PRODUCT DISTRIBUTION AGREEMENT
THIS PRODUCT DISTRIBUTION AGREEMENT (the "Agreement"), dated as of the ____
day of November 2001, by and between Look Models International, Inc.
(hereinafter referred to as "LMI"), a Delaware corporation, with its principal
offices located at Xxxxxxxx Xxxxx Xx.0, Xxxxxx 0000 Xxxxxxx, and Models Prefer,
Ltd. (hereinafter referred to as "MP"), a Connecticut corporation, with its
principal offices located at 000 Xxxxxx Xxxx, Xxxxxxxx 0, Xxxxxx, Xxxxxxxxxxx
00000. LMI and MP shall be collectively referred to hereinafter as the
"parties", or individually as the "party."
RECITALS
WHERAS, Dialpack, a German corporation, has purchased the assets of the
bankrupt entity Variotec, the former supplier of the Product to MP; and
WHEREAS, LMI and Dialpack have entered into an International Production and
Distribution Agreement dated as of November 15, 2001 (the "Production and
Distribution Agreement") wherein Dialpack has granted LMI, amongst other things,
the worldwide exclusive right to promote and distribute the Product under the
"Catwalk", "Look" and other "Model"-type labels; and
WHEREAS, LMI and MP now wish to enter into this Agreement whereby LMI will
supply the Make-up Product to MP and MP will distribute the Make-up Product
within the Distribution Territory in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 "Distribution Territory", whether on an exclusive or non-exclusive basis,
shall mean North America, and the ability to sell through and/or over QVC
in the United Kingdom only. Specifically excluded from the Distribution
Territory, if on an exclusive basis, is that certain distributor in Texas
that presently purchases from Dialpack.
1.2 "Exclusivity Purchase Guarantee" shall mean the minimum amount of the
Product that MP must purchase in order to obtain exclusivity in a
particular year.
1.3 "Intended Use" shall mean the utilization of the Product for a moisturizing
makeup.
1.4 "Make-up Product" shall mean the Product as used for the Intended Use.
1.5 "Minimum Purchase Guarantee" shall mean the minimum amount of the Product
to be purchased by MP in a particular year.
1.6 "Product" shall mean an empty dispenser comprising of a pump and two supply
cartridges that are separately filled with moisturizing makeup. The
dispenser uses a dial located on its front outside casing to mix the
fill-in quantities designated by the dial. The Product utilizes patented
technology to operate this process.
1.7 "Year One" shall hereinafter be defined as the period from December 1, 2001
to November 30, 2002.
1.8 "Year Two" shall hereinafter be defined as the period from December 1, 2002
to November 30, 2003.
1.9 "Year Three" shall hereinafter be defined as the period from December 1,
2003 to November 30, 2004.
ARTICLE II
REPRESENTATIONS
2.1 MP and its related parties, affiliated entities, subsidiaries, principals,
employees, officers and directors agree that:
(a) MP is a corporation duly organized, validly existing and in good
standing under the laws of the State of Connecticut, and has the
corporate power and authority to enter into this agreement.
(b) All corporate and other actions required to be taken by or on the part
of MP to authorize it to enter into and perform under the Agreement
have been duly taken. No consents, authorizations or approvals,
whether of governmental agencies or instrumentalities or otherwise,
are necessary in order to enable MP to enter into and perform under
this Agreement.
ARTICLE III
TERMS
3.1 Product Supply. Based upon the Production and Distribution Agreement and
the terms of this Agreement, as set forth more fully hereinafter, LMI will
supply MP with the Make-up Product in the Distribution Territory. LMI will
supply MP with the Product for sale in the Distribution Territory on an
exclusive basis if MP fulfills the exclusivity provisions of 3.4(a)-(d).
3.2 Exclusivity. The exclusivity herein is only for the Distribution Territory,
and only for the calendar year that MP complies with the applicable minimum
purchase guarantee and exclusivity provisions pertinent hereto. LMI will
supply the Product exclusively to MP so long as items 3.4(a)-(d) are
complied with in the given year in which said items are applicable.
