Licence Contract

between

Fair TradeMark Canada

(hereafter referred to as "TransFair")

and Company xyz

(hereafter referred to as the "Licensee")

Preamble

TransFair is a national member organization of the Association "TransFair InternationaL e.V.", which is the owner of a Collective Mark registered in Canada as well as in other countries for products traded according to the principles of fair trade. Through the use of the Collective Mark both organizations want to promote the sales of fairly traded products and the advantages of fair trade for smaller producers in the countries of origin. In accordance with the statutes of both organizations it is permissible to allow non-members to use the Collective Mark. The Licensee is planning to sell fairly traded coffee and to label it with the Collective Mark. For this purpose the parties to the present contract enter into the following agreement:

Article 1. Object covered by the Licence, Contract Product

(1) The object covered by the licence is the Collective Mark depicted in Appendix 1. The object covered by the licence has been registered as a Collective Mark with the Federal Office for Patents of Canada with the registration Number TMA445,974 and with the Federal Office for Patents of the Federal Republic of Germany with the registration Number 2021679 and with the International Office in Geneva with the IR-Number 595860.

(2) The contract product is fairly traded coffee, i.e. coffee, which has been produced, traded, processed and marketed in accordance with the criteria laid down in the present contract. TransFair may change these criteria in accordance with the regulations laid down in the present contract.

(3) TransFair assures that it is capable of and entitled to enter into licence agreements on the object covered by the licence in the contract territory (see Article 3 below) as well as to administer and to fulfil them.

Article 2 Licence permission

(1) The licensee shall be granted a simple, non-exclusive, and non- transferable licence to use the object covered by the licence on the contract product in the contract territory (see below) in accordance with the regulations laid down in the present contract and to the extent stipulated therein.

(2) TransFair shall undertake to grant the right to use the object covered by the licence for the contract product described in Article 1.2 above to third parties only in the case of the said party undertaking, in the same way as the licensee, to comply with the criteria laid down in Articles 1.2. and 4.2.

Article 3 Contract territory

(1) The contract territory is the territory of Canada.

(2) The licensee shall promise not to take any steps to actively market the contract product outside the contract territory without the specific written permission of TransFair, and in particular not to advertise, nor engage in any other promotional activities nor run sales-depots outside the contract territory.

Article 4 Conditions of Purchase for Coffee

(1) The licensee may purchase the contract product either from small producers or small producer-associations authorized by TransFair, or from an importer authorised by TransFair.

(2) In the case of purchase from a small producer or a small producer- association the licensee shall undertake to comply with the criteria laid down n Appendix 2 (in particular with regard to minimum quality, prefinancing, rules for the drawing up of the supply-contracts etc.) and to provide the relevant evidence of compliance. In the case of purchase from an authorized importer the licensee shall undertake to comply with the criteria laid down in Appendix 3 and to provide evidence of compliance.

(3) The register of authorized producers or producer-associations and authorized importers valid at the time of ratification of the present contract is enclosed in Appendix 4. TransFair has the right to delete from, or add to, these registers, producers, producer-associations, or importers. In the case of deletion the licensee may no longer enter into supply-agreements on the purchase of coffee with the producers, producer-associations or importers deleted from the register from the moment of having been informed of the deletion or of the date on which the deletion by TransFair shall take effect. The fulfilment of orders already placed at the time of notification of the deletion is limited to a period of four months from the date of notification to the licensee; this does not apply, if the licensee did have or should have had prior knowledge of the causes which lead to the deletion.

(4) The producer or producer-association of the product covered by the contract shall receive a minimum price, which is calculated on the basis of Appendix 5. The prices referred to are non-binding recommended minimum- prices for raw coffee. The licensee shall watch over the compliance with s for raw coffee. The licensee shall watch over the compliance with these minimum prices even in those cases, where he/she is supplied via an intermediary (importer).

(5) The criteria set out in paragraph (2) may be amended by TransFair. TransFair shall give the licensee reasonable advance notice of all important amendments, usually 3 months prior to the amendment taking effect.

(6) In the case of the licensee not purchasing raw coffee, but rather fully or partially processed coffee, he/she shall be obliged to supply evidence in a satisfactory manner of compliance with the criteria laid down in paragraph (2); the parties shall come to a separate arrangement on the content and form of this proof.

Article 5 Licence Fee

(1) The licensee shall pay TransFair a licence fee of Cdn.$ 0.13 per pound of green coffee, to be determined on the basis of Appendix 2 and Appendix 3.

