Exhibit 10.13
Distributor Rights Agreement between Purchaser and Old Whiskey River
DISTRIBUTOR RIGHTS AGREEMENT
AGREEMENT made as of the 9th day of December, 2002 by and
between Old Whiskey River Distilling Company, LLC, a limited liability company
organized under the laws of the State of Hawaii, with its principal place of
business at 0000 Xxxxx Xxxxx Xxxx, Xxxxx, Xxxxxx 00000 ("Grantor") and Drinks
Americas Inc., a Delaware corporation with its principal place of business at
000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx 00000 ("Grantee").
Definitions.
"Alive Spirits" shall mean Alive Spirits, L.L.C., an
Oregon limited liability company that has acted as distributor for the
whiskey known as "Old Whiskey River" on behalf of Grantor and shall,
subsequent to the date hereof, act as supplier to Parliament.
"Contract Year" shall mean initially the period
commencing on the effective date of this Agreement and ending on
December 31, 2002, and then any calendar year thereafter.
"Initial Term" shall mean the period commencing as
of the date first written above and continuing in full force and effect
through December 31, 2017.
"Maxmillian" shall mean Maxmillian Partners, LLC, a
Delaware limited liability company that is the principal owner of the
Grantee.
"Parliament" shall mean Parliament Import Company, Inc.
"Products" shall mean the alcoholic beverage products
listed on Schedule 1(f) annexed hereto and any products developed
during the term of this Agreement using Xxxxxx Xxxxxx'x name or
likeness or developed by Xxxxxx Xxxxxx in conjunction with Xxxx X.
Xxxxxx ("Xxxxxx").
"Promissory Note" shall mean that certain 6%
Promissory Note issued on the date hereof by Grantee to Xxxxxx in the
principal amount of $225,000 and payable by its terms no later than one
hundred and eighty (180) days from the date of issuance.
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"Renewal Term" shall mean any five-year period
commencing on the first day following the end of: (i) the Initial Term,
or (ii) any five-year renewal period after the first renewal period.
"Territory" shall mean the world.
Appointment.
Grantor hereby appoints Grantee as the sole and
exclusive holder of the distribution rights of the Products in the
Territory. Grantee shall have the right, in its sole discretion, to
appoint distributors and sub-distributors within the Territory. Grantee
shall notify Grantor of any such appointment within thirty (30) days.
Grantee hereby accepts appointment as the sole and
exclusive holder of distribution rights of the Products in the
Territory and shall, during the term of this Agreement, use all
reasonable efforts to cause the Products to be distributed initially in
the United States and thereafter throughout other parts of the
Territory.
Grantor and Grantee hereby agree and acknowledge
that: (i) Grantee does not, and in the future may not hold the
necessary permits and licenses to operate as a distributor in the
Territory, and (ii) the Grantee, therefore, may assign any or all of
its rights and delegate any or all of its duties under this Agreement
to Parliament, Alive Spirits and any other entities it may deem
appropriate.
Grantor shall cause Alive Spirits, its current
distributor, to continue in each State during the Transition Period (as
defined below), its service of the Products line, pursuant to the
Drinks Americas Sub-License, Distribution and Supply Agreement attached
hereto as Exhibit 2(d) (the "Sub-License Agreement"), including without
limitation, the sale of the Products together with appropriate brand
registration and renewals, price posting and sub-distributor
appointments, as required by appropriate administrative laws and
regulations. Grantor shall also cause Alive Spirits to cooperate in the
completion and processing of any application necessary for the transfer
of any brand registration or license to Grantee or its designee, as
necessary. For purposes of this Agreement, the "Transition Period" with
respect to each State shall mean the period commencing on the date
hereof and continuing, with respect to said State, until such time as
Alive Spirits is notified by the Grantee that Parliament and/or any
other designee of Grantee is authorized to distribute, sell and ship
the Products in said State. The services of Alive Spirits and any
sub-appointees related thereto shall be deemed to comply with Section
2(a) herein and shall comply with all applicable laws, rules and
regulations.
