DEFINITIVE LICENSE AND DISTRIBUTION AGREEMENT
This Definitive License and Distribution Agreement ("Agreement") is made
effective August 1, 2004 between PEACE MOUNTAIN NATURAL BEVERAGES CORPORATION, a
Massachusetts corporation with an address of X.X Xxx 0000 Xxxxxxxxxxx,
Xxxxxxxxxxxxx 00000-0000 XXX (hereinafter "PEACE MOUNTAIN") and Creative
Enterprises International, Inc., a Nevada corporation with an address of 000
Xxxxxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxxxx 00000 (hereinafter "CREATIVE
ENTERPRISES") regarding the license and distribution of PEACE MOUNTAIN'S Skinny
Water, Diet Water, Skinny Tea, Skinny Juice and Skinny Shake products ("SKINNY
PRODUCTS") by CREATIVE ENTERPRISES.
WHEREAS, PEACE MOUNTAIN has researched and developed at great expense and
represents that it owns all right, title and interest in and to proprietary
information relating to the design, development, manufacture of the SKINNY
PRODUCTS including the good-will, trademarks and trade names associated with the
aforementioned SKINNY PRODUCTS;
WHEREAS, PEACE MOUNTAIN is offering License and Distribution rights to
CREATIVE ENTERPRISES for the manufacture, distribution and sale of the SKINNY
PRODUCTS on an exclusive basis as further defined hereunder;
WHEREAS, CREATIVE ENTERPRISES desires to obtain such License and
Distribution right under which it provides the manufacturing, marketing,
promotion, distribution and order fulfillment for the SKINNY PRODUCTS;
NOW, THEREFORE, in view of the foregoing premises and in consideration of the
mutual covenants herein contained, PEACE MOUNTAIN and CREATIVE ENTERPRISES agree
as follows:
RIGHTS GRANTED
1.1 The Letter of Agreement ("LOA"), Schedule A, between PEACE MOUNTAIN and
CREATIVE ENTERPRISES dated February 26, 2004 is incorporated by reference
hereunder. In the event of any conflict of terms between the LOA and this
Agreement, this Agreement shall govern the parties.
1.2 PEACE MOUNTAIN grants to CREATIVE ENTERPRISE exclusive License and
Distribution rights to the SKINNY PRODUCTS for three years as defined in
the LOA.
1.3 CREATIVE ENTERPRISES is granted rights to bottle the SKINNY PRODUCTS.
CREATIVE ENTERPRISES will bottle the SKINNY PRODUCTS either using
concentrate purchased from PEACE MOUNTAIN or concentrate which it produces
in accordance with formulations agreed upon with PEACE MOUNTAIN, such
agreement which shall not be unreasonably withheld. All ingredients shall
be GRAS.
1.4 PEACE MOUNTAIN grants a right of first refusal to CREATIVE ENTERPRISES
to enter into a license and distribution agreement for future SKINNY
PRODUCTS on same terms and conditions as mutually agreed upon by the
parties. CREATIVE ENTERPRISES shall have 30 days after receiving notice
from PEACE MOUNTAIN of PEACE MOUNTAIN'S intention to place the newly
developed SKINNY PRODUCTS on the market to enter into a definitive license
agreement for such additional SKINNY PRODUCTS otherwise it shall be deemed
to have declined to exercise its right.
MARKETING EFFORTS
2.1 CREATIVE ENTERPRISES agrees to use reasonable efforts to market PEACE
MOUNTAIN'S SKINNY PRODUCTS continuously during the term of this Agreement,
and any subsequent renewals thereof using commercially acceptable practices
consistent with the ordinary course of business for similar products in the
industry while following sound business judgment.
2.2 CREATIVE ENTERPRISES has spent nearly [****] to-date since the signing
of the LOA in the areas of label design, legal review of the labels,
setting up national warehouse and trucking infrastructure, publicity and
the hiring of distributors.
[*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.]
2.3 CREATIVE ENTERPRISES plans to spend an additional [****] in marketing
and promotion during the remainder of 2004 and during 2005 to launch the
SKINNY PRODUCTS. The expenditures to used for travel/entertainment
expenses, distributor commissions and advance payments, focus groups,
samples, branding, trade show exhibits, distributor sales meeting,
sponsored events, trade advertising, web promotions oriented at customer
loyalty, and sales activities to cultivate national retailers such as
Target, 7-11, Albertson's, and Walgreens.
