<PAGE>   1
                                                                   EXHIBIT 10.42

            Agreement with Berghaus Limited dated September 10, 1999





                                BERGHAUS LIMITED

                                       and

                                 X DOGS.COM INC.

                             DISTRIBUTION AGREEMENT


<PAGE>   2



                                Table of Contents
<TABLE>
<S>                                                             <C>
1.          Definitions and Interpretation ................      1
2.          Commencement ..................................      5
3.          Grant .........................................      5
4.          Term ..........................................      6
5.          Royalties .....................................      6
6           Targets .......................................      7
7.          Purchase and Sale of Products .................      8
8.          Marketing of the Products .....................      9
9.          Indemnity and Insurance .......................     13
10.         Books and Records .............................     14
11.         Report and Remittance Forms ...................     15
12.         Packaging and Advertising of Products .........     16
13.         Quality Control ...............................     18
14.         Confidential Information ......................     18
15.         Sufficient Use of Trade Marks .................     19
16.         Benefit of Use of Trade Marks .................     20
17.         Rights not to be challenged ...................     20
18          Infringements .................................     21
19.         Sales Outside the Territory ...................     22
20.         Sales by the Company in the Territory .........     23
21.         Sale of Competitive Products ..................     23
22.         Termination ...................................     24
23.         Rights and Obligations on Termination .........     26
24.         Representations and Warranties ................     29
25.         Agency Relationship ...........................     30
26.         Notices .......................................     31
27.         Assignments ...................................     32
28.         Legal and Ethical Requirements ................     33
</TABLE>



                                        i
<PAGE>   3



<TABLE>
<S>                                                             <C>
29.         Local Law Compliance ..........................     34
30.         Governing Law .................................     35
31.         Force Majeure .................................     35
32.         Whole Agreement ...............................     36
33.         Agreement Severable ...........................     36
34.         Agreement to Co-operate .......................     37
35.         Waiver and Variation ..........................     37
36.         Execution in Counterpart ......................     37
Schedule 1 ................................................     39
Schedule 2 ................................................     40
Schedule 3 ................................................     41
</TABLE>



                                       ii
<PAGE>   4



THIS AGREEMENT is made on 10th September 1999 between the following parties:

1. BERGHAUS LIMITED (Registration No: 871405) (incorporated in England & Wales)
whose registered office is at The Pentland Centre, Lakeside, Squires Lane,
Finchley, N3 2QL, England ("the Company"); and

2. X DOGS.COM INC incorporated in Nevada whose registered office is at 527,
Marquette Avenue, Suite 2130, Minneapolis, Minnesota 55402, United States of
America ("the Distributor").

RECITALS:

A. The Company is the owner of the Trade Marks in the Territory.

B. The Company has agreed to grant to the Distributor the right to import,
market, distribute and sell certain products under the Trade Marks on the terms
and conditions set out in this Agreement.

IT IS AGREED, as follows:

1.   DEFINITIONS AND INTERPRETATION

1.1  "ADVERTISING PERCENTAGE" means ten percent (10%)

     "ANNIVERSARY DATE" means I January 2001 and each I January thereafter
     during the term of this Agreement.



                                        1
<PAGE>   5



     "CHANGE OF CONTROL" means the acquisition by any person together with its
     affiliates of more than 50% of the stock of the Distributor or stock
     holding more than 50% of the voting rights in the Distributor.

     "CONFIDENTIAL INFORMATION" means and includes all advice, information and
     knowhow including (without limitation) any designs, processes,
     developments, improvements, inventions, concepts, graphics and styling
     relating to the Products and trade secrets relating to the Products or the
     business of the Company or any associated company, whether tangible or
     intangible, provided by the Company to the Distributor.

     "CONSUMER PRICE INDEX" means the index of retail prices published by the
     Government of the United States of America or, if for any reason such index
     is not published, any similar index (whether or not published in the
     Territory) specified by the Company.

     "CONTRACT YEAR" means the period commencing with the Effective Date and
     ending on 31 December 2000 for the first Contract Year, and each successive
     twelve (12) month period commencing on an Anniversary Date.

     "Effective Date" means 10th September 1999.



                                        2
<PAGE>   6



     "FOB PURCHASES" means the purchase price of Products invoiced to the
     Distributor by the Company or its nominated suppliers calculated on an FOB
     basis (as defined in Incoterms from time to time).

     "INTELLECTUAL PROPERTY RIGHTS" means the Trade Marks and any patents,
     copyright, registered or unregistered designs or any applications or rights
     to apply for any of the foregoing which are owned or used by the Company.

     "MANUAL" means the Company's brand manual together with its Strategic
     Marketing Plan (as amended from time to time).

     "NET SALES" means the total sum invoiced by the Distributor, plus the fair
     market value in the case of transactions otherwise than at arm's length,
     for sales of Products after deduction of

     (i)  taxes of the nature of sales, excise, value added or other similar tax
          charged upon and included in the invoice price to the purchaser; and

     (ii) where applicable, the usual discounts, allowances, rebates or refunds
          actually and in good faith made or given by the Distributor to its
          customers with respect to such sales other than all discounts,
          allowances, rebates or refunds for or in respect of payment in cash or
          payment within a particular time or given for promotional purposes.

     "PERCENTAGE ROYALTY" means the following percentage, dependent on the
     period in which such purchases are made.



                                        3
<PAGE>   7



<TABLE>
<CAPTION>
PERIOD                                                      PERCENTAGE
------                                                      ----------
<S>                                                         <C>
10th September 1999 to 31 December 2000                     10
1 January 2001 to 31 December 2001                          12
1 January 2002 to 31 December 2002                          14
1 January 2003 to 31 December 2003                          16
1 January 2004 to 31 December 2004                          16
</TABLE>

     "PRODUCTS" means such products as are purchased by the Distributor from the
     Company (or any other source approved under clause 7. 1 (b)).

     "QUARTER" means each of the three (3) month periods ending on 31 March, 30
     June, 30 September and 31 December in each Contract Year. The first Quarter
     shall be deemed to be from the Effective Date until 31 December 1999.

     "TARGET" means the sale and/or purchase obligations of the Distributor
     under clause 6.

     "TERRITORY" means the country or countries listed in Schedule 2.

     "TRADE MARKS" means the trade marks which are registered (or the subject of
     pending applications for registration) in the Territory listed in Schedule
     3, together with all other trade marks, trade names, service marks, style
     names, trade dress, logos and other trade symbols which are under the
     control or proprietorship of the Company and which the Company stipulates
     are to be used by the Distributor from time to time in relation to the
     Products.

