PRODUCT DISTRIBUTION AGREEMENT
Exhibit
10.2
PRODUCT DISTRIBUTION
AGREEMENT
THIS
DISTRIBUTION AGREEMENT (“Agreement”) is made on the 1st day of
May, 2008 (hereafter, the “Effective Date”), by and between SUNCOAST
NUTRICEUTICALS, INC. (hereinafter, “Supplier”) whose address is 00000 Xxxxx
Xxxx, Xxxxxxxxxxx, XX 00000; and
BETWEEN
THE LINES, INC. (hereafter, “Distributor”) whose address is 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000
RECITALS
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A.
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Supplier
has created and markets certain all-natural sun care and skin care
Products with various brand names and trademarks (hereafter, “Products”)
which are proprietary to Supplier, and which are set forth in Schedule “A”
annexed hereto.
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B.
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Distributor
desires that Supplier appoint Distributor as Supplier’s exclusive
distributorin the following market:
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ALL
RETAIL AND WHOLESALE CRUISE SHIP SALES ORIGINATING IN THE UNITED STATES, AND ALL
NON-CRUISE SHIP SALES ORIGINATING OUTSIDE THE UNITED STATES, ITS TERRITORIES AND
POSSESSIONS, CANADA, AND MEXICO.
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C.
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Supplier
and Distributor also desire that Distributor utilize specific agreed
channels of distribution as more particularly set forth
herein.
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NOW, THEREFORE, in
consideration of their mutual promises set forth below and other valuable
consideration, the parties agree as follows:
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1.
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SCOPE
OF AGREEMENT
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1.1 Definitions. As used
in this Agreement, the following terms shall have the following
meanings:
a. “Contract
Year” means any given twelve-month period ending on an anniversary of the
Effective Date.
b. “Product(s)”
means Supplier’s product(s) set forth in Schedule “A” and any new or improved
versions of the product(s) introduced by Supplier from time to
time.
1.2 Exclusivity. Supplier
hereby appoints Distributor as Supplier’s exclusive distributor in the defined
markets set forth in Recital “B” above, and as a non-exclusive distributor in
all other markets.
This
Agreement does not grant to Distributor any rights with respect to the
distribution and sale of the Products in any market other than that defined
above. The exclusive right granted Distributor to distribute and sell Products
to the markets set forth herein is expressly made subject to Section 2.1.a
below. Distributor acknowledges and agrees that Supplier has retained for itself
and/or granted to others the rights to distribute and sell the Products in
markets other than that granted Distributor herein.
Accordingly,
Distributor agrees (i) not to distribute or sell Products except in the market
area defined in 1.2, above, through Distributor’s agreed distribution channels
and (ii) to require that each Distributor contractor, agent, representative,
and/or sub-distributor selling or handling Products (“Sub-distributors”) will
comply with the limitations and restrictions imposed by this Section 1.2; and
(iii) to take all reasonable steps to enforce such limitations and restrictions
on the Sub-distributors.
Distributor’s
failure to comply with any of the provisions of this Section 1.2 shall be a
material breach of this Agreement.
1.3 Independent
Contractors. Neither party shall, for any purpose, be deemed to be an
agent of the other party and the relationship between the parties shall only be
that of independent contractors.
1.4 No Other Terms and
Conditions. The parties acknowledge and agree that any terms and
conditions of any purchase order, sales acknowledgement or other document
submitted to the other by either party which conflict with the terms and
conditions of this Agreement shall be of no force or effect, and the terms and
conditions hereof control and supersede such conflicting documents and any
course of conduct or usage of the trade inconsistent with any of the terms and
conditions hereof.
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2.
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PURCHASE
AND SALE OF PRODUCT.
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2.1 Purchase and Sale.