2.4 CREATIVE ENTERPRISES plans to complete the various milestones as
defined on SCHEDULE D for a launch of the SKINNY PRODUCTS during the
2004-2005 timeperiod. The events and timelines on SCHEDULE D are for
planning purposes and subject to change based on actual market conditions.
TERM
3.1 The term of this Agreement shall be for an initial period of three (3)
years commencing on the effective date and shall automatically renew for
additional one year terms under the same terms and conditions contained
herein. Said renewals to take effect automatically following the expiration
of the previous term unless terminated as provided hereunder.
TERMINATION
4.1 PEACE MOUNTAIN may terminate this Agreement for cause if:
i. commencing no later than January 2005 CREATIVE ENTERPRISES shall
bottle SKINNY PRODUCTS, such amount bottled increasing
periodically thereafter such that no later than December 2005 the
ongoing run-rate representing the average weekly quantity
bottled shall equate to the amount necessary to produce [****]
bottles of [****] size ("Minimum Purchase Amount"); or
ii. in subsequent renewal terms, CREATIVE ENTERPRISES fails to bottle
weekly in a ongoing average monthly run-rate a quantity of the
SKINNY PRODUCTS which is [****] greater than the Minimum Purchase
Amount for the preceding period; or
iii. CREATIVE ENTERPRISES materially breaches any obligation under
this Agreement and/or the LOA and such breach remains uncured
after thirty (30) days.
4.2 The obligations of confidentiality of Paragraph 9 shall survive the
term of this agreement until one of the exceptions of Paragraph 9.5 shall
apply.
4.3 CREATIVE ENTERPRISES may cure a breach of this Agreement for failure to
bottle the Minimum Purchase Amount under 4.1 (i) or 4.1 (ii) by making a
payment
[*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.]
to PEACE MOUNTAIN in the amount of $10,000 for each month where CREATIVE
ENTERPRISES is in breach of the aforementioned performance criteria.
ROYALTIES AND COMPENSATION.
5.1 If CREATIVE ENTERPRISES purchases the concentrate for SKINNY PRODUCTS
from PEACE MOUNTAIN, CREATIVE ENTERPRISES shall pay PEACE MOUNTAIN the
factory cost for the concentrate. Factory cost shall include the cost of
the actual ingredients plus reasonable and ordinary direct expenses
attributable to PEACE MOUNTAIN'S production costs including but not limited
to packaging costs, labor, overhead, shipping and other related expenses
involved in the production of concentrate.
5.2 PEACE MOUNTAIN'S compensation from CREATIVE ENTERPRISES for the License
and Distribution rights granted shall be [****] of the Gross Profits
generated from the sale of the SKINNY PRODUCTS. Gross Profit shall mean
revenue collected less [****]. Marketing and direct sales expenses shall be
based on the [****] paid to third parties [****] by CREATIVE ENTERPRISES.
Gross Profits shall be paid on at least a calendar year basis but
calculated and reserved on the books of CREATIVE ENTERPRISES at quarterly
intervals.
5.3 During the period of August 1, 2004 through December 31, 2005, CREATIVE
ENTERPRISES shall pay to PEACE MOUNTAIN advances against its share of the
GROSS PROFITS. The amount of the advance each month shall be [****] for
August 2004 through December 2004, and shall increase in January 2005 to
[****] per month for the remaining months through December 2005. All
payments shall be made in advance on the first day of each month.
All payments shall be non-recourse advances against PEACE MOUNTAIN'S profit
share for the period August 2004 through December 2005. Advance payments
made by CREATIVE ENTERPRISES during the period can only be offset against
profits owed to PEACE MOUNTAIN during the August 2004 through December 2005
period. If the actual profits owed by CREATIVE ENTERPRISES for the period
exceed the amount advanced to PEACE MOUNTAIN, then CREATIVE ENTERPRISES
shall be obligated only to pay any amounts which exceed the total of the
advance payments. If the actual profits are less than the total amount of
all advance payments made by CREATIVE ENTERPRISES, PEACE MOUNTAIN shall not
be obligated to repay or credit the shortfall against profits earned in
subsequent periods.
