SOLE DISTRIBUTION AGREEMENT
X.X.X.
Taste on Demand Inc.
THIS SOLE
DISTRIBUTION AGREEMENT (the "Agreement") is entered into
this 7th day of February 2009 by and between
(1) Taste on Demand Inc., a
company incorporated and validly existing under the laws of Nevada, whose
offices are at 00 Xx'Xxxxxx Xxxxxx, Xxxx, Xxxxxx ("XXX"), and
(2) Cap
Designs Inc., a company incorporated and validly existing under the laws of
California, whose offices are at 00000 Xxxxxxx Xxxx., Xxxxxx, Xxxxxxxxx 00000,
wholly owned by (i) Xxxxx
Xxxxx, whose address is Xxxxxx 0/00, Xxxxx, Xxxxxx and (ii) Xx. Xxx Xxxxxx (the "Distributor").
CHAPTER I – GRANT OF
RIGHTS
Art. 1
Exclusive
Distributorship, Products, Territory
The
Distributor hereby represents and warrants to XXX that it has the knowledge,
skills and ability and sufficient means to carry on its obligations under this
Agreement and that it has extensive experience in manufacturing, promoting,
selling and distributing products to the beverage manufacturers and bottlers in
South America (including the sale of tens of million of cap container device in
South America).
Based on
the Distributor's representations and in reliance upon their accuracy, XXX
hereby grants to the Distributor the exclusive right to manufacture, distribute,
promote and sell the products listed in Annex 1 (the "Products"), within the
territory of South America (the "Territory"), subject to the
terms and conditions hereof.
CHAPTER II – DISTRIBUTOR’S
OBLIGATIONS
Art. 2
Manufacture,
Distribution and Sale
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2.1
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The
Distributor shall fund, at its own expense, the manufacturing of a
prototype of the Products (the "Prototype") and of the
Products themselves.
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2.2
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The
Distributor shall sell the Products within the Territory under its own
name and behalf and at its exclusive risk, hazard and
liability.
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2.3
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The
Distributor undertakes to promote the sale of the Products in the
Territory in the most effective way and in co-operation with
XXX. In this context, the Distributor undertakes to safeguard
all interests of XXX with the ordinary businessman’s
diligence.
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2.4
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The
Distributor represents and warrants to dispose and undertakes to maintain
the financial means, as well as the adequate organisation in terms of
structures, staff and facilities so as to ensure the most effective
manufacturing, promotion, distribution and sale of the Products within the
Territory.
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2.5
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The
Distributor shall make available to XXX, free of charge, one prototype of
the Products manufactured by it and copies of all marketing and promotion
materials produced by it in every language. If the Distributor
produces only one prototype of the Product it shall not be required to
make such prototype available to XXX if such prototype is necessary by it
for the promotion of the Products.
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2.6
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The
Distributor shall be solely responsible for compliance with all applicable
laws relating to its manufacturing, promotion, marketing and sales
activities pursuant to this Agreement. The Distributor shall be
solely responsible to obtain, at its own risk and expense, all regulatory
licenses, authorizations, permits and approvals necessary to carry on its
activities under this Agreement and for the Products in the
Territory.
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2.7
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XXX
and the Distributor shall be and always act as independent
contractors. In particular, the Distributor is not authorised
to represent and in general to act in the name of
XXX.
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Art. 3
Obligation
to Minimum Sales
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3.1
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The
Distributor undertakes to sell the following quantities of the Products
(each, a "Minimum
Quantity"):
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·
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Within
the first nine months as of the commencement date of this Agreement (the
"First Period"),
the Distributor shall not be obligated to sell any
Products.
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·
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Within
the 12-month period after the First Period (the "Second Period"), the
Distributor shall be obligated to sell 15 million Products (the "Second Period
Quantity"). For the purpose of calculating the Second Period
Quantity, any and all Products that have been sold by the Distributor
within the First Period shall be considered to have been sold within the
Second Period.
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·
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Within
the 12-month period after the Second Period (the "Third Period"), the
Distributor shall be obligated to sell 20 million Products (the "Third Period
Quantity").
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·
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The
Third Period Quantity shall be increased by 15% with respect to each
12-month period after the Third Period and the Distributor shall be
obligated to sell such quantities accordingly, i.e., the minimum sales
obligations during the first 12-month period after the Third Period is 23
million Products and during the second 12-month period after the Third
Period is 26.45 million
Products.
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3.2
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In
case of non-fulfilment of the obligations imposed on the Distributor under
Art. 3.1, XXX shall only be entitled to terminate the Agreement with
effect 90 (ninety) days after notice of termination. The
Minimum Quantities are not payment obligations and if the Distributor
fails to attain to such Minimum Quantities, it shall not be required to
make any payments on account thereof and the only remedy available to XXX
for such failure is its right to terminate this
Agreement.
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Art. 4
Consideration
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4.1
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In
consideration for the rights detailed in Art. 1, the Distributor shall pay
XXX an amount of US$0.07 per Product for each Product which has been sold
by the Distributor and for which consideration was actually received by
the Distributor (the "Consideration").
