Distribution Agreement Between Swiss Research Inc. And DNP International, Inc. Dated January 20, 2006

Exhibit 10.1


DISTRIBUTION AGREEMENT


This Distribution Agreement (the " Agreement" ) is made and executed as of January 20, 2006 by and between DNP INTERNATIONAL, INC. (" DNP" ), and SWISS RESEARCH, INC. (" SRI" ).


A.

SRI manufactures and sells sweetener products known as Shugr99 Natural Sweetener and Shugr Sweet99 (collectively, " Shugr" ).


B.

DNP and SRI desire to establish a non-exclusive distribution relationship regarding the commercial sale of Shugr.


NOW THEREFORE, for good and valuable consideration, the adequacy of which hereby is acknowledged, the parties agree as follows:


ARTICLE I


DEFINITIONS


As used in this Agreement, each of the following terms has the meaning set forth thereafter, such meaning to be equally applicable both to the singular and plural forms of the terms herein defined:


" Agreement" means this agreement, together with all schedules hereto now or hereafter signed by DNP and SRI (all of which are herein incorporated by reference), as the same may be modified, amended or supplemented from time to time.


" Authorized Sales Market" means any established flavor, nutritional, nutraceutical, food, confection and pharmaceutical companies.


" Change of Control" means the occurrence of any of (i) an acquisition after the date hereof by an individual or legal entity or group of effective control (whether through legal or beneficial ownership of capital stock, by contract or otherwise) of in excess of 50% of the voting securities of an entity, (ii) the merger of that entity with or into another entity, (iii) the acquisition of all or substantially all of the assets of an entity, or (iv) the execution by the entity of an agreement to which the entity is a party or by which it is bound, providing for any of the events set forth above in (i) or (iii).


" Large Account Customer" means any customer account that would purchase in excess of 5,000 kilograms of Products per month.


" Products" means Shugr99 Natural Sweetener (a natural sweetener) and/or and Shugr Sweet99 (a non-nutritive sweetener).


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LA-91802 v2 1004800-0101


The terms "sale" and "resale" and any grammatical variant thereof shall include, without limitation, sales, contracts for sale, conditional sales, installment sales, rentals or leases, and any other arrangement whereby Products are placed at the disposal of the ultimate user.


"Territory" means the United States of America and Canada.


ARTICLE II


APPOINTMENT AS DISTRIBUTOR


SECTION 2.01 SRI hereby appoints DNP as a non-exclusive authorized distributor in the Territory for the sale of Products, and DNP hereby accepts this appointment. SRI shall sell the Products to DNP at any price equal to or greater than the price it pays to SRI for such Product.


SECTION 2.02 SRI expressly reserves the right to sell and deliver Products to any Large Account in the Territory (and nothing in this Agreement shall obligate SRI to impose any restriction upon the use or resale of Products by any such Large Account); the use or resale of Products in any area by a Large Account shall not constitute breach of any provision of this Agreement by SRI, and SRI shall be under no obligation to procure the termination of such use or resale.


SECTION 2.03 DNP shall conduct its business in the purchase and resale of Products as a principal for its own account and at its own expense and risk. This Agreement does not in any way create the relationship of principal and agent, or any similar relationship, between SRI and DNP. DNP covenants and warrants that it will not act or represent itself directly or by implication as agent for SRI and will not attempt to create any obligation, or make any representation, on behalf of or in the name of SRI.


SECTION 2.04 DNP shall limit the distribution of Products to the Authorized Sales Market. In addition, DNP shall not sell and deliver Products to any Large Account Customers without the prior written consent of SRI.


ARTICLE III


SALES


SECTION 3.01 DNP shall use its best efforts to sell and promote the sale of Products within the Territory, which best efforts shall include but not be limited to prompt performance of all of its obligations under this Agreement. DNP will maintain such annual minimum purchases of Products from SRI in accordance with the requirements set forth in Schedule 3.01.


SECTION 3.02 DNP shall warehouse Products at its sole expense in accordance with SRI recommended storage and handling instructions. DNP' s storage facilities shall be sufficient to enable DNP to satisfy properly its sales responsibilities under this Agreement and shall be consistent with promoting the reputation of, and public confidence in, the Products and SRI.


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ARTICLE IV


INVENTORY, MARKETING AND RELATED OBLIGATIONS


SECTION 4.01 DNP will maintain in the Territory at all times a stock of new Products as shall be mutually agreed upon as reasonably necessary or desirable in order to meet the sales requirements in the Territory. DNP will carry on its business transactions with its customers by selling Products from DNP' s stock and agrees not to order Products from SRI for direct shipment to DNP' s customers except in non-repetitive emergency circumstances which orders shall be satisfied by SRI, in its sole discretion.


SECTION 4.02 SRI will furnish DNP with a reasonable supply of price lists, sales literature, catalogues, information on Products, and recommendations as to stocking of Products.