[*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.]
5.4 All shipments of concentrate by PEACE MOUNTAIN to CREATIVE ENTERPRISES
shall be F.O.B Worcester, MA or any other shipping point selected by PEACE
MOUNTAIN which is equal or a lesser distance from CREATIVE ENTERPRISES'
offices.
5.5 CREATIVE ENTERPRISES shall reimburse PEACE MOUNTAIN for PEACE
MOUNTAIN'S out of pocket expenses related to the development and
modification of the SKINNY PRODUCTS, legal expenses for license agreements
and protection of intellectual property (including costs for foreign
trademark registrations which shall commence upon the signing of this
Agreement), and other expenses incurred at the bequest of CREATIVE
ENTERPRISES associated with the introduction of the SKINNY PRODUCTS
including but not limited to travel and entertainment expenses. Reimbursed
expenses shall be directly related to this Agreement and payable upon
presentation of actual copies of invoices or bills.
RECORDS AND INSPECTION
6.1 CREATIVE ENTERPRISES shall provide to PEACE MOUNTAIN on a quarterly
basis reporting which indicates its plans for the upcoming three month for
the marketing and promotion of the SKINNY PRODUCTS.
6.2 CREATIVE ENTERPRISES shall provide to PEACE MOUNTAIN on a quarterly
basis a report of the actual marketing and promotion expenditures for the
previous three month period.
6.3 PEACE MOUNTAIN shall have the right upon reasonable notice to CREATIVE
ENTERPRISES to inspect the records of CREATIVE ENTERPRISES for the purposes
of reviewing any contracts or other agreements for which CREATIVE
ENTERPRISES has entered which affects the sale, marketing, distribution or
manufacture of the SKINNY PRODUCTS.
6.4 PEACE MOUNTAIN shall have the right to periodically inspect samples of
the bottled SKINNY PRODUCTS to ensure that the SKINNY PRODUCTS are
consistent with PEACE MOUNTAIN'S formulation.
6.5 CREATIVE ENTERPRISES shall provide to PEACE MOUNTAIN on a quarterly
basis accounting indicating the quantity of SKINNY PRODUCTS produced and
shipped for the previous period.
TRADEMARKS AND COPYRIGHTS
7.1 Throughout the term of this Agreement, CREATIVE ENTERPRISES shall have
the right to utilize PEACE MOUNTAIN'S trademarks and copyrights for the
SKINNY PRODUCTS for exclusive purpose of promoting and selling the SKINNY
PRODUCTS. PEACE MOUNTAIN grants to CREATIVE ENTERPRISES an
exclusive license to use the aforementioned trademarks and trade names
("MARKS") associated with the SKINNY PRODUCTS for the sole purpose of
promoting, selling and distributing the SKINNY PRODUCTS. Notwithstanding
such exclusive license of the MARKS to CREATIVE ENTERPRISES, PEACE MOUNTAIN
shall retain all its existing rights of use and ownership in the MARKS.
7.2 Such MARKS are listed on Schedule C. CREATIVE ENTERPRISES will submit
to PEACE MOUNTAIN any proposed use of the MARKS for PEACE MOUNTAIN'S
approval prior to commencing such use.
7.3 CREATIVE ENTERPRISES will submit to PEACE MOUNTAIN copies of all uses
of PEACE MOUNTAIN'S trademarks and copyrights including but not limited to
advertisements, promotional materials or any other use.
7.4 CREATIVE ENTERPRISES shall have the right to modify and revise
promotional materials, labeling and packaging of the SKINNY PRODUCTS
provided that any such modifications or revisions do not adversely affect
the PEACE MOUNTAIN trademarks, trade names or good-will associated with the
MARKS.
7.5 CREATIVE ENTERPRISES shall identify all SKINNY PRODUCTS and promotional
materials including any web sites:
(a) as bottled under license from PEACE MOUNTAIN with following
language appearing on the PRODUCT label and in conjunction will
all advertising or web promotion:
"bottled under license from Peace Mountain Natural Beverages
Corp."
(b) and identifying PEACE MOUNTAIN's rights in the trademark "Skinny
Water" on the PRODUCT label and all marketing materials as
follows:
"Skinny Water" is registered trademark of Peace Mountain Natural
Beverages Corporation"
NON- COMPETITION
8.1 CREATIVE ENTERPRISES agrees not to reverse engineer, determine the
formulation of or copy in any other form or manner PEACE MOUNTAIN'S SKINNY
PRODUCTS.