1.2 In this Agreement, unless the context otherwise requires:

     (a)  headings and underlines are for convenience only and do not affect the
          interpretation of this Agreement;



                                        4
<PAGE>   8



     (b)  words importing the singular include the plural and vice versa;

     (c)  an expression importing a natural person includes any company,
          partnership, joint venture, association, corporation or other body
          corporate and any governmental agency or authority;

     (d)  a reference to any thing includes a part of that thing;

     (e)  references to clauses, parties and schedules are references to
          clauses, parties and schedules to, this Agreement.

2. COMMENCEMENT

     This Agreement shall commence and be deemed effective as of the Effective
     Date notwithstanding that it may be executed after that date.

3. GRANT

3.1 Subject to the terms of this Agreement, the Company grants to the
Distributor the exclusive right to:

     a)   import the Products into the Territory; and

     b)   use the Trade Marks in relation to the Products in the Territory.

3.2 The rights granted under clause 3.1 shall not include sales over the
internet outside the Territory.



                                        5
<PAGE>   9



3.3 Without limiting its other obligations, the Distributor shall comply with
    the terms of the Manual.

4. TERM

     This Agreement shall commence on the Effective Date and continue until 31st
     December 2004 (subject to earlier termination as provided under this
     Agreement).

5. ROYALTIES

5.1  The Distributor shall pay to the Company a royalty equal to the product of
     the Percentage Royalty and the amount of FOB Purchases of Products invoiced
     to the Distributor.

5.2  The Distributor shall make payment of the royalties referred to in clause
     5.1 in US Dollars (or any other currency stipulated a reasonable time in
     advance by the Company) by telegraphic transfer to the Company at such
     place as may be nominated from time to time by the Company, within thirty
     (30) days after the date of the FOB Purchase invoice giving rise to the
     obligation to pay such royalty. The Distributor may deduct from such
     payment such amount as it is required to deduct on account of any taxation
     liability of the Company in the Territory. The Distributor shall obtain an
     official receipt for any amount so paid and forward this immediately to the
     Company together with a written explanation as to why such deduction is
     necessary. The Distributor will also provide such assistance and sign such
     documentation as may be available in order to enable such royalty to be
     paid without any deduction.

5.3  The Distributor shall convert the royalties payable at the bank telegraphic
     transfer selling rate prevailing for the currency so stipulated on the day
     of each payment.



                                        6
<PAGE>   10



5.4  The Distributor will provide each Quarter a statement as to the calculation
     of the royalty certified as correct by a senior executive of the
     Distributor approved by the Company.

5.5  The Distributor will also provide to the Company by 31 March in each
     Contract Year a calculation of the royalty paid for the previous Contract
     Year confirmed as correct by its auditors and the Distributor will also
     provide to the Company each Quarter such other reports, statements,
     accounts and records as are referred to in sub-clause 11.1.

6.   TARGETS

6.1  The Distributor undertakes that the Net Sales of Products by the
     Distributor in the following periods shall be not less than:

<TABLE>
<CAPTION>
PERIOD (CONTRACT YEAR)            NET SALES TARGETS (US DOLLARS 000'S)
----------------------
                            USA               CANADA              MEXICO
                            ---               ------              ------
<S>                        <C>                  <C>                 <C>
   2000                     5,811                  0                  0
   2001                    13,957                  0                  0
   2002                    25,735                260                  0
   2003                    46,208                944                  0
   2004                    68,645              2,140                713
</TABLE>

6.2  The Distributor undertakes that the FOB Purchases by the Distributor in the
     following periods shall be not less than:

<TABLE>
<CAPTION>
PERIOD (CONTRACT YEAR)         FOB PURCHASES (US DOLLARS 000'S)
<S>                            <C>
   2000                                      3,823
   2001                                      7,873
   2002                                     15,046
   2003                                     27,431
   2004                                     40,671
</TABLE>



                                        7
<PAGE>   11



6.3  The Company will be entitled to terminate this Agreement by notice in
     writing to the Distributor in the event that the Distributor fails to
     achieve:

     (a)  the aggregate Net Sales Target for any country for any calendar year;
          or

     (b)  the FOB Purchase Target for any calendar year.

7.   PURCHASE AND SALE OF PRODUCTS

7.1  The Distributor will purchase the Products ready packaged only from:

     (a)  the Company; or

     (b)  from such supplier as may be authorised from time to time in writing
          by the Company

     and the Distributor will not repackage any Products nor alter, amend or
     modify any packaging in which any Products are supplied nor remove, deface,
     obscure, alter or modify any Trade Marks, brand names, logos, graphics or
     wording applied to any of the Products on their packaging without the prior
     written consent of the Company.

7.2  All prices for the Products quoted by the Company or its suppliers shall
     (unless otherwise agreed in writing) be for payment by irrevocable Letter
     of Credit 30 days from shipment in US Dollars or in such other currency as
     may be as specified by the Company or such supplier.



                                        8
<PAGE>   12



7.3  Products shall be sold subject to the conditions of sale of the Company or
     other authorised supplier as shall be notified to the Distributor from time
     to time. If there is any conflict between the provisions of such conditions
     of sale and the provisions of this Agreement, the latter shall prevail.

7.4  Neither the Distributor's standard conditions of purchase nor any terms or
     conditions in any order forms or other documents prepared by the
     Distributor shall apply to the sale of the Products by the Company or other
     authorised supplier to the Distributor.

7.5  Title to the Products will pass to the Distributor at the point specified
     in the purchase order and the confirmation thereof or at the point
     specified in the conditions of sale of the Company or other authorised
     supplier.

7.6  The responsibility for all operations, costs and expenses from the point
     specified in the said conditions of sale or purchase order and the
     confirmation thereof (including transportation, insurance, custom duties)
     will be paid by the Distributor.

7.7  The Distributor shall maintain at all times a full range of stock of the
     Products to meet all reasonable expectations of business including periods
     of expected peak demand PROVIDED THAT the Distributor shall maintain at all
     times a stock of Products in an amount necessary to accommodate sales for
     45-60 days based on a reasonable sales estimate.

8.   MARKETING OF THE PRODUCTS

8.1  The Distributor shall use its best endeavors to create, meet and expand
     demand in the Territory for the Products.



                                        9
<PAGE>   13



8.2  At the commencement of this Agreement, and for each Contract Year
     thereafter the Distributor will provide to the Company a marketing plan for
     the distribution of the Products within the Territory which marketing plan
     is to be approved by the Company. The marketing plan for each Contract Year
     of this Agreement other than the first Contract Year is to be agreed upon
     three (3) months prior to each Anniversary Date and will be reviewed on a
     Quarterly basis. The marketing plan will specify objectives and strategies
     with respect to the following and any related matters which are consistent
     with the Distributor's obligations under sub-clause 8. 1. The Company will
     not unreasonably withhold its approval of or agreement to any marketing
     plan presented by the Distributor.

