Document:

exv10w26

 

EXHIBIT 10.26

AGREEMENT

     This Agreement (“Agreement”) is entered into as of July 14, 2004
(“Effective Date”) by and among Stamps.com Inc. (“Stamps.com”), on the one
hand, and eBay Inc. (“eBay”) and PayPal, Inc. (“PayPal”) (Stamps.com, eBay, and
PayPal are referred to throughout this Agreement as “Party” or “Parties,”
depending on context), on the other hand, as follows:

Agreement

     NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter set forth, the parties agree as follows:

     1. Payments

     (a) eBay shall pay Stamps.com (redacted) up front, designated for
settlement, within four (4) business days of execution and delivery of this
Agreement.

     (b) eBay shall pay Stamps.com (redacted), designated for software
and patent licensing and software support.

     2. Dismissal of the Action

     Within two (2) business days after the execution and delivery of this
Agreement and the payment specified in Section 1(a), above, Stamps.com shall
cause to be filed with the Superior Court of the State of California, County of
Los Angeles, in the action bearing Case No. BC 298001 and entitled Stamps.com
Inc. v. PayPal Inc. and eBay Inc. (“Action”) a fully executed Request For
Dismissal with prejudice of the entire Action, including all cross-claims.

     3. Licenses from Stamps.com

     (a) Stamps.com hereby grants eBay and PayPal a license to use, develop
and launch as a product or application on the websites of www.ebay. or www.paypal.com the software
that Stamps.com has already delivered to PayPal (“Software”), for a period of
three years commencing on the Effective Date of this Agreement, in the
discretion and option of eBay.

     (b) Stamps.com will provide support for the Software for three years
commencing on the Effective Date of this Agreement.

 

 

     (c) Stamps.com hereby grants a non-exclusive, non-sublicensable, limited
patent license to eBay for three years commencing from the date of the
settlement and license agreement for (i) the Software and (ii) the current
eBay/USPS shipping offering or a substantially similar offering (the phrase
“substantially similar” shall be defined under principles of U.S. Copyright
law), under United States Patents (redacted) This license shall
extend to and be for the benefit of eBay’s and PayPal’s customers to the extent
such customers are using eBay’s and PayPal’s websites.

     (d) Except as specified in this Section 3, no Party grants to any other
Party hereto any licenses to any other intellectual property rights it now owns
or hereafter may own.

     4. Releases

     Except for the rights and obligations created or preserved by this
Agreement and License, Stamps.com, on the one hand, and eBay and PayPal, on the
other hand, for themselves and their respective agents, employees,
representatives, predecessors, successors, affiliates, parent and subsidiary
entities, assigns, shareholders, officers, directors, attorneys, insurers,
heirs, executors and administrators, release and forever discharge each other
and their agents, employees, representatives, predecessors, successors,
affiliates, parent and subsidiary entities, assigns, shareholders, officers,
directors, attorneys, insurers, heirs, executors and administrators from any
and all claims, rights, demands, obligations, agreements, contracts,
representations, promises, liens, accounts, debts, liabilities, expenses,
damages, costs, interest, attorney’s fees, judgments, orders, and causes of
actions of every kind and nature, whether known or unknown, suspected or
unsuspected, existing or claimed to exist, which Stamps.com, on the one hand,
and eBay and PayPal, on the other hand, ever had, now have, or claim to have
against the other with respect to the subject matter of the Original License
Agreement or the Action, including all claims that were or could have been
asserted by any party in the Action.

