PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE US SECURITIES AND EXCHANGE COMMISSION.)
EXHIBIT 10.67
INTERNATIONAL DISTRIBUTION AGREEMENT
This International Distribution Agreement ("Agreement") dated as of January 8, 2009 (the "Effective Date"), is by and between Cirtran Beverage Corp., a Utah corporation located at 4125 South 6000 West, West Valley City, UT 84128, USA (the "Company") and Tobacco Holding Group Sh.p.k, an Albanian Company with its notice address at Rruga Kavajes, Ish Kombinati, Ushqimor, Tirane, Albania (the "Distributor").
The Company is engaged in the business of advertising, marketing, distributing, and selling the Playboy brand products listed in the attached Schedule 1, as it may be amended from time to time (the "Products"). The Company's licensors, Play Beverages, LLC, and Playboy Enterprises International, Inc. ("Playboy International") have entered into a Product License Agreement (the "License Agreement") dated as of November 1, 2006, pursuant to which Playboy International has licensed the use of the Playboy name on the Products. A copy of the License Agreement is attached as Exhibit "A". The License Agreement was later amended on December 19, 2008 listing Albania as a licensed territory upon receipt of confirmation of local counsel, the Company will request immediately from Playboy International the confirmation once this agreement is executed and it is a condition precedent to the obligations of both parties hereunder that such confirmation take place. The Company and Distributor desire that the Distributor act as the exclusive seller and distributor of the Products in the Territory as defined below.
The parties agree as follows:
1. APPOINTMENT.
1.1 Appointment. The Company hereby appoints the Distributor as its exclusive distributor for the Products in the Territory, having the exclusive right to sell and distribute the Products in the Territory. Distributor acknowledges that Playboy International has retained certain rights to distribute Products to United States military bases and possessions in the Territory.
1.2 Trademarks. The Company hereby grants to the Distributor the nonexclusive, nonassignable, nontransferable right to use the Company's trademarks, trade names and trade dress described in the attached Schedule 3 (the "Trademarks") solely in connection with the distribution, marketing, and sale of the Products in the Territory. The Trademarks will remain the sole and exclusive property of the Company or its licensors.
1.3 Initial Non-cancellable Purchase Order. As a condition precedent to the effectiveness of this Agreement, upon execution of this Agreement Distributor shall place with the Company a non-cancellable purchase order and pay immediately for XXXXXX cases of Product. The Distributor must prepay for this order in advance at the same time the order is issued via wire transfer. The Distributor must accept, for the first 6 months from the date of this agreement, the same product formula and packaging sold in the USA.
PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE US SECURITIES AND EXCHANGE COMMISSION.
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1.4 Localization. Company will consider in good faith requests from Distributor to change the formula, taste, color or form factor of the Products to better match local tastes in the Territory. In Company's discretion, such localized Products may be in addition to, or in replacement of, the initial Products. Distributor will be responsible for translating Product labels to local language(s). All translations will be subject to approval by the Company. Distributor will provide the Company with any label information required by law in the Territory. Distributor shall be responsible to obtain all governmental licenses, approvals, permits and approvals for the importation and distribution of the Products in the Territory.
2. EFFECTIVE AND TERMINATION DATES.
2.1 Term. This Agreement shall be effective as of the Effective Date and shall remain in force for five years (the "Term"), unless terminated prior thereto as provided herein. This Agreement will automatically renew for successive renewal Terms of five years each if at the end of the then current Term (i) Distributor is not in default hereunder, (ii) Distributor has satisfied the Minimum Sales Requirement described in paragraph 2.4 for each year of the then-current Term, (iii) the parties have agreed upon the Minimum Sales Projections for the renewal term, and (iv) Distributor has not notified the Company that it does not intend to renew the Term, which notice must be given at least 90 days prior to the expiration of the then-current Term. The Company will use its best efforts to extend the License Agreement for the full Term of this Agreement.
2.2 Termination by Mutual Consent. This Agreement may be terminated at any time by mutual consent of the parties in writing effective as provided herein.