Subject to the terms and conditions set forth herein, Supplier agrees to sell
and Distributor agrees to purchase Products in accordance with Distributor’s
purchase orders and this Agreement. In this regard:
a. Distributor
agrees to purchase and take delivery of not less than the following minimum
quantity of Products (at wholesale price) in each Contract Year:
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Contract
Year
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Purchase
Requirement
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1st
Contract Year
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$ | 500,000 | ||
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2nd
Contract Year
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$ | 1,000,000 | ||
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3rd
- 5th Contract Years
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$ | 2,000,000 | ||
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Subsequent
Periods
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$ | 2,500,000 | ||
The
foregoing minimum purchase requirement will be satisfied for any given Contract
Year if Distributor’s aggregate purchases of Product equals or
exceeds the minimum number for that Contract Year. If Distributor fails to meet
or exceed the foregoing minimum purchase requirement in any given Contract Year,
then, as Supplier’s sole remedy, Supplier may elect, by written notice to
Distributor (i) to terminate this Agreement or (ii) to make non-exclusive for
all purposes the sales and distribution rights granted Distributor by Section
1.2.
b. All
Products will be sold under Supplier’s trademarks and trade-names only, using
Supplier’s trade dress, and Supplier will retain all proprietary rights in and
to the same.
2.2 Purchase Orders and
Forecasts. Within ten (10) days following the execution of this
Agreement, Distributor shall provide Supplier with an initial six (6) months
firm purchase order for the purchase of Products and a forecast of its Product
requirements for the seventh (7th) through twelfth (12th) months thereafter
divided on a monthly basis. Commencing with the fourth (4th)
month of the first Contract Year and continuing thereafter, Distributor will
provide Supplier, on or before the last day of each calendar month during the
term of this Agreement, an additional firm purchase for Products for the third
full calendar month thereafter and a revised or supplemental forecast of Product
requirements for the fourth (4th) through ninth (9th) months thereafter (unless
the term hereof is shorter), it being the intent that (except for the initial
six months guaranteed purchase order) in general Distributor will provide three
(3) months purchase orders and six (6) months forecasts on a rolling monthly
basis during the term of this Agreement. Distributor’s purchase orders for a
given month, in order to be conforming, must specify only delivery dates during
that month. Distributor’s forecasts are non-binding, but shall be Distributor’s
reasonable best estimate of its future Product requirements.
2.3 Acceptance of Purchase
Orders. Within ten (10) days of receipt of a purchase order from
Distributor, Supplier may request in writing a modification of the Product
designations, quantities, delivery dates, and special shipment instructions
specified thereon. Supplier’s failure to request a modification or to reject a
purchase order within the ten (10) day period shall be deemed an acceptance
thereof. Upon actual or deemed acceptance of a purchase order by Supplier, a
binding contract for the sale and purchase of Product shall exist between
Supplier and Distributor in accordance with this Agreement and Distributor’s
purchase order. If Supplier requests modification of any of the aforementioned
terms of Distributor’s purchase order, then Distributor shall have ten (10) days
following receipt of the request to accept or reject Supplier’s modifications.
If Distributor does not respond or object to Supplier’s request within ten (10)
days of receipt, the modifications specified thereon shall be deemed accepted by
Distributor. Upon Distributor’s actual or deemed acceptance of purchase order
modifications by Supplier, a binding contract for the sale and purchase of
Products shall exist between Supplier and Distributor in accordance with this
Agreement and Distributor’s purchase order as so modified. The foregoing
modification procedure shall apply only with the regard to Product designations,
quantities, delivery dates, and special shipment instructions. With respect to
all other terms, Supplier and Distributor agree that the terms and conditions of
this Agreement shall apply to the sale of Product hereunder and cannot be
modified or amended except as provided in Section 13.8.
2.4 Non-Conforming
Orders. Supplier will use reasonable commercial efforts to fill
non-conforming purchase orders for Products in accordance with Distributor’s
requests.
2.5 Shipment. Supplier
will ship Product to Distributor to the delivery destination(s) specified in
Distributor’s purchase orders, but in no event may Supplier be required to ship
to more than TEN different locations within the United States. Supplier shall
arrange prepaid insured common carrier transportation of the Products in
accordance with Distributor’s instructions, at Distributor’s expense. Supplier
may not under-ship or over-ship by more than ten percent (10%) without
Distributor’s prior written consent.
2.6 Delivery, Title and Risk of
Loss. For purposes of this Agreement, delivery to Distributor will occur
when the Products are placed in the possession of the common carrier by
Supplier. Title and risk of loss or damage with respect to the Products shall
pass to Distributor upon delivery by Supplier.
2.7 Packaging for
Shipment. Unless otherwise agreed in advance, all Products shall be
packed by Supplier as Supplier reasonably deems appropriate to minimize risk of
loss or damage in transit.
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3.