     (a)  product lines and new product plans;

     (b)  pricing and margin structure;

     (c)  distribution channels;

     (d)  sales and distribution targets on a product by product basis;

     (e) accumulation of market data including assessment of total market size
     and segmentation in units and value (which will be updated on a six monthly
     basis);

     (f) overview of trading for the current year and objectives and strategies
     for the following year;

     (g)  assessment of competition;

     (h)  advertising and promotional expenses; and

     (i) overall advertising and promotional strategy including in particular
     the use and cost of promotions, public relations, sponsorship, exhibitions,
     point of sale and other in-store merchandising.

8.3  In addition to its obligations under clause 8.2 the Distributor at the
     commencement of this Agreement and prior to each Contract Year thereafter
     shall supply a Business Plan for the



                                       10
<PAGE>   14



     remaining term of the Agreement which is to be agreed by the Company not
     less than three months prior to the beginning of each Contract Year. The
     Business Plan shall be in a format reasonably specified by the Company and
     will in particular include Key Success Factors and Key Performance
     Indicators in the areas of distribution, marketing, operations and
     corporate citizenship. The Company and the Distributor will review progress
     against such plan on a Quarterly basis.

8.4  The Distributor shall:

     (a) develop and agree with the Company as set out in clause 8.2 a legally
     supportable distribution policy for the Products;

     (b) promote and enhance the reputation and the recognition and awareness of
     the Trade Marks in the Territory;

     (c) develop a sales, marketing and merchandising facility for the Products
     in the Territory;


     (d) engage such key staff as the Company shall specify, such appointments
     to be approved by the Company before implementation;

     (e) offer a complete stock and refill service to all retailers;

     (f) achieve distribution throughout all agreed trading channels;

     (g) establish speciality shops within appropriate and agreed stores in the
     Territory; establish Berghaus Centres (speciality stores) as requested by
     the Company, provided that the Company shall not require any stores to be
     established within the first 18 months from. the date of this Agreement and
     thereafter any such request shall be on 9 months' notice in writing to the
     Distributor;



                                       11
<PAGE>   15



     (i) establish the Company's signage where possible within agreed retail
     stores in the Territory; and

     (j) position the Berghaus Visual Merchandising System within agreed retail
     outlets as stated within the annual marketing plan referred to in clause
     8.2.

8.5  The Distributor will use its best endeavors to ensure that the Products are
     distributed only through such specialist outdoor outlets, genuine outdoor
     departments in department or sports stores and footwear or sports stores as
     are approved in writing by the Company. In all cases, such stores should
     have a clientele of medium to high quality. The Distributor shall not
     distribute the Products in any circumstances through market stalls or
     stores of low quality and image. The Distributor shall procure that
     wherever possible, retailers who stock the Products shall use the fittings,
     display units, advertisements and point of sale material provided by the
     Company. The Distributor shall be permitted to distribute the Products
     through mail order or over the internet, subject to the Company's written
     approval but may not sell Products through either such channels to
     purchasers outside the Territory.

8.6  In each Contract Year the Distributor must spend a minimum of the
     Advertising Percentage of Net Sales (or in the first Contract Year the
     Target) of Products for that year on consumer advertising and promotion in
     the Territory. Within 30 days following the end of each Contract Year the
     Distributor shall submit a statement to the Company, certified as true and
     correct by a senior executive of the Distributor approved by the Company
     detailing the amounts spent and how the money was spent.

8.7  The Distributor will at its own expense participate twice a year in the
     Company's international meetings and four times a year in product
     development meetings.



                                       12
<PAGE>   16



     8.8   The Company grants to the Distributor the non-exclusive right to
           enter into preliminary negotiations for sponsorship or promotional
           agreements relating to the Trade Marks directly with athletes, clubs,
           federations, committees or similar organizations within the Territory
           approved in writing by the Company. The Distributor shall have no
           power to conclude any such agreement or enter into any such agreement
           on the Company's behalf. Any proposed agreement shall be presented to
           the Company for approval and, (unless the Company and the Distributor
           otherwise agree), shall be entered into directly between the Company
           and the relevant athlete, club, federation, committee or
           organization. Fees or payments to be made under such agreements shall
           be borne as between the Company and the Distributor in such
           proportion as they may from time to time agree.

     9.    INDEMNITY AND INSURANCE

     9.1   The Distributor shall, at its expense, carry comprehensive general
           liability insurance and product liability insurance covering the
           Products marketed or sold in connection with the Trade Marks under
           this Agreement issued by a responsible insurer approved in advance by
           the Company providing coverage approved in advance by the Company and
           otherwise in terms approved in advance by the Company. Unless
           otherwise agreed such insurance shall:

     9.1.1 include insurance coverage for the Distributor's obligation to
           indemnify the Company in accordance with clause 9.3.

     9.1.2 be for the benefit of the Distributor but shall name the Company as
           co-insured and payee.

     9.1.3 remain in effect for the initial and any subsequent term of this
           Agreement so long thereafter as the Distributor may continue to use
           any of the Trade Marks.



                                       13
<PAGE>   17



     9.1.4 provide that 30 days written notice be furnished to the Company prior
           to cancellation, or prior to any material modification or change.

     9.2   Upon the execution of this Agreement, the Distributor shall promptly
           furnish the Company with a certificate evidencing that insurance has
           been effected in accordance with the provisions of this clause.

     9.3   Subject to the provisions of clause 18, the Distributor agrees to
           defend, indemnify and hold harmless the Company and the Proprietor,
           including all subsidiaries, affiliates and assignees of the Company
           and the Proprietor against all claims, judgements, actions, debts or
           rights of action, of whatever kind, and all costs, including
           reasonable legal fees, arising out of the promotion, marketing,
           distribution or sale of the Products by the Distributor under this
           Agreement.

     10.   BOOKS AND RECORDS

     10.1  The Distributor shall keep full and correct records and accounts
           showing details of the Products imported, distributed, bartered and
           sold by it pursuant to this Agreement and otherwise containing such
           information as may be necessary to enable the Company to monitor
           compliance with this Agreement.

     10.2  The Distributor shall throughout the continuance of this Agreement
           give access to its records and accounts at all reasonable times (and
           in any event within 48 hours of request) to the Company or any agent
           or accountant authoriauthorized by the Company. Such person may take
           extracts from or copies of any such records or accounts.



                                       14
<PAGE>   18



     10.3 In the event that this Agreement is terminated for any reason the
          Distributor shall provide the same access to its records and accounts
          for a period of one year thereafter.

     10.4 Throughout this Agreement the Distributor agrees to provide to the
          Company not later than one (1) calendar month after its preparation a
          copy of the Distributor's most recent year-end financial accounts
          (including balance sheet and profit and loss accounts) certified by an
          independent chartered accountant (or the equivalent in the Territory).