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Grantor shall further cause Alive Spirits, pursuant
to the Sub-License Agreement, during the Transition Period and
thereafter, to (i) sell the Product inside the Territory and (ii) sell
the Product to Parliament for distribution outside of the Territory, on
such terms and in such amounts as negotiated between Parliament and
Alive Spirits. For the purposes of this Section 2(e) only, "Territory"
shall have the meaning assigned to such term in the Sub-License
Agreement.
Duration.
The term of this Agreement shall be the Initial Term,
unless sooner terminated in accordance with Section 11, and shall
include any Renewal Term, provided renewal occurs in accordance with
Section 3(b).
At the end of the Initial Term and each Renewal Term,
this Agreement shall be automatically renewed for an additional Renewal
Term of five (5) years provided that Grantee has achieved the minimum
sales goals set forth in Section 4, and this Agreement has not been
terminated in accordance with Section 11.
Minimum Volume Obligations.
During the term of this Agreement, Grantee's minimum
sales volume obligations for the Product shall be as set forth on
Schedule 4(a) annexed hereto ("Volume Obligations"). In the event the
Grantee exceeds the Volume Obligations for the Products for a
particular Contract Year, such excess shall be credited toward meeting
the Volume Obligations during the following Contract Year.
Notwithstanding any provisions contained herein to
the contrary, Grantor may not terminate this Agreement pursuant to
Section 11(a)(i) herein if Grantee's default thereunder is due to an
inability or unwillingness of any supplier of the Products to accept or
fulfill orders for Products placed by the Grantee.
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Licensing Fee.
During the Term of this Agreement, all Products sold
by Grantee, less any credits and returns, shall pay licensing fees to
Licensor at a per case rate calculated by using the following formula:
(i) the price at which Grantee sells the respective case of the
Product, less (ii) a sales fee of $2.00, less (iii) the price paid by
Grantee to distiller for the respective case of the Product, shall
equal the license fee for such case of Product.. Payment of the license
fee shall be made in US dollars to a bank designated by Grantor and
shall be due thirty (30) days from the date of the xxxx of lading of
the delivery on which the licensing fee is due, with late fees to
accrue at a rate of twelve percent (12%) per annum thereafter.
Marketing and Advertising. To develop sales of the Products in the
Territory, the parties shall make a coordinated marketing, advertising,
and promotional effort; provided, however that Grantee shall ultimately
make all decisions with respect to said effort. The parties shall meet
once during each Contract Year to discuss plans for marketing,
advertising and promotion of the Products for the following Contract
Year with Grantee being responsible for the implementation of such
plans after consultation with Grantor. At such meetings the parties
shall discuss the budget for such programs and each party's
contribution thereto. All marketing, advertising and promotional
efforts will be in compliance with the Xxxxxx License (as defined
below).
Representations, Warranties and Covenants of Grantee. Grantee
represents, warrants and covenants to Grantor as follows:
This Agreement, when executed and delivered by the
Grantee, will constitute a valid and legally binding obligation of the
Grantee, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other laws of general application affecting
enforcement of creditors' right generally.
Grantee will cause Parliament to obtain the federal,
state and local licenses or permits that are necessary to conduct its
business within the Territory as a distributor of the Products and to
engage in the transactions intended by this Agreement.
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Grantee shall maintain a distributor network of
adequate size to represent and promote the sales of the Products. Such
sales force shall be kept properly informed as to all advertising,
marketing and promotional programs and policies regarding the Products.
Grantee shall use all reasonable efforts (i) to sell,
or cause its designee to sell, to its customers only containers of the
Products of saleable quality and (ii) to remove any unsaleable Products
from its or any sub-distributor's or retailer's inventory in the
Territory.
Grantee shall furnish reports or information
concerning the Products that Grantor may from time to time reasonably
request.