     All parties hereto acknowledge that they have read, considered and
understand the provisions and significance of Section 1542 of the California
Civil Code, which presently provides as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

     The parties hereto expressly waive any and all rights they have or may
have under Civil Code § 1542 as now worded or hereafter amended. In connection
with this waiver, the parties acknowledge that they are aware that they may
hereafter discover claims presently unknown or unsuspected or facts in addition
to or different from those which they now know or believe to be true with
respect to the claims, matters and causes

 

 

of action released by this Settlement Agreement. Nevertheless, all parties
intend by this Settlement Agreement to release fully, finally and forever all
matters released herein. In furtherance of such intention, the releases as set
forth in this Settlement Agreement shall be and remain in effect as full and
complete releases of such matters released herein notwithstanding the discovery
or existence of any additional or different claims or facts relevant thereto.
It is expressly understood and agreed that this waiver of Civil Code §1542 and
the mutual releases set forth herein are material terms of this Settlement
Agreement, and were separately negotiated between the parties hereto.

     5. Confidentiality and Public Statements

     The terms of this Agreement shall be maintained in confidence, and no
release of the terms of this Agreement shall be made by any Party without the
prior written consent of the other Parties. However, each Party may disclose
the terms of this Agreement, as necessary: (i) to satisfy SEC reporting
requirements; (ii) to its outside professional representatives (accounting,
legal, audit, etc.); (iii) as part of any negotiations or due diligence
associated with a potential change of control or exclusive license or sale of
any patents subject to this Agreement; or (iv) as required by court order or
legal process, provided the disclosing Party makes reasonable efforts to obtain
a protective order to maintain confidentiality and promptly provides the other
Party with notice of such process or court order. The parties agree (i) to
issue a mutually agreeable initial press release announcing this Agreement,
attached hereto in Exhibit A, to be released on the date as set forth in
Exhibit A. The Parties agree not to comment publicly, privately or
confidentially concerning the terms and conditions of this Agreement beyond the
content of the initial press release or any public SEC filings hereunder.

     6. No Prior Assignment

     Each of the parties hereto warrants that it has not previously assigned,
transferred or granted, or purported to assign, transfer or grant, any claim,
matter, or cause of action which is being released herein.

     7. No Admission of Liability

     Neither this Agreement, nor any action taken pursuant to this Agreement,
shall constitute an admission of any wrongdoing, fault, violation of law or
liability of any kind on the part of any party to this Agreement, which claims
and allegations are denied and contested. Neither this Agreement, nor any
action taken pursuant to this Agreement, shall be interpreted to constitute any
measure of a reasonable patent royalty rate or that any patent license is
required or necessary. The Agreement has been jointly negotiated and drafted
and the parties hereto each shall be deemed to have participated equally in the
drafting of this Agreement. The language of this Agreement shall be construed
as a whole according to its fair meaning, and not strictly for or against any
of the parties hereto. Wherever possible, each word, phrase and provision of
this Agreement shall be interpreted in such a manner as to be valid under
applicable law, but, if any word, phrase or provision of this Agreement shall
be held or deemed to be invalid or prohibited, such

 

 

word, phrase or provision shall be ineffective to the extent of such
prohibition without invalidating the remainder of the import of such word,
phrase or provision or the remaining words, phrases or provisions of this
Agreement.

     8. Governing Law and Enforcement

     This Agreement shall be governed and construed according to the laws of
the State of California. If legal action is necessary to enforce any of its
terms, such action shall be brought in a court having appropriate jurisdiction
within the County of Los Angeles.

     9. Attorneys Fees and Costs to Prevailing Party

     Each party shall bear its own attorney’s fees and costs in connection with
the Action and this Agreement. However, in any legal action or proceeding to
enforce the terms of this Agreement or License, the prevailing Party shall be
entitled to recover its reasonable attorneys’ fees actually incurred, together
with other costs relating to any such legal action or proceeding.

     10. Final Embodiment of Agreement

     This Agreement consists of a single, integrated, written contract
expressing the entire agreement of the Parties with respect to its subject
matter, and may only be modified or amended by a written instrument executed by
the parties hereto. No agreements, representations or warranties of any kind
have been made by any party hereto, except as expressly set forth herein. All
prior discussions and negotiations with respect to the subject matter hereof
have been and are merged and integrated into, and superseded by, this
Settlement Agreement.