     11.  REPORT AND REMITTANCE FORMS

     11.1 Within forty five (45) days of the end of each Quarter the Distributor
          shall provide to the Company a report showing:

     (a)  details of all sales of each of the Products made during that Quarter
          to include the quantities of each type of the Products sold and a
          breakdown of such sales by country and distribution channel together
          with details of the computation from gross sales to net sales;

     (b)  estimates of anticipated sales of each of the Products for such period
          as the Company may request;

     (c)  details of the quantity and value of all Quarter.

     11.2 Within ninety (90) days of the end of each Contract Year the
          Distributor shall provide to the Company a report showing a summary of
          the data set out in clause 11. 1 for the relevant Contract Year.



                                       15
<PAGE>   19



     11.3 If so requested by the Company, any report provided under sub clauses
          11. 1 or 11.2 shall be provided on forms furnished by the Company and
          shall be confirmed as correct by a senior executive of the Distributor
          approved by the Company.

     11.4 The rendering of any report or the payment of any royalty shall not
          prejudice any right of the Company to recover any additional amount
          that may be found to be due in respect of royalties or otherwise and
          no such right shall be deemed to have been waived by the lapse of time
          or any act or omission on the part of the Company.

     12.  PACKAGING AND ADVERTISING OF PRODUCTS

     12.1 The Distributor shall ensure that all the Products are marked with
          such of the Trade Marks as may be appropriate and as prescribed in
          writing by the Company from time to time.

     12.2 The Distributor will imprint irremovably, legibly and prominently on
          the Products and on any packaging, labelling and advertising or
          promotional materials used in connection therewith, or otherwise, any
          notice of trade marks and/or copyright together also with such
          designation of ownership, registration and/or licence as shall
          reasonably be requested by the Company including without limitation
          the following:

     (a)  the symbol (R) in the upper right-hand comer next to the Trade Marks
          which are registered with the appropriate patent and/or trade mark
          body in the Territory; and

     (b)  the symbol (TM) in the upper right-hand comer next to the Trade Marks
          which are not registered with the- appropriate patent and trademark
          body in the Territory.



                                       16
<PAGE>   20



     12.3 No other marks or wording shall appear on any of the Products,
          packaging, labelling, advertising or promotional materials unless the
          Distributor first obtains the written consent of the Company PROVIDED
          THAT the Distributor may continue to use the Distributor's name and
          mark on hang tags, packaging materials and in advertising and on
          promotional materials in accordance with the directions of the
          Company.

     12.4 The Distributor shall, at its expense, furnish to the Company;

     (a)  at the earliest opportunity, mock ups of all matter which is proposed
          to be used by the Distributor containing or displaying any of the
          Trade Marks including, without limiting the generality of the
          foregoing, any label, brochure, packaging, business card, stationery,
          letterhead, advertisement, point-of-sale and other publicity
          materials, telephone or other directory entry, sign, decal and prior
          to release final copies of all Display Material.

     (b)  In the event that the Company does not raise any questions relating to
          the nature, quality or workmanship of such samples within twenty-eight
          (28) days of receipt by the Company of such samples, the samples shall
          be deemed satisfactory for the use pursuant to this Agreement. The
          Distributor's obligations hereunder shall extend to all matters made
          or used by its agents or sub-contractors appointed in accordance with
          this Agreement. Wherever possible Display Material will be based on or
          incorporate Display Material provided by the Company in order to
          ensure that the brand image projected by the Products is in conformity
          with the Company's world wide brand profile and image.

     12.5 The Distributor shall not use any of the Trade Marks as part of its
          corporate, business or trading name.



                                       17
<PAGE>   21



     12.6 The Distributor shall use the Trade Marks only in accordance with the
          policies and guidelines and/or instructions laid down by the Company
          or its agent from time to time.

     13.  QUALITY CONTROL

     13.1 The Distributor shall ensure that all uses of the Trade Marks are
          consistent with the high quality, character and image of the Trade
          Marks and shall comply with any direction reasonably made by the
          Company relating to the quality of the Products and/or their packaging
          and/or any related promotional or advertising material.

     13.2 The Distributor shall store and transport the Products in conditions
          that will preserve the Products and their packaging in good condition
          and shall comply with any reasonable requests from the Company in such
          regard.

     13.3 If requested, the Distributor shall, give all reasonable assistance in
          locating and recovering any defective Products and, in particular,
          shall comply (and procure so far as it is able that its customers
          comply) with any product recall procedure adopted by the Company.

     14.  CONFIDENTIAL INFORMATION

     14.1 All Confidential Information shall be used only for the performance of
          this Agreement and shall be kept confidential by the Distributor and
          shall be revealed to directors, officers, employees and agents of the
          Distributor only to the extent necessary to enable the Distributor to
          fulfil its obligations and responsibilities pursuant to this
          Agreement. The Distributor shall impose upon all such directors,



                                       18
<PAGE>   22



          officers, employees and agents to whom any Confidential Information is
          revealed obligations of confidentiality and restrictions on use in
          respect thereof identical to these herein contained and shall be
          responsible for any breach of any of such obligations by any of such
          directors, officers, employees or agents. This provision shall not
          apply to any Confidential Information which is in the public domain or
          to the extent to which it may be required to be disclosed by law or
          which is obtained by the Distributor in good faith from a third party
          with the right to disclose it. In the event that the Distributor is
          required to make any Confidential Information public as a result of
          the requirements of any law or regulatory authority (including any
          stock exchange) the Distributor will inform the Company beforehand and
          use its best endeavours to ensure that any such disclosure is carried
          out in a manner which the Company believes causes as little harm as
          possible to the Company's reasonable commercial interests.

     14.2 The Company makes no warranty as to the accuracy, sufficiency and
          suitability for use by the Distributor of advice, information,
          technical assistance or know-how provided by the Company for use by
          the Distributor in the marketing of any Products and assumes no
          responsibility or liability, including liability for direct, indirect
          or consequential damages of any nature which arise out of or in
          connection with the Distributor's use thereof.

     15.  SUFFICIENT USE OF TRADE MARKS

     In order to preserve the Company's ownership of the Trade Marks in the
     Territory, the Distributor will take all steps reasonably required to
     ensure that sufficient use of the Trade Marks is made to avoid abandonment
     by reason of non-use.



                                       19
<PAGE>   23



     16.  BENEFIT OF USE OF TRADE MARKS

          The Distributor acknowledges that


     (i) all use of the Trade Marks in any form and for any class of goods or
     services shall accrue without cost to the Company to the benefit of the
     Company; and

     (ii) except as otherwise provided in this Agreement it has no right in any
     Intellectual Property Rights or any associated goodwill nor any right to
     use any Intellectual Property Rights.

     17.  RIGHTS NOT TO BE CHALLENGED

     17.1 The Distributor acknowledges the validity of the Intellectual Property
          Rights and shall not at any time during the continuance of this
          Agreement or thereafter directly or indirectly, by itself or through
          its directors, officers, employers, agents or any person in which the
          Distributor holds any issued share capital or controls, whether
          directly or indirectly, the composition of its board of directors or
          any of its voting power, contest or assist any other person in
          contesting the validity of the Intellectual Property Rights or the
          right, title and interest of the Company to the Intellectual Property
          Rights.