3.3 Minimum Purchase Guarantee Provisions.
(a) The Minimum Purchase Guarantee for Year One shall be two hundred
thousand (200,000) units (the "Year One Minimum Purchase Guarantee").
There shall be an immediate up-front commitment by MP or a party with
which it decides to contract, upon the signing of this agreement, to
purchase one hundred thousand (100,000) units for immediate delivery,
and MP shall issue, immediately upon the signing of this agreement, to
the benefit of LMI, an irrevocable stand-by letter of credit with
language acceptable to LMI's bank, drawn on an acceptable bank,
covering the cost of the first one hundred thousand (100,000) units
based upon the pricing provisions of Section 3.7 hereunder. The letter
of credit shall be for the benefit of Look Event Management, GmbH
("LEM"), and shall be confirmed by LEM's bank in Austria. On or before
March 1, 2002, MP shall purchase the next one hundred thousand
(100,000) units and shall issue, to the benefit of LEM, an irrevocable
stand-by letter of credit with language acceptable to LEM's bank, and
drawn on an acceptable bank covering the additional one hundred
thousand (100,000) units.
(b) The Minimum Purchase Guarantee shall increase in Year Two to three
hundred thousand (300,000) units ("Year Two Minimum Purchase
Guarantee"). On December 1, 2002, MP shall purchase one hundred fifty
thousand (150,000) units and shall issue, to the benefit of LEM, an
irrevocable stand-by letter of credit with language acceptable to
LEM's bank, and drawn on an acceptable bank covering the first one
fifty hundred thousand (150,000) units. On or before April 1, 2003, MP
shall purchase the next one hundred fifty thousand (150,000) units and
shall issue, to the benefit of LEM, an irrevocable stand-by letter of
credit with language acceptable to LEM's bank, and drawn on an
acceptable bank covering the next one hundred fifty thousand (150,000)
units.
(c) The Minimum Purchase Guarantee shall increase in Year Three to four
hundred thousand (400,000) units ("Year Three Minimum Purchase
Guarantee"). On December 1, 2003, MP shall purchase two hundred
thousand (200,000) units and shall issue, to the benefit of LEM, an
irrevocable stand-by letter of credit with language acceptable to
LEM's bank, and drawn on an acceptable bank covering the first two
hundred thousand (200,000) units. On or before April 1, 2004, MP shall
purchase the next two hundred thousand (200,000) units and shall
issue, to the benefit of LEM, an irrevocable stand-by letter of credit
with language acceptable to LEM's bank, and drawn on an acceptable
bank covering the next two hundred thousand (200,000) units.
(d) In the event that MP fails to meet the Minimum Purchase Guarantee in
any particular year, the preferred pricing provision of 4.6 hereunder
shall no longer apply.
3.4 Exclusivity Purchase Guarantee Provisions. MP must satisfy the Exclusivity
Purchase Guarantee in each year on order to obtain exclusive supply of the
Product from LMI for the particular year.
(a) The Exclusivity Purchase Guarantee for Year One shall be four hundred
thousand (400,000) units. In Year One, LMI is granting MP a period of
exclusivity until June 1, 2002, notwithstanding the fact that the
Exclusivity Purchase Guarantee for Year One can only be satisfied on
or before June 1, 2002. In addition to complying with the Minimum
Purchase guarantee as set forth in Section 3.3(a), on or before June
1, 2002, MP must purchase a further two hundred thousand (200,000)
units, in addition to its Minimum Purchase Guarantee, in order to meet
its Exclusivity Purchase Guaranty for Year One, and shall issue, to
the benefit of LEM, an irrevocable stand-by letter of credit with
language acceptable to LEM's bank, and drawn on a bank acceptable to
LEM covering such two hundred thousand (200,000) units.
(b) The Exclusivity Purchase Guarantee for Year Two shall be six hundred
thousand (600,000) units. In addition to complying with the Minimum
Purchase guarantee as set forth in Section 3.3(b), on or before June
1, 2002, MP must purchase an additional three hundred thousand
(300,000) units, in addition to its Minimum Purchase Guarantee, in
order to meet its Exclusivity Purchase Guaranty for Year Two and shall
issue, to the benefit of LEM, an irrevocable stand-by letter of credit
with language acceptable to LEM's bank, and drawn on a bank acceptable
to LEM covering such three hundred thousand (300,000) units.
