Exhibit 10.5
Xanadu Normans Wines Distribution Agreement
THIS AGREEMENT is made on the 24th day of June 2003.
BETWEEN
XANADU WINES LIMITED (ABN 59 086 435 136) of 00 Xxx Xxxxxx, Xxxx Xxxxx, Xxxxxxx
Xxxxxxxxx ("Xanadu")
AND
DRINKS AMERICAS, INC. of Xxxxx 000, 000 Xxxxxxx Xxxx, Xxxxxx, XX 00000, XXX
("Importer")
THE PARTIES COVENANT AND AGREE:
1. OPERATIVE PART
1.1 Interpretation
In this Agreement, unless the context requires otherwise:
Agreement means this deed as amended or supplemented from time to time;
Commencement Date means the 15th day of July 2003;
Competing Producer means an Australian wine producer that can
reasonably be considered to be competitive with Xanadu having regard to
its overall image, recognition, reputation, sales volume, product range
or other similarities;
Competing Product means an Australian wine product that can reasonably
be considered to be competitive with the Products taking into account
each or any of the following criteria in relation to the wine:
(a) the normal wholesale selling price;
(b) quality;
(c) grape varieties or wine style;
(d) image and profile;
(e) labeling, get-up or packaging;
(f) the brand or product name or producer name; and
(g) any other similarities;
but "Competing Product" does not include:
(h) any wine product from any producer for which the Importer
is Importer and/or wholesaler at the date of this Agreement;
(i) any wine product from any producer which is sold or
distributed at any time or from time to time by the Importer
on behalf of an independent commission agent;
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(j) any Australian wine product which does not compete with
the Products taking into account the criteria numbered (a) to
(g) in this definition;
Confidential Information means any knowledge or information, which the Parties
now have or may acquire in the future concerning:
(a) this Agreement; or
(b) the policy, processes, operations, affairs, or activities
of either party including but not limited to trade secrets,
drawings, know how, techniques, instructions, business and
marketing plans, records of any type, accounts arrangements,
customer information and lists, concepts and formulae; and
(c) the intellectual property of either party (whether by
ownership or license), including but not limited to patents,
trademarks, logos, copyrights, processes, confidential
information and know how, registered and non-registered
designs, models, computer programs and software, computer
source codes, operation manuals, drawings, equipment,
advertising and promotional materials;
whether such information:
(d) is disclosed in writing, orally or by any other means by a
party or by any person on that party's behalf to the other
party; or
(e) comes to the knowledge of a party as a result either
indirectly or directly of that party's association with the
other party;
Force Majeure means any war, riot, terrorism, civil commotion, labor disputes or
strikes, airport closure, lockouts, inability to obtain labor or materials,
fire, other acts of God, accidents, government restrictions or appropriations,
or other causes of a like nature which are beyond the control of a party;
Further Term means each further term of ONE (1) year commencing at the
expiration of the immediately preceding Term;
Import Price means the price charged by the Importer when selling to a
Wholesaler;
Incoterms 2000 means the English text of the International Commercial Terms
coming into force as of 1 January 2000 published by the International Chamber of
Commerce;
Laid in Cost means the Net Price plus ocean freight, U.S. Federal duties and
taxes, inland freight from wharf to warehouse, including a warehouse "in" fee
but excluding any other warehouse monthly or "out" fees;
Marketing Fund means the advertising and promotional fund established by the
Importer under clause 4.2;
Marketing Plan means the marketing plan developed by the Importer and Xanadu
each year during the Term pursuant to clause 4.2;
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Minimum Sales means the minimum annual sales for each Product agreed between
Xanadu and the Importer from time to time pursuant to Clause 4.3 except that
until varied, the minimum sales for each Product are those specified in Schedule
1;
Net Price means the net price for the Products determined by Xanadu from time to
time, which unless expressly stated otherwise, shall be exclusive any tax, rate,
charge or duty which may be incurred outside of Australia;
Payment Terms means a date no more than one hundred and twenty (120) days from
the date of Xxxx of Lading for initial twelve (12) month period from the date of
this agreement, and thereafter a date no more than ninety (90) days from the
date of Xxxx of Lading;
Products means the Xanadu wines specified in Schedule 1, as amended by Xanadu
from time to time;
Schedule means a schedule to this Agreement;
Term means a term of TWO (2) years commencing from the Commencement Date;
Territory means all the States and Territories of the United States of America;
and
Wholesaler means any person appointed by the Importer as a distributor or
sub-agent pursuant to Clause 5;
1.2 Interpretation
In this Agreement, except where the context otherwise requires:
(a) a reference to a statute includes a reference to each
regulation made under that statute and each amendment to or
re-enactment of either;
(b) if a party is two or more persons, the covenants and
agreements on their part
must be observed and performed by them jointly and each of
them severally and may be enforced against any one or any two
or more of them;
(c) if the day or last day for doing an act is not a business
day, the day or last day for doing the act will be the next
following business day; (d) except in the Schedule, headings
do not affect the interpretation of this Agreement;
(e) a reference to a party includes the executors,
administrators, personal representatives, successors, and
assigns, of that party or if a party is two or more persons,
those of each of them; and
(f) where the context permits, a reference to the Importer
shall include a reference to a Wholesaler and the Importer
shall be responsible for the observance and performance of
those terms by the Wholesaler.
