Exhibit 10.4
Xxxxxx Tequila Purchase Agreement
Purchase Agreement
PURCHASE AGREEMENT dated as of July 29, 2003 between DRINKS AMERICAS, INC.
a Delaware corporation ("Purchaser") and XXXXXX TEQUILA PARTNERS, a
California general partnership ("Seller").
WHEREAS, Seller owns the trademark "Xxxxxx" and the logo "Guadalajara
Imports" for use on tequila;
WHEREAS, Seller has the right to distribute Xxxxxx Tequila (as hereinafter
defined) in California and Missouri and wishes to participate with Purchaser, as
provided herein, in exploiting the aforesaid trademarks;
WHEREAS, Purchaser desires to purchase the aforesaid trademarks, and
Seller is willing to sell such trademarks to Purchaser pursuant to the terms
hereof;
NOW THEREFORE, the parties hereto, in consideration of the premises hereof
and other good and valuable consideration, hereby agree as follows:
1. Definitions. The following terms used herein shall have the meanings
given to such terms below.
"This Agreement" means this Purchase Agreement between Purchaser and
Seller.
"Xxxxxx Tequila" means tequila spirits bearing either of the Trademarks.
"Assignment" means an assignment from Seller to Purchaser, subject to
Seller's Right, of all right, title and interest in registrations of the
Trademarks, and in applications for such registration, for use on all products
whatsoever within the Territory, including the registrations and applications
listed in Schedule I.
"Branded Products" means any products whatsoever bearing either of the
Trademarks and sold by Purchaser in the Territory.
"Brand Net Profit" means the operating profit derived from sales by
Purchaser of Branded Products and shall equal to excess of the amounts actually
collected from customers for the purchase by them of Branded Products, less (i)
the cost of goods sold and all other direct costs thereof, and (ii) an
appropriately allocated portion of all general corporate and administrative
expenses, allocated on the basis of revenues from various activities of
Purchaser.
"Closing" has the meaning given to such term in Section 3 hereof.
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"Confidential Information" means non-public information received from a
party to this Agreement, including financial information, operating procedures
and techniques, concepts, drawings, designs, samples, promotional materials,
marketing and sales strategies and procedures, and all other information labeled
"Confidential" by such party with reference to this Agreement.
"Deferred Payment" means the US$50,000 balance of the Purchase Price after
payment of the Down Payment.
"Down Payment" means a US$100,000 portion of the Purchase Price, payable
at the Closing.
"Purchase Price" means US$150,000 comprising the Down Payment and the
Deferred Payment.
"Purchased Property" means a 75% undivided interest in all registrations,
and applications for registration, of each of the Trademarks in the Territory
with regard to any products whatsoever, subject to the provisions of Sections 6
and 7 hereof and the exclusive right of Purchaser, vis-a-vis Seller, to register
or apply for registration of either of the Trademarks in any other jurisdiction
in the Territory with respect to any such products.
"Purchaser" means Drinks Americas, Inc., a Delaware corporation.
"Retained Percentage" means (i) 25%, if the Deferred Payment is duly paid,
or (ii) 45%, if the Deferred Payment is not so paid and the assignment mentioned
in the second sentence of Section 4 hereof shall have been made.
"Retained Right" means Seller's right to receive the Retained Percentage
of Brand Net Profit and licensing royalties, as provided in Section 7 hereof;
provided, however, that in no event shall the Retained Right entitle Seller to
less than $3.00 for each case of Xxxxxx Tequila sold to customers subsequent to
the date which is 18 months following the Closing.
"Schedule I" means schedule I hereto listing all the registrations, and
applications for registration, of either of the Trademarks owned by Seller
within the Territory, showing the jurisdictions in which and products as to
which each such registration or application has been filed.
"Seller" means Xxxxxx Tequila Partners, a California general partnership
in which Blue Agave Marketing, Inc., 0000 Xxxxxxx Xxxxxx, Xx. Xxxxx, XX 00000,
and Great Western Brokerage, Inc., X.X. Xxx 0000, Xx Xxxxx, XX 00000.