Grantee shall timely file, or cause its designee to
timely file, all registrations, price schedules, and reports for the
Products that are required by applicable laws or regulations in
appropriate form, with copies thereof to the Grantor.
Grantee shall conduct, and cause its designee to
conduct, its activities under this Agreement in accordance with local,
state and federal laws and regulations regarding the sale of the
Products.
Grantee shall comply with all covenants made by the
Grantor in that certain License Agreement with Xxxxxx Xxxxxx effective
as of June 19, 2001 (the "Xxxxxx License"), for so long as said Xxxxxx
License is in effect, with the exception of any obligations arising
under: (i) Section 4 thereunder relating to royalties, and (ii) Section
8 thereunder relating to Xxxxxx Xxxxxx'x conversion option to the
extent such provisions continue to be in full force and effect in the
Xxxxxx License.
Representations, Warranties and Covenants of Grantor. Grantor
represents, warrants and covenants to Grantee as follows:
Grantor has the authority to enter into and carry out
its obligations under this Agreement. This Agreement when executed and
delivered by the Grantor will constitute a valid and legally binding
obligation of the Grantor, enforceable in accordance with its terms
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other laws of general application
affecting enforcement of creditors' right generally.
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This Agreement and its execution, delivery and
performance does not and will not breach any agreement or understanding
to which Grantor is a party, including without limitation, the Xxxxxx
License.
Grantor has the right to designate and appoint the
Grantee as the exclusive holder of distribution rights of the Products
in the Territory. Any and all distribution rights to any of the
Products heretofore designated or granted to Alive Spirits or any other
person or entity have been fully and properly terminated, except as
otherwise specifically contemplated in writing by the parties hereto.
Grantor shall use its best efforts to prevent the
sale of unauthorized shipments of the Products in the Territory by
entities or persons other than Grantee or its designated assignee.
Neither Xxxxxx nor Grantor nor Alive Spirits has
violated any beverage alcohol laws or criminal statutes.
Grantor shall defend, indemnify and hold harmless
Grantee from and against any and all damages and liability, costs or
expenses, including without limitation reasonable attorney's fees it
may incur as a result of product liability, trademark infringement,
product recall, breach of any of Grantor's representations or
warranties herein, breach of contract or other action relating to or
arising from Grantee's distribution of the Products within the
Territory.
Inventory; Point of Sale Merchandise.
Grantee shall, as of the date hereof, purchase from certain control
state liquor warehouses inventory of the Products at the price set
forth in Schedule 9(a) annexed hereto. Said inventory is described
in said Schedule. Grantee's obligation under this Section 9(a) may
be assigned to Parliament without Grantor's consent.
Grantee shall, as of the date hereof, purchase from Alive Spirits
point of sale merchandise, at a price equal to Alive Spirits' cost,
up to an aggregate purchase price of $50,000. Said point of sale
merchandise and Alive Spirits' respective cost is set forth in
Schedule 9(b) annexed hereto.
Grantee shall, on an as needed basis, purchase from Alive Spirits
such additional point of sale merchandise as Alive Spirits holds as
of the date hereof, at a price equal to Alive Spirits' cost, up to
an aggregate purchase price of $33,524. Said point of sale
merchandise and Alive Spirits' respective cost is set forth in
Schedule 9(c) hereto.
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All sales of the inventory being purchased pursuant to this Section
9 shall be included on behalf of Grantee for purposes of calculating
its Volume Obligations.
Trademarks. Simultaneously with the execution of this Agreement,
Grantor and Grantee shall enter into that certain Trademark License
Agreement, substantially in the form attached as Exhibit B hereto and
incorporated by reference herein, whereby Grantor grants to Grantee an
exclusive license to use the trademarks and/or brand names in the
Territory as applied to the Products (the "Trademarks") and any
individual names used in association with the Products ("Celebrity
Names") for the Term of this Agreement for the purpose of the
marketing, sale, promotion and distribution of the Products.