2.3 Termination upon Default. This Agreement may be terminated by the Company upon a default under Paragraph 5.2 hereof.
2.4 Termination for Under-Performance.
(a) The Parties have agreed on the Minimum Sales Projections for each of the five years in the initial Term, which is attached hereto as Schedule 7. The Parties may in their discretion, but are under no obligation to, revise the Minimum Sales Projections during the Term to reflect market conditions. Any such revision must be in a writing signed by both Parties.
(b) If actual sales for a twelve month period ending on an anniversary of the Effective Date are less than 80% of the Minimum Sales Projection for that year (the "Minimum Sales Requirement"), then the Company may terminate this Agreement upon sixty (60) days prior written notice to Distributor; provided that such notice is given within ninety (90) days after the end of the relevant twelve month period.
PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE US SECURITIES AND EXCHANGE COMMISSION.
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(c) It is a condition to any renewal of this Agreement that the Parties agree in writing on new Minimum Sales Projections for each year of the renewal Term. The Parties will consider, among other things, the saturation of the Products in the Territory and the overall growth rate of the product class(es) which includes the Products throughout the Territory. The Parties' agreement to new Minimum Sales Projections shall be in writing signed by both Parties and must be agreed upon no later than thirty (30) days prior to the expiration of the then-current term unless the Parties mutually agree to extend such deadline.
3. DISTRIBUTOR'S OBLIGATIONS.
The Distributor will develop and maintain a market for the Products in the Territory and meet the sales and distribution goals on Schedule 4, which shall be updated at least annually, and to do the following:
3.1 Territory Development. Within the first year after the Effective Date, Distributor shall have commercially launched the Products fully in all its channels in each country in the Territory. For purposes of this Agreement, if an approved sub-distributor has been appointed for the country, a full commercial launch means that the Products are being distributed to at least 70% of the accounts of the sub-distributor. If Distributor has not appointed an approved sub-distributor for the country, a full commercial launch means that the Products are being distributed to at least as many outlets as would equal 70% of the accounts serviced by the largest beverage distributor in that country; provided that at the request of Distributor, made not more than four months after the Effective Date, the Company will consider in good faith alternative definitions for commercial launch in specified countries.
3.2 Compliance with License Agreement. Distributor shall conduct all of its activities hereunder in full compliance with the License Agreement. Distributor shall fully and promptly comply with any requests of the Company for information or reports which the Company may need in order to comply with the reporting requirements of the License Agreement.
3.3 Sub-Distributors. Distributor may appoint qualified sub-distributors with exclusive or non-exclusive rights within specified countries or areas within the Territory. The appointment of any sub-distributor is subject to the prior written approval of the Company and Playboy International, which approval may be withheld in their sole discretion. All sub-distributors must agree in writing to comply with this Agreement, the License Agreement and such other restrictions as may be reasonably imposed by the Company or Playboy International. Distributor shall be fully responsible to the Company and Playboy International for any violation of this Agreement or the License Agreement by its sub-distributors. Any refundable initial fees or payments obtained by Distributor from a sub-distributor shall be subject to return or surrender in the same manner as the return or surrender of the Security Deposit pursuant to Paragraph ___ below. Distributor may obtain non-refundable initial fees or payments only with the express written consent of the Company, which consent may be withheld in the Company's discretion.
PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE US SECURITIES AND EXCHANGE COMMISSION.
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3.4 Purchase from Company. Distributor must purchase all Product from the Company or its designated subcontractor. Distributor will have no right to manufacture, or to cause third parties to manufacture, the Products. Company will control the manufacture of the Product either at Company's own facilities or those of subcontractors, located inside or outside of the Territory, in Company's discretion. All orders for Products will be placed with Company even if a subcontractor is used for manufacture.
3.5 Distribution. Distributor will supply Products purchased from the Company, or its designated subcontractor, to customers in the Territory. Distributor will not distribute, cause to be distributed or assist in the distribution of the Products outside the Territory or other than as specified by the Company nor will Distributor distribute, cause to be distributed or assist in the distribution of any product or item not specifically requested by the Company that bears any or all of the Trademarks during or at any time after the distribution of the Products pursuant to this Agreement. Distributor will not engage in transshipping or otherwise violate the scope of the Territory defined herein. Nothing contained herein shall be construed to grant Distributor any right to manufacture Products or to purchase Products from any person other than the Company or its designated subcontractors.