8.2 CREATIVE ENTERPRISES agrees that during the term of this Agreement it
will not distribute any other product that may be a competitive product to
the SKINNY PRODUCTS. Competitive products for the purposes of this
Agreement shall mean any enhanced water product offering weight loss.
CONFIDENTIAL INFORMATION
9.1 PEACE MOUNTAIN may disclose certain of its confidential information
such as formulations for the SKINNY PRODUCTS and other non-public
information, technical data, financial information, corporate practices,
procedures and other data owned or used by it, which, together with all
photographs, copies, reproductions, extractions, tracings, outlines,
paraphrasing, bulletins, memoranda, manuals, records, summaries, letters,
books and notes in which the same may be embodied it considers to be
proprietary information ("TRADE SECRETS").
9.2 CREATIVE ENTERPRISES agrees that any TRADE SECRETS disclosed hereunder
shall be and remain exclusively the property of PEACE MOUNTAIN and shall be
held in the strictest confidence by CREATIVE ENTERPRISES. No TRADE SECRETS
may be disclosed or delivered to others (other than employees, consultants
and representatives of CREATIVE ENTERPRISES with a need to know, provided
that such persons agree to abide by the terms of confidentiality of this
Agreement with respect to PEACE MOUNTAIN'S TRADE SECRETS received by such
person) or used by the party receiving it for any purpose (other than the
limited purpose of performance of rights granted in this Agreement) without
the prior written consent of PEACE MOUNTAIN.
9.3 Except as necessary for the performance of the limited purpose as
contemplated by this Agreement or as expressly authorized in writing by
PEACE MOUNTAIN, CREATIVE ENTERPRISES, or any party receiving such TRADE
SECRETS from CREATIVE ENTERPRISE, agrees that it will not copy, take
noteof, photograph, outline, summarize, reproduce in any way, disclose or
use the TRADE SECRETS or any part thereof and that such party will return
to PEACE MOUNTAIN, upon PEACE MOUNTAIN'S request, all documents provided by
PEACE MOUNTAIN and all copies, summaries, notes and outlines thereof.
9.4 CREATIVE ENTERPRISES hereto shall take reasonable measures to prevent
unauthorized disclosure of TRADE SECRETS and treat such TRADE SECRETS with
at least the degree of care that it would for its own proprietary
Information. Notwithstanding, CREATIVE ENTERPRISES shall use at minimum
upmost care in protecting the confidentiality of TRADE SECRETS.
9.5 The obligations of confidentiality set forth in this Agreement shall
not apply to:
a. Information which is in the public domain as of the date
of this Agreement or which later comes into the domain from a source
other than any party hereto receiving it pursuant to this Agreement;
b. Information approved for release by written authorization
of PEACE MOUNTAIN;
c. Information rightfully acquired by a party on a non-
confidential basis from a third party having a right to disclose the
same;
d. Information rightfully known to a party prior to receipt
of the proprietary information and
e. Information developed by a party subsequent to the date
of disclosure hereunder without reliance on any proprietary
information of the other party except to the extent of such party's
right to use such information.
9.6 CREATIVE ENTERPRISES may disclose TRADE SECRETS and other Proprietary
Information received from PEACE MOUNTAIN to the extent legally compelled to
do so by any order, subpoena or document discovery request provided that
prior to disclosure, written notice of such disclosure is furnished to the
PEACE MOUNTAIN as soon as practicable in order to afford PEACE MOUNTAIN an
opportunity to seek a protective order (it being agreed that if PEACE
MOUNTAIN is unable to obtain or does not seek a protective order and
CREATIVE ENTERPRISES is legally compelled to disclose such information,
disclosure of such information may be made without liability).
9.7 These obligations of confidentiality shall supplement and supercede any
conflicting provisions in the any confidentiality agreement executed by the
parties prior to the signing of this Agreement including but not limited to
the confidentiality agreement dated February 12, 2004 which is attached as
Schedule B.