"Territory" means the entire world, except Mexico.
"Trademarks" means, collectively, the trademark "Aquila," the logo
"Guadalajara Imports" and any artwork, designs or logos associated therewith.
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2. Purchase and Sale. Purchaser hereby agrees to purchase the Purchased
Property from Seller in consideration of the Purchase Price, of which the Down
Payment is to be delivered by Purchaser to Seller at the Closing hereinafter
mentioned.
3. Closing. The Closing shall be held at the offices of Ballon Xxxxx Xxxxx
& Xxxxxx, P.C., 0000 Xxxxxxxx, Xxx Xxxx, XX 00000, on or before such date as is
60 days following the execution hereof. At the Closing, each of the following
shall occur:
(a) Seller shall deliver to Purchaser a master assignment of the
Trademarks from Seller to Purchaser and Seller, in all jurisdictions in the
Territory and as to all possible products, indicating a 75% undivided interest
for Purchaser and a 25% undivided retained interest for Seller, respectively,
therein;
(b) Seller shall deliver to Purchaser such individual assignments of
either of the Trademarks from Seller to Purchaser and Seller, in such
jurisdictions and as to such products covered by Schedule I as Purchaser shall
request in writing prior to the Closing, indicating the agreed 75%/25% undivided
interests of Purchaser and Seller respectively therein, in proper form for
recording in such jurisdictions;
(c) Seller shall deliver to Purchaser an assignment of all its
right, title and interest in the manufacture, importation, promotion,
distribution and/or sale of Xxxxxx Tequila, including an assignment of all
brokerage, point-of-sale and other agreements of Seller pertaining to such
activities, together with any consents required with respect to such assignment
of agreements;
(d) Purchaser shall make payment of the Down Payment to Seller by
bank cashier's check or wire transfer; and
(e) each party hereto shall deliver such other documents as are
reasonably requested to evidence the performance of the obligations of such
party hereunder.
4. Payment of Deferred Payment. The Deferred Payment shall be paid in good
funds by Purchaser to Seller not later than the first to occur of (i) the date
which is six months following the date of the Closing, and (ii) the date which
is 30 days following the collection by Purchaser of payment by customers in good
funds for an aggregate of not less than 5,000 cases of Xxxxxx Tequila sold by
Purchaser to such customers. In the event that the Deferred Payment is not paid
when due, Purchaser shall assign to Seller, and record in the appropriate
trademark offices in the Territory, a 20% undivided interest in the Trademarks
so that the Trademarks shall then be owned 55% by Purchaser and 45% by Seller,
which adjusted percentages shall be given effect retroactively as of the Closing
Date with any necessary payment of distributions made during such six-month
period to accomplish such retroactive adjustment to be made promptly by
Purchaser. Thereafter, Purchaser's obligation to pay the Deferred Payment shall
be cancelled, and Seller shall not have any obligation to return any portion of
the Down Payment to Purchaser.
5. Covenants. The parties hereto represent and covenant to each other as
follows:
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(a) Orders Prior to Closing. Seller hereby appoints Purchaser to acts as
its agent and designee in accepting and filling orders for sales of Xxxxxx
Tequila, in the name and for the account of Seller, in the Territory generated
by Purchaser prior to the Closing and, assuming the Closing is completed, to
account for the fulfillment of such orders (including sales proceeds and
fulfillment costs) as if they had occurred following the Closing for Purchaser's
account, it being agreed that if the Closing fails to occur for any reason, such
orders shall be deemed to belong to Seller for all purposes;
(b) Defective Products. Seller represents to Purchaser that the quality of
Xxxxxx Tequila sold by Seller prior to the Closing meets industry standards, and
covenants that it shall assume responsibility for, and reimburse Purchaser for
all costs arising as a result of, any Xxxxxx Tequila in the hands of
distributors discovered during the 45-day period following the Closing to be
unsaleable by them;
(c) Additional Assignments. In order to enable Purchaser to protect its
rights in various jurisdictions within the Territory, Seller agrees to execute
and deliver to Purchaser such additional assignments of the Trademarks, in such
jurisdictions and as to such products covered by Schedule I as Purchaser may
request from time to time, indicating the respective undivided interests of
Purchaser and Seller respectively therein, in proper form for recording in such
jurisdictions;
(d) Broker's Representative. Purchaser agrees that Seller shall continue
to act as broker's representative in handling sales by Purchaser of Xxxxxx
Tequila in the States of California and Missouri for so long as Seller
reasonably performs the responsibilities attendant to such assignment and shall
be entitled to a standard fee for providing such services; and
(e) Territorial Restriction. Purchaser shall not sell any Branded Products
to customers either (i) in Mexico, or (ii) in the Territory where Purchaser
knows or has reason to know that such customer intends to resell such Branded
Products in Mexico.
