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EXCLUSIVE SALES DISTRIBUTION/REPRESENTATIVE AGREEMENT
AGREEMENT made as of the 23rd day of August, 2007, by and between
CirTran Beverage Corp., a Utah corporation with a place of business in Los
Angeles, California ("CBC") and American Sales & Merchandising, LLC, a Delaware
limited liability company with a place of business in Portland, Maine ("Agent").
WHEREAS CBC has entered into an Amended and Restated Exclusive
Manufacturing, Marketing and Distribution Agreement (the "Master Agreement")
with Play Beverages, LLC ("Principal") a copy of which is attached hereto as
Exhibit "A". The Master Agreement provides, among other things, for CBC to
distribute and market products and beverage products (the "Products") which
Principal has the right to manufacture pursuant to a License Agreement dated
November 1, 2006 by and between Principal and Playboy Enterprises, a copy of
which is attached hereto as Exhibit "B" (the "License Agreement"). The Products
include all Playboy-branded beverage products, Playboy-branded energy drinks,
Playboy-branded enhanced water and any other Playboy-branded beverages to be
manufactured by or on behalf of Principal under the License Agreement and
distributed by CBC under the Master Agreement; and
WHEREAS Agent is engaged in the business of representing companies to
purchasers and potential purchasers of products; and
WHEREAS, CBC wishes to engage Agent to act as its Exclusive Worldwide
Sales Distribution/Representative for the Products under the Master Agreement
and Agent is willing to act as the Exclusive Sales Representative for CBC,
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, CBC and Agent do agree as follows:
1. APPOINTMENT OF AGENT. CBC hereby appoints Agent as its
exclusive primary agent, for sales of the Products in all territories and
markets named and defined under the terms of the Master Agreement (the
"Exclusive Accounts") and the License Agreement. The Exclusive Accounts shall
not be changed without prior agreement of the parties herein except as provided
in Section 9 below.
2. AGENT'S DUTIES. Xxxxxxx X. Liberty and/or his designee shall
have primary responsibility for the management of Agent's relationship with CBC.
Agent shall, either by its own employees or sub-agents or brokers (if such
sub-agents or brokers are approved by CBC and by Playboy as required in the
License Agreement):
a. provide the distribution services described on
Exhibit "C";
b. promote the sale of Products to the Exclusive
Accounts;
c. solicit orders at prices and on terms fixed by CBC
and promptly transmit to CBC after each offer or
order for Product received by Agent; it being
understood that Agent has no authority to enter into
agreements on behalf of CBC or to bind CBC to any
contract with any Account;
d. quarterly, during CBC's budget process, provide CBC
with budget figures for its Exclusive Accounts, in
detail and format approved by CBC.
3. CBC'S DUTIES. CBC shall:
a. supply Agent with sales and promotional materials,
including sample Products, if required, and price
lists and conditions of sale;
b. accept or reject orders forwarded by Agent within ten
(10) days of receipt by CBC of an order;
c. fix sales prices (that are approved by Principal to
the extent required by the Master Agreement) to
Exclusive Accounts;
d. promptly deliver no fewer than ninety percent (90%)
of confirmed orders;
e. make payment of sales commissions as required in
Section 5 of this Agreement.
f. reimburse Agent for reasonable expenses incurred in
the course of participating in the meetings with
representatives of the individual Exclusive Accounts.
4. COMMISSIONABLE REPRESENTATIVES. It is anticipated that ASM
will utilize outside sales representatives, brokers or sales
contractors ("Commissionable Representative") compensated on a
percentage of gross sales basis to be the sales
representatives for one or more of the Exclusive Accounts. If
ASM determines to appoint a Commissionable Representative, ASM
shall so notify CBC and shall present CBC with a proposed
agreement with the Commissionable Representative. If CBC
approves the Commissionable Representative and the agreement,
the Commissionable Representative will be entitled to
compensation as provided in Section 5.b below. Agent shall be
responsible to supervise the activities of the Commissionable
Representatives and will be responsible to pay any
compensation to the Commissionable Representatives in excess
of the compensation provided in Section 5.b. In no event will
Agent share in any part of the compensation to the
Commissionable Representatives provided in Section 5.b. Agent
will notify CBC in writing of the particular Exclusive
Accounts or areas services by each Commissionable
Representative.