     11. Severability

     Each of the provisions herein constitutes a material provision of this
Agreement and no one provision may be severed from any of the other provisions
in the event of breach. However, if any court of competent jurisdiction holds
any provision of this Agreement invalid or unenforceable, it is the intent of
the parties that all other provisions of this Agreement are construed to
remain fully valid, enforceable, and binding on the parties.

     12. Consultation with Counsel

     The parties hereto, and each of them, represent and declare that in
executing this Agreement, they relied solely upon their own judgment, belief
and knowledge, and the advice and recommendation of their own independently
selected counsel concerning the nature, extent and duration of their rights and
claims, and they have not been influenced to any extent whatsoever in executing
the Agreement by any other party hereto or by any person representing such
other party.

 

 

     13. Authority to Act

     Each party signing this Agreement represents and warrants that such party
has the full authority to execute, deliver and perform this Agreement. The
parties hereto agree to indemnify each other and to hold the same free and
harmless from any and all claims, demands, loss, damage, judgment, liability
and expense, including costs and reasonable attorney’s fees, resulting from any
breach of the representations or warranties contained in this paragraph.

     14. Counterparts

     This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Signatures transmitted by facsimile may be used and shall
be binding on the parties hereto.

     Wherefore, the Parties have caused this Agreement to be executed as set
forth below.

	 	 	 
	DATED: July ___, 2004

	 	PAYPAL, INC., a Delaware corporation
	 
	 
	

	 	By:
	

	 	

 

	 
	

	 	Its:
	

	 	

 

	 
	 
	DATED: July ___, 2004

	 	EBAY INC. a Delaware corporation
	 
	

	 	By:
	

	 	

 

	 
	

	 	Its:
	

	 	

 

	 
	 
	DATED: July ___, 2004

	 	STAMPS.COM INC. a Delaware corporation
	 
	

	 	By:
	

	 	

 

	 
	

	 	Its:
	

	 	

 

 

 

EXHIBIT A

Stamps.com Contact:

Austin Rettig

(310) 581-7552

http://investor.stamps.com

Stamps.com Announces Settlement and License Agreement with eBay

SANTA MONICA, Calif., and SAN JOSE, Calif., [July 14, 2004] –Stamps.com Inc.
(Nasdaq:STMP) and eBay Inc. today announced that the companies have resolved
various disputes among them that led to the filing of litigation in June 2003.
eBay will pay Stamps.com an undisclosed amount up front, designated for
settlement. The parties also agreed to a three-year license of software and
intellectual property owned by Stamps.com. Further details were not
disclosed.

“We are very satisfied with the outcome in this matter,” said Ken McBride, CEO
of Stamps.com. “This deal represents a terrific return to our shareholders for
the large investment we have made in our technology and intellectual property.”

“We are pleased to reach a mutually beneficial arrangement with Stamps.com,”
said Michael Jacobson, Senior Vice President and General Counsel of eBay.

About Stamps.com

Stamps.com (Nasdaq: STMP) is a leading provider of Internet-based postage
services. Stamps.com enables customers to print U.S. Postal Service-approved
postage with just a PC, printer and Internet connection. The company targets
its services to small businesses, home offices, and individuals, and currently
has partnerships with companies including CompUSA, Earthlink, HP, Microsoft,
NCR, Office Depot and the U.S. Postal Service.

# # #

Stamps.com Statement:

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of
1995: This release may contain forward-looking statements that involve risks
and uncertainties. Important factors, including the company’s ability to
complete its products and obtain regulatory approval, which could cause actual
results to differ materially from those in the forward-looking statements, are
detailed in filings with the Securities and Exchange Commission made from time
to time by Stamps.com, including its Annual Report on Form 10-K for the fiscal
year ended December 31, 2003, its subsequent Quarterly Reports on Form 10-Q,
and its Current Reports on Form 8-K, if any. Stamps.com undertakes no
obligation to release publicly any revisions to any forward-
looking statements to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events.exv10w40

 