(c) The Exclusivity Purchase Guarantee for Year Three shall be eight
hundred thousand (800,000) units. In addition to complying with the
Minimum Purchase guarantee as set forth in Section 3.3(c), on or
before June 1, 2002, MP must purchase an additional four hundred
thousand (400,000) units, in addition to its Minimum Purchase
Guarantee, in order to meet its Exclusivity Purchase Guaranty for Year
Three and shall issue, to the benefit of LEM, an irrevocable stand-by
letter of credit with language acceptable to LEM's bank, and drawn on
a bank acceptable to LEM covering such four hundred thousand (400,000)
units.
(d) In order for MP to achieve the Exclusivity Purchase Guarantee, MP must
comply with the Minimum Purchase Guarantee provisions, as described
herein, must purchase the prescribed amount by June 1st of the
particular year, and must issue an irrevocable stand-by letter of
credit according to the terms described in 3.4(a)-(c). For so long as
MP meets the Exclusivity Purchase Guarantee in each year, the
exclusivity period shall continue for the period of June 1, 2002
through November 30, 2002 in Year One, and six months from the time
that the exclusivity provisions are satisfied in Years Two and Three.
If MP meets the exclusivity requirements of Year One, there shall be a
grace period of six (6) months in year Two wherein MP shall be given a
courtesy exclusivity period. If MP meets the exclusivity requirements
of Year Two, there shall be a grace period of six (6) months of Year
Three wherein MP shall be given a exclusivity period. If the
Exclusivity Purchase Guarantee is satisfied before the expiration of
the six month term described above, the remaining exclusivity time
period shall run from that time. In the event that MP does not satisfy
the Exclusivity Purchase Guarantee in a particular year, there shall
be no courtesy exclusivity period in the following year.
3.5 Annual Forecasts.
(a) Separate from any Minimum Purchase Guarantees and Exclusivity Purchase
Guarantees, MP shall be required, at the beginning of each year, to
provide LMI with a forecast of product quantity that MP expects to
purchase for such year.
(b) Separate from any Minimum Purchase Guarantees and Exclusivity
Guarantees, additional orders shall be placed no less than ninety (90)
days before MP's desired delivery date.
3.6 Shipping Costs. MP shall be responsible for all shipping costs, that is,
goods shall be shipped FOB (freight on board), and all customs and excise
duties shall be borne by MP.
3.7 Pricing. The pricing per unit shall be a maximum of three dollars ($XXX).
However, due to the fact that a completed inventory of the Product was
purchased by Dialpack from the bankrupt entity Variotec, LMI can offer a
price per unit of two dollars and seventy-five cents ($XXX) for the initial
two hundred thousand (200,000) units purchased by MP. Thereafter, as new
units will need to be produced, the pricing per unit shall be set between
the parties, but the price shall never exceed three dollars ($XXX) for all
units purchased after the initial two hundred thousand (200,000), unless MP
fails to satisfy the minimum purchase guarantees described above.
3.8 Distribution Limitation. For the first two (2) years of this Agreement, and
only in the event that MP has complied with Exclusivity Guaranty
provisions, LMI shall not distribute the Make-up Product under the
"Catwalk" or "Look Models" brands over QVC or other televised shopping
channel without the consent of MP.
3.9 Use Extension. So long as MP is not in breach of this Agreement and
complies with the Minimum Purchase Guarantee provisions and the Exclusivity
Purchase Guarantee provisions hereof, MP shall have the right to request
the distribution of the Product with a varied use within the modeling or
model related categories in the Distribution Territory in accordance with
this Agreement. With respect to any new distribution, MP would be required
to sell the Product in accordance with the terms of this Agreement,
including those governing Minimum Purchase Guarantees and Exclusivity
Purchase Guarantees.