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5. COMMISSIONS.
a. For establishing, managing and supervising the entire
distribution network and network sales
representatives servicing the Exclusive Accounts, CBC
through the 2007 selling season and thereafter shall
pay Agent a commission equal to four percent (4%) of
all amounts received by CBC, net of cash discounts,
chargebacks and returns, if any (collectively
"Commissionable Receipts").
b. For Commissionable Receipts received by CBC for
products sold to the Exclusive Accounts serviced by
an Agent-designated Commissionable Representative,
CBC shall pay the Commissionable Representative an
amount equal to the commissions payable to the
Commissionable Representatives, but not more than
three percent (3%) of the Commissionable Receipts
that are attributed to such Commissionable
Representative through the 2007 selling season and
thereafter.
c. CBC shall supply commission statements to Agent on a
timely basis, but in no event later than the 25th of
every month, showing all Commissionable Receipts
received by CBC in the prior month, including all
chargebacks and returns incurred by CBC is such prior
month.
d. CBC shall remit commissions due to Agent on a monthly
basis, in arrears, each month immediately following a
month in which there is a Commissionable Receipt,
simultaneously with delivery of the commission
statements referred to Section 5.c. All late
commission payments by CBC shall bear interest at the
rate of ten percent (10%) per annum.
e. At the end of each calendar year, CBC shall notify
Agent in writing of the amount to be credited to the
CBC for commissions paid on returns and chargebacks
for such calendar year not deducted in arriving at
the Commissionable Receipts (the "Annual Chargeback
Debit"). Agent shall thereafter have thirty (30) days
to dispute the Annual Chargeback Debit, in writing,
after which period the Annual Chargeback Debit will
not be subject to dispute by Agent. CBC will then
deduct the Annual Chargeback Debit from all future
commissions earned by the Agent until the Annual
Chargeback Debit is paid in full. In the event of a
dispute in the Annual Chargeback Debit, such dispute
will be submitted to arbitration in accordance with
Section 10 of this Agreement.
f. If authorized and approved by Principal, CBC will
disburse $100,000, or such lesser amount as Principal
has authorized, (the "Advance") from the Bridge Loan
described in the Master Agreement to ASM as an
advance against commissions. ASM shall use the
Advance solely for the purpose of performing its
duties hereunder. If made, the Advance shall be
recouped from commissions earned under Section 5.a.
Accordingly, as long the Advance or any portion
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thereof is outstanding, ASM agrees that in lieu of
remitting commissions to ASM pursuant to Section 5.d,
CBC shall use the commissions to reduce the Advance
and shall remit such commissions (i) to CBC in
prepayment of the Bridge Loan, if the Bridge Loan is
then outstanding, or (ii) to Principal, if the Bridge
Loan has been paid in full. This Section does not
affect the right of ASM to receive commission
statements pursuant to Section 5.c. Once the Advance
has been fully recouped from commissions, this
Section 5.f will be of no further force or effect.
6. SUB-AGENCY. Agent may enter into sub-agency agreements
hereunder only with the prior written consent of CBC, Principal and of Playboy
as provided in the License Agreement and Master Agreement. Any sub-agency
agreement Agent enters into must conform, in form and substance, to the terms of
this Agreement, including, without limitation, an indemnification, in form and
substance similar to Section 11 hereof, running to CBC directly.
7. CO-AGENCY. CBC and Agent further agree that CBC will not enter
into any other sale representation agreements with any other sales
representatives with respect to the Exclusive Accounts for the term of this
Agreement other than agreements with the Commissionable Representatives as
defined in Section 4.
8. TERM. This Agreement shall remain in full force and effect as
long as Agent is in material compliance with its obligations hereunder and the
Master Agreement remains in full force and effect.
9. INTERNATIONAL TERRITORIES.
a. When CBC proposes to begin selling the Product in a
new country or other territory, it may require Agent
to disclose the extent to which Agent, or
subcontractors with whom Agent has existing business
relationships, has existing distribution capacity in
such country or other territory. If CBC, in its
reasonable business judgment, is not satisfied with
the distribution capacity it may so notify Agent and
the parties may negotiate in good faith regarding
Agent's plans to establish suitable capacity. If
within twenty days after CBC's original notice, CBC
has not become satisfied with Agent's plans it may,
by further notice to Agent, remove such country or
other territory from the definition of Exclusive
Accounts hereunder.
10. DEFAULTS. The following constitute events of default
justifying termination.
a. If either party shall become insolvent, admit in
writing its inability to pay debts as they mature or
cease to conduct business as a going concern.
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b. If any bankruptcy, reorganization, debt arrangement,
or other proceeding under any bankruptcy or
insolvency law or any dissolution or liquidation
proceeding shall be instituted by or against either
party.
c. If either party is in material breach of any
provision of this Agreement and such breach is not
cured within thirty (30) days of receipt of notice of
breach from the other party.