     17.2 Except as provided in this Agreement, the Distributor shall not use or
          register whether during the continuance of this Agreement or
          thereafter, any business or trade name, licensor name, trade mark or
          labelling or packaging design which incorporates or which is
          substantially identical with or deceptively or confusingly similar to
          any of the Trade Marks or other Intellectual Property Rights.

     17.3 The Distributor shall not supplement or interfere with or obliterate
          the Trade Marks applied to the Products.

     17.4 The Distributor shall take due care not to do or cause to be done any
          action or thing which affects the validity of the Intellectual
          Property Rights or the Company's ownership thereof or



                                       20
<PAGE>   24



          jeopardises the maintenance thereof, either during the continuance of
          this Agreement or thereafter In the event that the validity or the
          maintenance of the registration of any of the Trade Marks or other
          Intellectual Property Rights is in jeopardy than the Distributor, if
          reasonably requested by the Company, will cease distribution of such
          of the Products as are affected by such potential invalidity.

     17.5 Nothing contained in this Agreement, whether express or implied, shall
          give to the Distributor any claim, right, title or interest in the
          Confidential Information, and the Distributor acknowledges and agrees
          that all rights in such Confidential Information belong to and are the
          exclusive property of the Company and that, during and after any
          termination of this Agreement, the Distributor will not claim any
          rights in or to such Confidential Information nor dispute or assist
          others to dispute the Company's ownership thereof.

     18.  INFRINGEMENTS

     18.1 (a)  If any suspected or actual infringement or illegal use of the
               Intellectual Property Rights or any wrongful use of the
               Confidential Information by any person in the Territory or
               elsewhere shall come to the attention of the Distributor, the
               Distributor shall immediately give notice thereof in writing to
               the Company. The Company shall, at its absolute discretion, take
               whatever action it deems appropriate at its own expense and shall
               have the sole conduct of any such action. If requested, the
               Distributor will provide such assistance as may be reasonably
               required in any suit or action subject to the payment by the
               Company of the Distributor's direct expenses in the provision of
               such assistance.

     (b)  If the Company initiates any action respect of any such conduct, all
          compensation recovered whether at trial or by way of settlement shall
          belong entirely to the Company.

     18.2 (a)  If the Distributor receives any notice, claim or proceedings
               alleging trade mark infringement, passing off, copyright
               infringement, patent infringement, or related



                                       21
<PAGE>   25



               causes of action arising out of the Distributor's use of the
               Intellectual Property Rights or the Confidential Information the
               Distributor shall notify the Company forthwith and shall not make
               any admissions or take any substantive steps in connection
               therewith without the prior written consent of the Company.

     (b)  If such legal action referred to in 18.2(a) above relates to use by
          the Distributor in accordance with the terms of this Agreement then
          the Company shall defend or assist in the defence of such litigation,
          and shall bear all costs and expenses of such defence. If any damages
          or awards are assessed against the Distributor in such litigation and
          provided that the Distributor has in fact complied with the relevant
          terms of this Agreement they shall be satisfied and paid by the
          Company.

     (c)  If such legal action referred to in 18.2(a) above relates to use
          otherwise than in accordance with the terms of this Agreement, the
          Company, in its sole discretion shall choose whether to defend or
          assist in the defence of such action. If the Company chooses not to
          defend or assist in the defence of such an action, the Distributor
          shall bear all of its own costs and expenses and shall be responsible
          for any awards against it or the cost of any settlement or compromise.
          If the Company chooses to defend or assist in the defense the
          Distributor shall reimburse the Company for all direct expenses
          incurred by the Company and for all costs and damages awarded against
          the Company.

     19.  SALES OUTSIDE THE TERRITORY

     19.1 The Distributor will not sell or cause or permit to be sold any
          Products outside the Territory, nor will the Distributor, directly or
          indirectly, sell or cause or permit to be sold Products in the
          Territory where, to its knowledge, such Products are intended for
          re-sale or distribution outside the Territory. In particular the
          Distributor shall not engage in advertising by reference to the Trade
          Marks aimed at any place outside the Territory or use any branch or
          distribution depot outside the Territory for the sale or marketing of
          the Products and in the case of proposed sales over the internet will
          specifically state that Products are only



                                       22
<PAGE>   26



          available in the Territory. The Distributor will use its best
          endeavours lawfully to prevent any person from distributing or selling
          the Products from the Territory.

     19.2 During this Agreement the Company shall refer all enquiries received
          by it relating to sales of the Products in the Territory to the
          Distributor. During this Agreement the Distributor shall refer to the
          Company all enquiries it receives for the Products for sales outside
          or export from the Territory.

     20.  SALES BY THE COMPANY IN THE TERRITORY

     20.1 The Company will not sell or cause or authorise to be sold in the
          Territory any products similar to the Products and bearing the Trade
          Marks provided that the Company and its authorised licensees and/or
          distributors may sell to retailers operating both inside and outside
          the Territory who may purchase Products outside the Territory all or
          some of which are to be sold in the Territory at retail level whether
          themselves or through an affiliate.

     20.2 Nothing contained in this Agreement shall preclude the Company
          manufacturing or authorising the manufacture of Products or other
          goods in the Territory for sale to the Distributor or for export.

     21.  SALE OF COMPETITIVE PRODUCTS

     Unless specifically authorised in writing so to do by the Company, the
     Distributor will not, directly or indirectly, by itself or through its
     directors, officers employees, agents or any person in which the
     Distributor holds any issued share capital or controls whether directly or
     indirectly the composition of its board of directors or any of its voting
     power, sell or distribute any products in the Territory or procure the sale
     or distribution of any products for sale in the Territory which are in
     direct competition with the Products. If the Distributor proposes to, sell
     any other products (which are not in direct competition), the Distributor
     shall give the Company at least 60 days prior written notice of its
     intention to sell such products. If the Company believes that the products
     are in direct competition with


                                       23
<PAGE>   27
     the Products, it shall notify the Distributor whereupon the Chief
     Executives of the Company and the Distributor shall meet and discuss in
     good faith whether the products are directly competitive or not.

