EXHIBIT 10.5
DISTRIBUTION AGREEMENT
This agreement is entered into this 8th day of February 2002, by Xxxxxx Xxxxxx,
an individual residing in San Diego, California, USA, (hereinafter referred to
as "Xxxxxx Xxxxxx") on the one hand, and CHANNOINE COSMETICS AG LIECHTENSTEIN, a
corporation located in the principality of Liechtenstein, Europe (hereinafter
referred to as "CHANNOINE') on the other hand, whereas CHANNOINE desires to
avail itself of the promotional end marketing services provided by Xxxxxx Xxxxxx
in order to further the promotion and sales of CHANNOINE products. as described
In the attached exhibit A, and whereas Xxxxxx Xxxxxx desires to utilize his
marketing skills In the sales of CHANNOINE products as described in the attached
schedule, and whereas both parties with to work together to maximize the sales
of CHANNOINE products, it is hereby agreed by and between them, and each of
them, as follows:
1. DISTRIBUTION RIGHTS
CHANNOINE hereby grants to Xxxxxx Xxxxxx the exclusive distribution rights Of
and to CHANNOINE COSMETIC Proucts as described in section 4 and as listed in the
attached exhibit A, throughout the Territory of North America. which, for the
purpose of this agreement, is defined as the United States of America, Canada
and Mexico (hereinafter referred to as Territory").
2. DURATION OF CONTRACT
This AGREEMENT shall COMMENCE OR February 8, 2002 and continue thereafter until
terminated by CHANNOINE or Xxxxxx Xxxxxx or any of either party's successors.
At any paint in time, Xxxxxx Xxxxxx has the right to terminate the contract
without particular cause, with 90 (ninety) days written notice. CHANNOINE has
the right to terminate the contract for cause as stated in section 11 of this
agreement.
3. CONFIDENTIALITY OF FINANCIAL CONSIDERATIONS
Both parties hereby agree that any past financial obligations by Xxxxxx Xxxxxx
to CHANNOINE for the acquisition of the Distribution Rights to CHANNOINE
Products in the Territory, have been fulfilled in full. Both parties also agree
that any past and/or future exchange of financial considerations relating to the
Distribution Rights shall be kept confidential,
4. PRODUCTS
CHANNOINE PRODUCTS shall mean the products described in the attached exhibit A.
CHANNOINE reserves the right to change or modify the CHANNOINE PRODUCTS In any
manner and at such limes as CHANNOINE may, In Its sole discretion, consider
necessary or advisable, and any such changes or modifications shall be accepted
by Xxxxxx Xxxxxx, Unless products are damaged in transport or unless products
are in non-salable condition, CHANNOINE shall have no obligation to exchange,
replace. change or modify any CHANNOINE Products previously octal by CHANNOINE
to Xxxxxx Hansarr.
5. ADDITION OF NEW PRODUCTS
If CHANNOINE believes that a new product is suitable far the Territory,
CHANNOINE
will offer Xxxxxx Xxxxxx any new, not yet In the Territory distributed products,
for distribution in the Territory. Within 1 (one) month, Xxxxxx Xxxxxx will give
written notice, if Xxxxxx Xxxxxx will fast this product or not, should Xxxxxx
Xxxxxx decide to test this product, it becomes part of this Agreement. After a
test period of 2 months, Xxxxxx Xxxxxx will make a final decision whether this
new product an be included in exhibit A.
Even if Xxxxxx Xxxxxx decides not to distribute this product, CHANNOINE shall be
barred from distributing and selling this product on its own account, or to
appoint any other person, persons or company as a distributor for this product
within the Territory.
6. PRICES AND PRICE INCREASES
Xxxxxx Xxxxxx shall purchase all CHANNOINE products at an agreed upon price
between the parties. Exhibit B states the valid prices on February 8, 2002. All
prices are ex works Liechtenstein in US-Dollars.
Prices as stated in exhibit B are calculated on the basis of an exchange rate of
USD 1.00 = 1.14 Euru (One US-Dollar equals one point one four Euro). In the
event of the exchange rate between usd and euros fluctuating by more than 8%
(Eight Percent) according to the daily exchange rate published In "The Wall
Street Journal", CHANNOINE reserves itself the right to change the pleas as
shown in exhibit B. Changes in price due to other circumstances, including but
not limited to changes in product formulations, changes in product packaging,
etc. cannot be made by CHANNOINE without written notification of such
circumstances TO Xxxxxx Xxxxxx.