11. INDEMNIFICATION.
a. Agent shall, to the extent permitted by applicable
law, indemnify, hold harmless and defend CBC against
costs, expenses (including legal fees), judgments,
fines, and amounts paid in settlement, actual and/or
consequential (each a "Claim Cost"), incurred by CBC,
in connection with any threatened, pending or
completed action, demand, claim, suit or proceeding
(each a "Claim") to which CBC is or was a party, is
threatened to be made a party or is otherwise
involved, by reason of Agent's breach of this
Agreement, Agent's unauthorized use of the Playboy
trademarks or Agent's negligence or malfeasance in
promoting the sale of the Products hereunder.
b. CBC shall, to the extent permitted by applicable law,
indemnify, hold harmless and defend Agent against all
Claim Costs incurred by CBC I connection with any
Claim to which Agent is or was a party, is threatened
to be made a party or is otherwise involved, by
reason of CBC's breach of this Agreement or, to the
extent of indemnification received by CBC under the
Master Agreement, damage caused by the Products.
c. The Agent and CBC each agree to promptly and
adequately notify the other of the commencement or
existence of any Claim and, as soon as known, the
facts constituting the basis for such Claim. In the
event either party fails to notify the other
reasonably, promptly and adequately of the existence
of a Claim, such party shall additionally indemnify
the other for (i) any damages proximately caused by
the resulting loss or impairment of a material
defense or (ii) any directly resulting material
increase in any damages.
d. The Agent and CBC each agree not to settle or
compromise any Claim the effect of which settlement
or compromise would be to materially impair the
rights of the other party in this agreement without
prior approval and consent of the other, which
approval and consent shall not be unreasonably
withheld. If either Agent or principal settles or
compromises any Claim without such prior approval and
consent, the settling party, whether Agent or CBC,
shall have no right to seek either indemnification or
contribution from the other for any portion of such
settlement amount.
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12. AMENDMENTS. This Agreement contains the entire understanding
of the parties and supercedes any prior oral or written understanding between
Agent on the one part and CBC or Principal on the other part. This Agreement may
be changed only be a writing signed by both parties.
13. INDEPENDENT CONTRACTORS. The parties acknowledge that they are
independent contractors and nothing contained herein shall be construed as
placing the parties in the relationship of partners or joint ventures. Agent
does not have, nor shall it hold itself out as having, any authority to create
any contract or obligation on behalf of CBC.
14. GOVERNING LAW. This Agreement shall be interpreted and
enforced pursuant to the laws of the State of Utah and of the United States.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their successors and
assigns.
16. NOTICES. All notices shall be in writing and shall be deemed
valid and sufficient notice (a) as of the delivery if delivered by hand or
overnight delivery service; (b) five days after mailing if delivery is by mail;
(c) if delivery is by facsimile, then upon confirmation by mail as provided in
sub-paragraph (b) of this Section 16, and when delivered to:
CBC:
Cirtran Beverage Corp.
0000 X. 0000 Xxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
With a copy to:
Xxxx X. Xxxxxxxx
Xxxxxxxxx Xxxxxxx & XxXxxxxxxx
2180 S. 0000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Agent:
Xxxxxxx X. Liberty
American Sales & Marketing, LLC
23 No Xxxxxxx Xx
Xxxx, ME 04101
With a copy to:
Xxxx X. Xxxxxx
Xxxxxx Xxxxx Xxxxxxx Xxxxx
00 Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xx 00000-0000
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IN WITNESS WHEREOF the parties hereto have set their hands and seals as
of the date first above written.
CBC: Agent:
Cirtran Beverage Corp. American Sales & Merchandising, LLC
By: /s/ By: /s/
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Name: Name: Xxxxxxx X. Liberty
Its: President Its: Manager
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Exhibit "C"
ASM will be responsible for developing a detailed distribution network and
providing CBC with required expense budgeting associated with the establishment
of a distribution sales force and associated expenses. ASM will be actively
involved, as a consultant, in all aspects of the marketing campaign, product
designs, and merchandising displays. ASM (with Principal's participation) will
work directly with Playboy Corporate to gain maximum marketing support from
Playboy, seeking Playboy's participation in multiple joint promotions of the
Playboy brand and Playboy Energy products.
o Selection of Distribution Method and Creation of Distribution Network
* ASM will utilize the DSD method as the primary mode of
distribution. The selection of a distributor will be evaluated on
a case by case, market by market basis with the following factors
given the greatest consideration:
* Performance in the marketplace.
* Current brand and package portfolio.
