AGREEMENT
THIS
AGREEMENT is made
effective the 10th day of
December 2004 and replaces any and all previous agreements.
AMONG:
HOUSE OF
BRUSSELS CHOCOLATES INC.,
a Nevada
corporation, with offices at Xxx Xxxxxxxx, Xxxxx 0000, Xxxxxxx, XX, 00000
(hereinafter called “HOBC”).
OF
THE FIRST PART
AND:
SCHOKINAG
CHOCOLATE NORTH AMERICA INC., a
California Corporation, located at 0000 Xxxxxx Xxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxxx, XX 00000 (hereinafter called “Schokinag”).
OF
THE SECOND PART
(Collectively
known as the “Parties”)
WHEREAS:
|
A. |
HOBC
wishes to provide manufacturing, co-packing, marketing and distribution
services with respect to certain chocolate products developed and owned by
Schokinag, and |
|
B. |
Schokinag
wishes to engage HOBC to provide manufacturing, co-packing, marketing and
distribution services with respect to certain of its chocolate products,
and |
|
C. |
Both
HOBC and Schokinag wish to support and encourage the success of their
joint undertakings. |
NOW
THEREFORE, the
Parties hereby agree as follows:
|
1. |
Both
Schokinag and HOBC agree to provide best efforts with respect to the
marketing and distribution of those Schokinag chocolate products detailed
on Exhibit A (the “Schokinag Products”). Within the scope of its efforts,
HOBC intends to take the lead role in the exclusive introduction and sale
of the Schokinag Products to national/regional wholesalers, retail chains
and private label customers throughout North America. Schokinag shall
continue its efforts and focus on food service and speciality distributors
with the objective of penetrating the gourmet foods market. Schokinag
shall forward all sales leads relating to national product sales
opportunities to HOBC for follow-up. During the term of this agreement,
HOBC agrees to neither manufacture nor promote products that directly
compete with the Schokinag Products (for these purposes, directly
competing products shall be narrowly defined).
|
|
2. |
Be
it agreed that Schokinag and HOBC will, in the future, determine a plan to
utilize Schokinag’s road show unit (hereinafter the “Big Tin”), for
general marketing purposes. |
Be it
also agreed that Schokinag and HOBC will, in the future, determine a mechanism
by which HOBC will be able to replicate the Big Tin as its own cost, for its own
use in generating sales.
|
3. |
Effective
March 1, 2004 (or earlier, if possible), Schokinag agrees to appoint HOBC
as exclusive manufacturer and co-packer of the Schokinag Products. A
detail of agreed manufacturing and co-packing fees is included on Exhibit
A. During the term of this agreement, Schokinag agrees to provide the raw
materials (including shipping) required in connection with the manufacture
and packaging of the Schokinag Products at a price determined by summing
variable contract pricing and typical distributor-level margins. At no
time during the term of the agreement shall HOBC obtain raw materials for
the Schokinag Products from any other source.
|
|
Beyond any existing packaging that Schokinag may have in
inventory, HOBC will replace the source for any or all packaging materials
used in co-packing the Schokinag Products as it sees fit, but only with
the prior approval of Schokinag. In the event HOBC makes a replacement of
same or similar packaging materials, it will invoice Schokinag for such
materials at the previously detailed cost of such materials, as included
in the “Schokinag Product Base Cost Analysis”, less 50% of the difference
between the previously detailed cost and the actual cost paid by HOBC when
the packaging is actually incorporated into finished
goods. |
|
4. |
Both
Schokinag and HOBC may purchase units of the Schokinag Products for resale
at a “Base Cost” as calculated in the “Schokinag Product Base Cost
Analysis”, included as Exhibit C to this Agreement. In general, the Base
Cost of a Schokinag Product shall equal the total costs of its raw
material content, packaging materials and co-packing fee. Shipping costs
for finished goods to Schokinag, or final customers shall be borne by the
party purchasing the units. |
|
5. |
During
the term of this agreement, HOBC shall perform inventory counts to verify
the amount and condition of inventories held in connection with its
manufacturing and co-packing efforts on behalf of Schokinag. The results
of such counts shall be forwarded regularly, but not less than on a
quarterly basis. Normal waste or loss of product by obsolescence or age
shall be borne by Schokinag to a maximum of 1.5%. The cost of other
discrepancies or excessive waste or spoilage shall be borne by
HOBC. |
|
6. |
The
Initial Term of this agreement shall be for three (3) years. No sales
targets will be set for years 1 and 2. However, in the event that HOBC
achieves Minimum Product Sales associated with this agreement in excess of
$3 million during year 3, then HOBC shall enjoy the unilateral right to
extend this agreement and its associated privileges for an additional term
of five (5) years. In the event HOBC fails to achieve Minimum Product
Sales during its Initial Term, further extensions of this agreement must
be mutually agreed to by both parties. |
|
7. |
All
current and future recipes associated with the Schokinag Products are
confidential and proprietary and shall remain the exclusive property of
Schokinag. In addition, the words “Schokinag”, “European Drinking
Chocolate”, “Extreme Dark”, and “Drink Your Chocolate” are trademarks
owned by Schokinag and shall remain their exclusive
property. |
In the
event either HOBC or Schokinag enter into a “Private Label” sale of the
Schokinag Products, product packaging related to the sale must contain a phrase
analogous to “Made with Schokinag Chocolate” in easy to read lettering.
