"9.0 Governing Law and Venue
9.1This Agreement is governed by Danish law.
9.2 Any dispute arising out of or in connection with the Agreement or regarding deliveries made under the Agreement must be settled with final and binding effect in accordance with the "Rules of Procedure of the Danish Institute of Arbitration".
1. the Respondents' termination on 25 January 2011 (Exhibit 2) of the sole distribution agreement of 17 February 2004 (Exhibit 1) was unjustified
2a. the Respondents are obligated to pay compensation to the Claimant for the loss the Claimant has suffered as a consequence of the Respondent's unjustified termination of the agreement of 17 February 2004 (Exhibit 1)
2b. Primary claim : the Claimant has made a claim for compensation against the Respondents because the Respondents took over the distribution network, the goodwill, the market and the sales and marketing activities which the Claimant had established in Northern America from 2004 until the time of termination (Exhibit 1) in connection with the termination of the agreement of 17 February 2004 and because of the Claimant's loss in its existing stock of Trollbead products as at 25 January 2011 to the extent that such compensation is not awarded under claim 2a
Alternative claim : the Claimant has made a claim for compensation against the Respondents as a result of the Respondents having terminated the agreement of 17 February 2004 (Exhibit 1)
3. the Claimant is entitled to sell the existing stock of Trollbead products as at 25 January 2011, also in the North American Market, where such sale is accompanied by a statement that no commercial relationship exists between the Claimant and the Respondents.
4. the Respondents have acted in contravention of sections 1 and/or 19 of the Danish Marketing Practices Act by having collected and used confidential information about the Claimant's business and partners and/or forwarded Exhibit 3 to the Claimant's partners.
In respect of Lund Trading's claim 1:
Award in favour of the Respondents.
In respect of Lund Trading's claim 2a:
Award in favour of the Respondents.
In respect of Lund Trading's claim 2b:
Primary claim: Dismissal.
Alternative claim: Award in favour of the Respondents.
In respect of Lund Trading's claim 3:
Award in favour of the Respondents.
A Primary claim:
Lund Trading be ordered to pay USD 2,185,906.80 to accumulate the following interest:
USD 3,149.92 plus default interest; see section 3(1), see section 5(1) of the Danish Interest Act, from 2 March 2011 until payment is made.
USD 1,672,756.88 from 15 April 2011 at 1% for every month or part of a month from 15 April 2011; see Exhibit 1, page 129 of the bundle, clause 4.7 and
USD 510,000 plus statutory interest from 6 May 2011.
Lund Trading be ordered to pay a smaller amount to Aagaard subject to the arbitration tribunal's discretion.
B Lund Trading be ordered to acknowledge being obligated to pay outstanding royalty to Aagaard for the period 1 October 2010 to 25 January 2011 plus contract interest of 1% for every month or part of a month from the due date of 15 April 2011.
C Lund Trading be ordered to acknowledge being obligated to pay the full profit to Aagaard from the unauthorised sale of Aagaard's products which has taken place after the termination of the sole distribution agreement on 25 January 2001 plus the statutory interest applicable from time to time from 6 May 2011 until payment is made.
Alternatively in respect of claim C:
Lund Trading be ordered to acknowledge being obligated to pay royalty of the unauthorised sale of Aagaard's Products which has taken place after the termination of the sole distribution agreement on 25 January 2011 plus contract interest of 1 % for every month or part of a month from the due date of 15 April 2011.
D Lund Trading be ordered to acknowledge having acted in contravention of the sole distribution agreement (Exhibit 1, page 129 of bundle).
E Lund Trading be ordered to acknowledge having acted in contravention of sections 1 and 19 of the Danish Marketing Practices Act.
"Lund Trading, LLC is selling other product lines...".
