Exhibit 10.14
Distributor Rights Agreement between Purchaser and Y Sake
DISTRIBUTOR RIGHTS AGREEMENT
AGREEMENT made as of the 9th day of December, 2002 by and
between Y Sake 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
sake known as Y Sake 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 Xxx Xxxxxxxxx'x name or
likeness or developed by Xxx Xxxxxxxxx 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.
000
"Xxxxxxx Xxxx" 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.
101
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.
102
Licensing Fee. During the Term of this Agreement, all Products
sold by Grantee, less any credits and returns, shall be subject to a license
fee, payable to the Grantor 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 Yamaguchi 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.
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.
103
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 Xxx Xxxxxxxxx, dated as
of April 24, 2000 (the "Yamaguchi License") for so long as said
Yamaguchi License is in effect, with the exception of any obligations
arising under Section 3 thereunder relating to royalties.
104
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.
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 Yamaguchi 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.
105
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; Sales Merchandise. Grantee shall, on an as needed basis,
purchase from Alive Spirits inventory of the Products currently held by Alive
Spirits. Said purchase will be at the price set forth in Schedule 9 annexed
hereto. The inventory is described in Schedule 9. Distributor's obligations
under this Section 9 may be assigned to Parliament without the consent of
Seller. 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;
(17) 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;
106
(18) 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;
(19) 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;
(20) 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;
(21) 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;
(22) 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
(23) 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:
(24) 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;
(25) 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;
(26) 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;
107
(27) 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
(28) Grantor has ceased to do business.
Events Following Expiration or Termination.
Upon the expiration or termination of this Agreement, the
following shall occur:
(29) All rights, licenses and privileges granted to Grantee
under this Agreement shall immediately cease and terminate;
(30) 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;
(31) 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.
108
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.
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.
109
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.
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]
110
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
Y SAKE LLC
By: /s/_______________________________
Name: Xxxx Xxxxxx
Title:
111
SCHEDULE 1(g)
Products
Sake known as "Y Sake" which is associated closely with Xxx Xxxxxxxxx'x name and
likeness, including the brand names "Rain," "Wind," "Sky" and "Snow."
112
SCHEDULE 4(a)
Minimum Volume Obligations
Products Contract Year Cases Per Contract Year
All Products 2002 None
All Products 2003 2,500 cases, in the aggregate
All Products 2004 4,000 cases, in the aggregate
All Products 2005 5,000 cases, in the aggregate
& all subsequent
Contract Years
113
SCHEDULE 9
114