|
8. |
Schokinag
agrees to provide financing to a maximum of $50,000.00 (fifty thousand
dollars) to assist in the purchase of specialized equipment to be used in
the manufacture and packaging of the Schokinag Products. A detail of the
equipment, together with the amounts to be financed by Schokinag, are
detailed at Exhibit B. HOBC shall take title to the equipment and provide
a written promissory note to Schokinag for the amount financed. HOBC
agrees to reimburse Schokinag for the amounts financed at a rate of eight
cents ($0.08) per unit packed under its co-packing agreement. Such
repayment amounts may be calculated on a “co-packing invoice” by invoice
basis and credited against the amounts then due and payable to HOBC. This
invoicing should occur monthly. |
IN
WITNESS WHEREOF the
parties hereto have executed this Agreement as of the day and year first above
written.
HOUSE
OF BRUSSELS CHOCOLATES
INC.
a Nevada
corporation, by its authorized signatory:
s/s Xxxxx
Xxxxxxxxx
_____________________________
Signature
of Authorized Signatory
Xxxxx
Xxxxxxxx
_____________________________
Name of
Authorized Signatory
Chief
Executive Officer
____________________________
Position
of Authorized Signatory
SCHOKINAG
CHOCOLATE NORTH AMERICA INC.
a
corporation based in California, by its authorized signatory :
s/s Xxxxx
Xxxxxxxxx
_____________________________
Signature
of Authorized Signatory
Xxxxx
Xxxxxxxxx
_____________________________
Name of
Authorized Signatory
President
_____________________________
Position
of Authorized Signatory
Exhibit
A
Schokinag
Products
|
Product
Name |
Unit
Size |
Schokinag Item Number |
HOBC
Item Number |
|
Bittersweet
Retail Bar |
12x9oz
|
7617209758 |
76172097 |
|
Milk
Retail Bar |
12x9oz
|
0000000000 |
72238097 |
|
White
Retail Bar |
12x9oz
|
7252809758 |
72528097 |
|
Semisweet
Baking Chunks |
12x12oz
|
7615012758 |
76150127 |
|
Milk
Baking Chunks |
12x12oz
|
7223212758 |
72232127 |
|
White
Baking Chunks |
12x12oz
|
7252612758 |
72526127 |
|
22/24
Retail Cocoa |
12x8oz
|
7302008758 |
73020087 |
|
Triple
Chocolate EDC |
12x12oz
|
7654012758 |
76540127 |
|
White
Chocolate EDC |
12x12oz
|
7254012758 |
72540127 |
|
Xxxxx
xx Xxxxx EDC |
12x12oz
|
0000000000 |
72240127 |
|
Chocolate
Mocha EDC |
12x12oz
|
7344012758 |
73440127 |
|
German
Chocolate Cake EDC |
12x12oz
|
7677712758 |
76777127 |
|
Extreme
Dark EDC |
12x12oz
|
7775412758 |
77754127 |
|
No-Sugar-Added
Triple Chocolate EDC |
12x12oz
|
7654312758 |
76543127 |
*EDC =
European Drinking Chocolate
