DISTRIBUTION AGREEMENT
This
Distribution Agreement (the "Agreement") is entered into this 9th day of July,
2008, by and between Cono Italiano, Inc. ("Cono"), a Delaware corporation,
having its principal place of business at 000 X. Xxxxx Xxx, #000, Xxxx Xxxxxx,
XX 00000, and Xxxx Gelato, Inc. ("Xxxx"), a South Carolina corporation, having
its principal place of business at 0000 Xxxxxxx Xxxxxx Xxxxxxx, Xxxxxxx at
Xxxxxxx, Xxxxx X 0, Xxxxxx Xxxx, Xxxxx Xxxxxxxx 00000. Cono holds an sole
license to produce and distribute a cone shaped pizza (the "Pizza Cono") in the
United States, Canada, and Mexico and the parties desire to and hereby do, enter
into a distributor/supplier relationship for the retail sale of the Pizza Cono
and for sales of franchises pursuant to the terms and conditions set forth in
this Agreement.
(b) Cono
represents and warrants that Cono and Xxxxx Xxxxx are each in good standing and
have not breached any agreements with Cono Italiano. Cono also represents and
warrants that Cono and Xxxxx Xxxxx have not breached any other agreements with
any other person or entity relating to the Products.
(c) Xxxxx
Xxxxxxxxx represents and warrants that (i) to the best of his knowledge, the
representations and warranties in section 1.3(b) are true and accurate and (ii)
he and any affiliates or other entities with which he is employed or has an
ownership interest in are in good standing and have not breached any agreements
between Cono Italiano and Pizza Hands/P-Group that gave Xxxxx Xxxxxxxxx and/or
his affiliates and employers the rights to distribute, sell, and manufacture the
Products in the United States, Canada, and Mexico.
(b) The
foregoing notwithstanding, Cono understands that Xxxx is currently in
discussions with certain groups regarding distribution and sales rights in
several areas and by written mutual agreement, the parties may make special
exceptions to the foregoing definition of Retail Channels.
(a)
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Xxxx
may terminate this Agreement at any time during the first twelve (12)
months without cause. In the event of such termination, Cono shall not be
responsible for the return of any funds previously paid by
Xxxx.
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(b)
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Upon
breach by one party of any material term of this Agreement (other than any
payment provisions, which are covered by section 2.2(d) below), the other
party shall give written notice of such breach and, in the event such
breach is not cured within thirty (30) days, the party giving notice shall
have the right to terminate the
Agreement.
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(c)
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If
there is a breach in either (i) any of the agreements between and/or among
Cono Italiano, Xxxxx Xxxxx, and Total Luxury Group related to Xxxxx’x and
Cono’s rights to the Products in the United States, Canada, and Mexico
(the “Xxxxx Documents”) or (ii) any of the agreements between Cono
Italiano and Pizza Hands/P-Group that gave Xxxxx Xxxxxxxxx (and any
affiliates or other entities with which he is employed or has an ownership
interest in) the rights to distribute, sell, and manufacture the Products
in the United States, Canada, and Mexico (the “Xxxxx Documents”), then
Xxxx shall give written notice of such breach and, in the event such
breach is not cured within thirty (30) days, Xxxx shall have the right to
terminate the Agreement.
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(d)
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In
the event one party fails to pay any undisputed amounts due under this
Agreement, the other party shall give written notice of such breach and,
in the event such breach is not cured within thirty (30) days, the party
giving notice shall have the right to terminate the
Agreement.
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(e)
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In
the event one party becomes insolvent, files a petition in bankruptcy,
makes an assignment for the benefit of creditors, or otherwise becomes
incapable of performing its duties and responsibilities, the other party
may terminate the Agreement.
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(f)
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In
the event Cono is unable to meet Xxxx'x forecasted demands for the
Products or if Cono is unable to provide Products of reasonable commercial
quality, and either of such inabilities continues for a period of thirty
(30) days after Xxxx provides notice of either situation to Cono, Xxxx may
terminate the Agreement.