(2) The licence fee shall be accounted for and paid on a quarterly basis. The licensee shall present his/her accounts within 30 days after the end of the quarter of a calendar year just passed, and will pay the licence fees for this period to TransFair. Payments are to be transferred to TransFair's bank account number 050928 at the Caisse Populaire St-Jean-Baptiste d'Ottawa, 725 Somerset Street West, Ottawa, Ontario K1R 6P7

Article 6 Regulations for the use of the Object covered by the Licence

(1) The licensee shall undertake to make regular use of the object covered by the licence and to endeavour as far as possible to promote the sale of the contract product.

(2) The licensee shall undertake to use the object covered by the licence exclusively for contract products (Article 1.2.). He/she shall abstain from any action which might cause or promote confusion with products other than the contract product. He/she shall undertake, for the duration of the present contract and within eight months following termination of the present contract, not to purchase, promote or sell without prior consent by TransFair any other coffee, which is described as fairly traded or which might in any other way compete with the contract product (Article 1.2.). The licensee has no claim to permission or upholding of the consent.

(3) The licensee shall undertake to depict the object covered by the licence in an obvious fashion on any packaging of the contract product and meant for the final purchaser, and to print a covering note on the contract product, as well as provide the name and postal and electronic addresses of TransFair. Particular regulations regarding the size and location of the object covered by the licence, format and wording of the covering note, as well as the note on TransFair are to be taken from Appendix 6. TransFair has the right to change all guidelines stipulated in Appendix 6 with nine months' notice.

(4) The licensee shall present TransFair with all packaging, promotional material, advertising campaigns, sales promotion campaigns, price-lists and other advertising material aimed at the final purchaser and related to the object covered by the licence (as long as these contain factual information on the object covered by the licence) before it is to be distributed for the first time.

(5) The licensee shall abstain, in particular, in the design of the packaging and its promotional activities, from anything which might create the impression that the final purchaser or other third parties might have claims against TransFair (legal claims, claims resulting from product liability, etc.). In the case of the licensee violating this duty and of resulting claims against TransFair, the licensee shall provide TransFair with compensation and hold it free from such claims.

(6) In the case of the licensee purchasing, processing or distributing coffee other than that of the contract product (raw as well as roasted coffee), it shall keep separate accounts for the contract product.

Article 7 Violations of Rights of Protection and Competition

(1) The licensee shall undertake to inform TransFair without delay of any violations of the use of the object covered by the licence and to assist TransFair in the litigation of these violations. The licensee is not obliged to share in the costs of the litigation.

(2) The licensee shall undertake, when promoting or selling the contract product not to offend against principles governing unfair competition. It has been informed of the strict requirements of the courts in regard to promotional activities with an ethical component. The advantages of fair trading for the small producers are to be depicted in a positive and truthful manner; any denunciation of rival products not marketed via fair trade channels is to be avoided. In cases of doubt, the importer should seek coordination with TransFair.

(3) The licensee shall inform TransFair without delay about legal proceedings undertaken by him or against him on matters of competition.

Article 8 Entitlement to Inspection and Information

(1) The licensee shall provide TransFair quarterly of his/her own accord with copies of delivery contracts entered into during the relevant accounting period, together with the accounts in accordance with Article 5.2 of this contract, as well as delivery notes which it has received or provided regarding the contract product supplied by itself (raw and roasted coffee). The delivery notes have to provide information on both quantity and quality of the contract product.

(2) The importer shall undertake to provide, within six months of the end of every business year, a written statement from the auditor hired by it, which certifies that the statements submitted for the completed business year are in accordance with the criteria as set out in Articles 4.2 and 4.3., as well as the accounting regulations as set out in Article 5.2., and the obligation to inform as set out in paragraph (1) of the present article.

(3) TransFair is entitled to have an authorised representative inspect, at any reasonable office-hour, all business documents and production processes on the business premises of the licensee, as well as in the business premises of processing companies contracted by or cooperating with the licensee, in as much as this is relevant to keeping a check on compliance with the clauses of the present contract. The licensee is required to present and make possible the copying of any relevant documents. It is, furthermore, required to provide any information needed. If a violation of the importer against the present contract is detected, it shall pay for the costs of the inspection.

(4) TransFair shall undertake to keep all business secrets of the licensee, of which it may gain knowledge, in confidence and not pass them on to third parties.

(5) The licensee agrees to allow TransFair to undertake a credit check through an authorized credit bureau, and to provide, in confidence, the necessary banking and financial information necessary to do this.

Article 9 Duration of the Contract

(1) The present contract shall take effect on <DATE> and is entered into for an unlimited period.