     22.  TERMINATION

     22.1 The Company may (without prejudice to any other rights of termination
          available to it) terminate this Agreement forthwith by giving notice
          of termination to the Distributor in the circumstances set out in
          clause 6 or upon any of the following events:

     (a)  if any sum payable to the Company or to any authorised supplier of any
          Products hereunder is not paid by the due date for payment;

     (b)  if the Distributor commits any other breach of any of its obligations
          hereunder and fails to remedy the same (if capable of remedy) within
          thirty (30) days of the date of service by the Company of a notice
          specifying the breach in question and requiring it to be remedied;

     (c)  if the Distributor is unable to pay its debts as they fall due or
          suspends payment of any of its debts or enters into any arrangement
          with creditors for the payment of any of its debts;

     (d)  if an administrator, receiver, manager or liquidator is appointed in
          respect of the Distributor or any of its assets;

     (e)  if a winding up resolution is passed or a winding up or bankruptcy
          order is made in respect of the Distributor or the Distributor goes
          into liquidation;

     (f)  if there is any Change of Control;

     (g)  if any event or act occurs or is done by or in relation to the
          Distributor which is equivalent or analogous to any of those described
          in any of sub-clauses 22. 1 (c), (d) and (e);



                                       24
<PAGE>   28
     (h)  if the Distributor shall at any time directly or indirectly contest or
          assist any other licensee or person in contesting the validity of the
          Intellectual Property Rights or the right title and interest of the
          Company;

     (i)  if any marketing plan referred to in sub-clause 8.2 is not agreed at
          the time referred to in sub-clause 8.2;

     22.2 Where the Company is entitled to terminate this Agreement under
          sub-clause 22.1 then the Company shall as an alternative to
          termination have the right to amend the Agreement in all or any of the
          following ways:

     (a)  by converting some or all of the rights granted under sub-clause 3.1
          from exclusive rights to non-exclusive rights; and/or

     (b)  by removing any trade marks, trade names, service marks, style names,
          trade dress, logos and/or other trade symbols from the definition of
          "Trade Marks"; and/or

     (c)  by removing any products from the definition of "Products"; and/or

     (d)  by removing any country or countries or any part or parts of any
          country or countries from the definition of "Territory".

     Any such amendment shall be made by means of a notice served on the
Distributor and shall take effect from the date on which such notice is served
or such later date as may be specified in the notice.

     22.3 The Distributor may (without prejudice to any other rights of
termination available to it) terminate this Agreement forthwith by giving notice
of termination to the Company upon any of the following events:



                                       25
<PAGE>   29



     (a)  if the Company commits any breach of any of its obligations hereunder
          and fails to remedy the same (if capable of remedy) within thirty (30)
          days of the date of service by the Distributor of a notice specifying
          the breach in question and requiring it to be remedied;

     (b)  if the Company is unable to pay its debts as they fall due or suspends
          payment of any of its debts or enters into any arrangement with
          creditors for the payment of any of its debts;

     (c)  if an administrator, receiver, manager or liquidator is appointed in
          respect of the Company or any of its assets;

     (d)  if a winding up resolution is passed or a winding up or bankruptcy
          order is made in respect of the Company or the Company goes into
          liquidation;

     (e)  if any event or act occurs or is done by or in relation to the Company
          which is equivalent or analogous to any of those described in any of
          sub-clauses 22.3 (b), (c) and (d).

     22.4 Any exercise by either party of any of its rights under this clause 22
          shall be without prejudice to any accrued rights of either party under
          this Agreement.

     22.5 Without prejudice to the rights, powers and remedies of the Company
          otherwise under this Agreement the Distributor will pay to the Company
          interest at a rate three per cent (3%) per annum. above the Midland
          Bank p1c, England, Base Rate for the time being in force on any monies
          due but unpaid for fourteen (14) days by the Distributor on any
          account whatsoever pursuant to this Agreement, such interest to be
          calculated from the date upon which such monies become due and payable
          until payment of such monies in full. Such interest will be compounded
          monthly and if not paid shall itself bear interest.

     23.  RIGHTS AND OBLIGATIONS ON TERMINATION

     23.1 Upon the termination of this Agreement, the Distributor shall promptly
          return all Confidential Information together with any copies and shall
          not thereafter make any use of



                                       26
<PAGE>   30



          such Confidential Information except insofar as the Distributor may
          have been specifically released by the Company from its obligations of
          confidentiality hereunder.

     23.2 The Company or its nominee may, by giving the Distributor written
          notice within thirty (30) days following termination of this
          Agreement, purchase from the Distributor any part or all of the
          Products not previously sold by the Distributor. The price payable for
          such Products (or materials) shall be the Distributor's purchase cost
          (including duties, taxes and delivery charges) or the net realisable
          market value of such Products in the Territory whichever is the lower.

     23.3 Should the Company fail to purchase the Products pursuant to clause
          23.2, then notwithstanding such termination:

     (a)  the Distributor shall have the right for a reasonable period up to but
          not exceeding six (6) calendar months after termination to sell the
          Products manufactured or imported by it prior to termination in the
          Territory under the Trade Marks in accordance with the terms of this
          Agreement provided that the price charged for the Products shall be at
          least sixty-five (65) per cent of the price prevailing immediately
          prior to termination;

     (b)  After termination of the above sell-off period the Distributor shall
          immediately destroy in the presence of the Company or its
          representative any of the Products which are not then sold;

     (c)  all other provisions, terms and conditions of this Agreement shall
          continue to apply during the period referred to in clause 23.3(a)
          except that the Company shall be at liberty to appoint another person
          as the distributor of the Products or the licensee of the Trade Marks
          or both; and

     (d)  the six month period referred to in sub-clause 23.3(a) will not be
          extended by an event of force majeure.



                                       27
<PAGE>   31



     23.4 After termination of this Agreement (but subject to clause 23.3) the
          Distributor:

     (a)  shall cease using the Trade Marks and other Intellectual Property
          Rights in the Territory and shall not thereafter use or register any
          words or marks that incorporate or are substantially identical with or
          deceptively similar to or so closely resemble any one or more of the
          Trade Marks so as to be likely to cause confusion;

     (b)  shall execute any and all necessary documents with respect to the
          cancellation of the Distributor as registered user of the Trade Marks;
          and

     (c)  shall not knowingly do any act or thing that would have the effect of
          causing another person in the Territory to believe that the
          Distributor is still associated or connected with the Company.

     23.5 Notwithstanding the termination of this Agreement:

     (a)  the provisions of clause 14 shall not terminate but shall continue to
          remain in full force and effect;

     (b)  the Distributor shall continue to pay any royalties or other
          applicable payments due hereunder and shall continue to provide access
          to its records and accounts and furnish information and reports in
          accordance with provisions of clauses 5, 10 and 11;

     (c)  the Company and the Distributor shall continue to have rights and
          remedies with respect to damages and any other relief for breach of
          this Agreement on the part of the other occurring prior thereto; and

     (d)  any provisions of this Agreement necessary to enable the parties to
          enforce their respective rights and obligations hereunder shall remain
          in full force and effect.



                                       28
<PAGE>   32



     23.6 Upon the expiry or termination of this Agreement for any cause
          whatsoever except in accordance with clause 22.2(f) the Distributor
          shall if requested supply to the Company a list of the Distributor's
          customers for the Products.

