DISTRIBUTION AGREEMENTDistribution Agreement |
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AMERICAN ENTERPRISE DEVELOPMENT CORP | Havoc Distribution, Inc | Black Dog Distributors, L.L.C. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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EXHIBIT 10.3
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of this __15th__ day of March, 2007 (the "Effective Date"), by and between Havoc Distribution, Inc. ("Havoc"), and Black Dog Distributors, L.L.C. ("Distributor").
In consideration of the mutual premises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS.
1.1 "Product" or "Products" means any and all Havoc(r) energy drink products, whether directly distributed under the Havoc(r) brand or under a private label brand which is distributed by, through or under the Havoc(r) brand, including but not limited to those initial Products which are specifically identified and listed in Exhibit A. Products shall expressly include any and all Havoc(r) Items which are presently existing as well as any and all new non-alcoholic beverages which are associated with the Trademarks that Havoc wishes to develop and/or introduce into the Territory in the future, whether or not same are presently contemplated or under development.
1.2 " Trademarks" means the words Havoc(tm) and any and all variations and derivations thereof, any materials, logos, slogans, designs and distinctive bottles patented, copyrighted or designed by or on behalf of Havoc, and other related trademarks, together with any rights existing as a result of the use of the foregoing in connection with Products.
1.3 "Accounts" means individual retail and wholesale outlets, categories of outlets and channels of distribution, which shall include National Accounts and warehouse purchasers (which means a warehouse, or a wholesale business, owned or controlled by the retailer(s) to which it sells or otherwise supplies products), which are located within the Territory.
1.4 "Item" or "Items" means stock keeping units of Products, by flavor and package or container type, design and size.
1.4 "Territory" means the geographical boundaries of the State of Florida; provided, however, that with respect to any particular Product(s) or Item(s), the Territory may be further geographically limited or restricted in order to comply with any specific geographical restrictions or limitations which may be imposed on a Product or Item by virtue of any licensing or distribution agreements by, under or through which Havoc has derived the right or entitlement to market or distribute such Product or Item.
2. APPOINTMENT AND GRANT OF LICENSE AND RIGHTS.
2.1 Appointment and License. Havoc hereby grants Distributor the exclusive right to distribute and sell Products to Accounts in the Territory, and the limited non-exclusive license to use the Trademarks solely in connection therewith, in each case subject to the remaining provisions of this Agreement.
2.2 National Accounts. "National Account" means a group of affiliated, centrally managed Accounts, which are designated by Havoc for National Account treatment. Havoc retains the right to manage and establish pricing policies for National Accounts. So long as Distributor complies with any National Account pricing policies, or otherwise sells to National Account outlets at prices (taking account of any Havoc support and allowances) and on terms mutually agreeable to all concerned parties, it will retain the exclusive right to sell Products to National Account outlets in the Territory. Havoc agrees that Havoc shall at all times maintain pricing policies with respect to any National Account which shall afford Distributor a sales margin of no less than twenty percent (20%), and shall correspondingly and accordingly lower its pricing to Distributor in order to enable Distributor to maintain said minimum sales margin on all such National Accounts. Distributor agrees, however, that if it is unwilling to sell to a National Account on acceptable terms, or for any other reason cannot or does not sell to a National Account, Havoc may arrange for alternate sources of supply to that National Account's outlets in the Territory. In that circumstance, where Havoc arranges for alternate sources of supply to that National Account's outlets in the Territory, Havoc shall pay Distributor an invasion fee, calculated in accordance with procedure set forth in Exhibit B, for the Item(s) and Product(s) sold to such National Account for distribution at an outlet or outlets in the Territory.
2.3 Distributor Representations. Distributor represents and warrants that (i) it will comply with all food, labeling, health, packaging and other relevant Federal, state and local rules, orders, regulations and laws (including returnable container or deposit laws) applicable to its performance hereunder, including those applicable to its use of the Trademarks, and (ii) it has the infrastructure, equipment and capability to diligently and aggressively cover and service the Territory in its entirety.