(2) The present contract can be terminated by either party with 3 months' notice to the end of a calendar month. The right to immediate termination for serious grounds remains unaffected.

(3) The following in particular constitute serious grounds entitling TransFair to terminate the contract immediately:

1. Use of the object covered by the licence for coffee which has not been purchased from authorized producers, producer-associations or importers.
   
   
2. Use of the object covered by the licence for coffee, which has been purchased under conditions less favourable than those laid down in Appendices 2 and 3.
   
   
3. Violation of the regulations regarding the design of packaging destined for the final purchaser. 4. Intentional or repeated violation of the rules of competition law in the promotion and sale of the contract product. 5. Repeated delay in accounting, payment of the licence fees or the supply of documentation described in Articles 8.1 and 8.2. 6. Refusal to comply with TransFair's entitlement to inspection and information.

Article 10 Contract termination procedure

(1) The licensee may promote and sell contract products labelled with the object covered by the licence until the termination of the contract, and no longer. The same applies in the case of an immediate termination by TransFair. In case of a regular termination of the contract (see Article 9.2) the parties to the contract shall negotiate a limited opportunity for continued sales of such licence products, which the licensee already had in storage at the time of termination, or for which it has entered into binding supply contracts, which cannot be cancelled unilaterally. When negotiating this period of continued selling, the following factors shall be taken into account with regards to the interests of the licensee: its smallest possible financial loss, its possible (part) responsibility for the termination of the contract, and its other sales opportunities; and with regards to the interests of TransFair its market responsibility for the licence product, the credibility of fair trade, and the interest of equal treatment of all licensees

(2) The licensee shall submit final accounts within 30 days of the termination of the contract and pay, without delay, the licence fees resulting from the final accounting. In the case of immediate termination by TransFair it is not entitled to set off or to exercise the right of retention against TransFair.

(3) Upon termination of the contract the licensee shall, at TransFair's discretion, hand over free of cost or destroy, and document the destruction of, all documents (printing masters, promotional material, stickers with the object covered by the licence etc.). Empty packaging material already imprinted with the object covered by the licence and the information described in Article 6.3 has to be destroyed and the destruction documented, unless it has been proven that the object covered by the licence and the information described in Article 6.3. has been removed. The licensee is not entitled to set off or to exercise the right of retention against TransFair.

Article 11 Jurisdiction

(1) The place of jurisdiction for any disputes arising from the present contract shall be Ottawa, Ontario. TransFair is also entitled to take legal action at the seat of the licensee or at its own seat. (2) This contract and all cases arising out of it shall be exclusively dealt with by means of the laws of Canada and/or the Provinces of Ontario and <province of licensee> as applicable.

Article 12 Final Clauses

(1) Any amendments to the present contract shall be set down in writing. In cases, where unilateral amendments to, or adaptations of, the contract by TransFair are possible, written notification from TransFair to the licensee shall suffice.

(2) Appendices 1 to 6 as well as the Statutes of the Collective Mark and the Regulations governing the Implementation of the Collective Mark (up to date version in Appendix 7) in their relevant versions are part of this contract. The versions relevant at the time of ratification are enclosed.

Article 13 Partial Invalidity

Should any of the individual provisions of the present contract become invalid, either wholly or in part, or in the case of gaps in the present contract, all other provisions of the present contract shall remain valid. The invalid clause or gap shall be replaced by such a provision as would have been agreed upon by the parties, had they foreseen the invalidity or been aware of the gap.

Appendix 1

Common Mark Standards for the Usage of the Common Mark: Any possibility of mistaking the TransFair-logo for a product-trade-mark has to be prevented against when designing packaging right from the beginning. The logo has to be reproduced solely from masters provided by TransFair InternationaL, including the word "TransFair" written in capital letters. Independent of any particular usage, the logo has to stand clear all around. The TransFair-logo may only be reproduced in black/white.

See also appendix 6 for details of use of the logo.

Appendix 2

Guidelines for the Importation of Coffee from Small Producers or Small Producer Associations

1. Contractual arrangements concerning the importation of coffee have to be entered into for a minimum of one crop cycle, with the stated intent on behalf of the buyer to renew the contract.
   
   
2. Contractual arrangements concerning the importation of coffee as well as any changes thereof have to be documented in writing. This written agreement has to include all major elements of the contract, in particular regarding volume, quality, price, and conditions of transportation. The buyer may only invoke clauses beneficial to him, provided they have been agreed upon in writing.
   