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(g)
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Xxxx
may terminate this Agreement immediately if there is a breach in the
non-infringement representation and covenant set forth in section 1.3 or
if there is ever an adjudication, arbitration ruling, settlement agreement
which materially reduces or terminates the rights of Cono to manufacture,
distribute and / or sell the
Products.
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(a)
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$50,000
upon execution of this
Agreement;
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(b)
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$25,000
upon delivery to a warehouse designated by Xxxx all manufacturing
equipment needed to manufacture and package empty cones within the United
States;
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(c)
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$25,000
upon successful installation of production equipment in a manufacturing
site in the United States or upon completion of satisfactory definitive
arrangements and installation of manufacturing equipment with a third
party manufacturer within the United States capable of providing Products
sufficient to meet Xxxx’x reasonable forecasted needs for the Products at
a price not exceeding $0.52 per unfilled cone, including freight (as well
as the reasonable forecasted needs of all wholesale
customers);
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(d)
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$50,000
after Cono concludes ninety (90) days of production of Products in the
United States (at a price not exceeding $0.52 per unfilled cone, including
freight) sufficient to meet the actual demand for Products by Xxxx and
other customers;
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(e)
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$100,000
ninety (90) days after the payment made pursuant to section 3.1 (d) above,
provided that production continues to meet the actual demand for Products
by Xxxx and other customers (at a price not exceeding $0.52 per unfilled
cone, including freight).
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In the
event Cono is unable to establish a production facility in the United States
capable of meeting the actual demand for Products from Xxxx and other customers
on or before a date eight (8) months after the effective date of this Agreement,
then the payments made by Xxxx pursuant to this section 3 shall be refunded to
Xxxx, and all options to purchase common stock granted to Xxxx pursuant to
section 4 below shall be canceled. In the event Xxxx terminates this Agreement
pursuant to (i) section 2.2(g) at any time during this Agreement or (ii) any
subsection of section 2.2, other than section 2.2(a) or section 2.2(g), within
the first three (3) years following the execution of this Agreement, then the
payments made by Xxxx pursuant to this section 3 shall be refunded to
Xxxx.
Payment
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Subsection
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Shares
Issued
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$ | 50,000 | 3.1 | (a) | 250,000 | ||||||
$ | 25,000 | 3.1 | (b) | 0 | ||||||
$ | 25,000 | 3.1 | (c) | 0 | ||||||
$ | 50,000 | 3.1 | (d) | 0 | ||||||
$ | 100,000 | 3.1 | (e) | 250,000 |
Said
shares shall be issued in two installments: (i) 250,000 shares shall be issued
simultaneously with Xxxx’x payment of $50,000 pursuant to section 3.1(a) of this
Agreement, and (ii) 250,000 shares shall be issued simultaneously with Xxxx’x
payment of $100,000 pursuant to section 3.1(e). All such shares shall be subject
to the provisions of SEC Rule 144 and other applicable SEC regulations;
provided, however, that all of such shares shall have the same rights as any
shares held by the current shareholders.
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5.2 GOVERNING
LAW. This Agreement shall be construed and enforced in accordance with the laws
of the State of NEW JERSEY.
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[SIGNATURES
APPEAR ON FOLLOWING PAGE]
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[Signature
Page for Distribution Agreement]
Xxxx
Gelato, Inc.
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By
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/s/
Xxxxxxxx X. Xxxxx
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By
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/s/ Xxxxxx Xxxxxxx
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Xxxxxxxx
X. Xxxxx
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Xxxxxx
Xxxxxxx, President
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Chief
Executive Officer
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Date:
July 9, 2008
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Date:
July 9,
2008
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For
purposes of Section 1.3(c) only:
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/s/
Xxxxx Xxxxxxxxx
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Xxxxx
Xxxxxxxxx
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