* Reach and/or geographic coverage.
* Ability to establish mutual goals and objectives
* ASM and CBC will utilize all types of distributors depending
on the marketplace, however, emphasis will be placed on
"Soda Bottlers", and "Beer and Soda Distributors" with the
other types being utilized on a strategic basis.
* DSD method provides the most effective means to reach all
channels of trade while ensuring the brand receives the greatest
level of support at the wholesale level.
* ASM and CBC may utilize other methods to address specific
opportunities, retailer requests or voids.
Establishment of a Distribution Network:
* Identify most likely candidates.
* With Management, determine scope and depth of support CBC intends
to supply at Wholesale level i.e. POS Material, Sales Promotion
Material, Advertising, Price Support and Manpower.
* Establish Budgets with Management to fund financial support at
Wholesale level (Incentives, Price Promotion, POS & Advertising
CO-OP).
* Produce a contract for execution with Distributors.
o Selection of Distribution Network
* There are various types of distributors within the DSD system.
* Soda Bottlers
* Bottlers of beverage products that maintain a
distribution arm to distribute their product
* Beer Wholesalers
* Distributors of primarily beer products but also
distribute a portfolio of Non Alcoholic products.
* Non Alcoholic Wholesale Distributors
* Wholesalers that distribute a N/A portfolio only.
* Wine/Spirits Wholesale Distributors
* Distributors of primarily wine and spirits products but
also distribute a portfolio of Non Alcoholic products.
* Candy and Tobacco Wholesale Distributors
* Distributors of primarily candy and tobacco products
but also distribute a portfolio of Non Alcoholic
products
Physical Distribution - Outline and Plan of Action for Domestic Distribution
1) Scope and Launch
o Phased Distribution by Region and in areas where special promotions
have created sufficient demand
2) Distribution Method
o Description of each Distribution Method by Channel
3) Selection Process
o Selection of Distribution Method o Selection of Distributor Network
4) Proposed Distribution Plan Phase 1
o Proposed Distribution Network by State
1. Scope
"Phased Distribution" by Geographic Region (Except for areas
where special promotions have created enough demand to warrant
establishing distribution within that area)
Phase 1
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* Northeast
o New England, New York, New Jersey & Pennsylvania
* Mid Atlantic
o Maryland, Delaware, Virginia, West Virginia, North
Carolina & South Carolina
Phase 2
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* West Coast
o California, Oregon & Washington
Phase 3
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* South West
o Nevada, Arizona, New Mexico, Utah, Okalahoma & Texas
Phase 4
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* Mid West
o Idaho, Montana, Wyoming, Colorado, N. Dakota, S.
Dakota, Nebraska, Kansas, Minnesota, Wisconsin, Iowa,
Illinois, Missouri
* Ohio Valley
o Michigan, Ohio, Indiana & Kentucky
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Phase 5
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* Southeast
o Tennessee, Arkansas, Mississippi, Louisiana, Georgia,
Alabama & Florida
Phase 6
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* Other
o Alaska & Hawaii
2. Distribution Methods
* DSD (Direct Store Door)
o Delivery to individual accounts by a wholesaler.
o Most prominent and far reaching method of distribution.
o Typically provides a supplier the greatest level of
support at the wholesale level
* Direct (Direct to Retail)
o Direct shipment to retail warehouse by Playboy (or
supplier) for distribution to individual accounts by
the retailer.
o Used primarily for commodities (private label,
perishable, etc) or specific opportunities.
* Wholesale (Direct to Retail via Warehouse)
o Direct shipment to retail warehouse by a wholesaler for
distribution to individual accounts by the retailer.
o Also used for commodities and/or to reach specific
channels i.e. Health, Natural, etc
* Combination
o A combination of at least two of the aforementioned
methods. Products distributed through a "combination"
include Gatorade, Poland Springs, etc.
3. Selection Process
* Selection of Distribution Method
o Agent's intention is to utilize the DSD method as our
primary mode of Distribution.
o DSD method provides the most effective means to reach
all channels of trade while ensuring the brand receives
the greatest level of support at the wholesale level.
o Agent will utilize the other systems to address
specific opportunities, retailer requests or voids.