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4.2
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The
Consideration shall be paid by the Distributor to XXX on a monthly
basis.
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4.3
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Until
the 10th
day of each calendar month, the Distributor shall provide XXX with a
monthly report setting forth the quantity of the Products sold by it
during the immediately preceding month and the aggregate quantity sold by
it during the relevant period for which it is obligated to a Minimum
Quantity. The Distributor shall promptly provide all necessary
information required by XXX for verification of the reports, the
Consideration to which it is entitled and the attainment of the
Distributor with its Minimum Quantity obligations. If requested
by XXX, the Distributor shall provide XXX with access to all its books and
records for purposes of ensuring the Distributor's full compliance with
its obligations hereunder.
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Art. 5
Sales
Outside the Territory
Save as
otherwise provided for by mandatory law of the Territory or as may be agreed in
writing by XXX, the Distributor undertakes not to sell, promote or assist any
sale of Products outside the Territory.
Notwithstanding
the foregoing, the Distributor shall have the right until November 4, 2009 to
engage Inbev in distribution of the Products in channels outside the Territory;
provided, that Inbev undertakes to purchase minimum quantities for such
territories in volume acceptable to XXX.
If XXX
has negotiated a distribution or license agreement with respect to territories
outside the Territory with third parties (the "Other Channel"), it shall have
the right to notify the Distributor of such agreement with the Other Channel and
the Distributor shall have 15 days to elect whether it wishes to match the
quantities for such territories for the same periods through
Inbev. If the Distributor elects to so match the quantities for the
relevant periods within such 15-day period, then it shall provide XXX with
written evidence of Inbev's willingness to accept terms similar to the terms
agreed on with the Other Channel, and XXX shall not enter into the agreement
with the Other Channel.
If the
Distributor does not exercise its right to operate in such territories through
Inbev during such 15-day period, then it shall no longer have the right to
engage Inbev in distribution of the Products for such territories.
If the
parties fail to agree on appropriate minimum quantities, XXX shall be barred
from dealing with Imbev for a period of 24 months following the date on which
the parties fail to agree on the adjustments.
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Art. 6
Intellectual
Property Rights
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6.1
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For
the purpose of this Agreement, "Intellectual Property
Rights" shall mean all intellectual property rights, including
without limitation copyrights, patents, patent applications, and
registrations and applications for registration thereof, computer
software, programs, data and documentation, technology, trade secrets and
confidential business information, whether patentable or non-patentable
and whether or not reduced to practice, know-how, designs, prototypes,
enhancements, improvements, works-in-progress, research and development
information, and other proprietary rights relating to any of the foregoing
(including without limitation remedies against infringements thereof and
rights of protection of an interest therein under the laws of all
jurisdictions).
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6.2
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XXX
shall continue to be the sole owner of any and all its existing
Intellectual Property Rights owned by it prior to the date hereof. The
Distributor shall have no Intellectual Property Rights whatsoever in the
Products.
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6.3
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XXX
has applied for a patent protection in Israel in November 2007 and also
applied for international patent protection with respect to the Products
(PCT stage) in October 2008 and is obligated utilize its best efforts to
complete the PCT stage.
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6.4
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If
requested by the Distributor, XXX shall complete the applicable patent
registration procedures in countries in which the Distributor obtained
binding distribution agreements with third parties for reasonable
quantities.
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Art. 7
Sub-Distributor
or Sub-Agents
The
Distributor is entitled to appoint sub-distributors, dealers or sub-agents in
the Territory at its own expenses hazard, risk and liability, provided that XXX
has previously given its consent in writing, such consent not to be unreasonably
withheld or delayed. In any event, individual contract duration shall
coincide with that of this Agreement and, notwithstanding any authorisation
given, the Distributor shall be responsible and liable towards XXX that such
sub-distributors, dealers or sub-agents, if any, shall at all times comply with
the Agreement.
Art. 8
Secrecy
The
Distributor undertakes not to disclose nor to use for other purposes, also after
the expiration or termination of the Agreement for any reason, trade or company
secrets or confidential information relating to the Products and/or XXX it has
become aware of.
XXX
undertakes not to disclose nor to use for other purposes, also after the
expiration or termination of the Agreement for any reason, trade or company
secrets or confidential information relating to the Distributor it has become
aware of. Notwithstanding the foregoing, the Distributor hereby
acknowledges that it is aware that XXX is a public reporting company and agrees
that is will provide to XXX promptly upon demand any information, data and other
materials required by XXX in order to fully comply with its reporting
obligations or other applicable laws. Disclosure made by XXX
that is mandated by applicable law shall not be deemed a violation of the
provisions of this Article 8.
