DISTRIBUTORSHIP AGREEMENT
CERTAIN
PORTIONS OF THE EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST FOR CONFIDENTIAL
TREATMENT AND ALL NON-PUBLIC INFORMATION HAS BEEN FILED WITH THE SECURITIES
AND
EXCHANGE COMMISSION
THIS
AGREEMENT IS MADE AS OF THE 24th DAY OF
August,
2007, by and between Royal Spring Water, Inc, (Supplier) a Nevada corporation
and existing under the laws of Nevada, with its principal place of business
at
00000 Xxxxxx Xxxxxx Xxxxx 000 Xxx Xxxx XX 00000, and Rhythm
Structured Water Limited, (Distributor) a company organized and existing
under the laws of the United Kingdom, with its principal place of business
at
Xxxxxxxxx
Xxxxx, Xxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx, XX00 0XX, Xxxxxx
Xxxxxxx;
ARTICLE
I. DEFINITIONS
When
used
in this Agreement, the following terms shall have the meanings indicated. The
meanings shall be applied whether the singular or the plural form of the term
is
used.
"Products"
means the Products described in the attached Exhibit A, manufactured by supplier
for the sale of the "Goods". Supplier may change the specifications
and design at its sole discretion at any time by mailing written notice of
such
changes to Distributor. Each change shall become effective within 30 days
following the date notice thereof is mailed to Distributor.
"Affiliate"
means any company controlled by, controlling, or under common control with
supplier.
"Agreement"
means this agreement, and the Exhibits, together with all amendments thereto.
"Attachment" means any form or exhibit attached to this agreement.
"Customer"
means any person who purchases Products from Distributor.
"Delivery
Point" means Suppliers facilities located at Hereford Texas.
"Goods"
means those items described in exhibit A.
"Products"
means Goods, Products.
"Territory"
means the following geographic area or areas: United Kingdom
"Trademark"
means any trademark, logo, or service xxxx, whether or not registered, used
to
represent or describe the Products of Supplier, as set forth in Exhibit
B.
1
ARTICLE
II. APPOINTMENT OF DISTRIBUTOR
Appointment.
Supplier hereby appoints Distributor as Supplier's exclusive distributor of
Products in the Territory, and Distributor accepts that position.
Referrals.
If Supplier or any Affiliate is contacted by any party inquiring about the
purchase of Products in the Territory, Supplier shall, or shall cause that
Affiliate to, refer such party to Distributor.
Term: Two
years from the time of signature of this agreement
Cancellation
of Agreement: Supplier may cancel this agreement at any time if Distributor
has
breached any of the terms and conditions of this agreement or in the event
Distributor has not purchased at least a minimum of *||||||||||||||||||
(40) foot containers * (||||||||||
cases per
container) during the two year term of this agreement, with a minimum of
1
container every two months. This is after the initial 6 months of pre-work
to
get the product and the brands in front of potential clients and Orders
for the
products. In the event Distributor has not breached any of the terms and
conditions of this agreement the Distributor will have the right to extend
his
term by a further eight years, giving a potential total of ten years contract
period. In the event of such an Eight year extension,
Distributor agrees to a minimum of *||||||||
40 foot
containers per month will be ordered for the remaining Eight
years.
Relationship
of Parties. Distributor is an independent contractor and is not the legal
representative or agent of Supplier for any purpose and shall have no right
or
authority (except as expressly provided in this Agreement) to incur, assume
or
create in writing or otherwise, any warranty on the part of Supplier. Supplier
shall not exercise any control over any of Distributor's employees, all of
who
are entirely under the control of Distributor. Distributor shall be responsible
for the acts and omissions of Distributor's employees. Distributor shall, at
its
own expense, during the term of this Agreement and any extension thereof,
maintain full insurance under any Workmen's Compensation Laws effective in
the
state or other applicable jurisdiction covering all persons employed by and
working for it in connection with the performance of this Agreement, and upon
request shall furnish Supplier with satisfactory evidence of the maintenance
of
such insurance. Distributor accepts exclusive liability for all contributions
and payroll taxes required under Federal Income Tax Law, Federal Social Security
Laws and State Unemployment Compensation Laws or other payments under any laws
of similar character in any applicable jurisdiction as to all persons employed
by and working for it. Nothing contained in this Agreement shall be deemed
to
create any partnership or joint venture relationship between the
parties.