SECTION 4.03 DNP shall not make any advertisement or any public statements regarding Shugr or its product ingredients without SRI' s prior written approval; DNP hereby agrees to indemnify SRI for any claims or damages arising from any non-approved advertising or statements by DNP.


SECTION 4.04 All uses by DNP in its advertising or elsewhere of SRI' s name or any trademark or trade name (or any mark or name closely resembling the same) now or hereafter owned or licensed by SRI or any of its affiliates shall be subject to the prior written approval of SRI. DNP is not authorized to use any such trademark or trade name outside DNP's Territory nor as a part of DNP's trade style or corporate name; however, nothing in this Agreement shall prohibit DNP from placing a " Distributed by DNP" label on each box, bag, drum or other package distributed by DNP.


SECTION 4.05 DNP will keep detailed records of its business relating to Products, including without limitation, the quantity and price for each sale of Products to customers of DNP. From time to time during regular business hours, SRI or its authorized representatives may examine such records and DNP's accounts relating to the sale of Products.


ARTICLE V


CONDITIONS OF SALE


SECTION 5.01 The sale by SRI to DNP of Products shall be subject to the provisions of this Agreement. Any provision of any purchase order placed by DNP which is inconsistent with any term of this Agreement shall be null and void unless expressly accepted by SRI in writing.


SECTION 5.02 The prices of Products sold to DNP by SRI shall be as set forth on Schedule 5.02, which is subject to change from to time by SRI in its sole discretion (provided, however, that SRI agrees that it shall not change Schedule 5.02 prior to January 1, 2007), plus such sums as are in reimbursement for any taxes paid (or equivalent to any taxes payable) by SRI to any taxing authority upon the transportation, use or sale of such Products, except to the extent that DNP may provide proper exemption certificates. After January 1, 2007, SRI shall have the right to modify the pricing of Products, provided SRI delivers fifteen (15) days prior written notice to DNP. DNP agrees to pay


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when due all indebtedness now or hereafter owed by DNP to SRI. SRI may from time to time apply all or part of any outstanding credits to DNP against any indebtedness (whether due or to become due) owed by DNP to SRI as the same shall become due.


SECTION 5.03 No purchase order shall be binding on SRI until accepted in writing by a duly authorized officer or employee of SRI. SRI may refuse to accept any purchase order for any reason. DNP's order shall be subject to such reasonable allocation as, in the sole judgment of SRI, may be necessary or equitable in the event of any shortages of Products or parts at any time. Within thirty (30) business days following SRI' s delivery of the ordered Product to DNP or its designee, DNP shall pay SRI 100% due under such purchase order (e.g. for the Product ordered plus taxes or similar charges (where applicable) as described in Section 5.02 above).


SECTION 5.04 Delivery to DNP shall be at any facility or warehouse of DNP located in Los Angeles or Irvine, California as DNP shall designate. Claims for damage or defectiveness of Products must be made within ten (10) days (the " Inspection Period" ) after arrival of shipment at the specified destination and, if requested by SRI, promptly returned to SRI who shall determine, in good faith, whether the claim has merit. In the event DNP claims that any container from a common lot contains defective Products, then DNP shall (i) promptly send the claim in writing to SRI during the Inspection Period to permit SRI to determine whether the entire common lot is damaged or defective and (ii) open no further containers from the common lot unless and until SRI determines whether the entire lot shipment has been damaged or is defective. If such Products are determined by SRI to be damaged or defective, SRI shall bear the shipping expense of the return; however, if SRI determines that the Products are not damaged or defective, DNP (or its customer) shall bear such expense. Shipping dates are estimated, and SRI shall not be liable for loss or damage due to delay in manufacture or delivery resulting from any cause beyond its reasonable control including, but not limited to, compliance with regulations, orders or instructions of any federal, state or municipal government or any department or agent thereof, acts of God, acts or omissions of DNP, acts of civil or military authority, fires, strikes, facilities shutdowns or alterations, embargoes, war, riot, delays in transportation, or inability to obtain necessary labor, manufacturing facilities or materials from usual sources, and any delays resulting from any such cause shall extend the time for delivery correspondingly. In no event shall SRI be liable for consequential or special damages due to any cause. All expenses and charges caused by DNP, in cluding, but not limited to, its failure to accept delivery of or pay for such Products, shall be paid by DNP to SRI on demand.


SECTION 5.05 SRI expects normally to give advance notice to DNP regarding changes in design. SRI shall have the right, however, to change design of Products without notice to DNP, without incurring any liability whatever, including any obligation to modify the same on Products previously ordered from SRI. DNP agrees not to alter or modify Products purchased hereunder in any way which will impair or lessen the validity of the trademarks under which these Products are made or sold.