EXHIBIT 10.40

Framework Contract

between

Smith and Wesson Corp., 2100 Roosevelt Avenue, Springfield, Massachusetts 01102
(hereafter referred to as “S&W”)

and

Carl Walther GmbH, Karlstr. 33, 89073 Ulm (hereafter referred to as “Walther”)

Prefatory Note

A business relationship already exists between the two contractual partners.
According to the terms of the contract of 7 June 2002, S&W manufactures “PPK/S”
pistols and markets these pistols (“PPK/S Contract”). According to the terms of
the contract of 15 January/4 February 2002, Walther supplies products that are
used by S&W in the manufacturing and marketing of pistol models
“SW-99”(“SW-99
Contract”).

Both contractual partners now intend to intensify their business relationship
and agree to the following:

	1.	 	Marketing

 

 

	 	a)	 	S&W will exclusively market the products listed in appendix A
(hereafter
referred to as “products”) in the United States of America
(hereafter referred to as “sales region”). During the length of the
contract period, Walther itself will not sell or market these
products in the sales region, either directly or indirectly. S&W
will make a long-term effort to promote the sales of the products
in the sales region, and, as far as is reasonable, will offer, at
Walther’s request, services for the products to be marketed, as
well as furnish Walther with sales reports.
	 
	 	b)	 	S&W will provide Walther with sales statistics regarding the marketing
of the
products in the sales region in reasonable detail at least once
every quarter and, in addition, at Walther’s request. These
statistics will, at the very least, contain detailed information
regarding clients’ names and addresses, as well as quantities sold
and at what prices. Copies of any sales or dealer contracts from
S&W involving Walther’s products will be furnished to Walther
immediately upon closing. Walther maintains the right at any time,
with 30 days prior notice, to verify such information by inspecting
account books and other records from S&W. Such inspections will be
carried out by Walther’s own staff or by a third party legally
sworn to confidentiality (i.e. lawyers or financial auditors) on
S&W’s business premises and at Walther’s expense. Should this
inspection yield evidence that false sales statistics have been
provided by S&W, S&W will be required to reimburse Walther for the
expense of the inspection.
	 
	 	c)	 	S&W will produce sales projections for the products by the end of
October of
every calendar year for the following calendar year. Walther must
approve these projections.
	 
	 	d)	 	S&W will annually commit at least 3% of the effective
turnover of the products (not including sales or other excise
taxes), including PPK and PPK/S products, for the sales promotion of
products, including advertising costs for all Walther, PPK and PPK/S
products. Especially relevant are expenses for advertising agencies,

 

 

	 	 	 	cooperative programs, and show promotion. These advertising
measures must be approved by Walther.

	2.	 	Length of Contract

	 	a)	 	This agreement is valid until 7 January 2007.
	 
	 	b)	 	The contractual partners will negotiate for a two-year extension of
this contract
over a reasonable period before 7 January 2005, though they are not
thus obligated to do so.

	3.	 	Prices

	 	a)	 	In accordance with clause 1, the prices for the products are listed in
appendix
A. Walther has the right to raise these prices once within a period
of 12 months upon consultation with S&W.
	 
	 	b)	 	In accordance with appendix A, the prices were determined by the
contractual
partners as of September 2003 on the basis of an exchange rate of 1
EUR = 1.12 USD. S&W bears the risk of a fluctuating exchange rate
until 31 December 2004 (inclusive). Regardless of clause 3 a), the
partners will set the prices in October 2004 in accordance with the
exchange rate valid at the time. These prices will be in effect
from January until December 2005 (inclusive). The same procedure
will be followed for price adjustments in the following years.

	4.	 	Orders and Deliveries

	 	 	For both partners, binding delivery contracts will be reached only upon
written order
confirmation from Walther. Delivery will be carried out in accordance
with Incoterms FOB. Risk of unforeseen loss of or damage to products is
transferred to S&W when the product passes over the ship’s railing at the
given shipping port.

