Exhibit 10.13
EXCLUSIVE DISTRIBUTORSHIP
AGREEMENT
This agreement (the
“Agreement”) is made as of the 14th day of July, 2004,
by and between Royal Bodycare, Inc., a Nevada corporation, located
at 2301 Crown Court Irving, Texas 75038 USA (“RBC”),
and Coral Club International, Inc., an Ontario corporation, located
at 61 Alness Street, Suite 215, Toronto, Ontario, M3J 2H2, Canada
(“CCII” or the “Distributor”).
WHEREAS, RBC and CCII entered into
an Exclusive Distributorship Agreement dated June 1, 1999 (the
“Former Agreement”), and the parties hereto desire to
enter into a new Exclusive Distributorship Agreement that
supercedes and replaces in all respects the Former
Agreement;
WHEREAS, RBC manufactures a line of
top quality health, nutritional, and personal care products
(collectively, “Products”) for sale to independent
members;
WHEREAS, the Distributor is a
corporation of Ontario, Canada, with the power to carry on business
as contemplated by this Agreement;
WHEREAS, the Distributor desires to
promote and sell the Products as the exclusive Distributor in the
Territory (as hereinafter defined), subject to the terms and
conditions of this Agreement;
WHEREAS, the parties hereto desire
to establish, among other things, the terms and conditions under
which orders will be placed by the Distributor and accepted and
filled by RBC.
NOW, THEREFORE, in consideration of
the premises stated above and subject to the terms and conditions
contained herein, the parties agree as follows:
I. TERRITORY
As used herein,
“Territory” shall be comprised of the countries in
Regions A, B, C and D as follows:
A. Region A: the countries of the
former USSR, known as of the date of this Agreement as Armenia,
Azerbaijan, Belarus, Estonia, Georgia, Kazakhstan, Kyrgyzstan,
Latvia, Lithuania, Moldova, Russian Federation, Tajikistan,
Turkmenistan, Ukraine, and Uzbekistan,
B. Region B: Czech Republic,
Finland, Hungary, Poland, Romania, Slovakia, and
Slovenia,
C. Region C: Albania,
Bosnia-Herzegovina, Bulgaria, Greece, Croatia, Cyprus, Macedonia,
and Yugoslavia, and
D. Region D: Israel.
II. PRICES
The prices for all Products
available for purchase by the Distributor are set forth in the CCII
export price list effective June 1, 2004 (the “Price
List”). The parties hereto acknowledge that such prices shall
be paid in US Dollars, ex factory and export packed, at RBC’s
facility in Irving, Texas, USA. The Distributor shall be
responsible for all land, sea, or airfreight charges, wharfage, and
storage charges. The Distributor at its sole expense shall arrange
any insurance desired by the Distributor to insure the Products
while in transit. The prices set forth in the Price List may be
changed by RBC on not less than ninety (90) days prior written
notice to the Distributor, providing that any price changes shall
be on a basis no less favourable than prices offered to other
similarly situated distributors. RBC shall fill any orders pending
at the time any such notice is given at the prices in effect
immediately before the notification.
III. DELIVERY
RBC shall deliver the Products to
the Distributor ex factory and export packed, at RBC’s
facility in Irving, Texas, USA. Upon delivery, which shall be
defined as the date Distributor is notified that Products are
segregated in RBC’s warehouse for CCII’s account and
available for shipment, title to the Products and all risk of loss
or damage shall pass to the Distributor. The Products shall be
ordered not less than twelve (12) weeks prior to the shipment date
requested by the Distributor. RBC will consider requests from the
Distributor for new products, modified formulations or modified
packaging. RBC, at its sole discretion, shall determine whether an
under what terms such requests shall be fulfilled. RBC’s
obligation to meet the delivery dates quoted in response to the
Distributor’s orders is subject to the prompt receipt by RBC
of all information reasonably required to permit RBC to proceed
with the fulfilment of the Distributor’s order or the
production of the ordered Products, as the case may be, immediately
and without interruption. The Distributor shall arrange for export
and shall pay for all export related fees and expenses directly
attributable to each of the Distributor’s orders including,
but not limited to, those covering preparation of consular or other
documents (but excluding fees and expenses related to any
application by RBC for any export license that may be required by
the U.S. Export Administration Act of 1979, as amended [“the
EAA”]), freight, storage, and warehouse-to-warehouse
(including war risk and terrorism) insurance. RBC shall at its sole
expense apply for and obtain any required export licenses that may
be required by the EAA in connection with the transactions
contemplated by this Agreement.