SECTION 5.06 Any customer of DNP either wishing to sample or purchase Shugr must sign the SRI nondisclosure agreement (" NDA" ) in the form attached hereto as Exhibit A . Any customer of DNP wishing to purchase any quantity of Shugr must sign the SRI end user agreement, in the form attached hereto as Exhibit B , which requires identifying " Shugr99" or " Shugr Sweet99" (as applicable) as the source for sweetening in addition to legal ingredient listing requirements.


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SECTION 5.07 DNP shall pay all license fees, sales, use, occupation, retailer's occupation, personal property, and excise taxes and any other fees, assessments or taxes which may be assessed or levied by any national, state or local government and any departments and subdivisions thereof, against any of the Products ordered by DNP and under DNP' s direct or indirect control.


SECTION 5.08 DNP shall not sell any sweetener product that SRI, in good faith, determines may compete with Shugr as a result of exact or similar ingredients being used.


SECTION 5.09 DNP shall not contact or sell to any Large Account Customers unless DNP first obtains the prior written approval of SRI. If DNP contacts a Large Account Customer without such prior written approval, SRI shall have the right to reject such account as a DNP account, and sell directly to such Large Account Customer.


ARTICLE VI


WARRANTIES, INDEMNIFICATION AND INSURANCE


SECTION 6.01 DNP EXPRESSLY WAIVES AND SRI DISCLAIMS ALL WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING ALL WARRANTIES OF MERCHANTABILITY OR OF FITNESS. WITHOUT LIMITING THE FOREGOING, SRI MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE LEGAL CLASSIFICATION OF THE PRODUCTS AND DNP AGREES TO CONDUCTS ITS OWN INVESTIGATION AND ANALYSIS WITH RESPECT TO THE PROPER LEGAL CLASSIFICATION OF THE PRODUCTS.


SECTION 6.02 SRI assumes no liability on product ingredient and product function claims. All commercial users of Shugr must obtain independent legal counsel on product ingredient and product function claims.


SECTION 6.03 . DNP represents and warrants that DNP and any customers of DNP shall comply with all GRAS regulations and any other applicable laws or regulations with respect to the use of the Products. DNP shall indemnify and hold SRI harmless from and against any and all costs, expenses (including reasonable attorney' s expenses) and any other liability arising out of the breach of its representations, warranties or obligations under this Agreement.


SECTION 6.04 DNP shall indemnify and hold harmless SRI and its affiliates and their respective equityholders, managers, directors, officers, agents, employees and representatives for, and will pay to such persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys' fees) or diminution of value, whether or not involving a third-party claim, arising, directly or indirectly, from or in connection with DNP' s use of, or operations or activities with respect to, the Products, excluding claims arising from the gross negligence or willful misconduct of SRI.


SECTION 6.05 Promptly after receipt by SRI of any claim or notice of the commencement of any action, administrative or legal proceeding, or investigation as to which the indemnity provided for in Section 9.01 hereof may apply, SRI shall notify DNP of such fact. DNP shall assume the defense thereof; provided,


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however, that if the defendants in any such action include both SRI and DNP and SRI shall reasonably conclude that there may be legal defenses available to it which are different from or additional to, or inconsistent with, those available to DNP, the SRI shall have the right to select separate counsel (reasonably acceptable to DNP) to participate in the defense of such action on behalf of SRI, at DNP' s expense.


SECTION 6.06 DNP shall at its own cost, cause SRI and its respective agents, employees, officers, and representatives to be added as additional insureds on all policies of general commercial liability insurance and product liability insurance covering such party, which coverage shall have limits of liability which are commercially reasonable but shall not be less than $100,000 per loss occurrence. Each policy shall contain an endorsement which provides that any amendments or cancellation of any such policy shall not be effective unless SRI shall have been given thirty (30) days prior written notice of any such intended amendment or cancellations. Within five (5) days of the beginning of each policy period, DNP shall deliver to SRI a certificate evidencing the coverage required hereby and the amount thereof. Such coverage shall be maintained for not less than five (5) years following termination of this Agreement.


ARTICLE VII


TERMINATION


SECTION 7.01 This Agreement shall be for an indefinite period until it is terminated as hereinafter provided.


SECTION 7.02 Either DNP or SRI may terminate this Agreement by written notice of termination delivered to the other party, such termination to be effective not less than ninety (90) days after receipt by the other party of such notice.


SECTION 7.03 Notwithstanding Section 7.02, SRI may terminate this Agreement, effective immediately, by delivering to DNP or its representative written notice of such termination in the event of the happening of any of the following, each such termination a termination for " Cause" :


(a) Failure of DNP to function in the ordinary course of business.


(b) Any breach by DNP of the terms of this Agreement.


(c) Any Change of Control of DNP.


(d) Any attempted transfer or assignment of this Agreement or any right or obligation hereunder by DNP without the prior written consent of SRI.


(e) Any dispute, disagreement, or controversy between or among principals, partner ...