 

 

	5.	 	Payment Conditions

	 	a)	 	Provided no other terms are agreed upon, strictly net payments are due
from
S&W within 45 days of invoice receipt. For payments within 10 days
of invoice receipt, a cash discount of 2% will be granted.
	 
	 	b)	 	Clause 5 a) above or other payment provisions are only valid
for indemnity
limits on commercial credit insurance maintained by Walther at its
own discretion, provided Walther duly maintains the present
insurance sum of USD 600,000.00. Moreover, deliveries will be made
on the basis of prepayments or drafts on an FSCB-certified bank
guarantee.

	6.	 	Commercial Trade Mark Rights

	 	a)	 	For the valid length of this contract, Walther grants S&W an exclusive
license
in the sales region to use patents, brand names, design patents and
other commercial trade mark rights pertaining to Walther or to
third parties for the sale and marketing of the products. Walther
or the third party remain, however, owners of these trade mark
rights. S&W will immediately inform Walther when violations of
these rights by other third parties in the sales region become
known, and, at Walther’s demands and expense, S&W will undertake
all necessary and reasonable judicial and extra-judicial measures
for the defense of all such violations of commercial trade mark
rights by third parties in the sales region. Walther will exempt
S&W from all claims, damages, judgments or costs, should a product
of Walther’s or the sale or advertising by S&W of a product of
Walther’s in accordance with the terms of this contract violate a
patent, trademark, company secret or any other commercial trade
mark right pertaining to a third party.
	 
	 	b)	 	For the length of this contract, S&W grants Walther the right to use
the brand

 

 

	 	 	 	name “Smith & Wesson” as well as other labels or trade names for
the labeling or packaging of products in accordance with S&W’s
instructions. Walther will observe S&W’s instructions in regards to
such trade names and labels, in particular those concerning
approved design and specifications. Upon demand, Walther will also
provide S&W samples of the envisioned use of such trade names or
labels for pre-approval. These commercial trade mark rights remain
the property of S&W. All legal positions created or strengthened by
the use of these trade mark rights by Walther belong exclusively to
S&W. Walther will inform S&W immediately should violations to these
rights by third parties in the country where the products are
manufactured be made known.

	7.	 	Legal Regulations and Other Standards

	 	a)	 	S&W is responsible for keeping Walther continually posted on
all legal requirements applicable to the products in the sales
region. Walther will ensure that all products that it delivers
(built to proper specifications in accordance with the stipulations
of both partners) will comply with all legal requirements applicable
to them in the sales region, in particular import and security
regulations (for example BATF and SAAMI regulations) or other
official or acknowledged standards.
	 
	 	b)	 	For these purposes S&W will take extra care that for joint commitment
of
final specifications or series samples/prototypes, all regulations
are observed in accordance with part a) of this clause.
	 
	 	c)	 	S&W will immediately arrange for any changes to pre-determined
specifications, should additional requirements for the observance
of the regulations in clause a) become known.
	 
	 	d)	 	Should any additional need for changes in accordance with c) become

 

 

	 	 	 	necessary, this will not affect the validity of orders under the
conditions, which up until the time of the notification in
accordance with c) were received by Walther. At S&W’s request and
own expense, Walther will carry out any necessary modifications, in
as far as this is possible and reasonable. Agreed upon delivery
deadlines will be extended in such a case by the time period
required to carry out the modifications. If not, each contractual
partner has the right to cancel such orders immediately. In this
case, Walther has the right to demand the agreed upon compensation,
minus the expenses saved by not carrying out the modifications.
	 
	 	e)	 	Extra expenses as a result of necessary additional changes to
specifications
will be covered by S&W.
	 
	 	f)	 	Should a third party take legal action against Walther or an individual
hired by
Walther for the fulfillment of its contractual obligations to S&W,
because the specifications of S&W merchandise do not meet the
regulations mentioned in part a) of this clause, S&W indemnifies
Walther from any penalties incurred as a result, including any
expenses required for defense of the legal action.