3. TERM . The period during which this Agreement remains in effect is referred to as the "Term". The Term will commence on the Effective Date and will continue for six (6) years. Thereafter, provided neither party is in default, this Agreement will automatically renew for successive one-year annual renewal periods, unless either party elects in writing not to renew at least ninety (90) days before the end of the initial or renewed Term or unless the Agreement has been earlier terminated pursuant to its other provisions. Any liability of each party to the other because of the termination of this Agreement shall be exclusively governed by Section 13.2 herein.
4. ANNUAL PLANS. 30 days before the annual anniversary date of this agreement, Havoc and Distributor will jointly and collectively develop a sales and marketing plan for the ensuing year intended to maximize distribution and sales of Products in the Territory (an "Annual Plan"). The first Annual Plan for the remainder of the initial year of the Term will be developed within 30 days of the Effective Date. Each Annual Plan will set forth mutually agreeable targets and minimum performance standards for sales and market penetration, and will include plans for increased sales and market penetration (including planned promotions, campaigns, allowances and other Havoc support and funding), proposed pricing, as mutually agreed to by Havoc and Distributor, and such other information, as the parties deem appropriate. Each Annual Plan will also outline anticipated advertising, promotional and contribution requirements. Distributor will diligently pursue and implement each Annual Plan.
5. PERFORMANCE.
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(a) |
Distributor will begin commercial sales of Products within thirty (30) days of the Effective Date. Distributor agrees to use commercially reasonable efforts to actively market and promote all of the Products in the Territory, to call upon all Accounts regularly and diligently, and to maintain an inventory of Products sufficient to supply reasonably anticipated demand. Havoc may monitor Distributor's performance in this regard. |
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(b) |
Distributor shall earn the right to acquire the publicly traded common stock of Havoc on preferential terms through the achievement of certain performance thresholds related to Distributor's sales volume and revenue generation on the sale and distribution of Products in the Territory, in accordance with the terms and conditions set forth in Exhibit C . |
6. MARKETING, DISTRIBUTION AND SALES.
6.1 Highest Quality Positioning. An essential element of the consideration Havoc has bargained for is Distributor's agreement to position and price, and aggressively market, promote, merchandise and distribute, the Products as premium products of the highest quality.
6.2 C ooperative Advertising and Promotions. Distributor acknowledges the importance of advertising, promoting and merchandising the Products to increase and maintain demand in the Territory. Accordingly, Distributor agrees to participate in, and contribute funds to, such cooperative advertising, merchandising and promotional plans (including acquiring and using marketing equipment) as may be included in any Annual Plan, or as may be mutually agreed, in an amount not to exceed one-half of one percent (0.50%) of Distributor's gross revenue from the sale of Products in the Territory for Distributor's preceding fiscal year. In consideration, Havoc agrees that Distributor shall be entitled to the exclusive control and use of any and all promotional tools (e.g., sports and venue tickets, suites, etc.) which inure to or are derived by Havoc under, out of or in connection with any licensing or distribution agreement for any Item or Product which is exclusively marketed or distributed by Havoc within the Territory.
6.3 No Transshipping. Distributor agrees that it will not distribute or sell Products outside the Territory or Accounts. Distributor will refrain from selling Products to any party if it has reason to believe, or if Distributor is advised that Havoc believes, that such party may be a source of Products sold outside the Territory. Distributor agrees to comply with reasonable Havoc transshipping policies provided to Distributor from time to time; provided, however, that there shall be no restrictions or limitations placed by Havoc upon Distributor with respect to the transshipping of Products outside the Territory in cases where such transshipping is destined for markets outside the continental United States (unless such transshipping is otherwise limited or restricted by virtue of any licensing or distribution agreements by, under or through which Havoc has derived the right or entitlement to market or distribute such Product or Item).
6.4 Data and Reports . Distributor will maintain accurate and complete books and records concerning its performance and its implementation of Annual Plans, which may be inspected by Havoc during Distributor's regular business hours upon no less than seven (7) days advance notice of inspection provided by Havoc to Distributor. Distributor shall deliver to Havoc no later than twenty (20) days after the end of each calendar quarter (March, June, September and December) during the term of this Agreement a written report showing the following for the preceding quarter.