7. Transfer of Distribution Rights
Xxxxxx Xxxxxx hereby agrees not to transfer the distribution rights to
CHANNOINE Products in the Territory to a Third Party,
8. SUB-LICENSING OF DISTRIBUTION RIGHTS
Under the following conditions, Xxxxxx Xxxxxx may grant a sub-license to a Third
Party to purchase and/or resell CHANNOINE products In the Territory:
8.1. Xxxxxx Xxxxxx agrees to supervise and assure the sub-licensee
compliance with CHANNOINE's quality standards at all times.
8.2. Xxxxxx Xxxxxx agrees to use adequate precautions to assure that
sub-licensee will not take any actions that may potentially harm the
CHANNOINE brand in any manner,
8.3. Xxxxxx Xxxxxx agrees to supervise and, if he deems necessary, veto:
8.3.1. The selection of Distribution channels) through which the
third party intends to distribute CHANNOINE products;
8.3.2. The production and distribution and marketing of CHANNOINE
collateral materials, PR-Materials (i.e. Press-releases),
E-Commerce Solutions, and all other CHANNOINE labeled
materials made available to the public.
8.3.3. Claims made about the CHANNOINE Corporation and about
CHANNOINE products.
Any violation of the terms in this agreement by Xxxxxx Xxxxxx'x sub-licensee
will be treated by CHANNOINE as if Xxxxxx Xxxxxx himself committed the
violation. Therefore, any action by Xxxxxx Xxxxxx'x Sub-Licensee that noticeably
damaged the CHANNOINE brand and/or reputation in any manner, entitles CHANNOINE
to terminate this agreement.
9. PACKAGING, LABELING
Prices of CHANNOINE products as shown in exhibit B include packaging in inner
and outer cartons. Product containers, outer packaging, and product insert
sheets will be labeled in German and English. Any other farm of packaging and/or
labeling demanded by Xxxxxx Xxxxxx shall have to be agreed upon and may lead to
prices other than shown in exhibit B.
10. SUPPLY GUARANTEE
CHANNOINE agree to provide Xxxxxx Xxxxxx with all requested supplies of products
as stated in exhibit A, which are within CHANNOINE's potential.
11. TERMS OF DELIVERY
Unless otherwise specified by CHANNOINE, deliveries are ex works, and not
including costs of transport, insurance, custom duties, excise, sales, use and
similar taxes, surcharges and other taxes or charges levied by any and all
federal, state, county, municipal or other governmental authorities, all of
which shall be payable by Xxxxxx Xxxxxx.
12. SELECTION OF DISTRIBUTION CHANNELS/METHODS
Xxxxxx Xxxxxx shall have the right to distribute CHANNOINE products through any
distribution channel, manner or method that Xxxxxx Xxxxxx chooses, as long as
such channel, manner or method ensures a level of quality consistent with
CHANNOINE's brand image and quality level. Potential Distributions channels
include, but are not limited to:
o High-end Department Store Retail Outlets
o Boutiques
o Health and Beauty Spas (Day Spas, Destination Spas, Hotel
Spas, Cruise Ship Spas, Etc.)
o Direct Sales, Multi Level Marketing, Network Marketing
o TV Shopping Networks
o Infomercials
Xxxxxx Xxxxxx may terminate this Agreement without cause anytime by giving 90
(ninety) days prior written notice to CHANNOINE.
CHANNOlNE may terminate this agreement for any one of the following reasons:
13.1. If Xxxxxx Xxxxxx transferred the Distribution Rights to CHANNOINE
Products In the Territory to a Third Perky,
13.2 If Xxxxxx Xxxxxx'x action relating to the Distribution of CHANNOINE
products In the Territory resulted in a noticeable damage to the
CHANNOINE brand.
Such actions may include, but are not limited to:
13.2.1 Selection of (a) distribution channel(s) for CHANNOINE products that
may be considered substantially inferior when compared against
CHANNOINE's perceived brand and product quality.
13.2.2 Repeated production and unauthorized distribution of collateral
material that can be considered substantially inferior when compared
against CHANNOINE's own collateral materials.
13.2.3 Any misrepresentations about the CHANNOINE corporation and/or CHANNOINE
products resulting in legal action taken against CHANNOINE.
Notwithstanding the term of this Agreement, In the event of any breach or
default by CHANNOINE in any of the terms or conditions of this agreement, or any
other contract or arrangement between the parties relating to the sale by Xxxxxx
Xxxxxx of any CHANNOINE Products, Xxxxxx Xxxxxx may immediately terminate this
Agreement by giving 90 (ninety) days prior written notice to CHANNOINE.