"Lund Trading, 11 c may be selling other products and it is obvious that we will only agree to pay 12 % royalty on products that are the property of LA and manufactured under our licence agreement, Any other products whether jewelry, or gift boxes, displays or other items we offer to our customers are not going to be included in the 12 % royalty calculation. I also think we should exclude items we purchase from LA for sale in North America and items such as bracelets or necklesses that are not the property and copy protected by LA".
"A short outline of yesterday's meeting....
We reviewed all of your and L.A.'s items. We agree. I will write them in the following....
10.We must commit to enforcing the Trollbeads copyright, and we will naturally also receive any profit on the infringement...."
"1.0 Purpose of the Agreement
1.1 The Rights Holder holds all worldwide property rights in the jewelry line 'Trollbeads', including all intellectual property rights, and any and all tools, moulds, drawings, sketches, designs, trademarks and copyrights related thereto (hereinafter referred to as the 'Product').
1.2 The Sole Distributor is an American company established for the purpose of selling, distributing and marketing various products in the North American market.
2.0 The Product
2.1 The Rights Holder has exclusive right to the Product, to develop the Product and approve the manufacturer - respecting the Rights Holder’s property rights cf. clause 1.1 above -from whom the Sole Distributor will purchase the Product, however provided that the terms and conditions, except for commercial, agreed between the Sole Distributor and the above manufacturer are approved by the Rights Holder.
2.2 The Sole Distributor is only entitled to purchase the Product from manufacturers approved by the Rights Holder. The Rights Holder is entitled to carry out ongoing quality control of the manufacturer or manufacturers as well as of the final Product. The Product quality must equal the European quality level, and the manufacturers must observe all local and international rules, legislation and human rights.
3.0 Sole distribution
3.1 The Sole Distributor has the sole right of distribution in the entire North American market (hereinafter referred to as the 'Market'). The sole distribution right includes all links in the sales chain, with the exception of sale from the websitewww.trollbeads.com. The Sole Distributor is not entitled to establish an internet business trading in the Products, with the exception of a B2B website - Business to Business - solely targeting businesses. However, the Sole Distributor is entitled to allow its customers to establish their own e-commerce sites.
3.2 The sole distribution right comprises the Product and product range related thereto at the date of entering into this Agreement, as listed in the forwarded product portfolio [...].
3.3 The Sole Distributor is not entitled to trade with any third party' in the name of the Rights Holder and must not purport to be the Rights Holder’s agent.
3.4 The Sole Distributor is only entitled to sell the Product to customers residing in the Market, cf. clause 1.2 above. The Sole Distributor undertakes to forward any and all orders and inquiries regarding the Product from customers residing outside the Market to the Rights Holder. The Rights Holder must also refer present dealerships in and inquiries about the Market to the Sole Distributor.
3.5 To the extent possible and for its own account, the Sole Distributor undertakes to strive to enforce the property rights of the Rights Holder, including intellectual property rights, cf. clause 1.1 above, in the Product in North America if the Product is copied or in any other way infringed[…] The Sole Distributor is entitled to all income generated by such infringement.
"5.0 Marketing Material
5.1 The Sole Distributor must make an active and dedicated effort to promote the sale and expeditious distribution of the Product in the Market".
5.2 To promote sale of the Product in the Market, the Sole Distributor must arrange for necessary and professional marketing, advertising and other forms of promotion of the Product".
"7.0 Intellectual Property Rights.
7.1 The Product must be marketed and sold as "Trollbeads" under the trademarks, logos, designs, copyrights, etc. applied by the Rights Holder from time to time in an ethically and morally proper manner.
7.2 The Sole Distributor may not market nor sell the Product in violation of the Rights Holder’s property rights; cf. clause 1.1 above.
8.0 Term of Agreement and Termination.
8.1 This Agreement enters into force on the signing hereof. However, the royalty period as well as the term of Agreement will not commence before the date on which the first actual delivery from the manufacturer/manufacturers approved by the Rights Holder has been received by the Sole Distributor.