DISCLAIMERS AND WARRANTIES
10.1 PEACE MOUNTAIN warrants that it has the right, title and interest in
the SKINNY PRODUCTS and has the right to grant the license made hereunder,
but it makes no warranty or representation that said licensed copyright nor
that any product manufactured pursuant to this Agreement will not infringe
upon the patent or rights of another.
LIMITATION OF LIABILITY. NEITHER SPECIAL, INCIDENTIAL OR CONSEQUENTIAL
DAMAGES SUFFERED BY A PARTY SHALL BE LIABLE FOR ANY OTHER PARTY, ANY OF ITS
AFFILIATES, ANY OF ITS SUBLICENSEES OR ANY THIRD PARTY ARISING OUT OF, OR
IN CONNECTION WITH, THE LICENSE OR USE OF THE TECHNOLOGY OR SALE OR USE OF
ANY LICENSED PRODUCT. IN ADDITION TO THE FOREGOING, NEITHER LICENSOR NOR
LICENSEE SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES SUFFERED BY THE OTHER PARTY, ANY AFFILIATE OR
SUBLICENSE OF THE OTHER OR ANY THIRD PARTY ARISING OUT OF, OR IN CONNECTION
WITH, THIS AGREEMENT, THE PERFORMANCE BY EITHER PARTY OF ANY OF ITS
OBLIGATIONS HEREUNDER, ANY REPRESENTATION OR WARRANTY OF EITHER PARTY
HEREUNDER OR OTHERWISE, EXCEPT ANY SUCH DAMAGES WHICH ARISE OUT OF, OR
RESULT FROM, ANY INTENTIONAL AND KNOWING BREACH OF THIS AGREEMENT. THE
FOREGOING LIMITATIONS APPLY TO ALL CLAIMS, INCLUDING, WITHOUT LIMITATION,
BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY,
MISREPRESENTATION OR OTHER TORTS.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, THE FOREGOING
IS IN LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED, WHENEVER ARISING BY LAW,
CUSTOM OR CONDUCT. IN NO EVENT SHALL LICENSOR BE LIABLE FOR INDIRECT OR
CONSEQUENTIAL DAMAGES.
NOTICES
11.1 All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by facsimile transmission
(receipt verified), telexed, mailed or registered or certified mail (return
receipt requested), postage prepaid, or sent by express courier service, to
the Parties at the following addresses (or at such other address for a
Party as shall be specified by like notice; provided, that notices of a
change of address shall be effective only upon receipt thereof):
If to PEACE MOUNTAIN addressed to:
Xxxx Xxxxx Xxxxx
Peace Mountain Natural Beverages Corp.
00 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
If to CREATIVE ENTERPRISES addressed to:
Xxxxxxx Xxxxxxx
Creative Enterprises International, Inc.
000 Xxxxxxxxx Xxxx
Xxxx Xxxx, XX 00000-0000
SEVERABILITY
12.1 If any section, paragraph or subparagraph of this Agreement or any
portion hereof is held to be indefinite, invalid, illegal or otherwise
void, voidable or unenforceable, the same shall be severable and severed
from this Agreement, and the balance of the Agreement shall continue in
full force and effect. If any provision of this Agreement conflicts with
any present or future statute, bylaw, ordinance or regulation, contrary to
which the parties have no legal right to contract, or if any provision of
this Agreement is deemed unreasonable, then the parties hereto agree that
such provision shall be curtailed and limited to the extent necessary and
bring it within the requirements of the law, and the Agreement shall remain
valid and enforceable, and the parties to be bound by and perform this
Agreement as thus modified.
DISPUTE RESOLUTION
13.1 In the event any dispute or controversy arises out of or in connection
with this Agreement, the Parties agree to exercise their best efforts to
resolve the dispute or controversy as soon as possible within sixty (60)
days of notice from one party to the other of such dispute or controversy.
The Parties shall, without delay, continue to perform their respective
obligations under this Agreement which are not affected by such dispute or
controversy. With the exception of instances in which irreparable harm is
imminent, the Parties shall first attempt to resolve the dispute in the
aforementioned manner.