	8.	 	Guarantee

	 	a)	 	Provided nothing contrary is determined in the following clauses, this
contract
is subject to German law. Walther guarantees that upon risk
transfer, any delivered products correspond to the agreed upon
specifications or to the agreed upon series samples/prototypes and
that no material or processing deficiencies are present in the
products.
	 
	 	b)	 	The products are to be examined by S&W for deficiencies as well as for
deviations in design or quantity. S&W will conduct appropriate spot
inspections upon reception of the products. Deficiencies and
deviations in design and quantity that are not able to be
determined in the course of the above mentioned spot

 

 

	 	 	 	inspections are to be reported in writing to Walther by S&W for the
preservation of rights immediately upon their discovery.
	 
	 	c)	 	In the case of product deficiencies, Walther guarantees to
correct any product deficiencies found, regardless of clause 7, at
its own cost, in the form of remedy, rectification of defects, or
subsequent delivery, at its own discretion. With Walther’s
agreement, S&W also has the right to correct deficiencies itself or
to contract a third party to do so at Walther’s expense.
	 
	 	d)	 	Should Walther not successfully implement the remedy by the given
deadline,
S&W has the right to cancel this particular order.
	 
	 	e)	 	Further claims in regards to deficiencies, in particular to pay
compensation,
are not valid except if the deficiencies are intentional. Clause 9,
however, remains unaffected by this rule.

	9.	 	Product Liability

	 	a)	 	Walther is, regardless of clauses 7 and 8, responsible for the
manufacturing
and design of the product to be delivered. If a product to be
delivered by Walther, however, is to be used as a component of
another product by or at the discretion of S&W, S&W is then
responsible for the assembly of the entire product. S&W is also
responsible for assembly if the manufacturing of the product to be
delivered by Walther is based on instructions provided by S&W.
	 
	 	b)	 	S&W will be responsible for product marketing, instruction (including
the
appropriate warnings), as well as monitoring after the product has
been introduced into the sales region for all products to be
delivered by Walther. This is especially true in the case of BATF
trace requests. S&W will give suggestions for product handbooks in
accordance with all legal requirements and other official and
generally recognized standards in the sales region. On the basis of
S&W’s

 

 

	 	 	 	suggestions, Walther will produce the handbooks and deliver them
together with the products. Walther is to be immediately, at all
times, and without having to make a special request to this effect,
made aware of all developments regarding its products, in
particular BATF trace requests.
	 
	 	c)	 	Should a contractual partner be taken to court by a third party as a
result of an
occurrence or information, which, according to the previous
clauses, it is not responsible for, the other contractual partner
is required to indemnify the first from liability at its request.
This also applies to any natural or legal entity that reliably
serves either contractual partner in the fulfillment of its duties
or the protection of its rights in the business relationship, and
in particular to suppliers.
	 
	 	d)	 	The requirement to indemnify from liability does not apply if the other
contractual
partner is responsible for motivating the third party to take the
legal action. Moreover, this requirement also involves compensation
for rightful legal actions and the defense of unrightful claims,
including any resulting expenses, in particular any legal or court
fees.
	 
	 	f)	 	If either of the two contractual partners is, in the context of this
business
relationship, taken to court by a third party, it is required to
inform the other contractual partner immediately, routinely, and in
detail. Both contractual partners are required to cooperate with
the handling and defense of legal actions to the utmost reasonable
extent. For this purpose they will exchange information, provide
one another with documents, name witnesses, etc.
	 
	 	g)	 	If any obligation to indemnify from liability exists, the contractual
partner under
this obligation, at the request of the entitled contractual
partner, must immediately take all measures requested and that
appear necessary for the dispute with the third party. The
contractual partner with this obligation will also conduct
extra-legal and, as far as is permitted, legal negotiations with
the third party either itself or through the intervention of hired
legal advisors. The contractual partner with

 