IV. DELAYS
RBC’s performance of its
obligations under this Agreement shall be excused for the duration
of any delay arising directly or indirectly from (A) acts of God,
unforeseeable circumstances, acts (including delay or failure to
act) of any governmental authority, war (declared or undeclared),
terrorist acts, riot, revolution, fires, strikes, labour disputes,
sabotage, or epidemics, (B) inability due to causes beyond
RBC’s reasonable control to timely obtain instructions or
information from the Distributor, or (C) any other cause beyond
RBC’s reasonable control
V. PAYMENT
Payment for Products shall be made
in two instalments or as otherwise mutually agreed by the parties
in writing. In the absence of an alternative written agreement, the
first payment is due at the time the Distributor places its order
with RBC. This payment will be sent via wire transfer to RBC, in
the amount of fifty percent (50%) of the aggregate amount of the
order. The remaining balance of fifty percent (50%) will be sent
via wire transfer to RBC, upon notification by RBC that Products
are segregated in RBC’s warehouse for CCII’s account
and are ready for shipment. In certain cases, Products ordered may
require full payment upon confirmation of the order. RBC shall
notify Distributor which Products require full payment at the time
an order including such Products is placed.
VI. GOVERNMENTAL
AUTHORIZATION
A. All sales hereunder shall be
subject to the export control laws and regulations of the United
States Government, including but not limited to the EAA.
B. The Distributor shall be
responsible for the timely obtaining of any required authorizations
such as import licenses, exchange permits, or any other specific
governmental authorization within the Territory for the importation
and/or sale of the Products. The Distributor shall use its
commercially reasonable effort and, if needed, engage an expert at
reasonable expense in order to obtain governmental approval for the
sale of RBC Products within the Territory. RBC shall in good faith
use its best efforts to provide Certificate of Analysis,
Certificate of Origin, Certificate of Free Sale, or other
documentation that may be requested by a government agency having
jurisdiction within the Territory as proof that the Products comply
with any applicable standards, requirements, tests, or procedures
within the Territory (collectively, the “Standards”).
The Distributor shall, if the Distributor has requested such
information, reimburse RBC at cost for any fees directly related to
obtaining these documents or authorizations. RBC shall not be
liable if any such approval/authorization is delayed, denied,
revoked, restricted, or not renewed, and the Distributor shall not
be relieved thereby of its obligations to pay RBC for any Products
already delivered to the Distributor at its request. RBC shall
manufacture the Products in accordance with the product
specifications, in conformity with all
applicable Standards as such are known to RBC, at the time of
manufacture. RBC shall not change or alter any Product formulation
without the prior consent of the Distributor. Products not in
conformity with the Standards or which may be otherwise defective
shall be destroyed by the Distributor or returned by the
Distributor to RBC at RBC’s expense, whichever is authorized
in writing by RBC. The Distributor agrees that it shall not make
any disposition, by way of trans-shipment, re-export, diversion or
otherwise, of the Products, other than in and to the
Territory.
VII. EXCLUSIVITY
A. RBC agrees that it will not sell
or deliver the Products to any person or entity within the
Territory, nor permit any other person or entity to do so, without
obtaining the prior written consent of the Distributor. RBC shall
further use its best efforts to preclude any other person or entity
from selling or delivering the Products within the Territory. The
export or sale of the Products by the Distributor outside the
Territory is prohibited without the prior written consent of
RBC.
B. In consideration of RBC’s
agreement to grant exclusive rights to distribute the Products in
the Territory, the Distributor agrees to pay to RBC, upon execution
of this Agreement, Sixty-five Thousand Dollars
(US$65,000).
VIII. SALES ACTIVITIES &
DISTRIBUTOR RESPONSIBILITIES/OBLIGATIONS
A. The Distributor shall use its
commercially reasonable efforts to promote and sell the Products in
the Territory in accordance with the RBC Compensation Plan, or a
plan similar to such plan, and its official Statement of Policies
and Procedures, along with any amendments thereto, which are
published in the member section of RBC’s web site located at
www.royalbodycare.com. RBC hereby acknowledges that
Distributor’s Compensation Plan and its official Statement of
Policies and Procedures, which are in effect in the Territory as of
the date of this Agreement, satisfy such obligation. Upon written
approval from RBC, which approval shall not be unreasonably
withheld, Distributor may modify its Compensation Plan and its
official Statement of Policies and Procedures to conform to legal
requirements in the Territory or to meet any other legitimate
business objective. Distributor hereby acknowledges that it is the
Distributor’s obligation to ensure that its Compensation Plan
and its official Statement of Policies and Procedures conform to
the legal requirements in the Territory. The RBC Compensation Plan
may be modified or amended at RBC’s sole discretion during
the Initial Term or any Renewal Term (as hereinafter defined) of
this Agreement on not less than ninety (90) days prior written
notice to the Distributor.