Sale
of Products by Distributor. Distributor shall use its best efforts to
distribute the Products and to fully develop the market for the Products
within
the Territory. The parties have consulted together and now agree that if
Distributor's best efforts are used as provided in this Section, a minimum
of
*||||||||||||||||||
(40) foot containers of Products ("Annual Market Potential") will be purchased
and distributed in the Territory during the two years of this Agreement.
At the
beginning of each subsequent year the parties will consult together in
good
faith and agree on the Annual Market Potential applicable to that year;
provided, however, that if they cannot agree, the Annual Market Potential
for
the immediately Preceding year will apply to the current two
years.
2
Competing
Products. Distributor agrees that it will not distribute or represent any
Products in the Territory that compete with the Products during the term of
this
Agreement or any extensions thereof. This includes any future products or brands
of products from the supplier. It is agreed that any such products or brands
will first be offered to the Distributor for his territory.
Advertising.
Distributor shall be entitled, during the term of the distributorship created
by
this Agreement and any extension thereof, to advertise and hold itself out
as an
authorized Distributor of the Products. At all times during the term of the
distributorship created by this Agreement and any extension thereof, Distributor
shall use the Trademarks in all advertisements and other activities conducted
by
Distributor to promote the sale of the Products. Distributor shall submit
samples of all proposed advertisements and other promotional materials for
the
Products to Supplier for approval including but not limited to web sites, Domain
names, sales brochures, posters etc. Distributor shall not use any such
advertisements or promotional materials without having received the prior
written consent of Supplier to do so. Distributor shall not, pursuant to this
Agreement or otherwise, have or acquire any right, title or interest in or
to
Supplier's Trademarks. Any such consent listed above shall not be unreasonably
withheld and the Supplier agrees to make every effort to assist the Distributor
in any and all ways to make the territory successful by not withholding any
consent and should will actively encourage and assist in the creation of such
material to be used for promotion.
New
Products. If Supplier or any Affiliate now or hereafter manufactures or
distributes, or proposes to manufacture or distribute, any product other than
the Products, Supplier shall immediately notify, or cause such Affiliate to
notify, Distributor of that fact and of all details concerning that product.
Distributor may request from Supplier distribution rights for that product
in
the Territory, or any portion thereof, and if so requested, Supplier shall
negotiate, such distribution rights with Distributor in good
faith. If Distributor does not obtain those distribution rights
or obtains them only for a portion of the Territory, and Supplier or an
Affiliate later desires to offer those distribution rights for the Territory
or
any portion thereof to another party, Supplier shall first, or shall cause
such
Affiliate to first, make that offer in writing to Distributor on terms and
conditions which shall be specified fully in that offer. That offer shall
contain a full description of the subject product. Distributor may request,
and
Supplier shall promptly provide, or shall cause such Affiliate promptly to
provide, further information concerning the product or the offer. If Distributor
fails to accept such offer, Supplier or the Affiliate may then offer the product
to another party for distribution in the Territory, but may not offer it on
terms and conditions more favorable than those offered to Distributor. If
Supplier or the Affiliate desires to make a better offer to another party,
Supplier shall first, or shall cause the affiliate first to, make such better
offer to Distributor in accordance with the procedure set forth above. The
price
of the offer for these further products shall not be made unreasonably high
so
as to cause the Distributor to reject such an offer. But shall be inline with
all other Distributors pricing and the Suppliers general pricing.
3
Distributor
Sales, Service and Storage Facilities. Distributor shall, at its expense,
engage and maintain a sales service and handling organization in the Territory,
staffed with such experienced personnel as are necessary to enable distributor
to perform its obligations under this Agreement. Distributor shall, at
its
expense, maintain facilities and personnel in the Territory that will enable
it
promptly and satisfactorily to perform, at a reasonable price the sales,
marketing and customer service of the Products sold by Distributor. To
assist
Distributor in this function, Supplier shall provide training, without
charge,
to any reasonable number of Distributor's personnel as Distributor shall
designate. Distributor shall, at its expense, at all times store and maintain
its inventory of Products in accordance with current, applicable instructions
issued by Supplier from time to time. Distributor shall, at its expense,
deliver
one copy of a current sales brochure and literature, to each Customer either
at
the time of sale or as needed to present the product, at that time, Distributor
shall, at its expense, fully explain and demonstrate to the customer the
proper
use of the Product. Distributor shall mail to Supplier, during the term
of the
distributorship created by this Agreement and any extension thereof, prompt
written notice of the address of each location at which products are stored,
and
the address of each facility established by Distributor to sell and service
the
Products. Supplier may, through its designated agent, inspect all such
locations
and facilities and the operations conducted therein at any time during
normal
business hours. Distributor shall supply a copy of the name and
address of its customers after a sale has been made. Distributor will
get permission from its customer to use its name, company info and web
address
in press materials to be used by supplier. If this agreement were to be
terminated by Supplier not due to breach of any of the terms and conditions
of
this agreement by Distributor then the Supplier shall agree a price with
the
Distributor for the customers gained by the Distributor over the agreement
term.