 

	 	 	 	the obligation does not, however, have the right to render
payments, recognize claims, or arrive at settlements without giving
the other contractual partner a minimum of ten days to respond. If
the contractual partner to be indemnified from liability offers no
objections within these ten days, it will be deemed to consent. If
the contractual partner does object, the other contractual partner
does not have the right to proceed in the manner it has proposed.
The objecting contractual partner, however, will be responsible for
all additional expenses resulting from its objection to the
proposed settlement.
	 
	 	h)	 	Regardless of any preceding clauses, S&W will keep Walther informed
routinely
and in detail regarding the results of market observations in the
sales region and will immediately report when the implementation of
preventative measures to avoid damages or losses (for example
product warnings or recalls) seem necessary or are demanded by a
third party. The contractual partners will mutually determine
whether and in what way such measures should be carried out. If
there should be any doubt as to whether the measures are necessary
or not, Walther will make the final decision. The costs of such
measures will be covered by whichever contractual partner is
responsible for the cause of the problem in accordance with a) and
b), if the other contractual partner should face penalties through
no fault of its own.
	 
	 	i)	 	Walther currently maintains liability insurance equal to at least €
5,000,000.00
for personal injury, € 1,000,000.00 for property damage, and
€ 100,000.00 for purely financial losses per damaging event and
twice the above mentioned sums for all damaging incidents that
might arise over the course of a year as a total indemnity limit.
Walther currently has a deductible of ten percent (10%), minimum
€ 100,000, maximum € 250,000. S&W currently maintains a
liability insurance policy with an indemnity limit of a minimum of
USD 5 million for personal injury, with a deductible of USD 2
million. The partners will, over the time period in which this
contract is valid, and for at least five years thereafter,

 

 

	 	 	 	duly maintain comparable insurance limits. Proof of
insurance protection is to be furnished at the other contractual
partner’s request.
	 
	 	 	 	Proof of insurance protection is to be furnished at the other contractual
partner’s
request.

	10.	 	Confidentiality

	 	 	Over the valid course of this contract and thereafter, the contractual
partners will handle all information regarding the other contractual
partner confidentially and not allow other parties access to such
information. This clause does not apply if:

	–	 	at the time of the receipt of the information by the other party, the
information
has been made publicly known or is later made publicly known,
provided this does not jeopardize this agreement or any other
agreement between the two partners,
	 
	–	 	the information released by one of the contractual parties
has already been made publicly known at the time of the receipt of
the information by another party,
	 
	–	 	the information of one of the contractual parties is made
publicly known independently by another party not bound by a
confidentiality obligation,
	 
	–	 	a contractual partner is required to release the information to a
recognized court of law.

	11.	 	Annulment, Termination of Contract

	 	a)	 	Regardless of the valid length of the contract established in clause 2,
each
contractual partner has the right to terminate the contract with
valid reason.

 

 

	 	 	 	Among reasons to be considered valid are:

	 	–	 	when bankruptcy or similar proceedings are opened over the assets of a
contractual partner or an application for the opening of such
proceedings is filed and not retracted or, except in the case
of mass inadequacy, rejected within 30 days,
	 
	 	–	 	when extensive parts of a contractual partner’s assets are confiscated
in
the course of a foreclosure and this measure is not reversed
within 30 days,
	 
	 	–	 	when, after notification, a contractual partner fails to render payments
due
to the other contractual partner according to the terms of
this contract within 30 days,
	 
	 	–	 	when a contractual partner does not fulfill fundamental obligations of
this
contract with 90 days of receiving a warning.,

	 	b)	 	In addition, Walther has the right at any time to terminate the
contract in a
one-month period in regards to individual or all products in the
course of a calendar month, should Walther deem this necessary or
advisable according to its own assessment of recent developments in
the USA of legal actions now being taken against various gun
manufacturers. In the case of such a termination on the part of
Walther, the partners will immediately enter into negotiations
regarding a possible continuation of their cooperation under new
conditions, though this clause does not require them to take this
step. Regardless of previous provisions, according to this clause
Walther can also terminate the contract if Walther withdraws its
products from the market in this sales region. If Walther intends
to market any of its products in this sales region before the
contract expiration given in clause 2, Walther will do so in
conjunction with S&W.