     23.7 The Distributor acknowledges that no rights whatsoever are extended to
          it beyond the expiration or termination of this Agreement other than
          as provided in this clause 25 and further acknowledges that it shall
          not be entitled to any compensatory payment on the expiration or
          termination of this Agreement.

     24.  REPRESENTATIONS AND WARRANTIES

     24.1 The Company represents and warrants that:

     (a)  it is a corporation duly incorporated and validly existing under the
          laws of its jurisdiction of incorporation as set forth on page I of
          this Agreement;

     (b)  it has full corporate power and authority to enter into this Agreement
          and to carry out the transactions contemplated hereby;

     (c)  it is the owner of the Trade Marks.

     The Company at its sole discretion may, upon written notice to the
Distributor, add or remove any trade marks to or from Schedule 3.

     24.2 The Company does not warrant that the Trade Marks may safely be used
          as a trade mark or business name in the Territory.

     24.3 The Distributor represents and warrants that:

     (a)  it is a corporation duly incorporated and validly existing under the
          laws of its jurisdiction of incorporation as set forth on page I of
          this Agreement;

                                       29
<PAGE>   33



     (b)  it has full corporate power and authority to enter into this Agreement
          and to carry out the transactions contemplated hereby;

     (c)  its board of directors has taken all action required by the law of its
          jurisdiction of incorporation, its memorandum or articles of
          association, by-laws or similar constituent documents or otherwise to
          authorise execution of this Agreement and the consummation of the
          transactions contemplated hereby;

     (d)  this Agreement is a valid and binding agreement by it and enforceable
          against it in accordance with its terms;

     (e)  neither the execution of this Agreement nor the consummation of the
          transactions contemplated hereby will violate any statute or law or
          any judgement, decree, order, regulation or rule of any court or
          governmental agency or authority in the Territory; and

     (f)  except for any required approvals of governmental agencies or
          authorities which it will use its best efforts to obtain, no consent
          of any person is necessary to the consummation of transactions
          contemplated hereby. In the event that any required consents are not
          obtained or are given on terms not acceptable to the Company, the
          Company shall be entitled upon receipt of knowledge thereof forthwith
          to terminate this Agreement.

     (g)

     25.  AGENCY RELATIONSHIP

     Except as otherwise provided herein, nothing in this Agreement shall render
one party the agent of the other in relation to any rights or obligations
granted under this Agreement or any transaction carried on pursuant to it, and
under no circumstances shall either party pledge or attempt to pledge the credit
of the other or incur any credit on behalf of the other.



                                       30
<PAGE>   34



     26.  NOTICES

     Any notice served by one party upon the other shall be in writing in the
English language and shall be delivered personally (including by courier) or be
sent by facsimile. Such notice or document shall be deemed to have been received
in the case of personal delivery when delivered or, if sent by facsimile, on the
day following that on which the facsimile was sent, PROVIDED THAT the party
serving such notice shall send a copy by registered air mail within two (2) days
after sending the notice.

Such notice shall be addressed as follows (or at such other place designated in
writing by the relevant party);

     (a)           If to the Company:

                   BERGHAUS LIMITED

     1, Stephenson Road,
     Stephenson Industrial Estate,
     Washington, Tyne & Wear, NE37 3HR, ENGLAND.

     Attention: Peter Smith
     Telephone: 44 191415 0200
     Facsimile: 44 191416 9886

     With information copy but not for service to:


     PENTLAND GROUP PLC
     The Pentland Centre
     Lakeside, Squires Lane
     Finchley, London N3 2QL
     England



                                       31
<PAGE>   35



     Attention:    The Legal Department
     Telephone:    44 181346 2600
     Facsimile:    44 181343 4876

     (b)           If to the Distributor:
                   X DOGS-COM INC.
                   527, Marquette Avenue,
                   Suite 2130,
                   Minneapolis, Minnesota 55402,
                   UNITED STATES OF AMERICA
                   Attention: Kent Rodriguez
                   Telephone: 1612 359 4027
                   Facsimile: 1612 359 9017

     27.  ASSIGNMENT

     27.1 The Company may assign any of its rights or delegate any of its duties
          arising out of or under this Agreement.

     27.2 The Distributor may not assign any of its rights or delegate any of
its duties arising out of or under this Agreement without the prior written
consent of the Company which consent may be withheld by the Company in its
absolute discretion.

     27.3 In the event of a Change of Control the Distributor shall immediately
notify the Company in writing giving full particulars of such Change of Control.

     27.4 Should ownership of the Trade Marks be assigned by the Company then,
upon such assignment, the Company shall assign all of its rights and delegate
all of its duties under this



                                       32
<PAGE>   36



Agreement to the assignee of the Trade Marks and the Distributor shall, with
effect from the date of such assignment, release and discharge the Company from
all claims and demands whatsoever in respect of this Agreement relating to the
period after the date of the assignment and shall, from the date of such
assignment, accept the assignee as the owner of the Trade Marks.

     27.5 On the request of the Company, the Distributor will execute,
acknowledge and deliver all such documents, deeds, agreements or other
instruments as may be requested by the Company to give effect to clause 27.4.

     28.  LEGAL AND ETHICAL REQUIREMENTS

     28.1 The Distributor shall at its own expense ensure that all local and
national laws, rules, regulations and other requirements and codes of practice
applicable in the Territory and all policies and ethical and other standards
from time to time specified by the Company in respect of the treatment of any
persons involved in the sale of any Products hereunder or otherwise in respect
of any human rights or other issues are complied with in relation to all
activities of the Distributor and/or its authorised subcontractors under this
Agreement.

     28.2 The Distributor shall ensure that adequate records are maintained to
demonstrate compliance with the obligations contained in sub-clause 28.1 and
shall as and when requested by the Company:

     (a)  furnish or cause to be furnished to the Company such proof of
          compliance with the obligations contained in sub-clause 28.1 as the
          Company may require;

     (b)  permit the Company or procure the Company to be permitted to undertake
          such inspection of any activities of the Distributor as the Company
          may require;



                                       33
<PAGE>   37



     (c)  permit the Company or procure the Company to be permitted to inspect
          any records required to be maintained under this sub-clause 28.2 and
          to take copies thereof

     29.  LOCAL LAW COMPLIANCE

     29.1 The Distributor shall at its own expense comply with all relevant
          legislation and other requirements of the Territory in connection with
          its activities under this Agreement The Distributor shall furnish
          proof of such compliance to the Company when and if the Company
          requires.

     29.2 As soon as possible after the execution of this Agreement the Company
          and the Distributor shall if requested by the Company, at the expense
          of the Distributor, execute such further documents as may be necessary
          to make and make joint application to record for the registration of
          the Distributor as a registered or permitted user of the Trade Marks
          in respect of such of the Trade Marks as are registered or as become
          registered to the extent provided by the law of the Territory.