2. APPOINTMENT OF IMPORTER
2.1 Appointment
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On and from the Commencement Date, Xanadu appoints the Importer and the
Importer accepts appointment as the sole and exclusive Importer of the
Products in the Territory for the Term and on the terms and conditions
of this Agreement.
2.2 Exclusivity
(a) Xanadu must not during the Term assign, transfer or sell
the rights to produce, sell, market or distribute the Products
to another person.
(b) The Importer acknowledges and agrees that:
(i) Xanadu has agreed to enter into this Agreement
because of the Importer's representation that the
Importer will make at least the Minimum Sales each
financial year; and
(ii) the Importer's ability to make at least the
Minimum Sales each financial year is likely to be
adversely affected if the Importer enters into a
contract , arrangement or understanding with the
Competing Producer or another person to sell or
distribute a Competing Product.
(c) The Importer agrees that the Importer will not, during the
Term, sell or distribute a Competing Product, or enter into
any contract, arrangement or understanding with a Competing
Producer or any other person to sell or distribute a Competing
Product unless both parties mutually agree.
2.3 Other Sales
Nothing in this Agreement prevents Xanadu from selling the Products
outside the Territory.
3. SUPPLY OF PRODUCTS
3.1 Supply of Products
Xanadu agrees to supply the Products to the Importer on the basis of
FOB an Australian Port (Incoterms 2000) on an exclusive basis and in a
timely manner following placement of an order by the Importer.
3.2 Price and Payment Terms
(a) Xanadu will invoice the Importer for the Products supplied
from time to time at the Net Price.
(b) The Net Price shall not include freight and insurance
necessary to have the Product delivered pursuant to Clause
3.1.
(c) Xanadu may not vary the Net Price for a Product without a
notice period of 90 days.
(d) The Importer must pay Xanadu the full amount of each
invoice within the Payment Terms.
4. SALES AND MARKETING
4.1 Determination of Import Price and Recommended Retail Price
The Importer shall determine the Import Price and the Recommended
Retail Price for the Products in consultation with Xanadu, on the basis
of the Importer's knowledge of the market in which the Products will
compete and the brand profile required by Xanadu.
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4.2 Marketing
(a) The Importer shall establish the Marketing Fund for the
Products, and apply the Marketing Fund in the manner set out
in the Marketing Plan.
(b) In October each year during the Term, Xanadu and the
Importer will meet to discuss and agree the Marketing Fund
budget for the next year, and prepare a plan setting out the
manner in which the Marketing Fund will be used to achieve
maximum impact in the market.
(c) In each year during the Term the Importer shall apply the
monies accumulated in the Marketing Fund in the manner
determined by the Marketing Plan.
4.3 Sales
(a) In October each year during the Term, Xanadu and the
Importer will meet to discuss and agree the Minimum Sales
budget for the next year.
(b) The Importer must use its Best Endeavors to make the
Minimum Sales set for each year during the Term.
(c) If the Importer fails to make at least the Minimum Sales
in any year, Xanadu may terminate this Agreement by giving the
Importer six (6) months written notice.
(d) If Xanadu gives the Importer a notice of termination under
paragraph (c) of this sub-clause, Xanadu shall not be liable
to pay the Importer the monies payable under clause 6.2(d),
unless the Importer satisfies Xanadu that its failure to make
the Minimum Sales was due to factors outside the control of
the Importer.
5. WHOLESALERS
(a) The Importer may appoint Wholesalers to distribute the
Products during the Term.
(b) If the Importer appoints Wholesalers:
(i) the Importer must be responsible for all of the
actions and omissions of the Wholesalers as if they
were the actions and omissions of the Importer; and
(ii) the Importer must be solely responsible for
payments of the Net Price for any Products delivered
to a Wholesaler, unless Xanadu invoices a Wholesaler
directly.
6. RENEWAL OF TERM
6.1 Automatic Renewal at end of Term
Subject to:
(a) Clause 6.2; and
(b) the Importer not being in default of its obligations under
this Agreement; the Term shall automatically be renewed for a
Further Term on the terms and conditions of this Agreement,
without any further action from either parties.