13.2 However, if either Party fails or refuses to participate in such
negotiations, or if, in any event, the dispute, controversy or claim is not
resolved to the satisfaction of both Parties within the sixty (60) day
period, any such dispute, controversy or claim shall be settled by
arbitration. Any such arbitration shall be conducted in accordance with the
rules of the American Arbitration Association and shall take place in
Springfield, Massachusetts. The Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
and the United States of America. The arbitrators shall include one
independent, unaffiliated nominee selected by each Party and a third
neutral arbitrator selected by such nominees. The Parties agree that any
arbitration panel shall include members knowledgeable as to the beverage
industry. Judgment upon the award rendered may be entered in the highest
state or federal court or forum, state or federal, having jurisdiction. The
prevailing Party shall be entitled to reasonable attorney's fees and costs
to be fixed by the arbitrators.
MISCELLANEOUS
14.1 Applicable Law. This Agreement shall be governed by the Commonwealth
of Massachusetts.
14.2 Forum and Venue. Any legal action or proceeding with respect to this
Agreement may be brought in the courts of the Commonwealth of Massachusetts
or any United States District Court in such State, and the parties hereby
irrevocably consent to the jurisdiction of such courts for the purpose of
any action or proceeding and waive any claim of lack of jurisdiction or
forum non conviens.
14.3 Assignability. Neither party hereto shall, without prior written
consent of the other party, assign this Agreement or any other right or
obligation hereunder. However, either party reserves the right to assign
this Agreement to a successor of substantially the entire business to which
this Agreement relates or to any Affiliate provided that such successor or
such Affiliate as the case may be agrees in writing to be bound by all of
the terms of this Agreement.
14.4 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Parties hereto and their respective successors and permitted
assigns, but nothing contained herein shall be deemed to permit assignment
by either Party except as otherwise permitted in this Agreement.
14.5 Entire Agreement. This Agreement supersedes all prior Agreements,
understandings and arrangements; oral or written, among the parties. This
Agreement shall be amended only by written agreement between the Parties.
The provisions of this Agreement will be construed as agreements which are
independent of any other agreement between the parties hereto and the
existence of any claim or cause of action by either of them against the
other, whether predicated on this or any other agreement, shall not
constitute a defense or offset to the enforcement of the covenants
contained in this Agreement.
14.6 Force Majeure. If either party is prevented from or delayed in
carrying out any of the provisions of this Agreement by reasons of any acts
of God, war, accidents, labor disturbances, break-down of plant equipment,
lack or failure of transportation facilities, source of supply of labor,
raw materials, power or supplies, or by reasons of any law, order
proclamation, regulation, ordinance, demand or requirement of any
Government or any subdivision, authority or representatives of any such
Government, or by reason of any other cause whatsoever beyond the
reasonable control of the party, preventing or delayed the performance of
its obligations hereunder, the party so presented in or delayed shall be
excused from such performance to the extent and during the period of such
prevention or delay, without, however, extending the terms of this
Agreement. Any obligation to pay money shall in no event be excused but
shall be suspended only until the cessation of any cause of prevention from
or delay in the performance of such obligation.
14.7 No Partnership. Nothing in this Agreement shall be deemed to
constitute a partnership between the parties nor shall either party be
taken to have any authority to bind or commit the other or be taken to have
authority to act as the agent of the other or in any other capacity other
than as expressly authorized in this Agreement. No Waiver. No waiver of any
right under this Agreement shall be deemed effective unless the same is set
forth in a writing signed by the party giving such waiver, and
no waiver of any right shall be deemed to be a waiver of such right, or any
other rights hereunder, in the future.
ENTIRE AGREEMENT
15.1 The foregoing contains the entire and only Agreement between the
parties regarding this Agreement. All prior and collateral representations,
promises or conditions in connection with the subject matter are merged
herein. Any representation, promise or condition not incorporated herein
shall not be binding on either party.
15.2 This agreement shall not be amended, modified or changed, except by
written instrument signed by the parties. The Parties acknowledge, execute
and deliver all such further documents, instruments or assurances and to
perform all such acts or deeds as may be reasonably required from time to
time in order to carry out the terms of this Agreement
IN WITNESS WHEREOF, PEACE MOUNTAIN and CREATIVE ENTERPRISES have executed this
Agreement intending to be legally bound thereby, as of the effective date first
above set forth.