Termination.
Grantor may terminate this Agreement prior to the
expiration of its term by giving notice to the Grantee for any of the
following reasons, which reasons Grantee acknowledges constitute good
cause;
(2) Grantee has failed to fulfill the Volume Obligations for the
applicable Contract Year and has not remedied the failure after one hundred and
eighty (180) days' written notice of such failure following the end of such
Contract Year;
(3) Grantee has failed to make payment of any license fee and has
not remedied the failure after ninety (90) days' written notice of such failure
and no bona fide dispute regarding said license fee(s) exists between the
parties;
(4) Grantee has breached or failed to fulfill any other material
term or condition of this Agreement and has not remedied the breach or failure
after ninety (90) days' written notice of said breach or failure to perform;
(5) Grantee or Maxmillian has filed a voluntary petition in
bankruptcy or entered into an arrangement under a national or federal bankruptcy
statute or other voluntary proceeding under any federal, state, or local law for
the settlement or extension of payment of its obligations to general creditors;
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(6) An involuntary lien or petition in bankruptcy has been filed
against Grantee or Maxmillian and such involuntary lien or petition is not
dismissed within thirty (30) days;
(7) Grantee or Maxmillian has ceased to do business, but not as a
result of a merger or consolidation to which it is a party; or
(8) Grantee has failed to pay the balance of the Promissory Note by
its maturity date.
Grantee may terminate this Agreement prior to its expiration by
giving notice to Grantor for any of the following reasons:
(9) Grantor has failed to fulfill any other material term or
condition of this Agreement and has not remedied this failure after ninety (90)
days' notice thereof;
(10) Grantor ceases to have the right to the Trademarks or Celebrity
Names and to grant the license to Grantee to use the Trademarks and Celebrity
Names herein;
(11) Grantor has filed a voluntary petition in bankruptcy or entered
into an arrangement under a national or federal bankruptcy statute or other
voluntary proceeding under any federal, state, or local law for the settlement
or extension of payment of its obligations to general creditors;
(12) An involuntary lien or petition in bankruptcy has been filed
against Grantor and such involuntary lien or petition is not dismissed within
thirty (30) days; or
(13) Grantor has ceased to do business.
Events Following Expiration or Termination.
Upon the expiration or termination of this Agreement, the following
shall occur:
(14) All rights, licenses and privileges granted to Grantee under
this Agreement shall immediately cease and terminate;
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(15) Grantee shall discontinue the use of the Trademarks except for
the purpose of liquidating or causing the liquidation of the remaining inventory
subject to subsection 12(a)(iii) below;
(16) Grantor shall, within ninety (90) days following termination or
expiration, arrange for the repurchase and transfer of any and all saleable
containers of the Products and all actual point-of-sale material for the
Products then owned by Grantee at its laid-in cost plus transfer and handling
charges including freight, warehousing, insurance and customs duties.
Any indebtedness of either party to the other party not already due
shall become immediately due and payable as of the expiration or the effective
date of termination of this Agreement. In no event shall either party be liable
for any debts of the other party to its customers or other creditors.
Business Records Related to the Products. Each party shall maintain
reasonably accurate and complete business records regarding the sale and
distribution of the Products. Each party shall make such records available to
the other party during regular business hours and shall send to such other party
copies of any such records as such party may from time to time reasonably
request.
Miscellaneous.
This Agreement represents the entire agreement between the parties,
supersedes all their prior oral or written agreements or understandings, and
shall not be changed except by a further written agreement or a written
amendment to this Agreement executed by both parties.
The failure by either party to exercise any of its rights under this
Agreement shall not be construed as a waiver of such rights. Any such failure
shall not preclude the exercise of such rights at any later time.
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Force Majeure. If any party is prevented from performing any of its
obligations hereunder by an occurrence beyond its reasonable control such as,
but not limited to, acts of God, fire, flood, war, insurrection, government
regulations, raw material shortage, strikes, or lack of common carrier
facilities, then the affected party shall be excused from performance for so
long as such occurrence exists.
