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Exhibit 10.14
Distributor Rights Agreement between Purchaser and Y Sake
DISTRIBUTOR RIGHTS AGREEMENT
AGREEMENT made as of the 9th day of December, 2002 by and
between Y Sake LLC, a limited liability company organized under
the laws of the
State of Hawaii with its principal place of business at 3624
South Kihei Road,
Kihei, Hawaii 96753 ("Grantor") and Drinks Americas Inc., a
Delaware corporation
with its principal place of business at 372 Danbury Road,
Wilton, Connecticut
06897 ("Grantee").
Definitions.
"Alive Spirits" shall mean Alive Spirits, L.L.C., an
Oregon limited liability company that has acted as distributor
for the
sake known as Y Sake on behalf of Grantor and shall, subsequent
to the
date hereof, act as supplier to Parliament.
"Contract Year" shall mean initially the period
commencing on the effective date of this Agreement and ending
on
December 31, 2002, and then any calendar year thereafter.
"Initial Term" shall mean the period commencing as
of the date first written above and continuing in full force and
effect
through December 31, 2017.
"Maxmillian" shall mean Maxmillian Partners, LLC, a
Delaware limited liability company that is the principal owner
of the
Grantee.
"Parliament" shall mean Parliament Import Company, Inc..
"Products" shall mean the alcoholic beverage products
listed on Schedule 1(f) annexed hereto and any products
developed
during the term of this Agreement using Roy Yamaguchi's name
or
likeness or developed by Roy Yamaguchi in conjunction with Shep
E.
Gordon ("Gordon").
"Promissory Note" shall mean that certain 6%
Promissory Note issued on the date hereof by Grantee to Gordon
in the
principal amount of $225,000 and payable by its terms no later
than one
hundred and eighty (180) days from the date of issuance.
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"Renewal Term" shall mean any five-year period
commencing on the first day following the end of: (i) the
Initial Term,
or (ii) any five-year renewal period after the first renewal
period.
"Territory" shall mean the world.
Appointment.
Grantor hereby appoints Grantee as the sole and
exclusive holder of the distribution rights of the Products in
the
Territory. Grantee shall have the right, in its sole discretion,
to
appoint distributors and sub-distributors within the Territory.
Grantee
shall notify Grantor of any such appointment within thirty (30)
days.
Grantee hereby accepts appointment as the sole and
exclusive holder of distribution rights of the Products in
the
Territory and shall, during the term of this Agreement, use
all
reasonable efforts to cause the Products to be distributed
initially in
the United States and thereafter throughout other parts of
the
Territory.
Grantor and Grantee hereby agree and acknowledge
that: (i) Grantee does not, and in the future may not hold
the
necessary permits and licenses to operate as a distributor in
the
Territory, and (ii) the Grantee, therefore, may assign any or
all of
its rights and delegate any or all of its duties under this
Agreement
to Parliament, Alive Spirits and any other entities it may
deem
appropriate.
Grantor shall cause Alive Spirits, its current
distributor, to continue in each State during the Transition
Period (as
defined below), its service of the Products line, pursuant to
the
Drinks Americas Sub-License, Distribution and Supply Agreement
attached
hereto as Exhibit 2(d) (the "Sub-License Agreement"), including
without
limitation, the sale of the Products together with appropriate
brand
registration and renewals, price posting and sub-distributor
appointments, as required by appropriate administrative laws
and
regulations. Grantor shall also cause Alive Spirits to cooperate
in the
completion and processing of any application necessary for the
transfer
of any brand registration or license to Grantee or its designee,
as
necessary. For purposes of this Agreement, the "Transition
Period" with
respect to each State shall mean the period commencing on the
date
hereof and continuing, with respect to said State, until such
time as
Alive Spirits is notified by the Grantee that Parliament and/or
any
other designee of Grantee is authorized to distribute, sell and
ship
the Products in said State. The services of Alive Spirits and
any
sub-appointees related thereto shall be deemed to comply with
Section
2(a) herein and shall comply with all applicable laws, rules
and
regulations.