The price shall be mutually agreed, if this is not the case then a mutually
agreed third party who is qualified in such matters shall be brought in
to
advise on the price and their decision would be deemed final by both
parties. In the event of termination by supplier due to breach
of any of the terms and conditions of this agreement by Distributor, then
Distributor will hand over to Supplier all the accounts they have secured
and
help with a smooth transition to a new distributor. In the event
Distributor terminates the agreement not due to breach of any of the
terms and conditions of this agreement by Supplier then Distributor will
hand
over to Supplier all the accounts they have secured and help with a smooth
transition to a new distributor.
Spare
Parts and Products. Distributor shall keep in stock an adequate supply of
the Products for the sales of Goods.
Confidential
Information. All information pertaining to the Products are recognized by
Distributor to be secret and confidential and to be the property of Supplier.
4
Those
items shall at all times and for all purposes be held by Distributor in a
confidential capacity and shall not, without the prior written consent of
Supplier, (i) be disclosed by Distributor to any person, firm or corporation,
excepting those salaried employees of Distributor who are required to utilize
such items in connection with the sale, marketing and servicing of Products
during the term of the distributorship created by this Agreement or any
extension thereof, or (ii) be disclosed to any person, firm or corporation,
or
copied or used by Distributor, its employees or agents at any time following
the
expiration or termination of this Agreement or any extension thereof. Supplier
may require as a condition to any disclosure by Distributor pursuant to this
Section that any salaried employee to whom disclosure is to be made sign a
confidentiality agreement, enforceable by Supplier, containing terms
satisfactory to Supplier.
ARTICLE
III. TERMS OF PURCHASE AND SALE OF PRODUCTS
Purchase
of Product. Distributor shall purchase its requirements for the Products
from Supplier. Such requirements shall include purchasing and maintaining
an
inventory of Products that is sufficient to enable Distributor to perform
its
obligations hereunder, Distributor shall buy sufficient
Products to enable Distributor to meet the full demand for Products in
the
Territory. All purchases of Products by Distributor from Supplier shall
be
deemed to be accepted by Supplier at the time a bankable acceptable irrevocable
letter of credit (“LC”) is opened in the name of supplier. To the
extent that LC is in compliance with the terms of this Agreement and drawn
on an
acceptable bank by suppliers bank, then Supplier shall perform in accordance
all
accepted orders. Supplier shall confirm its receipt and acceptance of each
order
within 5 days of receipt and approval of distributors LC by supplier’s bank. Or
if the Distributor wishes to make payment in full for any order, this is
also acceptable by the Supplier. Such payment must be made with in 7
days of the order from Distributor providing the order to
Supplier
Purchases
for Resale. All Products purchased by Distributor shall be purchased solely
for commercial resale, excepting those Products reasonably required by
Distributor for advertising and demonstration purposes. From time to time the
Supplier will assist the Distributor in Marketing of products and Brands. This
assistance shall be in the form of free product when launching new
products into the Distributor’s territory.
Order
Procedure. Each order for Products issued by Distributor to Supplier under
this Agreement shall identify that it is an order and shall further set
forth
the delivery date or dates and the description and quantity of Products
which
are to be delivered on each of such dates. An order for Products provided
by
distributor shall not provide a delivery date of less than 30 days for
the order
to arrive at the port of Houston after the date that order is delivered
to
Supplier and the LC or receipt of funds is approved by suppliers bank such
delivery date is to the port of Houston or any port of choice of distributor.
The individual contracts for the sale of Products formed by Distributor's
submission of orders to Supplier pursuant to the terms and conditions hereof
shall automatically incorporate, to the extent applicable, the terms and
conditions hereof, shall be subject only to those terms and conditions
(together
with all terms in orders which are contemplated by this Agreement) and
shall not
be subject to any conflicting or additional terms included in any documents
exchanged in connection therewith. Notwithstanding anything in this Section,
Supplier and Distributor may, by written agreement, modify the terms and
conditions of this Agreement. Such changes must be approved in writing
by both
parties.