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CHANNELS
OF DISTRIBUTION
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3.1 Agreed channels of
distribution. For the term of this Agreement, to include all
extensions thereof, the parties specifically agree that Supplier shall have the
unqualified right to approve or disapprove the channels of product distribution
as proposed by the Distributor.
Within
thirty days of the execution of this Agreement and prior to the delivery of any
product to Distributor, Distributor shall submit to Supplier a “Proposed Plan of
Distribution” of the Product. Within seven days of receipt, Supplier
shall approve or disapprove the “Proposed Plan of
Distribution”. Although it is agreed that Supplier’s approval shall
not be unreasonably withheld, if the Supplier disapproves a “Proposed Plan of
Distribution”, the Supplier shall specify the basis of it’s disapproval and
shall cooperate in reaching agreement as to a “Plan of
Distribution”.
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4.
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PRICES
AND PAYMENT.
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4.1 Price. The prices for
the Products (including volume discounts) for the first twelve (12) months of
this Agreement (the first “contract year”) are as set forth on Schedule “C”.
Prices do not include applicable sales or use taxes and shipping costs (freight
and insurance), which shall be separately stated on Supplier’s invoices and born
by Distributor.
4.2 Price Changes. The
prices set forth on Exhibit “C” shall be revised annually, on or before the
start of each Contract Year, to reflect any increase or decrease in
manufacturing costs for the Products reasonably projected by Supplier for the
next Contract Year (in each case, determined in accordance with generally
accepted accounting principles, consistently applied), with the first pricing
review occurring TWELVE months after the Effective Date of this Agreement. Price
changes are not effective unless mutually agreed to in writing (agreement not to
be unreasonably withheld if consistent with this Section 4.2), with the change
being effective with respect to invoices for shipment during the next ensuing
Contract Year.
4.3 Taxes. Distributor
shall be responsible for all VAT, sales, use and other similar taxes applicable
to Product supplied under this Agreement, unless Distributor provides written
proof of exemption.
4.4 Payment. Supplier
shall issue invoices for Product on or after the date of shipment. Payment shall
be due within thirty (30) days from the date of invoice. A late charge at the
rate of one and one-half percent (1½%) per month or the highest rate allowed by
law, whichever is lower, shall be applied to the total invoice price for
payments not received within sixty (60) days
after the
date of invoice.
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5.
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SPECIFICATIONS,
QUALITY CONTROL AND ACCEPTANCE.
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5.1 Specification
Changes. Supplier reserves the right to change the Specifications by
written notice to Distributor.
5.2 Quality Assurance.
Supplier shall be responsible for ensuring that the Products meet Supplier’s
internal quality assurance tests and procedures prior to shipment
hereunder.
5.3 Acceptance. Products
shipped hereunder shall be subject to acceptance by Distributor within fifteen
(15) days of receipt. Distributor shall promptly inform Supplier of any Product
rejected as non-conforming and at Supplier’s request shall return non-conforming
Products to Supplier, at Supplier’s risk of loss and expense. Products as to
which no rejection has occurred
within
fifteen (15) days shall be deemed accepted.
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6.
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PRODUCT
WARRANTY, DISCLAIMER OF WARRANTIES AND LIMITATION OF
LIABILITY.
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6.1 Product Warranty.
Supplier warrants to Distributor that the Products purchased hereunder shall be
free from defects in materials and workmanship and shall conform in all material
respect to the Specifications for a period of ninety (90) days from the date of
delivery thereof, provided the Product in question has been stored and used in
accordance with ordinary industry practices and conditions. SUPPLIER DOES NOT
WARRANT THAT THE OPERATION OF THE PRODUCTS WILL BE UNINTERRUPTED OR ERROR
FREE.
6.2 Remedies. In the
event that a Product does not comply with the product warranty set out in
Section 7.1 and such non-conforming Product is returned to Supplier within the
warranty period by Distributor freight prepaid, Supplier will replace such
non-conforming Product at no additional charge to Distributor; the replaced
Product will be returned to Distributor, freight
prepaid.
6.3 Disclaimer of
Warranties. The foregoing express warranties are limited to Supplier and
are not transferable and are in lieu of any other warranty by Supplier with
respect to Products furnished hereunder.