6. Trademark. Seller hereby represents that each of the registrations of
either of the Trademarks, and the applications for registration thereof, listed
on Schedule I hereto is owned by Seller and that, following the Closing and
subject to Seller's Interest, the Trademark shall be deemed to be entirely the
property of Purchaser and Seller shall not claim any title or right to use the
same in the Territory on any products whatsoever at any time and shall not
question, dispute, attack or put in issue, the title or any rights of Purchaser
in the Trademarks in the Territory on any such products. Purchaser agrees that
it shall not register either of the Trademarks in any jurisdiction which
recognizes undivided interests in the ownership of a trademark, and permits
registrations to reflect such undivided ownership, without appropriately
reflecting in such registration Seller's undivided interest in such Trademark.
7. Seller's Interest. Following the Closing, Seller shall own the Retained
Right. Seller agrees that whatever rights might accrue to Seller under the laws
of any jurisdiction as the result of reflecting, in any registration of either
of the Trademarks in such jurisdiction, the undivided interests therein of
Purchaser and Seller, Seller's rights hereunder shall be limited to, and
satisfied in full by, the Retained Right to receive the Retained Percentage of
the sum of (i) Brands Net Profit, plus (ii) any and all royalties received by
Purchaser from any licensing of the Trademark. The aforesaid payments shall be
made semi-annually, not later than the 30th day following the end of each
calendar half-year with regard to amounts collected by Purchaser during the
immediately preceding calendar half-year, such payments to be accompanied by
reasonable corporate administrative expense barometers and Xxxxxx Tequila
depletion reports. In the event of Purchaser's failure to make payment to Seller
of any amount to which Seller is entitled pursuant to the Retained Right, Seller
shall not as a result thereof gain any right to use either of the Trademarks or
any right or interest therein, and its sole remedy shall be to bring suit for
(i) an accounting, and/or (ii) payment of any amount then due, together with
(iii) interest at an annual rate equal to 2% above the prime rate reported by
the Wall Street Journal for the period from the due date of such payment to the
date on which payment thereof is made, and (iv) expenses of such action,
including reasonable legal fees.
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8. Transfer of Assets. Purchaser covenants that it shall not transfer
either of the Trademarks to any other person unless such person shall agree, in
a writing reasonably satisfactory to Sellers, to be bound by the continuing
provisions of this Agreement concerning the Retained Right. In the event of a
breach of this provision, or any judicial invalidation of Seller's rights under
Section 7 hereof, the limitation on enforcement of the Retained Right contained
in said Section 7 shall be null and void and Seller shall be entitled to any and
all rights granted to Seller under the laws of any jurisdiction in which the
registration of either of the Trademarks in such jurisdiction reflects Seller's
undivided interest therein in the amount of the Retained Percentage.
9. Perpetuities. Notwithstanding anything to the contrary herein, this
Agreement shall expire, and the provisions hereof shall be null and void, upon
the expiration of twenty-one years following the death of the last to die of
Xxxxx X. Xxxxx, J. Xxxxxxx Xxxxx, and their descendants living (including a
period of gestation) on the date of the execution hereof.