In the event of the termination of this Agreement, the terms and conditions of
this Agreement shall continue to be binding upon the parties in connection with
all transactions relating to CHANNOINE Products entered Into between the parties
prior to such termination.
Upon the termination of this Agreement, Xxxxxx Xxxxxx shell immediately (i)
discontinue all use of CHANNOINE's name and any and all trademarks, trade names
or designations of origin owned or used by CHANNOINE or Its suppliers, (ii)
cease REPRESENTING to the public or to any person or entity that Xxxxxx Xxxxxx
has any relationship with CHANNOINE, (iii) return to the CHANNOINE all
literature, advertising and promotional material, displays and similar items
which may have been furnished by CHANNOINE to Xxxxxx Xxxxxx, (iv) deliver to
CHANNOINE all files, permits, licensee and the like obtained or maintained by
Xxxxxx Xxxxxx on behalf of CHANNOINE or In connection with CHANNOINE.
Xxxxxx Xxxxxx further expressly acknowledges that upon the termination of this
Agreement CHANNOINE shall have no liability to Xxxxxx Xxxxxx for expenditures by
Xxxxxx Xxxxxx of time effort or money in connection with the performance of Its
obligations under this Agreement or in furtherance of any sale or promotian of
CHANNOINE.
14. TERMS OF PAYMENT
All orders placed by Xxxxxx Xxxxxx with CHANNOINE shall be prepaid in full. Upon
receipt of Xxxxxx Xxxxxx'x payment in full, CHANNOINE will ship ordered products
ex works Liechtenstein to Xxxxxx Xxxxxx'x destination of choice.
15. FARCE MAJEURA
In the event that delivery of goods, materials or supplies under the terms of
this agreement Is necessarily delayed due to strike, injunctions, government
controls, acts of God, or other causes reasonably beyond the control of either
party, then any time of performance shall be extended by a period to be mutually
agreed upon by the parties, without penalty to either party.
16. NON-COMPETITION
Xxxxxx Xxxxxx agrees that, throughout the lifetime of this agreement, he will
not expert CHANNOINE products to or distribute CHANNOINE products outside the
Territory, without the express written consent of CHANNOINE, Xxxxxx Xxxxxx will
net sell products at are substantially similar to CHANNOINE products of exhibit
A.
Xxxxxx Xxxxxx acknowledges and agrees that In the event of its unauthorized
exportation or distribution of CHANNOINE products outside the Territory without
the express written consent of CHANNOINE, CHANNOINE may not have an adequate
remedy at law, and therefore, injunctive or other equitable relief may be sought
to restrain such exportation or distribution whether threatened or actual.
CHANNOINE agrees that, throughout the lifetime of this agreement, it will not
export CHANNOINE products to or distribute CHANNOINE products in the Territory,
without the express written consent of Xxxxxx Xxxxxx. CHANNOINE will not sell
products in North America that are substantially similar to CHANNOINE products
of exhibit A.
CHANNOINE acknowledges end agrees that In the event of its unauthorized
marketing and promoting of CHANNOINE products within the Territory, Xxxxxx
Xxxxxx may not have an adequate remedy at law, and therefore, Injunctive or
other equitable relief may be sought to restrain such marketing and promoting,
whether threatened or actual.
17. TRADEMARKS
The parties acknowledge and agree that CHANNOINE and its suppliers have acquired
various patents, trademarks, trade names, end trade secrets with respect to
CHANNOINE Products, and that matters relating to the manufacture, production and
distribution of CHANNOINE Products constitute confidential information and trade
secrets of CHANNOINE and Its suppliers and are not commonly known or accessible
to the trade. Under this agreement the right is glean to Xxxxxx Xxxxxx to use
trade names, confidential information or trade secrets relating to CHANNOINE
Products for the sole purpose of furthering the products' sale in the Territory.
Xxxxxx Xxxxxx Is granted the right to use or duplicate same, in part or in
whole, i.e. for the design of marketing and safes aids and other collateral,
etc. Xxxxxx Xxxxxx shall receive such confidential
Information and trade secrets in confidence and trust, without revealing same to
any other person or duty, CHANNOINE reserves the right to review all sales aids,
marketing materials, and any other collateral produced by and through Xxxxxx
Xxxxxx to assure that their quality is consistent with the CHANNOINE image and
with the quality of collateral produced by CHANNOINE. In the event that
collaterals produced by and through Xxxxxx Xxxxxx do not meet CHANNOINE
standards, CHANNOINE reserves the right to prohibit their distribution in the
Territory.