SUPPLIER
GRANTS NO OTHER WARRANTY, EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
6.4 Limitation of
Liability. SUPPLIER SHALL IN NO EVENT BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATING TO THE
SALE OR USE OF ITS PRODUCTS, WHETHER OR NOT SUPPLIER HAS ADVANCE NOTICE OF THE
POSSIBILITY OF SUCH DAMAGES. IF SUPPLIER BREACHES ANY PROVISION OF THIS
AGREEMENT, DISTRIBUTOR’S SOLE AND EXCLUSIVE MAXIMUM LIABILITY, WHETHER BASED IN
CONTRACT, TORT, OR OTHERWISE, SHALL NOT IN ANY EVENT EXCEED THE CONTRACT PRICE
FOR THE PARTICULAR PRODUCTS. The foregoing limitation of liability will not
apply to the payment of costs and damage awards referred to in Section 7,
Indemnification.
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6.5
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Distributor
assumes full responsibility for its selection of the Products specified
herein
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and any
other equipment, programs or services used with the Products, their use, and
results obtained therefrom.
6.6 Within
SEVEN days of the execution of this Agreement and prior to the delivery of any
product to Distributor, Distributor shall submit to Supplier a policy of
liability insurance for general and Products liability in full force and effect
for a period of one year with the Supplier named as a co-insured and providing
for notice to Supplier in the event the policy is canceled for any
reason.
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7.
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INDEMNIFICATION.
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Supplier
shall indemnify, hold harmless and defend Distributor against any action brought
against Distributor to the extent that such action is based on a claim that any
unmodified Product, when used in accordance with this Agreement, infringes a
United States copyright and Supplier shall pay all costs, settlements and
damages finally awarded; provided, that Distributor promptly
notifies
Supplier in writing of any claim, gives Supplier sole control of the defense
and settlement thereof and provides all reasonable assistance in
connection therewith. If any Product is finally adjudged to so infringe, or in
Supplier’s opinion is likely to become the subject of such a claim, Supplier
shall, at its option, either: (i) procure for Distributor the right to continue
using
and
distributing the Product (ii) modify or replace the Product to make it
non-infringing, or (iii) refund the price paid upon return of the Product.
Supplier shall have no liability regarding any claim arising out of: (w) use of
other than a current, unaltered release of the Product unless the infringing
portion is also in the then current, unaltered release, (x) use of the Product
in combination with non-Supplier Products, data or equipment if the infringement
was caused by such use or combination, (y) any modification or derivation of the
Products not specifically authorized in writing by Supplier or (z) use of third
party Products.
THE
FOREGOING STATES THE ENTIRE LIABILITY OF SUPPLIER AND THE EXCLUSIVE REMEDY FOR
DISTRIBUTOR RELATING TO INFRINGEMENT OR CLAIMS OF INFRINGEMENT OF ANY COPYRIGHT
OR OTHER PROPRIETARY RIGHT BY THE PRODUCTS.
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8.
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PROPRIETARY
INFORMATION.
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8.1 Protection of Proprietary
Information. Supplier and Distributor agree to keep in confidence and not
disclose to others all knowledge, information and data furnished to either by
the other party and claimed by the other party to be proprietary, provided such
information is given in writing or, if oral, is reduced to writing within thirty
(30) days and such writing is marked to indicate the claims of ownership and/or
secrecy. Supplier and Distributor agree that neither shall use, nor reproduce
for use in any way, any proprietary information of the other except in
furtherance of the relationship set forth herein. Supplier and Distributor agree
to protect the proprietary information of the other with the same standard of
care and procedures used by
each to
protect its own proprietary information of similar importance but at all times
using at least a reasonable degree of care.
8.2 Limitations. Section
8.1 shall not be applicable and shall impose no obligation on a party with
respect to any portion of proprietary information which:
a. Was
at the time received or which thereafter becomes, through no act or failure on
the part of such party, generally known or available to the public;
b. Is
known to such party at the time of receiving such information as evidenced by
documentation then rightfully in the possession of either party;
c.
Is furnished to others by the other party without restriction of
disclosure;
d. Is
thereafter rightfully furnished to such party by a third party without
restriction by that third party on disclosure; or
e. Has
been disclosed pursuant to the requirements of law or court order without
restrictions or other protection against public disclosure; provided, however,
that the other party shall have been given a reasonable opportunity to resist
disclosure and/or to obtain a suitable protective order.
8.3 Survival. The
covenants of confidentiality set forth herein shall survive and continue and be
maintained from the Effective Date hereof until FIVE years after termination of
this Agreement.