3.6 Review of Reports and Inspection. Distributor will keep and maintain accurate and detailed books and records of its activities under this Agreement. Upon reasonable notice, Distributor will allow the Company and Playboy International to review Distributor's books and records, including any depletion or other reports applicable to the Products, and shall have the right to make extracts therefrom or copies in order to ensure Distributor's compliance with this Agreement. Within 10 days of a request from the Company or Playboy, Distributor will supply a statement detailing Distributor's accounts for the Products. Upon reasonable notice, Distributor will allow the inspection by the Company and Playboy International of the portions of the Distributor's facilities used in connection with the storage and distribution of the Products.
3.7 Marketing. Distributor will develop and execute marketing programs as initially set forth on Schedule 4 hereto, which shall be updated at least semi-annually. Distributor has agreed that the initial marketing budget for the initial launching stage should be set at $XXXXXX but never less than $XXXXXX. Distributor will assist the Company in brand growth and support volume case requirements with introductory and promotional case allowances as Distributor and the Company may agree.
3.8 Handling Business. Distributor will maintain a business organization and equipment necessary to function efficiently and effectively in the sale and distribution of Products. Distributor will maintain all state, federal and local licenses and permits necessary for it to perform under this Agreement and will keep such licenses and permits current.
3.9 Quality Control. Distributor will ensure that only products of merchantable quality are sold. Unmerchantable product is defined to be Product that is spoiled, putrid or foul, does not conform to the Company's manufacturing specifications for such Product, or has sustained damage to its primary or secondary packaging and is no longer commercially marketable. The Company shall replace, at its own expense, all unmerchantable Products, including transportation costs of delivering replacement Product to Distributor, other than Product which has been spoiled by mishandling by Distributor.
PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE US SECURITIES AND EXCHANGE COMMISSION.
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3.10 Confidentiality. During and after the term of this Agreement, Distributor will maintain the confidentiality of all documents, confidential information, trade secrets, marketing and operating methods, and data of the Company relating to the Products and the business of Company ("Trade Secrets") and refrain from using and disclosing Trade Secrets for personal gain, or for any other purpose not in furtherance of or incidental to the obligations of the Distributor hereunder, except with the Company's written consent.
3.11 Report Law Suits or Claims. Distributor will notify the Company promptly after becoming aware of any actual or potential claim or suit against the Company, the Distributor, or any customer of Products that alleges that a patent, trade name, copyright, or trademark of a third person will be infringed by reason of the sale or use in the Territory of the Products or any promotional materials of the Company or the Distributor with respect to the Products.
3.12 Infringement. Distributor will notify the Company promptly after becoming aware of the any infringement of any of the Trademarks, and will assist the Company (at the Company's expense) in any action or proceedings that the Company or its licensors may institute as the result of such infringement. Distributor will not make, cause others to make, or assist others in making, any claim whatsoever to any or all of the Trademarks or any trademark, designation, name, phrase, design or symbol similar thereto in connection with the manufacture, advertising, promotion, sale or distribution of merchandise.
3.13 Storage and Handling Standards. Distributor will comply with regulatory standards for storage, transportation and handling of Products and will provide access to its warehouse for the Company to inspect inventory.
3.14 Use of Trade Name or Trademarks. Distributor will refrain from removing the Trademarks from Products and from using the Trademarks on any other product except the Products. Distributor will refrain from using the Trademarks in the Distributor's corporate or business names without the Company's prior approval, or in any case, in any manner inconsistent with the rights of the Company and its licensors in the Trademarks.
3.15 Notice Requirements. Distributor will provide the Company with written notice by certified mail of any event that the Distributor alleges constitutes a default under Paragraph 5.2 of this Agreement, including without limitation:
(a) A description of each act or omission relevant to the default;
(b) The dates of each act or omi ...
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