     29.3 The Distributor shall obtain any consents, licences and approvals and
          comply with any formalities required for the performance of this
          Agreement and payment of royalties. In the event that the Distributor
          is unable to obtain any such consent, licence or approval within 3
          months of the date of signature of this Agreement the Company shall
          have the right to terminate this Agreement by giving thirty (30) days
          notice in writing to the Distributor.




                                       34
<PAGE>   38


     30.  GOVERNING LAW

     30.1 The formation, construction, validity and performance of this
          Agreement shall be governed in accordance with the laws of England and
          Wales.

     30.2 The parties irrevocably submit to the exclusive jurisdiction of the
          courts of England and Wales. Such submission shall not limit the right
          of the Company to commence any proceedings arising out of this
          Agreement in any jurisdiction it may consider appropriate.

     30.3 The Distributor waives any objection to the venue of any legal process
          on the basis that the process has been brought in an inconvenient
          forum.

     31.  FORCE MAJEURE

     31.1 Neither party shall be liable for delay or failure in the performance
          of this Agreement arising from any one or more of the following causes
          which shall forthwith be notified to the other upon such delay or
          failure:

     (a)  act of God or public enemy or war (declared or undeclared);

     (b)  acts of persons engaged in subversive activities or sabotage;

     (c)  fires, floods, explosions or other catastrophes;

     (d)  epidemics or quarantine restrictions;

     (e)  strikes, similar labour disruptions or public demonstrations and
          unrest;

     (f)  freight embargoes;

     (g)  unusually severe weather;

     (h)  delays of a supplier of either party due to any of the above causes or
          events; any other causes, similar or dissimilar, beyond the reasonable
          control of the party); or

     (i)  (in the case of the Distributor) a failure by the Company to meet
          agreed delivery dates for products



                                       35
<PAGE>   39



     PROVIDED THAT in any case due diligence is exercised to cure such causes
     and resume performance and the time for performance by such party shall be
     extended by a period of any such delay.

     31.2 If one or more causes of force majeure are asserted by either party as
          a basis for nonperformance of this Agreement and such non performance
          continues for a consecutive period of ninety (90) days the other party
          shall have the right to terminate this Agreement forthwith by giving
          written notice to that effect.

     32.  WHOLE AGREEMENT

     This Agreement contains the entire agreement and understanding between the
     parties hereto with regard to its subject matter and supersedes all prior
     agreements whether written or oral.

     33.  AGREEMENT SEVERABLE

     This Agreement is severable and if any provision shall be held invalid,
     illegal or which reflects the original intent of the parties shall be
     substituted for such invalid or unenforceable provision provided always
     that if the reasonable opinion of either party any such severance
     materially affects the commercial basis of this Agreement and no agreement
     can be reached by the parties as to the means by which such matters can be
     resolved, such party shall have the right to terminate this Agreement with
     immediate effect upon giving 90 days written notice to the other containing
     the reason(s) why the commercial basis has been materially affected.



                                       36
<PAGE>   40



     34.  AGREEMENT TO CO-OPERATE

     Each party hereto, upon the reasonable request of the other, will execute,
     acknowledge and deliver, or cause to be executed, acknowledged and
     delivered, all such further documents, deeds, assignments, licenses,
     transfers or conveyances as may be required both to satisfy the requisites
     of the law of the Territory and to give full effect to the terms and
     conditions of this Agreement.

     35.  WAIVER AND VARIATION

     A provision of or a right created under this Agreement may not be waived or
     varied except in writing signed by a duly authorised representative of the
     party or parties to be bound. No delay or failure of either party in
     exercising or enforcing any of its rights or remedies shall operate as a
     waiver thereof nor shall any partial exercise of such right or remedy
     preclude any other or further exercise of such right.

     36.  EXECUTION IN COUNTERPART

     This Agreement may be executed in any number of counterparts each of which
     shall be deemed an original and all of such counterparts taken together
     shall be deemed to constitute one and the same instrument.

     EXECUTED by the parties as an agreement the day and year first above
     written.

     SIGNED on behalf of the Company
     -------------------------------
     by its authorized representative

     in the presence of:

     ///Signed///                                ///Signed///
     -----------------------------               ------------------------------
     Witness                                     Representative



                                       37
<PAGE>   41



   D. Kennedy                                       P.A. Smith
----------------------------------                ------------------------------
Name                                              Name

Address:                                          Title: President
--------                                          ------
Berghaus Ltd.                                     Date: 10/09/99
                                                  -----

SIGNED ON BEHALF OF THE DISTRIBUTOR
-----------------------------------
by its authorised representative
in the presence of:

/// Signed///                                     ///Signed///
----------------------------------                ------------------------------
Witness                                           Representative

 S.B. Carlson                                        Kent A. Rodriguez
----------------------------------                ------------------------------
Name                                              Name

Address:                                          Title:
--------                                          ------
80 S. 8th Street                                  CEO
36th Floor                                        Date:
                                                  -----
Mpls., MN 55402                                   9/10/99





                                       38
<PAGE>   42


                                   SCHEDULE 1

                                    PRODUCTS

The following Berghaus ranges are covered by this Agreement:

Footwear:               Trekking, Cross Terrain, Freescape

Apparel:                Extrem, Performance, Freescape, ACL

Rucsacs:                Extrem, Performance, Freescape

Accessories:            Socks, hats, gloves, gaiters.

The Company will not grant distribution rights for other Berghaus branded
footwear, apparel, rucsacs or accessories to any third party within the
Territory without prior discussion with the Distributor.

In the case of any other products which would normally be sold mainly through
specialist outdoor retailers the Company may, at its sole discretion, grant to
the Distributor the right to distribute such products and provided that;

(a)  the Distributor can satisfy the Company that it will be able to market and
     sell the products to best effect; and

(b)  the grant of rights to such products does not conflict with the Company's
     strategy for sale of such products whether in the Territory or elsewhere.

In the case of other products (not normally sold mainly through specialist
outdoor retailers) the Company may, at its sole discretion, grant to the
Distributor the right to distribute such products but shall not be required to
do so.



                                       39
<PAGE>   43



                                   SCHEDULE 2

                                    TERRITORY

           United States of America, its territories and possessions.

                                     Canada

                                     Mexico




                                       40
<PAGE>   44




                                   Schedule 3

                                   TRADE MARKS

<TABLE>
<CAPTION>
MARK                        NUMBER                                                    CLASS
<S>                         <C>                                        <C>
USA
---
            Berghaus        75/592487 (pending)18,25

CANADA
------
            Berghaus        651778                                     N/A (equivalent goods to 18, 25)
            Berghaus        651778(l)                                  N/A (equivalent goods to 25)

MEXICO
------
            Berghaus        169579                                     18
            Berghaus        169587                                     25
</TABLE>

                                       41