   
3. Payment is to be effected netto upon the first request against the submittance of the documents. The following documents have to be submitted:

• bill
• certificate of weight
• bill of lading fob port of exportation
• Certificate of Origin, Form A (G.S.P.) or EUR/1-certificate, if applicable

4. Upon the request of the seller the buyer is obliged to provide, at the date of signing of the letter of intent or later, up to 60% of the minimum of the contract-value as a credit. The interest to service the credit has to be paid for by the seller; they may not exceed the level of interest and fees common in the market. The credit contract is to be entered separately and in writing, and it has to include regulations on the mode of repayment.
   
   
5. The conditions of the European Contract of Coffee (ECC-Conditions), latest version, have to be included in all international agreements between the parties concerned.
   
   
6. Coffee purchased under TransFair-conditions has to be taken from the latest possible harvest, unless the parties do not specifically agree otherwise, and it has to comply with the following minimum standards:
   
   
   1. for Arabica varieties: European preparation, clean cup
      
      
   2. for Robusta varieties: Fair average quality, clean cup.
      
      
7. If conflicts arise, the parties shall inform TransFair. If possible, TransFair will submit a suggestion for a solution. In case the parties do not agree on this solution, the conflict has to be resolved in accordance with ECC-regulations at a court of arbitration.

Appendix 3

Guidelines for the Importation of Coffee from Authorised Importers

1. The contract between the licensee and the importer, as well as all changes and additions, have to be fixed in writing.
   
   
2. The importer has to state explicitly that the coffee which is the object of the contract has been imported from small producers or small producer organisations in accordance with the regulations laid down in Appendix 2 of the present licence contract. He/she has to undertake to provide at any time upon the request of the licensee or upon the request of TransFair, documentation of having complied with these conditions. Such documentation has to include as a minimum copies of the contracts of purchase with the small producers or the small producer-association, as well as bills, certificates of weight, bills of lading, and certificates of origin for the lotes de cafe, which are the object of the contract. The licensee also has to secure the right that TransFair may at any reasonable office-hour inspect all business documents and production processes on the business premises, in as much as this is relevant to keeping a check on compliance with the clauses of the contract between the importer and the licensee.
   
   
3. If conflicts arise, the parties shall inform TransFair without delay. If possible, TransFair will submit a suggestion for a solution. In case the parties do not agree on this solution, the parties may involve a regular court or a court of arbitration of their choice.

Appendix 4 - Register of Fair Trade Coffee Producers

ORG_ID	ORG_SHORT	PH_PLACE	PH_REGION		COUNTRY
0001	CORACA IRUPANA	Irupana	Sud Yungas; La Paz		Bolivia
0002	COAINE	Caranavi ; Central Nor Este	La Paz		Bolivia
0003	CENCOOP	Coroico	La Paz		Bolivia

see the remainder of this list in the previous menu

Appendix 5

Recommended Minimum Prices for the Purchase of Raw Coffee The prices listed in the following pages are recommended minimum prices for the purchase of raw coffee from the producer-associations. Therefore they are not binding for the licensee or the importer. The licensee or importer, however, are advised that they might violate regulations concerning unfair competition, if they describe coffee purchased at prices lower than the ones listed on the following pages as "fairly traded coffee", and/or mark it with the TransFair-label.

Max Havelaar/TransFair/Fairtrade conditions for the purchase of coffee

1. In any commercial document this set of conditions will be referred to as the "Max Havelaar/TransFair/Fairtrade Conditions".
   
   
2. Only organizations of small coffee producers inscribed in the Max Havelaar/TransFair/Fairtrade Coffee Producers' Register (see Appendix 4) will be entitled to sell green or processed coffee to be marketed under one of the FairTrade labels promoted by the signatories to the Max Havelaar/ TransFair/Fairtrade Coffee Producers' Register and can claim the rights derived from that inscription.
   
   
3. Buyers and sellers will procure to establish a long term and stable relationship in which the rights and interests of both are mutually respected. No deals will be made for a period less than one crop-cycle. Any long-term agreement will be confirmed by means of the exchange of letters of intent, in which volume, quality, price-fixing procedures and shipment schedule, if applicable, are mutually confirmed. Parties will have to agree on the letter of intent before the harvest season valid for that specific origin has started.
   
   
4. Also all other customary conditions applicable to any international transaction will apply, such as the conditions of the European Contract of Coffee, latest edition (hereinafter to be referred to as ECC- conditions), unless overriden by any of the special Max Havelaar/ TransFair/Fairtrade conditions as specified herein.
   
   
5. For Arabicas, the New York "C" market shall be the basis of calculation. The price shall be established in US$-cents per pound, plus or minus the prevailing differential for the relevant quality, basis F.O.B. origin, net shipped weight.