PEACE MOUNTAIN NATURAL BEVERAGES CORPORATION
By: /s/ Xxxx Xxxxx Xxxxx
----------------------------------
Dated: August 4, 2004
CREATIVE ENTERPRISES INTERNATIONAL, INC
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------
Dated: August 4, 2004
SCHEDULE A
LETTER OF AGREEMENT BETWEEN PEACE MOUNTAIN AND CREATIVE ENTERPRISES
DATE FEBRUARY 26, 2004
LETTER OF AGREEMENT
This Letter of Agreement ("LOA") sets forth the basic agreement
between Peace Mountain Natural Beverage ("PEACE MOUNTAIN") and Creative
Enterprises International, Inc. ("CREATIVE ENTERPRISES"), collectively referred
to hereafter as the PARTIES, regarding agreements concerning the license and
distribution of PEACE MOUNTAIN'S Skinny Water products ("PRODUCTS") by CREATIVE
ENTERPRISES. The PARTIES recognize that there may be further additional terms
and conditions to be incorporated in a definitive License and Distribution
Agreement ("AGREEMENTS"). Each party intends to be bound by the following terms
and conditions in this LOA and such definitive Agreements when are formally
executed by the PARTIES.
WHEREAS, PEACE MOUNTAIN has researched and developed at great expense and
represents that it owns all right, title and interest in and to proprietary
information relating to the design, development, manufacture of the PRODUCTS
including the good-will, trademarks and trade names associated with the
aforementioned PRODUCTS;
WHEREAS, PEACE MOUNTAIN is offering License and Distribution rights to
CREATIVE ENTERPRISES for the manufacture, distribution and sale of the PRODUCTS
on an exclusive basis as further defined hereunder;
WHEREAS, CREATIVE ENTERPRISES desires to obtain such License and
Distribution right under which it provides the manufacturing, marketing,
promotion, distribution and order fulfillment for the PRODUCTS;
THEREFORE, the parties set forth the following general terms:
1. PEACE MOUNTAIN grants to CREATIVE ENTERPRISE exclusive License and
Distribution rights to the PRODUCTS worldwide for three years. Notwithstanding
such grant of exclusivity, PEACE MOUNTAIN shall retain the right to sell to the
specific customers identified in Schedule A ("HOUSE ACCOUNTS").
2. Under the License rights, CREATIVE ENTERPRISES shall purchase from PEACE
MOUNTAIN concentrate for the PRODUCTS and CREATIVE ENTERPRISES will contract for
the bottling of the PRODUCTS, such bottling to use the concentrate purchased
from PEACE MOUNTAIN and in the formulation prescribed by PEACE MOUNTAIN.
3. PEACE MOUNTAIN provides concentrate to CREATIVE ENTERPRISES at the cost of
$[xxx] FOB shipping point. One gallon of concentrate will yield approx, [xxx]
gallons of retail product. The purchase of the concentrate by CREATIVE
ENTERPRISES will be the license royalty payment to PEACE MOUNTAIN.
4. PEACE MOUNTAIN may disclose certain of its confidential information such as
formulations for the PRODUCTS and other information it considers to be
proprietary information ("TRADE SECRETS"). CREATIVE ENTERPRISES has entered into
a Confidentiality Agreement (Schedule B) with PEACE MOUNTAIN in order to protect
the TRADE SECRETS of PEACE MOUNTAIN. CREATIVE ENTERPRISES shall ensure that all
vendors and sub-contractors who receive PEACE MOUNTAIN's confidential
information shall enter into and be bound by the Confidentiality Agreement
between CREATIVE ENTERPRISES and PEACE MOUNTAIN.
5. The initial term of this LOA and the License and Distribution Agreements
shall be for a period of three years commencing from the date entered on the
signature lines below. The License and Distribution Agreements will be renewed
for additional one year terms with the minimum quantity increasing in each
renewal term by [xxx] above the prior term.
6. This LOA, and the License and Distribution Agreements shall terminate prior
to the three year term, or during any subsequent renewal term, if CREATIVE
ENTERPRISES fails to sell a minimum weekly volume of the PRODUCTS which is
equivalent to [xxx] bottles of [xxx] size during the initial term or the
adjusted higher minimum quantities for subsequent renewal terms, as provided in
Paragraph 5. The minimum weekly volume shall become effective six months after
the signing of the LOA.
[* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.]