3.10 Indemnification. Dialpack has agreed in the Production and Distribution
Agreement to indemnify LMI to the extent of its obligations under the terms
of the Production and Distribution Agreement. For so long as Dialpack
indemnifies LMI pursuant to the Production and Distribution Agreement, LMI
shall indemnify MP to the extent of its obligations under this Agreement.
MP agrees that in indemnifying LMI hereunder, LMI shall have the right to
choose its own legal counsel and/or the counsel to defend MP, and MP and
QVC agree that LMI has such right to choose said legal counsel.
ARTICLE IV
MISCELLANEAOUS
4.1 Addresses for notifications.
(a) For LMI: c/o Eaton & Xxx Xxxxxx, 0 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attn: Xxxxxx X. Xxxxxxxxxxx, Esq.
(b) For MP: Xx. Xxxxx X. Xxxxxxxxxxx, CEO, Models Prefer, Ltd., 000 Xxxxxx
Xxxx, Xxxxxxxx 0, Xxxxxx, Xxxxxxxxxxx 00000.
4.2 Notifications. Any notice, demand, request, or other communication
(collectively a "notice") required or permitted under this agreement must
be in writing and delivered by certified or registered mail, postage
prepaid, return receipt requested. A notice must be addressed to a party at
the party's last known address, which addresses are as listed in provision
4, above. A notice that is sent by mail will be deemed given three (3)
business days after it is mailed. Any party may designate, by notice to the
other party or the party's agent, substitute addresses or addressees for
notices; and, thereafter, notices are to be directed to those substitute
addresses or addressees.
4.3 Applicable Law. All questions concerning the construction, validity and
interpretation of this agreement and the performance of the obligations
imposed by this agreement shall be governed by the internal law, not the
law of conflicts, of the State of New York.
4.4 Arbitration. All disputes, controversies, claims or differences which may
arise between the Parties hereto, out of or in relation to or in connection
with this Agreement, or the breach thereof, and cannot be solved to the
mutual satisfaction of the Parties, shall be finally settled by arbitration
in accordance with the American Arbitration Association ("AAA") Arbitration
Rules as at present in effect with the following conditions. The award
rendered by arbitrators shall be final and binding upon both Parties. In
addition, (a) the appointing authority shall be the American Arbitration
Association; (b) the number of arbitrators shall be three (3); and (c) the
place of arbitration shall be New York, NY.
4.5 General Interpretive Principles. Common nouns and pronouns shall be deemed
to refer to the masculine, feminine, neuter, singular, and plural, as the
identity of the party may in the context require.
4.6 Binding Provisions. This agreement is binding upon and inures to the
benefit of the parties and their respective entities, colleagues,
successors, successor entities, and personal and legal representatives.
4.7 Provision Titles. The headings herein are inserted as a matter of
convenience only and do not define, limit, or describe the scope of this
agreement or the intent of the provisions hereof.
4.8 Execution in Separate Locations. As the parties are currently resident in
different jurisdictions, the parties agree that this agreement may be
executed by the parties while said parties are in different locations.
Accordingly, fax transmission of signatures shall be deemed to be authentic
and constitute execution of this agreement.
4.9 Non-Circumvention. MP shall exclusively deal with LMI in any matters
relating to the Product and not contact, consult with, have any dealings or
involvement with, or enter into discussions with any other vendor,
producer, supplier and/or distributor of the Product or such related
companies ("External Business Partners"), particularly External Business
Partners, with which LMI currently does business, concerning the business
that LMI and MP are involved in, or concerning business that LMI and the
External Business Partners are involved in, without having written
permission from LMI. Specifically, LMI has a relationship with Dialpack,
the producer and distributor of the Product, wherein it has secured the
ability to distribute the Product to certain defined territories and to
third parties, such as MP. It is expressly prohibited according to the
terms of this agreement for MP to contact, or secure with Dialpack, a
relationship, agreement, contract, or understanding for the distribution
and marketing rights to the Product.
IN WITNESS WHEREOF, the parties hereto have each duly executed and
delivered this Agreement as of the date first above written.
LOOK MODELS INTERNATIONAL, INC.
By: /s/Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Title: President
MODELS PREFER, LTD.
By: /s/Xxxxx X. Xxxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