8.2 The Agreement is non-terminable by the Rights Holder as long as the Sole Distributor maintains a sales organisation and meets the agreed minimum requirements.
8.3 The Agreement may, however, be terminated by either party after a period of ten years by giving 24 months’ notice.
8.4 The Rights Holder may terminate the Agreement without notice (i) after the expiry of one year if, following demand for payment, the guaranteed annual minimum royalty of USD 100,000 remains outstanding; (ii) after the expiry of two years if, following demand for payment, the guaranteed minimum royalty of USD 200,000 remains outstanding and; (iii) after the expiry of three years if, following demand for payment, the guaranteed minimum royalty of USD 300,000 remains outstanding. The Rights Holder is further entitled to terminate the Agreement without notice after three years if the total royalties paid during the three years do not exceed USD 1,200,000. The Rights Holder may also terminate the Agreement without notice after the fourth year if the royalties paid in the fourth year do not exceed USD 800,000. The Rights Holder will further be entitled to terminate the Agreement without notice after the fifth year if the royalties paid in the preceding year do not exceed USD 1,000,000.
8.5 The Agreement only applies to the parties. Transfer or sale of the Agreement to another company requires the consent of the other party.
8.6 The Rights Holder may terminate the Agreement without notice if outstanding royalties are not paid on or before 60 days after the due date.
8.7 Either party is entitled to terminate the Agreement without notice if the other party is declared bankrupt, suspends its payments, enters into liquidation or in any other way ceases its business activities.
8.8 At expiry of the Agreement - for whatever reason - the Sole Distributor is not entitled to any form of compensation, including but not limited to goodwill or loss of market, rioting further that the Sole Distributor is not entitled to market and sell the Product or use any intellectual property' rights, trademarks, logos, designs, copyrights, etc. related thereto either directly or indirectly. The Sole Distributor must —as soon as possible and free of any cost — deliver and/or cause to be delivered from the manufacturers moulds, design, including master moulds, etc. provided by the Rights Holder in connection with the signing of the Agreement or at a later date for use in the manufacturing process, tire sale or marketing of the Product in the Market".
"I have now also had time to visit your website and must confess that I was a bit surprised to see that you have started distributing Spinning. I find this to be incompatible with to the distribution of Trollbeads. Obviously, I would have expected you to engage in discussions with us before you took on a product that is so similar. Furthermore, it is quite the wrong signal to send out. We are trying to profile Trollbeads as high end - so it does not help distributing a product like Spinning which profiles below Pandora".
The Spinning product is about half the price of Pandora and is in no way competing with Trollbeads. You see after we left the giftware market we saw Spinning as a perfect match for this market and the old sales reps, which are no longer selling Trollbeads, were excited about selling Spinning. Spinning contacted us and initially I turned them down because I didn't want any' other product to take our focus away from or competing with Trollbeads. If it is competing with another product it is definitely Pandora.
But more importantly that main product for Spinning is NOT the charms which is not very popular and may even disappear from the collection. The main product is the Spinning rings which are very popular with a limited interest for the earrings. We have different people dealing with this and in no way is this product taking the focus away from Trollbeads which we by the way look upon as our baby".
"We still believe that it is wrong to profile Spinning along with Trollbeads. Obviously we would like you to focus 100 % on Trollbeads - but as a minimum ask you to separate Trollbeads from Spinning (and other products)) in the marketing and sales including having different websites. [...]".
"The Spinning jewelry line is really only a ring concept line and I cannot see why this in any way would influence our commitment to Trollbeads - which I can assure you it doesn't. We have an opportunity to market others products which your other distributor also do (according to the web links you send me yesterday). Operating in the USA is nothing like the condition in Europe [...] Our sales reps, have several product lines because they need to be able to make a sales when they travel all day visiting another potential customer in far away towns".