B. Except as otherwise provided
herein, the Distributor is not the agent of RBC for any purpose and
is not granted any express or implied right to assume or create any
obligation in the name of RBC or to bind RBC in any manner. The
Distributor shall refer to RBC all inquiries or requests for
Products received from areas outside the Territory. The Distributor
shall use its best efforts to operate under the professional and
ethical guidelines as set forth by the Direct Selling Association
located in Washington, D.C.
C. The general responsibilities and
obligations of the Distributor include, but are not limited to, the
following:
1. The Distributor will make its
commercially reasonable effort to sponsor members to the extent
permitted by law.
2. The Distributor will develop at
its own expense all training, promotional and business sales aids,
including any translation and printing costs. Upon request, RBC
will make available examples of US-based training, promotional, and
business sales aids for the Distributor’s use. RBC reserves
the right to review and approve any such materials developed by the
Distributor for use in the Territory. Such approvals shall not be
unreasonably delayed or withheld.
3. Distributor acknowledges that it
is Distributor’s sole obligation to ensure that labels
affixed to any Product distributed in the Territory comply with all
applicable legal requirements in the Territory. Products ordered by
Distributor may, at Distributor’s request, bear labels
specifically designed for use in the Territory, which labels shall
be developed by the Distributor at Distributor’s sole cost
and expense, including translation and printing costs. RBC reserves
the right to review and approve such labels prior to their use in
the Territory. Such approval shall not be unreasonably withheld or
delayed. Any such label to be affixed by RBC prior to delivery
shall comply with all legal requirements in the Territory and be
printed and furnished to RBC at the Distributor’s sole cost
and expense. Alternatively, upon mutual agreement, Distributor may
affix such approved labels after Products are shipped to the
Territory.
4. The Distributor will calculate
member commissions due on member sales in the Territory, and will
distribute payments for such commissions in the Territory. Based on
such calculations, the Distributor will remit to RBC commission
payments due to upline members located in the US and other
countries outside the Territory, to the extent that such upline
members are located in a territory that has a written cross-border
sponsoring arrangement with the Distributor. RBC and its affiliates
shall disburse these payments to such upline Members. The
Distributor shall not be obligated to pay commissions on sales aids
or promotional items distributed by the Distributor. In accordance
with applicable legal requirements in the Territory, the
Distributor may deduct withholding taxes from commissions earned in
the Territory.
5. RBC and its affiliates will
calculate member commissions due on member sales outside the
Territory. Based on such calculations, RBC and its
affiliates shall remit to the
Distributor commissions due to upline members located within the
Territory, to the extent that downline members on which such
commissions are earned are located in a territory that has a
written cross-border sponsoring arrangement with the Distributor.
The Distributor shall disburse these commission payments to such
upline members.
6. Upon request, which shall not be
overly burdensome or unreasonable, the Distributor will promptly
submit to RBC written reports concerning sales and marketing
information including, but not limited to, sales, demands, member
requests for products and services, member complaints, inventories,
backorders, and activities of members, in such form as specified by
RBC.
7. The Distributor will provide
pricing information, as needed, to its downline members and/or
consumers. RBC reserves the right to review and recommend to the
Distributor suggested wholesale/retail pricing in the Territory as
well as qualification and commission values.
8. The Distributor will not engage
in the sale, distribution, or promotion of products obtained from
sources other than RBC, except for sales aids approved by RBC or
speciality advertising items, which, subject to the provisions of
Section XIII, may bear the Company’s tradename or logo.
Notwithstanding the provisions of this paragraph 8, Distributor
shall have the right to sell certain products obtained from sources
other than RBC, which products are set forth in Appendix A attached
hereto.
9. RBC and Distributor each
acknowledge that the other has its own Commission Plan and related
computer software. The parties hereby agree to use their best
efforts to develop, as soon as practicable, a “bridge”
between these computer systems that will permit computerized
cross-border sponsoring and commissioning between members located
in the Territory and members located in territories commissioned by
RBC’s Compensation Plan and related computer software. The
parties further agree that, until such “bridge” is
implemented, cross-border sponsors shall be commissioned manually
in accordance with the policies and procedures in effect at the
date of this Agreement.
10. The Distributor will receive
orders and payments for Products from its members, promptly input
these orders and payments into the Distributor’s data
processing equipment, and deliver all ordered Products in
accordance with customary commercial standards in the
Territory.
IX. CONFIDENTIALITY
A. As used in this Section,
“Confidential Information” means information disclosed
to the Distributor by RBC or information disclosed to RBC by
Distributor, or known by the Distributor and RBC as a consequence
of, or through, the affiliation with each other, not generally
known in the industry in which RBC and Distributor are active in or
may become engaged. Distributor shall not disclose any not publicly
known information about RBC’s customer lists, products,
processes, and services, including information relating to
research, development, inventions, manufacture, purchasing,
accounting, en