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6.4.1 |
Depletions of Product by case for each item |
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6.4.2 |
Year-to-date sales of Product in cases for each item |
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6.4.3 |
Number of active accounts purchasing the Product |
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6.4.4 |
Sales to National Accounts within the Territory by cases for each item, upon request |
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6.4.5 |
Top 50 accounts with cases for each item |
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6.4.6 |
Ending inventory |
7. PURCHASE OF PRODUCT.
7.1 Purchase and Sale of Products. Distributor will purchase Products only from or as directed by Havoc. Havoc will sell to Distributor such quantities of Products as Distributor shall require in fulfilling its obligations hereunder, F.O.B. destination, on the condition that Havoc will only be obligated or required hereunder to fulfill firm orders for Products placed by Distributor which constitute "full truckloads", as that term is reasonably and mutually agreed upon by Distributor and Havoc from time to time throughout the Term of this Agreement. Payment terms are net thirty (30) days.
7.2 Order Requirements. Provided and on the condition that Distributor places a firm order with Havoc for a "full truckload" of Products, Havoc shall diligently and timely fulfill and ship to Distributor each such "full truckload" of Products as and when same are ordered from Havoc by Distributor.
7.3 Inspection of Products; Limitations on Liability. Distributor will inspect all deliveries of Products within ten (10) days of delivery to identify incorrect order fulfillment and patent defects, including overage Products, external damage to labels and packages, and other defects that can be determined without breaching packages or pallets. Havoc may inspect the damage and make a determination at its sole discretion. Havoc will replace all defective Products justifiably rejected, at no cost to Distributor, or issue a credit for the invoiced cost thereof. Subject to Section 17.1, this Section sets forth Distributor's sole remedy with respect to any such defects. Havoc is not liable for any damage caused by improper or inadequate handling, use or storage of Products by Distributor or its agents from and after delivery, or the use of Products after the recommended shelf life thereof.
7.4 Prices for Products. The initial delivered prices for Products (including freight and shipping charges) are set forth in Exhibit D. Havoc reserves the right to change prices on no less than ninety (90)-day notice to Distributor. Distributor's orders will be honored at the price in effect at the time they are placed by Distributor with Havoc.
7.5 Shortages; Allocations. If Havoc is unable to fulfill Distributor's order requirements, it will equitably allocate available supplies in good faith among Distributor and others dealing in the Products, taking into account historical and forecasted sales, planned promotions and marketing campaigns, and other relevant factors.
7.6 Havoc Representations. Havoc represents and warrants that all Products, on the date of shipment, will be merchantable, of good quality and fit for the purpose intended, and will not be impure, contaminated or adulterated, misbranded or mislabeled within the meaning of the Federal Food, Drug and Cosmetic Act, as amended, and the Food Additives Amendment of 1968, or an article which may not be introduced into interstate commerce.
8. HANDLING OF PRODUCTS.
8.1 Quality Control; Maintenance of Quality; Inspection of Facilities Distributor will be responsible for maintaining the quality of all Products in its possession or under its control. Distributor agrees to use the warehousing practices, inventory control, product rotation (including at Accounts), handling and other quality control procedures, which Havoc reasonably may specify, or, if not so specified, which are consistent with national brand industry standards in effect in the Territory. Distributor promptly will notify Havoc of any quality problems that come to its attention, and of the steps being taken to correct each such problem. Distributor agrees to keep complete and accurate records of the disposition and location of all Products distributed by it to facilitate tracing.
8.2 Distributor to Manage Claims. Distributor will give Havoc prompt written notice of any complaints involving Products it has distributed. Distributor will manage promptly, in cooperation with Havoc, all such complaints.
9. THE TRADEMARKS.
9.1 Trademark License. Distributor is hereby granted the limited, non-exclusive, non-assignable and non-transferable right to use the Trademarks, strictly in accordance with the terms hereof, in connection with the promotion, merchandising, distribution and sale of Products within the Territory. 9.2 Havoc Representations. Havoc represents and warrants that it owns and possesses adequate authority and rights to grant Distributor the right to use the Trademarks as contemplated hereby, and that the use of the Trademarks by Distributor in accordance with the terms of this Agreement will not infringe the trademark or other intellectual property rights of any third party.
9.3 Distributor Ackn