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Grantor shall further cause Alive Spirits, pursuant
to the Sub-License Agreement, during the Transition Period
and
thereafter, to (i) sell the Product inside the Territory and
(ii) sell
the Product to Parliament for distribution outside of the
Territory, on
such terms and in such amounts as negotiated between Parliament
and
Alive Spirits. For the purposes of this Section 2(e) only,
"Territory"
shall have the meaning assigned to such term in the
Sub-License
Agreement.
Duration.
The term of this Agreement shall be the Initial Term,
unless sooner terminated in accordance with Section 11, and
shall
include any Renewal Term, provided renewal occurs in accordance
with
Section 3(b).
At the end of the Initial Term and each Renewal Term,
this Agreement shall be automatically renewed for an additional
Renewal
Term of five (5) years provided that Grantee has achieved the
minimum
sales goals set forth in Section 4, and this Agreement has not
been
terminated in accordance with Section 11.
Minimum Volume Obligations.
During the term of this Agreement, Grantee's minimum
sales volume obligations for the Product shall be as set forth
on
Schedule 4(a) annexed hereto ("Volume Obligations"). In the
event the
Grantee exceeds the Volume Obligations for the Products for
a
particular Contract Year, such excess shall be credited toward
meeting
the Volume Obligations during the following Contract Year.
Notwithstanding any provisions contained herein to
the contrary, Grantor may not terminate this Agreement pursuant
to
Section 11(a)(i) herein if Grantee's default thereunder is due
to an
inability or unwillingness of any supplier of the Products to
accept or
fulfill orders for Products placed by the Grantee.
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Licensing Fee. During the Term of this Agreement, all
Products
sold by Grantee, less any credits and returns, shall be subject
to a license
fee, payable to the Grantor at a per case rate calculated by
using the following
formula: (i) the price at which Grantee sells the respective
case of the
Product, less (ii) a sales fee of $2.00, less (iii) the price
paid by Grantee to
distiller for the respective case of the Product, shall equal
the license fee
for such case of Product. Payment of the license fee shall be
made in US dollars
to a bank designated by Grantor and shall be due thirty (30)
days from the date
of the bill of lading of the delivery on which the licensing fee
is due, with
late fees to accrue at a rate of twelve percent (12%) per annum
thereafter.
Marketing and Advertising. To develop sales of the Products
in
the Territory, the parties shall make a coordinated marketing,
advertising, and
promotional effort; provided, however, that Grantee shall
ultimately make all
decisions with respect to said effort. The parties shall meet
once during each
Contract Year to discuss plans for marketing, advertising and
promotion of the
Products for the following Contract Year with Grantee being
responsible for the
implementation of such plans after consultation with Grantor. At
such meetings
the parties shall discuss the budget for such programs and each
party's
contribution thereto. All marketing, advertising and promotional
efforts will be
in compliance with the Yamaguchi License (as defined below).
Representations, Warranties and Covenants of Grantee.
Grantee
represents, warrants and covenants to Grantor as follows:
This Agreement, when executed and delivered by the
Grantee, will constitute a valid and legally binding obligation
of the
Grantee, enforceable in accordance with its terms, except as
limited by
applicable bankruptcy, insolvency, reorganization,
moratorium,
fraudulent transfer and other laws of general application
affecting
enforcement of creditors' right generally.
Grantee will cause Parliament to obtain the federal,
state and local licenses or permits that are necessary to
conduct its
business within the Territory as a distributor of the Products
and to
engage in the transactions intended by this Agreement.
Grantee shall maintain a distributor network of
adequate size to represent and promote the sales of the
Products. Such
sales force shall be kept properly informed as to all
advertising,
marketing and promotional programs and policies regarding the
Products.
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Grantee shall use all reasonable efforts (i) to sell,
or cause its designee to sell, to its customers only containers
of the
Products of saleable quality and (ii) to remove any unsaleable
Products
from its or any sub-distributor's o
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