"3. WEBSITE/SPINNING. Most of our distributors deal only with Trollbeads. Some of them have other products - which we have approved. We have looked at the image/profile of the product and made sure it had the right image next to Trollbeads before giving our consent. Spinning does not in our opinion have the image/profile to be distributes next to Trollbeads. As said, we prefer you not distribute a product like Spinning - but as a minimum it should not be on the same web site".
Branding of the product in the Market must be based on the general "Trollbeads Philosophy and Values" prepared by the Rights Holder. The Rights Holder must be included in the branding process and preparation of standard marketing material, just as the final design is subject to approval by the Rights Holder."
"Morten and I just had a bead pow wow. We would love for you to use your imagination and come up with some designs based on the following.
We want this beads line to be different from any other. One way, obviously, is to come up with unique ideas. Please spend some time and think about ways to symbolize things such as ecology, animal extinction, history, and anything American. American history, the Army or Navy (not literally), our land (ocean symbols) or anything else that screams AMERICA (again not literally).
By taking a concept and symbolizing it in a bead we can set ourselves a part. We do not want to take a stance on any one subject but something such as animal extinction could be a topic to address through a bead.
I will be away on business for the next few days so please copy Morten your response. Thank you and happy designing".
"For the past 2 years Morten has been secretly designing a line of bracelets and "beads" that are in direct competition with Trollbeads. He has hired a few artists to design sterling silver and gold beads that will fit on Trollbeads, Pandora and Chamilia. He has also chosen specific glass beads from the assorteds sent by Winnie to replicate for his new line. I was in charge of this project for a while and is why I know these details. Morten has not played by the rules for many years and I thought it was time you find out and keep the integrity of Trollbeads. He is obtaining a bad reputation among retailers and reps in the U.S.".
"Tim Young is the owner/operator of Novo Beads. He is the owner on paper as you saw but under Morten's direction, however I do not have any proof of that".
I would like to move forward with Novo Beads.
As I told you before, I want to make sure that any new corporation that is set up is done so correctly and with your permission. A few questions for you...
1. Is it ok that Steve owns the new corporation?
2. Do you want a separate rep force? Or can the new agency hire any of my existing reps [...?]
3. Are there any limitations to the new corporation that are important to you?"
"3) I will reiterate that it would be easier to convince the public that Boy George was straight, than Morten isn't involved in Novo. Mary Jo's daughter made a major announcement to all my reps, (long story). The entire state of MI knows it. Anyone at Pandora who cares, knows it. Trollbeads accidently sent an e-mail to my customers because Morten's IT guy used old files. The stories go on and on. So, what I am saying is, I'll reiterate but I have been pounding this drum for a year.
4) I don't know how expensive it would be and I don't know your personal situation but one way to bury your involvement is have a Trust own it. or cheaper and easier - Limited Partnership. The General partner would be a Corporation and you and Steve the limiteds. Limited Partners do not have to be divulged in public records. The General Partner (the Corp) could have an attorney as the President (or anyone for that matter). I have done this before and it works very well".
"I received a call from Kimberly Wahlberg last week. She indicated that she had a brief conversation with you regarding her husband forming a new Rep Agency specifically for Novo. She indicated that her call was exploratory and before proceeding with time and money, did I have an interest? She was clear and direct about two things: 1) that the new company stand alone and not be confused with KW Co. 2) that she would only proceed with your blessing, she was quite clear she would not proceed if it would adversely affect her LT relationship
She is waiting to hear if I have an interest? Of course I do, but I do not want to adversely affect anyone's relationships.
What do you think [thumbs up/thumbs down-sign]?"
"Re: Sole Distribution Agreement
Dear Mr. Petersen:
This letter concerns the sole distribution agreement entered into on February 17, 2004, between Lise Aagaard Copenhagen ("Aagaard") and Lund Trading, LLC ("Lund"), including the addendum thereto entered into on January 23, 2007 (together the "Distribution Agreement") regarding Lund's sale of the jewelry line "Trollbeads", all rights to which are exclusively owned by Aagaard, in the North American market.