18. PRODUCT GUARANTEE
CHANNOINE acknowledges that its products must meat arty and all applicable North
American requirements In effect, at all times, Xxxxxx Xxxxxx therefore agrees to
furnish all necessary data such as laws, statues, etc. In order to fulfill these
requirements and perform the final examination thereof.
Xxxxxx Xxxxxx shall immediately notify CHANNOINE of any defective CHANNOINE
Products sold and delivered by CHANNOINE to Xxxxxx Xxxxxx Xxxxxx Xxxxxx shall
allow CHANNOINE the opportunity to inspect any defective CHANNOINE Products and,
If requested by CHANNOINE, shall return such defective CHANNOINE Products to
CHANNOINE at CHANNOINE's expense. In the event that CHANNOINE determines, at Its
sole discretion, that the defects in any such defective CHANNOINE Products were
not caused by Xxxxxx Xxxxxx or others after the shipment of same by CHANNOINE to
Xxxxxx Xxxxxx, CHANNOINE shall, at its option, either provide Xxxxxx Xxxxxx with
a re-fund or credit for the purchase price paid by Xxxxxx Xxxxxx to CHANNOINE,
or exchange such defective CHANNOINE Products,
19. OTHER INFORMATION
Both parties agree to inform the other party immediately of any irregularity,
problems or other significant circumstances relating to this agreement. On
request, Xxxxxx Xxxxxx will provide CHANNOINE with regularly reports regarding
the market conditions, trends, clients, and activities.
20. NOTICES
Any notice required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been given upon delivery if delivered
personally, 48 hours after proper telefax transmittal If transmitted by telefax,
or 14 days after mailing if mailed by certified or registered airmail, return
receipt requested, postage prepaid, addressed in accordance with the addresses
set forth at the beginning of this Agreement, or such other addressee of which
notice is so given.
21. INDEMNIFICATION
Xxxxxx Xxxxxx shall indemnify and hold CHANNOINE harmless from and against any
and all claims, demands, causes of action, losses, liabilities, judgments,
damages, obligations, costs or expenses (including attorney's fees) arising out
of or in connection with any acts or omissions of Xxxxxx Xxxxxx under this
Agreement, or any other contracts or arrangements between the parties, or any
guarantee, warranty or representatlon, express or implied, made or given by
Xxxxxx Xxxxxx to its customers or any other persons or entities with respect to
this Agreement or any CHANNOINE Products.
22. CONTROLLING LAW
The parties hereby agree that any dispute arising from this agreement and/or in
regard to any provision there under and/or compliance herewith shall be
resolved pursuant to and under the laws of the Principality of Liechtenstein,
unless otherwise stated, disputes in regard to this contract will be resolved by
a Liechtenstein court.
23. RECOVERY OF COSTS AND PIES
If any dispute arises under or pursuant to this Agreement, or if it shall become
necessary for any party to take legal action to enforce this agreement and/or
any provision thereof, including by means of binding, non-judicial arbitratlon,
the prevailing party In any such action shall be entitled to and shall recover
from the other party all legal coats and fees incurred in such endeavor,
Including, but not limited to, attorneys' fees,
24. BINDING EFFECT ON SUCCESSORS
This agreement shall remain in effect and be binding upon the successors in
interest, beneficiaries, or assigns of both Xxxxxx Xxxxxx and CHANNOINE, and
shall remain effective, in all particulars, regardless of any change in
ownership, control or management of either Xxxxxx Xxxxxx or CHANNOINE.
25. GENERAL
In the event, that any provision of this Agreement is or will be determined
inoperative or unlawful, such provision shall be deemed severed from this
Agreement, but every other provision shell remain in full force and effect. For
any such severed provision there shelf be deemed substituted a similar provision
to accomplish the intent of the parties to the extent permissible by applicable
law. This Agreement, taken together with the exhibits attached hereto,
constitutes the entire agreement of the parties with respect to this transaction
and supercedes all prior oral or written negotiations, agreements, or
understandings with respect to such transaction. This agreement may not be
amended, changed or modified except by a writing duly executed by bath of the
parties hereto.
The parties hereto, by their signature below, acknowledge that they have read
and considered the above, and have had ample opportunity to discuss same with
independent legal counsel of their own choosing. the parties acknowledge that
the terms hereof are meant to be effective and binding as to each OF them and
not mere recitals. Being in agreement with the terms and conditions noted above,
the parties hereto affix their signatures as fellows on the signature page of
this agreement:
(TRANSLATOR'S NOTE: SIGNATURE PAGE, EXHIBIT A (PRODUCT LIST) AND EXHIBIT B
(PRICE LIST) WERE NET TRANSLATED)