Severability. If any term of this Agreement is in violation of, or
prohibited by, any applicable law or regulation, such term shall be deemed as
amended or deleted to conform to such law or regulation without invalidating or
amending or deleting any other term of this Agreement.
Assignment. Neither party may assign this Agreement without the prior
written consent of the other party, which consent shall not be unreasonably
withheld. Any purported assignment without the required consent shall be null
and void. Notwithstanding the foregoing, Grantor and Grantee agree that Grantee,
without the prior written consent of Grantor, may assign this Agreement and its
rights and obligations hereunder to Parliament, Alive Spirits and any other
entity it may deem appropriate. Grantor agrees that in the event that any
Product brand listed on Schedule 1(f) is assigned to a third party, Grantor's
obligations and Grantee's rights thereto under this Agreement shall be assigned
to said third party.
Notice. All notices, requests, demands or other communications under or
with respect to this Agreement shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by certified or registered mail,
return receipt requested, postage prepaid, a nationally recognized courier
service or sent by facsimile transmission to the parties at their respective
addresses as set forth above, or at such other address as shall be designated by
a party in a written notice to the other parties.
Choice of Law and Disputes.
This Agreement shall be governed by, and be construed in accordance with,
the laws of the State of New York, excluding its conflict of laws rules.
Any controversy, claim, or dispute arising out of, or in connection with,
or relating to this Agreement, or the breach or performance thereof, shall be
submitted to arbitration in the City of New York, pursuant to the rules then
obtaining of the American Arbitration Association. Any decision or award
rendered by such arbitration shall be final and binding upon the parties hereto
and judgment may be entered in any Court having authority to do so. Any decision
or award by the arbitrator(s) rendered pursuant to this Agreement shall be
limited to the specific parties involved and the specific issues determined
therein. The decision and award of the arbitrator(s) shall not be given any
collateral estoppel effect with regard to issues of fact or law determined or
necessarily determined thereby.
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Relationship of the Parties. The parties acknowledge that no joint venture
has been created by this Agreement and that neither party can take any action
that is legally binding on the other party without the prior consent of the
party to be charged. Grantee shall for all purposes be an independent contractor
and not an agent or employee of Grantor or any of its affiliates. Grantee and
Grantor are interested only in the results to be achieved, and the conduct and
control of the work or services of Grantee will lie solely with Grantee.
Counterparts. This Agreement may be executed and endorsed in one or more
original or facsimile counterparts and each such facsimile counterpart shall,
for all purposes, be deemed to be an original, and all counterparts shall
together constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed in its name and behalf by its officer or officers duly
authorized, on the day and year first written above.
DRINKS AMERICAS INC.
By: /s/______________________________
Name: J. Xxxxxxx Xxxxx
Title: Chief Executive Officer
OLD WHISKEY RIVER DISTILLING COMPANY LLC
By: /s/_______________________________
Name: Xxxx Xxxxxx
Title:
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SCHEDULE 1(f)
Products
Whiskey known as "Old Whiskey River" which is associated closely with Xxxxxx
Xxxxxx'x name and likeness.
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EXHIBIT 2(D)
Drinks Americas Licensing Agreement
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SCHEDULE 4(a)
Minimum Volume Obligations
Products Year Cases Per Contract Year
Old Whiskey River (750ml. per bottle) 2002 None
2003 8,000
2004 12,000
2005 & all 15,000
subsequent
Contract Years
Old Whiskey River --- No minimum
(200ml. per bottle; 50ml. per bottle; gift back) volume required
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SCHEDULE 9(a), (b) & (c)
Pricing
Products Amount Price Per Case
(a) Old Whiskey River 151 cases (750ml/12 bottles per case) $[100.00]
(b) [TO COME]
(c) [TO COME]
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