 

 

	 	c)	 	If – based on the annual joint sales/production meetings – the sales
projections
for the following calendar year that in accordance with article 1
c) are to be provided by S&W fall by 20% or more of actual S&W
sales from the previous year, the sales projections must be
accompanied by a detailed written explanation for this decline.
	 
	 	d)	 	Should the contract be terminated for any reason whatsoever, S&W has
the
right to sell off any products delivered by Walther that remain on
its premises. Walther, however, has the right to buy back all or
some of the products at the original sales price from S&W. Should
S&W intend to sell the products at a lower price to a third party,
Walther has the right to preemption.
	 
	 	e)	 	Should the contract be terminated for any reason whatsoever, no
settlement
claims will be permitted in accordance with §89b of the German
Commercial Code [HGB = Handelsgesetzbuch].

	12.	 	Previous and Future Collaboration

	 	a)	 	In the future, in accordance with the provisions of this contract,
Walther will
first offer S&W the opportunity to market any products not already
listed in appendix A in the sales region. Should an agreement
regarding price and/or sales quantities not be reached within
thirty days from the making of this offer, Walther is permitted to
carry out the marketing of the relevant products in the sales
region either itself or through a third party.
	 
	 	b)	 	S&W is now working on the development of so-called “smart gun
technology”. This technology will allow the user of a gun to be
electronically or biometrically identified. As soon as this
technology is ready for production, should this technology become
ready for production during the valid course of this contract, and
in so far as S&W has the right to offer licenses for this
technology, S&W will negotiate in good faith with Walther for a
license for the

 

 

	 	 	 	use of this technology for guns to be manufactured by Walther over
the valid course of this contract. The financial conditions of this
offer will be as favorable as those offered to similarly positioned
third parties. Both contractual partners recognize that at this
time it is not possible to determine when this technology will be
ready for production or to address all potential provisions of a
licensing contract. Thus all licensing of this technology is
dependent on whether S&W has the right to grant license to third
parties such as Walther and on whether the negotiation and carrying
out of a licensing contract can be performed to the mutual
satisfaction of both S&W and Walther.
	 
	 	c)	 	In the future, both partners will externally document their intensive
business
relationship. For this purpose, in the future they will use the
logo shown in appendix B in their communications, regardless of
which variety, though particularly for letterheads, catalogues,
internet sites, etc. This will be put into effect within a
transition period of a maximum of six months from the conclusion of
this contract.

	13.	 	Prohibition of Assignation to a Third party

Neither contractual partner has the right to pass on its commitments, as
listed in this
contract, to a third party without previous written authorization from
the other contractual partner.

	14.	 	Choice of Law, Arbitration Jurisdiction, Protection Provision

	 	a)	 	The legal relationship between the two partners in this contract is
subject to
German material law, with the exclusion of conflicts of law and the
Vienna UN Sales Convention (CISG).
	 
	 	b)	 	All disputes in or outside the context of this contract that may arise
between

 

 

	 	 	 	the contractual partners will be indisputably resolved according to
the arbitration regulations of the International Chamber of
Commerce, Paris (ICC) by three arbitrators. The location of the
arbitration proceedings will be Dusseldorf. The language of the
arbitration proceedings will be German.
	 
	 	c)	 	This contract exists in a German and an English version. Only the
German
version, however, is legally binding. The English version is for
informational purposes only.
	 
	 	d)	 	Should any condition of this contract be invalid or become so, this
does not
affect the validity of the remaining conditions. Both partners are
obligated to replace the invalid condition with a new one that
corresponds, though in a valid manner, most closely to the intent
of the original.

	 	 	 
	
 

	 	
 
	Place, Date

	 	Place, Date
	
 

	 	
 
	Smith & Wesson Corp.

	 	Carl Walther GmbH

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