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* Selection of Distribution Network There are various types of
distributors within the DSD system including:
o Soda Bottlers
* Bottlers of beverage products that maintain a
distribution arm to distribute their product
o Beer Wholesalers
* Distributors of primarily beer products but also
distribute a portfolio of Non Alcoholic products.
o Non Alcoholic Wholesale Distributors
* Wholesalers that distribute a N/A portfolio only.
o Wine/Spirits Wholesale Distributors
* Distributors of primarily wine and spirits
products but also distribute a portfolio of Non
Alcoholic products]
o Candy and Tobacco Wholesale Distributors
* Distributors of primarily candy and tobacco
products but also distribute a portfolio of Non
Alcoholic products
As stated previously, American Sales and Merchandising will utilize the DSD
method as its primary mode of distribution. The selection of a distributor by
ASM will be evaluated on a case by case, market by market basis with the
following factors given the greatest consideration:
* Performance in the marketplace.
* Current brand and package portfolio.
* Reach and/or geographic coverage.
* Ability to establish mutual goals and objectives
ASM will utilize all types of distributors depending on the marketplace,
however, emphasis will be placed on "Soda Bottlers", and "Beer and Soda
Distributors" with the other types being utilized on a strategic basis.
4. Detailed Proposed Domestic Distribution Plan Phase 1 by Distributor
* Northeast and Mid Atlantic
o Combination of Soda Bottlers, Beer and Non Alcoholic
Distributors.
o New England
* Maine:
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* Maine Distributors, Bangor, ME
* Federal Distributors, Lewiston, ME
* National Distributors, Portland, ME
* New Hampshire
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* Great State Beverages, Hooksett, NH
* White Mountain, Berlin, NH
* X. Xxxxxx, Keene, NH
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* Vermont
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* X. Xxxxxx, Brattleboro, VT
* Massachusetts
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* Atlas Distributing, Auburn, MA
* Lesco Distributing, Mattapoisett, MA
* X. Xxxxxx, Springfield, MA
* Great State Beverages, TBD
* Connecticut
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* Tommestti Distributors, Hartford, CT
* Connecticut Beverages, Xxxxxxx, CT
* B & E Distributors, Xxxxxx, CT
* North East Beverages, Providence, RI
o Rhode Island
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* North East Beverages, Providence, RI
o New York
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* Big Geyser, Inc. Melville, NY
* Coca Cola Bottling of Buffalo, Tonawanda, NY
* Day Wholesale, Xxxxxx Lake, NY
* Decrescente Distributing, Mechanicville, NY
* Eagle Beverage, Oswego, NY
* Elmira Distributing, Elmira, NY
* Xxxxxx Dairy, Fulton, NY
* XxXxxxxx Beverages, New York Xxxxx, NY
* Mincolla Distributing, Binghamton, NY
* Owasco Beverage, Auburn, NY
* Phoenix Beverage, Montgomery, NY
* Lake Beverage, Xxxx Xxxxxxxxx, NY
* Xxxxx Beverage, Olean, NY
* Xxxxx & Sons, Batavia, NY
o Pennsylvania
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* Philly Coke, Philadelphia, PA
* Xxxxx Beverage Group, Harrisburg, PA
* Faris Distributors, Connellsville, PA
* Xxxxx Beverage, Xxxxx, PA
* Lettierio Distributors, West Xxxxxx, PA
* Metro Beverage, Bensalem, PA
* RC Canada Dry of Scranton, Scranton, PA
o New Jersey
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* Canada Dry Asbury, Neptune, NJ
* X. X. Beverage Co., Newark, NJ
* Briars USA, South Brunswick, NJ
o Maryland
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* Xxxxx Xxxxxx & Sons, Brentwood, MD
o Delaware
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* N/K/S Distributors, New Castle, DE
o Virginia
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* Dixie Beverage, Winchester, VA
* United Beverage Co., Chester, VA
* Virginia Beach Beverage, Virginia Beach, VA
* H & H Distributing, Urbanna, VA
* Xxxxxxxx Distributing Co., Danville, VA
o West Virginia
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* Xx. Xxxxxx/7-UP Bottling, Columbus, OH
o N. Carolina
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* Piedmont Cheer Wine Bottling, Salisbury, NC
* Long Beverage, Morrisonville, NC
* Choice USA Beverage, Lowell, NC
* Nehi Bottling, Murphy, NC
o S. Carolina
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* Benchmark Distributing, Myrtle Beach, SC
* Capital Wine & Beverage, West Columbia, SC
* Coastal Wine & Beverage, Charleston, SC
* Piedmont Wines. Easley, SC
Note: The above listing of Distributors may not be complete. Other Distributors
or distribution methods will be explored and introduced as deemed appropriate in
the effort to maximize sales.
5) International Distribution:
1. Agent will identify the best foreign distribution
relationships for consideration and approval by Playboy,
Principal and CBC.
2. AS&M will work with foreign distributors in a similar
fashion as it does with domestic distributors.
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