached hereto and made a part hereof.


(e) Each party shall furnish the other party with information which is necessary to help further sales promotion of the Products.


5. Minimum Purchase Requirements.
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Distributor shall annually purchase a sufficient amount of Products from Manufacturer so as to meet or exceed the minimum purchase requirements set forth in Ex ...