6.2 Party may terminate at end of Term
(a) without limited clause 6.2(b) a party may terminate this
Agreement at the end of a Term by giving at least ONE (1)
year's notice of termination to the other party.
(b) Xanadu may where:-
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(i) the major shareholding or controlling interest of
Xanadu is changed; or
(ii) the major assets of Xanadu are sold or the
business is reconstructed such that it is no longer a
wine producer; or
(iii) the major shareholding or controlling interest
of the Importer is changed
terminate this Agreement with sixty (60) days written notice.
(c) If a party serves a notice under clause 6.2(a), this
Agreement will come to an end at the expiration of the Term,
except where this Agreement comes to an end under clause 7.
(d) If Xanadu serves a notice under clause 6.2(a) or (b),
Xanadu must pay the Importer a sum calculated using the
following formula:
X=20% x DS
Where X is the amount payable by Xanadu to the Importer under
this paragraph; and DS is the annual sales of the Products
averaged over the 2 years immediately preceding the
termination date.
(e) The parties may terminate this agreement at any time by
mutual consent evidenced in writing.
7. DEFAULT AND TERMINATION
7.1 Importer's default
The Importer will be in default of this Agreement if any of the flowing
events occur in respect of the Importer:
(a) a meeting is convened to place it in voluntary liquidation
or to appoint an administrator;
(b) an application is made to a court for it to be wound up;
(c) the appointment of a controller under section 9 of the
Corporations Act or other equivalent USA law of any of its
assets;
(d) it proposes to enter into or enters into any form of
arrangement with any of it creditors;
(e) it becomes an insolvent under administration;
(f) it ceases to carry on its business as a marketer and
importer of wine and wine products;
(g) it ceases to hold the relevant wine import and
distribution licenses; (h) it fails to have an organizational
structure capable of supporting the Marketing Plan; or
(i) it breaches any of its obligations in the Agreement, which
is incapable of remedy, or which it fails to remedy within 60
days of being given notice in writing to do so.
7.2 Xanadu's rights on default
(a) On the occurrence of a default under clause 7.1, Xanadu
may by written notice to the Importer terminate this Agreement
with immediate effect.
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(b) notwithstanding any other provision of this Agreement, if
Xanadu gives a notice under clause 7.2(a), Xanadu shall not be
liable to pay the Importer any monies payable under clause
6.2(d).
7.3 Parties' common law rights preserved
Nothing in this Agreement affects the parties' right to claim damages
for breach of this Agreement by the other party.
7.4 Importer's obligations on termination
Upon termination of this Agreement:
(a) the Importer may meet existing orders from customers for
the Products but must not accept any further orders;
(b) all orders submitted to Xanadu by the Importer that have
not been filled shall be deemed to be cancelled;
(c) all Products in the possession of the Importer which have
not been paid for in full shall immediately be returned to
Xanadu;
(d) Xanadu shall re-purchase from the Importer at the Laid In
Cost to the Importers warehouse any Products purchased and
paid for by the Importer but not sold by the Importer; and
(e) the Importer shall immediately cease the use and
circulation of all advertising and promotional or other
material relating to the Products, and return such material to
Xanadu or it's nominee.
8. COVENANTS AND WARRANTIES OF IMPORTER
The Importer covenants and warrants to Xanadu as follows:
(a) the Importer will hold in full force and effect, all
licenses or permits that are necessary to conduct its business
as a Importer of wine in the Territory and to engage in the
transactions contemplated by this Agreement;
(b) the Importer shall not alter the Products in any way
whatsoever;
(c) the Importer acknowledges and agrees that xxxx Xxxxxx
completing all of its obligations pursuant to clause 3.1 of
the Agreement, all risk in the Products shall pass to the
Importer;
(d) the Importer shall use its Best Endeavors to obtain orders
for as much of each of the products as possible and to
responsibly and diligently promote the Products; and
(e) the Importer shall take reasonable steps, including
maintaining sufficient stock, to meet customer demand for the
Products and ensure prompt delivery of the Products to
customers.
9. IMPORTER'S INDEMNITY
The Importer shall indemnify and keep indemnified, Xanadu:
(a) against any action, proceeding, liability, claim, demand
or loss suffered by Xanadu in connection with the Importer's
or any Wholesaler's distribution and promotion of the
Products; and
(b) against any negligent act or omission on the part of the
Importer or any Wholesaler or any breach by the Importer or a
Wholesaler of this Agreement, except any actions, loss,
damage, claim or liability caused or contributed to by the
negligent act or omission of Xanadu, its employees or agents.