Aagaard has learned that you have engaged in competing business activities through your involvement with the company Novo, LLC ("Novo"). These activities are in material breach of your duties of care and loyalty under the Distribution Agreement, which require you, as the owner of Lund, to "make an active and committed effort to promote the sale and expeditious distribution of the Product in the Market." Distribution Agreement, Sec. 5.1. Your activities are also in material breach of the Distribution Agreement for failure to comply with the Danish Marketing Practices Act, which, in relevant part, prohibits disloyal conduct and the abuse of business secrets.
In addition to violating your duties of loyalty and care, Aagaard also believes that you have failed to protect the intellectual property rights of Aagaard in 'Trollbeads', as required under the Distribution Agreement, and in fact have encouraged and/or facilitated the infringement of Aagaard's copyrights by Novo. Such conduct is also an abuse of business secrets in violation of the Danish Marketing Practices Act. These activities also violate the Responsible Jewelry Council Principles of Business Ethics, adopted by Aagaard in March 2010 as to which Aagaard informed all of its business partners and distributors to abide by, particularly the ethical principle requiring signatories to conduct business 'to a high ethical standard' and 'to ensur[e] integrity, transparency, and conformance with applicable law.'
Such conduct constitutes a material breach of the terms of the Distribution Agreement. As a result, Aagard hereby notifies Lund that the sole distribution rights granted to Lund under the Distribution Agreement hereby are immediately terminated. In return for a mutual re-lease of any rights (a form of which is contained in the Termination and Release Agreement attached hereto as Exhibit 1), obligations, and remedies under the Distribution Agreement, Aagaard is prepared to acquire the domain name www.trollbeadsus.com; the Facebook group "TrollbeadsUS Original"; the trademark "every story has a bead"; all new or relatively new store displays and store furniture, FRUs and sales islands in working order bearing the Trollbeads name or logo on it; any existing inventory and viable marketing materials of Lund related to Trollbeads; any outstanding accounts receivable existing on the date the release is entered into related to Trollbeads; and to assume any booking obligations, advertising commitments, and retail contracts. Attached are proposed Purchase, Assignment and Assumption Agreement (Exhibit 2), and Notice of Assignment to Retailers
In making this offer, Aagaard does not waiver any rights or remedies it may have under the Agreement, or otherwise. This offer will remain open until midnight on January 28, 2011".
"So while you remain under the contract with Lund Trading and will continue to receive commission on every order, we are releasing you from the non-compete provision of your contracts (Paragraph 9j)".
"[…]I think that Aagaard would be irreparably harmed by being forced to deal with a distributor whom it thinks is cheating it dealing with a competitor. I think that is poisonous, and I think that is equally, equally clear".
he ended up sending samples to Peter Aagaard. The Novo line did not end up with a faceted amethyst. It has a pumpkin bead, but that is not faceted.
some things, e.g. if he knew an architect. The build-out, the computer system and software, the web design, everything was handled by Tim who hired independent contractors.
American market. Both lines rely on symbols. The idea of a chain bracelet is that the beads can symbolize different events. An Eiffel tower can symbolize a visit to Paris, France, and a baby carriage that you had a baby. The baby carriages of Novo and Trollbeads are very different.
Linda from Lund Trading and 7-8 other Lund Trading people, fluctuating members of the staff. Novo did not make use of Lund Trading employees. These employees made long rolls of chains, cut them up, saddled, oxidized, and tumbled them. They did not do this work for Novo. First, Novo did not pay them. Second, Novo primarily do bangles. When Novo went to market, Jimin would make the chains. She was way overqualified to make chains, but she could do this for a couple of hours -and then Novo was fine for 30 days. Lund Trading paid its own employees, he did not. Novo had its own finance system. He opened a Novo bank account on 2 January 2010. The bank needed two signatures, so he and his wife signed. This was in case something should happen to him. There was not any co-mingling of the funds of Lund Trading and Novo.