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Art. 9
Unfair
Competition, Infringements or the like; Exclusivity (Non
Competition)
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9.1
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The
Distributor undertakes to immediately upon becoming aware of such
circumstances, inform XXX of any act of unfair competition or of any
breach of intellectual, industrial or commercial property rights by third
parties, including (but not limited to) as far as infringements of the
trade xxxx or other Intellectual Property Rights. Furthermore,
the Distributor undertakes to assist XXX in all actions aimed at
protecting such rights, at TOD’s expense.
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9.2
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The
Distributor undertakes neither to market nor to manufacture products equal
or similar to those covered by the Agreement for the entire duration of
the same. Furthermore, the Distributor undertakes not to act
either in the Territory or outside the same, either directly or indirectly
as an agent, distributor, retailer or licensee in the interest of third
parties manufacturing or marketing products in competition with the
Products. This obligation also applies to companies in which
the Distributor holds an outstanding position without necessarily being a
partner therein.
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Art. 10
Exclusive
Rights
Insofar
as permitted by mandatory provisions of any applicable law, during the terms of
this Agreement XXX undertakes to sell exclusively to the Distributor in the
Territory and shall not appoint any other distributor, agent or dealer in the
Territory.
CHAPTER IV - AGREEMENT
DURATION AND TERMINATION
Art. 11
Agreement
Duration
Unless
earlier terminated pursuant to the provisions of this Agreement, this Agreement
shall continue to be in effect until November 4, 2013.
Art. 12
Earlier
Termination
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12.1
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Without
prejudice to other termination provisions in the Agreement, either party
shall be entitled to terminate the Agreement forthwith upon written notice
to the other party if the latter shall commit any breach of the Agreement
which (if remediable) has not been remedied within 30 (thirty) days as
from written notice thereof or, forthwith without prior written notice, in
case of a material breach or a repetition of any breach
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12.2
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In
addition XXX shall be entitled to terminate the Agreement forthwith in any
of the following
events:
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a)
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bankruptcy,
composition with creditors or any other procedure related to the
insolvency of the Distributor;
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b)
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civil
or criminal judgements against the Distributor or its controlling
shareholder(s) that are detrimental to its repute, and may hamper its
activity;
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c)
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delayed
payment by the Distributor;
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d)
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failure
by the Distributor to generate sales prior to November 4, 2009; provided,
that if certain potential customers of the Distributor has clearly
indicated in writing their desire to purchase the Product but have
conditioned such purchase on the patent underlying the Product being
accepted, then notwithstanding a termination of this Agreement by XXX
pursuant to this Sub-section (d), the Distributor shall continue to be
exclusive distributor with respect to such potential customers for the
remaining of the Term.
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e)
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failure
by the Distributor to attain to the Minimum Quantity;
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f)
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introduction
of monetary, customs or other restrictions hindering the normal
performance of the Agreement, especially as regards
payments;
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g)
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change
of ownership or in management of the Distributor so that Xx. Xxx Xxxxxx no
longer controls the
Distributor.
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12.3
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Upon
termination of this Agreement, the Distributor shall return to XXX any and
all information, including all records, products and samples received from
XXX, and any copies thereof, as well as any notes, memoranda or other
writings or documentation, whether in its possession or under its control,
and shall erase all electronic records thereof, an shall so confirm to XXX
in writing.
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Art.
13
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Indemnity
Without
prejudice to the Parties rights as a consequence of a termination for breach,
the termination of the agreement will not entitle any party to any damage,
indemnity or reimbursement of any kind, either in relation to customers or
goodwill associated with the Products.
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CHAPTER V - FINAL
PROVISIONS
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Art.
14
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Agreement
non Assignable
The
Agreement may not be assigned or transferred, in whole or in part by the
Distributor. This Agreement may be freely assigned by XXX, without
the need of any approval or consent from the Distributor, in connection with a
transfer, conveyance of sale of its Intellectual Property Rights relating to the
Products. As a condition to an assignment by XXX, the transferee
thereof shall agree in writing to be bound by TOD's obligations
hereunder.
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Art.
15
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Derogations
and Complementary Agreements
Any
derogation, amendment, waiver or complementary agreement relating to the
Agreement shall be established in a written document signed by both
Parties.
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Art.
16
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Applicable
Law
The
Agreement is governed by Israeli Law, with the exclusion of conflict of laws
rules.
The
parties, intending to be legally bound, have signed this Agreement as of the
date first written above.
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/s/
Xxxxx Xxxxxx
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/s/ Uri Xxxxxx |
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X.X.X.
Taste on Demand Inc.
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Cap
Designs Inc.
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By: Xx. Xxx
Xxxxxx
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By:
Xx. Xxxxx
Xxxxxx
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Title:
Chief Executive
Officer
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/s/ Xxxxx Xxxxx | |
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Cap
Designs Inc.
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By: Xx. Xxxxx
Xxxxx
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Annex 1 – the
Products
A product
intended to effect liquids flowing out of a container (such as bottled water) by
way of changing the liquids flavor, taste, color or adding certain additives,
such as minerals, vitamins, medicines, alcohol, baby formulas, soups
etc.
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