10. Non-Agency. Nothing in this Agreement shall be construed to constitute
either party the agent of the other party or to constitute the parties as
members of a joint venture of partners, nor shall any similar relationship be
deemed to exist between them.
11. Severability. In the event that any provision of this Agreement shall
be judicially held to be invalid or unenforceable, or if the scope of any such
provision shall be held to be overly broad in scope or term, such holding shall
not invalidate or render unenforceable any other provision hereof and such
overly-broad provision shall be validated and enforced to the fullest extent
permitted by law.
12. Entire Agreement: Modifications in Writing. This Agreement constitutes
the entire agreement between the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements and understandings of the parties
hereto, whether written or oral. No modification of any of the terms and
conditions of this Agreement shall be valid unless contained in a written
instrument signed by both parties hereto.
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13. Nonassignability. Except as specifically contemplated herein, this
Agreement and any rights, privileges or obligations hereunder may not be
assigned or transferred in whole or part by either party hereto without the
prior written consent of the other party.
14. Confidentiality. Each of the parties hereto agrees not to disclose to
any other person at any time nor to use for any purpose other than for
implementation of this Agreement the Confidential Information received by it
from the other party under this Agreement; provided, however, that this Section
shall not prohibit disclosure by a party to this Agreement of information which
(i) generally becomes available to the public other than as a result of
disclosure by such party, (ii) was within the possession of such party prior to
being furnished to it by the other party to this Agreement, or (iii) becomes
available to such party on a non-confidential basis from a source independent of
such other party.
15. Notices. Any notice to be given hereunder shall be in writing and
shall be deemed duly given (i) upon mailing a confirmation by first class mail,
postage prepaid, of facsimile or e-mail transmission, (ii) when sent by
overnight delivery or courier, or (iii) when mailed by registered or certified
mail return receipt requested and postage prepaid:
(a) if Seller, addressed to:
Xxxxxx Tequila Partners
c/o Xxxxx Xxx
0000 Xxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxx
---------
(b) if to Purchaser, addressed to:
Drinks Americas, Inc.
000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxx
---------
with a copy to:
Ballon Stroll Xxxxx & Xxxxxx, P.C.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
---------
or to such other address as such party hereto shall designate in writing to the
other party.
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16. Waiver. A waiver by either party hereto of any particular default or
breach by the other party shall not affect or prejudice the rights of the
aggrieved party with respect to any other default or breach whether of the same
or different nature.
17. Assurances. Each of the parties hereto shall do such further acts and
things, including executing appropriate documents, as may reasonably be
requested by the other party to carry out the intent of this Agreement.
18. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of each of parties hereto and their respective successors and
permitted assigns.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed wholly within such state.
20. Jurisdiction and Venue. Each of the parties hereto hereby consents to
the exclusive jurisdiction of the state or federal courts located in the Borough
of Manhattan, New York, and agrees that any action concerning a dispute arising
out of or relating to this Agreement shall be brought in any such court and that
process, notice of motion, or other application of the court, or a judge
thereof, or any notice in connection with the proceedings provided for herein
may be served within or without the State of New York as provided herein for the
serving of notices hereunder.
21. Equitable Remedies. The parties agree that in the event of an actual
or threatened breach of the provisions herein concerning restrictions on the use
of the Trademark, or of any other act which would entitle the damaged party to
injunctive relief, such party may suffer irreparable damage and will not have an
adequate remedy at law. Accordingly, in the event of such an actual or
threatened breach or act, such party shall be permitted to apply for and to
obtain an injunction restraining any other party from such actual or threatened
action, in addition to such party's other remedies at law or equity.
22. Captions. The captions heading each Section of this Agreement are for
convenience only and shall have no effect on the interpretation or meaning of
this Agreement.
23. Duplicate Originals. This Purchase Agreement may be signed in
duplicate originals.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its respective name by one of its representative thereunto
duly authorized, as of the day and year set forth above.
/s/ Xxxxx Xxx
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/s/ J. Xxxxxxx Xxxxx
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