5
Cancellation
of Orders. All cancellation of orders by Distributor shall be in writing, or
if not initially in writing, shall be confirmed in writing. If Distributor
cancels an order, which has been accepted by Supplier, Distributor shall
reimburse Supplier for any cost incident to such order incurred by Supplier.
The
Supplier shall set out the list of such costs in this agreement so as to show
what potential ramifications a cancelled order could have on the
Distributor.
Purchase
Price. The prices for Goods, and any discounts applicable thereto, are set
forth in Exhibit A. All prices are F.O.B. the Delivery
Point.
Price
Changes. Supplier reserves the right, in its sole discretion, to change
prices or discounts applicable to the Products. Supplier shall give written
notice to Distributor of any price change at least 30 days prior to the
effective date thereof. The price in effect as of the date of Distributor's
receipt of notice of such price change shall remain applicable to all orders
received by Supplier prior to that effective date. The Supplier shall not make
any such price increases, to the Distributor solely for his territory and it
shall be proved that the Supplier itself has applied these prices across the
board to all Distributors and itself. These prices shall not be made detrimental
so as to force the Distributor to cancel this agreement due to the product
becoming uncompetitive in it’s markets.
Packing.
Supplier shall, at its expense, pack all Products in accordance with Supplier's
standard packing procedure, which shall be suitable to permit shipment of the
Products to the Territory; provided, however, that if Distributor requests
a
modification of those procedures, Supplier shall make the requested modification
and Distributor shall bear any reasonable expenses incurred by Supplier in
complying with such modified procedures which are in excess of the expenses
which Supplier would have incurred in following its standard
procedures.
Delivery:
Title and Risk of Loss. All deliveries of Products sold by Supplier to
Distributor pursuant to this Agreement shall be made F.O.B. the Delivery Point,
and title to and risk of loss of Products shall pass from Supplier to
Distributor at the Delivery Point. Distributor shall be responsible for
arranging all transportation of Products, but if requested by Distributor,
Supplier shall, at Distributor 's expense if any, assist Distributor in making
such arrangements. Distributor shall also procure insurance for the
transportation of the Products, to the final destination in Distributor’s
territory.
Inspection
and Acceptance. Promptly upon the receipt of a shipment of Products,
Distributor shall examine the shipment to determine whether any item or items
included in the shipment are in short supply. Within 5 days of receipt of the
shipment, Distributor shall notify Supplier in writing of any shortages, which
Distributor claims existed at the time of delivery. Within 5 days after the
receipt of such notice, Supplier will inform insurance company of the claim
of
shortages, to determine, the loss at the time of delivery. All replacements
of
goods as a result of damage will be paid for from the supplier’s
insurance. All other claims are the responsibility of the Suppliers
insurance Unless notice is given as provided in this Section, Distributor shall
be deemed to have accepted such Products and to have waived all claims for
shortages.
6
Payment.
Upon shipping xxxx of lading presented to suppliers bank, Distributor’s LC will
be paid to Supplier, unless it is already prepaid.
U.S.
Export Control. Supplier's obligations to sell and deliver Products shall be
subject to such United States laws and regulations as shall, from time to time,
govern the sale and delivery of goods for export from the United
States.
*-
THIS INFORMATION HAS BEEN REDACTED FROM THIS AGREEMENT BASED UPON THE COMPANY’S
REQUEST FOR CONFIDENTIAL TREATMENT OF SUCH INFORMATION. ALL NON-PUBLIC
INFORMATION HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION
Royal
Spring Water,
Inc. DATE:_______________________
_________________________
Supplier's
Signature
Its:_______________________
Bottled
Water
Company DATE:_________________________
___________________________
Distributor's
Signature
Its:________________________
7
EXHIBIT
A
PRICES -RHYTHM
STRUCTURED WATER
Bottle
size – 16.9 oz
Water
Bottler – Royal Spring Water Inc.
Brand
–
Rhythm Structured H20
Cap
–
Flat
Bottles
per case – 24 with shrink warp.
Price
per
Case – *|||
||||| FOB
Hereford
PAYMENT
TERMS
Irrevocable
Letter Of Credit payable of presentation of xxxx of lading for shipment with
in
five days from the issue of the order by Distributor
8
EXHIBIT
B
Rhythm
Structured H20
9