   For Robustas, the London "LCE" market shall be the basis of calculation. The price shall be established in US-dollars per metric ton, plus or minus the prevailing differential for the relevant quality, basis F.O.B. origin, net shipped weight.

   When by legal regulation, all coffee has to be passed through the auction, importer and exporter will agree on a reasonable margin for the exporter to cover his costs.

6. Over the prices established under 5 above, there shall be a fixed premium of 5 US$-cents per pound.
   
   
7. For certified organic or biological coffee with officially recognized certification, that will be sold as such under the mark of one of the marking organizations signatory to the agreement governing the International Fair Trade Coffee Producers' Register of which these Max Havelaar/TransFair/ Fairtrade conditions form part, an additional premium of 15 US$-cents per pound green coffee will be due, on top of the Max Havelaar/TransFair/Fairtrade price as determined under points 5 and 6.
   
   
8. To protect the producers, minimum prices have been defined which overrule the Max Havelaar/TransFair/Fairtrade prices as defined under 5 and 6 when these are lower than the relevant minimum price. The minimum prices vary according to type and origin of the coffee. The following minimum prices, including quality differentials, the fixed Max Havelaar/ TransFair/ Fairtrade premium of 5 US$-cents per pound and the organic premium of 15 US$-cents per pound, apply: (all prices in-US$- cents per pound F.O.B., port of origin)

9. Payment shall be net cash against a full set of documents on first presentation. The documents to be presented will be those stipulated in the contract and the ones customary in the coffee trade.
   
   
10. On request of the seller, the buyer shall make available up to 60% of the value of the contract, valued against the Max Havelaar/TransFair/ Fairtrade minimum price, in credit facilities in favour of the seller upon the signing of the letter of intent as described under 3, or at any date after that, according to the wishes and interests of the seller. The buyer may require the confirmation of the letter of intent by means of a regular purchase contract, prior to the release of the credit. All credit instruments, direct as well as indirect, are allowed, as long as the resources are effectively and at a reasonable cost available to the producer organization at the moment the collection of the harvest starts. The corresponding interest charges shall be covered by the seller at current commercial interest rates or better, according to the credit source. Reimbursement of the loan and interest charges shall be according to the terms and conditions mutually agreed upon in a separate loan agreement.
    
    
11. In case of dispute, parties are held to inform the involved marking organization signatory to the agreement governing the International Fair Trade Coffee Producers' Register, of which these Max Havelaar/ TransFair/Fairtrade conditions form part. If possible, mentioned marking organization will work out a settlement proposal to be presented to both parties. If this settlement proposal is not acceptable to either of the parties, the dispute will be submitted to arbitration according to the ECC conditions, latest edition.

Appendix 6

Specifications for the Design of Packaging Destined for the Final Consumer

1. The licence-product has to be depicted on the front of the packaging. Colour: black/white. Size: 15-20% of the front-area of the packaging.

   Temporary exceptions to this specification may be approved by TransFair in writing, at the written request of the licensee.

2. For the depiction of the licence-product, only printing masters supplied by TransFair may be used.

3. The following information has to be given on the packaging in an easily readable manner: origin of the coffee, coffee-specie(s), trade-name of the licensee, company of the licensee, final consumption date, name and address of TransFair. In the case of blended coffees it is not required to mention proportions of changing origins or proportions of minor volume.

4. Furthermore it is required to print on the back or side of the packaging in an easily readable type, the following text, or an equivalent text approved in writing by TransFair:

   "This high quality coffee has been awarded with the TransFair-seal for 'Fair Trade' by TransFair, an association of organizations which promote trading relationships with the 'Third World' on a basis of partnership.

   "Fair Trade supports and improves the conditions of lifelihood for small farmers overseas. It does not provide development aid, but rather supports self-reliance and equality for those producers who are disadvantaged under present trading conditions.

   "The specific measures of 'Fair Trade' include:

   • Producer prices which are significantly higher than the world market price
   • Adequate prefinancing
   • Longer term supply
   • and purchasing contracts.

<The following passage is not obligatory):

This TransFair-labelled coffee provides coffee-connoiseurs with a well blended mixture of beans from (... e.g. small farmers' cooperatives in Ecuador). Therefore you have not only selected a coffee-blend from (e.g. one of the world's best coffee-growing regions), but you have also contributed to the strenghtening of structures of self-support in these areas.

If you want to know more about TransFair and fair trade, please write to the following address: Fair TradeMark Canada 323 Chapel St. 2nd floor Ottawa, ON K1N 7Z2 Tel. 613-563-3351 Fax 237-5969 Email: bthomson@web.net

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