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10. XANADU'S INDEMNITY
Xanadu shall indemnify and keep indemnified, the Importer against any
action, proceeding, liability, claim, demand or loss suffered by the
Importer in connection with any defect of the Products or any breach by
Xanadu of this Agreement, except any actions, loss, damage, claim or
liability caused or contributed to by the negligent act or omission of
the Importer, any Wholesaler, or their employees or agents.
11. CONFIDENTIALITY
Subject to any legal requirement, each party shall keep strictly
confidential, the terms of this Agreement and all Confidential
Information it obtains from the other party.
12. NO ASSIGNMENT
The parties covenant and agree that the rights granted to each party
pursuant to this Agreement cannot be assigned, mortgaged, pledged or
encumbered in any way. A party shall not assign or otherwise deal with
the whole or any part of its interest in this Agreement without the
prior written consent of the other party.
13. DISPUTE RESOLUTION
(a) In the event of any dispute or difference arising between
the parties, either party may give to the other party notice
in writing of such dispute.
(b) If a party gives the other party notice of a dispute, at
the expiration of seven (7) days from the date of receipt of
such notice, the dispute shall be referred to a person with
appropriate experience ("the Arbitrator"), as agreed to
between the parties, or failing agreement, as determined by
the Chief Executive Officer of the Australian Institute of
Arbitrators and Mediators.
(c) The Arbitrator may call on any such evidence that he deems
appropriate in order to reach his determination.
(d) The award made by the Arbitrator shall be final and
binding on both parties, and neither party shall be entitled
to commence or maintain any action in respect of the dispute
until such matter has been so determined, and then only in
relation to the amount of relief the Arbitrator finds either
party is entitled to.
(e) The costs of arbitration shall be borne equally by both
parties.
14. FORCE MAJEURE
If either party becomes unable, wholly or in part, by an event of Force
Majeure, to perform any of its obligations under this Agreement:
(a) that party shall give the other party prompt written
notice of the Force Majeure and the probable extent to which
it will be unable to perform, or be delayed in performing, its
obligations; and
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(b) on giving the notice, the party will not be required to
perform such obligation so far as it is affected by the Force
Majeure during the continuance of the Force Majeure, provided
that it shall use its best endeavors to overcome or remove the
Force Majeure as quickly as possible (without being obliged to
settle any labor dispute).
15. NOTICES
15.1 Form and Address
A notice, order, consent or other communication in connection with this
Agreement must be in writing and may be signed by the relevant party or
its solicitors or agents and may be:
(a) left at or posted to the address of the addressee set out
in this Agreement or any other address notified to the sender as an
address for the giving of notices; or
(b) sent by facsimile transmission to a facsimile number
notified to the sender as an address for the giving of notices.
15.2 Receipt
Unless a later time is specified in it, a notice takes effect from the
time it is taken to be received, which is:
(a) if left at the address of the addressee, the next business
day after the date it is left;
(b) if posted, on the fifth business day after posting; and
(c) if sent by facsimile transmission, on the next business
day after the facsimile is sent.
16. SEVERANCE
If any part of this Agreement or the application of that part to any
person or circumstance is or becomes unenforceable, the other
provisions of this Agreement are not affected and continue to be
enforceable.
17. NO WAIVER
A party's failure or delay to exercise a power or a right does not
operate as a waiver of that power or right and the exercise of a power
or a right does not preclude its future exercise or the exercise of any
other power or right.
18. LEGAL RELATIONSHIP
Nothing in this Agreement shall give rise to any relationship of
agency, joint venture, partnership or trust between the parties.
19. GOVERNING LAW AND JURISDICTION
This Agreement is governed by, and will be construed in accordance
with, the laws of Western Australia, and the parties irrevocably submit
to the exclusive jurisdiction of the courts of Western Australia in
respect of all matters arising under, or in connection with, this
Agreement.
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20. COSTS
Each party shall bear its own costs in relation to the preparation,
negotiation and execution of this Agreement and all things to be done
under it, except where expressly stated otherwise.
21. EXCLUSION OF INTERNATIONAL CONVENTION ON THE SALE OF GOODS
The United Nations Convention on Contracts for the International Sale
of Goods concluded in Vienna, Austria on 11 April 1980 does not apply
to this contract or to any individual contract of sale of the products
concluded within the framework of this contract.
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SCHEDULE 1
Product Minimum Sales
(Annual)
9 liter Cases
Normans Encounter Bay 11,000
Normans Old Vine 1,200
Normans Chais Clarendon 50
TOTAL 12,250
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EXECUTED BY THE PARTIES AS A DEED
Xxxxxx Wines Limited
/s/ Xxxxxx Xxxxx
---------------------------------
/s/ Xxxx Xxxxxxxx
---------------------------------
Drinks Americas, Inc.
/s/ J. Xxxxxxx Xxxxx
---------------------------------
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