7. CREATIVE ENTERPRISES will not enter into any License or Distribution
Agreements, market, promote or otherwise sell any products which are competitive
to the PRODUCTS. Competitive products for the purposes of this Agreement shall
mean any enhanced water product offering beauty, weight loss and/or energy
improvement attributes.
8. PEACE MOUNTAIN grants to CREATIVE ENTERPRISES a first right of refusal on
future Peace Mountain products subject to terms and conditions to be negotiated
at that time; however the intention of the PARTIES is to have terms consistent
with this LOA and the AGREEMENTS.
9. CREATIVE ENTERPRISES will submit an outline of its proposed marketing efforts
within 60 days of signing the LOA. These marketing efforts will initially
include but not be limited to focus groups and market research intended to
determine market acceptance and opportunity for the PRODUCTS.
10. Prior to or at the time of signing the AGREEMENTS, CREATIVE ENTERPRISES will
submit to PEACE MOUNTAIN a comprehensive business and marketing plan. CREATIVE
ENTERPRISE estimates at this time to the best of its ability that it will invest
from [xxx] during the first months after signing the AGREEMENTS for promotion of
the PRODUCTS.
11. PEACE MOUNTAIN grants to CREATIVE ENTERPRISES an exclusive license to use
its trademarks and trade names ("MARKS") associated with the PRODUCTS for the
sole purpose of promoting, selling and distributing the PRODUCTS.
Notwithstanding such exclusive license of the MARKS to CREATIVE ENTERPRISES,
PEACE MOUNTAIN shall retain all its existing rights in the MARKS.
Such MARKS are listed on Schedule C. CREATIVE ENTERPRISES will submit to PEACE
MOUNTAIN any proposed use of the MARKS for PEACE MOUNTAIN'S approval prior to
commencing such use.
12. CREATIVE ENTERPRISES shall have the right to modify and revise promotional
materials, labeling and packaging of the PRODUCTS provided that any such
modifications or revisions do not adversely affect the PEACE MOUNTAIN
trademarks, trade names or good-will associated with the MARKS.
13. PEACE MOUNTAIN'S compensation from CREATIVE ENTERPRISES for the Distribution
rights granted shall be [xxx] of the Gross Profits generated from the sale of
the PRODUCTS. Gross Profit shall mean revenue collected less cost of goods sold,
marketing and direct sales expenses, but before all taxes and general
administrative expenses. Marketing and direct sales expenses shall be based on
the actual cost paid to third parties without any additional xxxx-up by CREATIVE
ENTERPRISES.
[* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.]
14. In the event either of the PARTIES breaches or fails to perform its
obligations ("BREACH") under the LOA, the party alleging the BREACH shall notify
in writing the breaching party and provide the breaching party with 30 days to
cure such breach. If such breach has not been cured within 30 days, the party
alleging the breach may terminate its obligations under the LOA and the
AGREEMENTS by delivering written notification to the other party.
16. The PARTIES are issuing this LOA on the understanding that this LOA is
binding on each party hereto and that it may be supplemented with the addition
of a mutually acceptable License and Distribution Agreements.
17. This Letter of Agreement shall be governed by the laws of the Commonwealth
of Massachusetts and any action relating to this agreement shall be brought in
Springfield, Massachusetts in the United States District Court for the District
of Massachusetts.
Agreed and Accepted on the date indicated below:
CREATIVE ENTERPRISES INTERNATIONAL INC.
/s/ Xxxxxxx Xxxxxxx
--------------------------
Xxxxxxx Xxxxxxx
Its: CEO President
Date: 2-26-04
PEACE MOUNTAIN NATURAL BEVERAGES CORP.
/s/ Xxxx Xxxxx Xxxxx
--------------------------
Xxxx Xxxxx Xxxxx
Its: President
Date: FEB. 26, 2004
SCHEDULE A
PEACE MOUNTAIN "HOUSE ACCOUNTS":
SCHEDULE B -
CONFIDENTIALITY AGREEMENT DATE FEBRUARY 12, 2004
SCHEDULE C - TRADEMARKS LICENSED
SKINNY SHAKE U.S. Reg. No. 2743268
SKINNY WATER U.S. Reg. No. 2557075
SKINNY TEA U.S. Reg. No. 2657057
SKINNY JUICE U.S. Reg. No. 2657083
DIET WATER U.S. Reg. No. 2576866