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9.
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TERM
AND TERMINATION.
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9.1 Term. The initial
term of this Agreement shall commence upon the Effective Date and shall continue
for a period of FIVE Contract Years (the “Initial Term”). Thereafter, this
Agreement shall be renewed for successive one (1) year terms unless terminated
by either party by ninety (90) days written notice given on or before the
commencement of any renewal term.
9.2 Termination. This
Agreement may be terminated as follows:
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a.
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At
any time upon mutual written agreement of the
parties;
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b.
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By
Supplier upon fifteen (15) days written notice to Distributor for failure
by Distributor to make payment for Products when due, unless such failure
is cured within the fifteen (15) day period;
or
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c.
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By
either party if (i) the other party is in material breach of its
obligations hereunder and such breach continues uncured for a period of
thirty (30) days after written notice to the defaulting party, or (ii) the
other party makes a general assignment for the benefit of its creditors,
appoints or has appointed a receiver, trustee in bankruptcy or similar
officer to take charge of all or part of its property, files or has a
petition filed against it in any bankruptcy (unless such petition is
dismissed within sixty (60) days of its filing), and/or is adjudged
insolvent or bankrupt.
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10.
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EXPORT
REQUIREMENTS.
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In the
event that any of the Products and any documentation and all related
technical information or materials become subject to export controls which are
licensable under the U.S. Government export regulations, Distributor will comply
strictly with all legal requirements established under such controls and will
not export, re-export, divert, transfer or disclose, directly or indirectly, the
Products, documentation and any related technical information or materials
without the prior approval of the U.S. Department of Commerce.
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11.
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MISCELLANEOUS.
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11.1 Successors and
Assigns. The rights and obligations of either party shall not be
transferable without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed. All obligations of the parties
herein shall be binding upon their respective successors or
assigns.
11.2 Choice of Laws. This
Agreement shall be governed by, and its terms shall be construed in accordance
with, the laws of the State of Florida.
11.3 Waiver. No waiver or
breach of any term or condition of this Agreement shall operate as a waiver of
any other breach of such term or condition, or of any other term or condition,
nor shall any failure to enforce any provisions hereunder operate as a waiver of
such provision or any other provision hereunder.
11.4 Severability. In case
any one or more of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, except in
those instances where removal or elimination of such invalid, illegal, or
unenforceable provision or provisions would result in a failure of consideration
under this Agreement, such invalidity, illegality or unenforceability shall not
effect any other provision hereof, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provisions had never been contained
herein.
11.5 Notices. All notices
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, one day after delivery to a nationally recognized
overnight delivery service, charges prepaid, three days after being sent by
registered or certified mail, postage prepaid, to the parties at their
respective addresses set forth above and:
If to
Distributor, with a copy as follows:
Attn: Xxx
Xxxxxxxx
If to
Supplier, with a copy to:
Attn: Xxxxx
XxXxxxxxx
or to
such other address as any party shall have specified by notice to the other in
accordance with this Section. Purchase orders, forecasts and other routine
business forms (and any notices not sent in accordance with the foregoing) shall
be effective only upon receipt.
11.6 Headings. Headings
used in this Agreement are for the purpose of reference only and are not to be
considered in construction or interpretation of this Agreement.
11.7 Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall be deemed one and the same
instrument.
11.8 Entire Agreement;
Amendment. This Agreement, including the Exhibits, contains the entire
Agreement between the parties relating to the subject matter hereof. All prior
agreements and all prior negotiations, representations and communications
relating to the same subject are superseded by this Agreement. This Agreement
may not be modified other than by a written document signed by an authorized
representative of each party.
Distribution
Agreement Page 9
SIGNATURES
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their respective duly authorized representatives the day and year first set
forth above:
Signature
of Supplier:
_____________________________
By: Xxxxx
XxXxxxxxx
Title: President
Signature
of Distributor:
BETWEEN
THE LINES, INC.
_____________________________
By: Xxxxxx
Xxxxxxxx
Title: Secretary
Distribution
Agreement Page 10
SCHEDULE
“A”
LIST
OF SUPPLIER’S PRODUCTS
[Information
Deleted]
Distribution
Agreement Page 11
SCHEDULE
“B”
CURRENT
PRODUCT WHOLESALE PRICE LIST
[Information
Deleted]
Distribution Agreement Page
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