EYI
PHILIPPINES CONSIGNMENT AND DISTRIBUTION LICENSING AGREEMENT
CONSIGNMENT AND DISTRIBUTION LICENSING AGREEMENT made as of the
20th day of September 2006,
BETWEEN:
ESSENTIALLY YOURS INDUSTRIES (INTERNATIONAL) LIMITED
7865 Edmonds Street, Burnaby, British Columbia,
Canada, V3N 1B9
(hereinafter referred to as "EYI International")
OF THE FIRST PART
AND:
ORIENTRENDS, INC.
a corporation
organized and existing under the laws of Philippines,
with principal office address at 112 H. V. dela Costa St.,
Salcedo Village,Makati City, represented in this act
by Mr. Raul F Bautista,
(hereinafter referred to as the "ORIENTRENDS")
OF THE SECOND PART
WITNESSES THAT WHEREAS:
A. EYI International, being a corporation incorporated in Hong
Kong,
Special Administrative Region of the People's Republic of China,
is
a subsidiary of EYI Industries, Inc. ("EYII"), a publicly
traded
company that, through its subsidiaries and distributors,
markets
health and wellness products through network marketing;
B. EYII owns the worldwide distribution rights and network
marketing
rights with respect to its health and wellness products, which
are
manufactured under its formulas and brand names ("EYI
Products"),
and are marketed by its distributors through a global network
("Network") of independent business associates ("IBAs"). An IBA
is
an individual, corporation or trust whose completed application
has
been received and approved/accepted by Essentially Yours
Industries
Inc. ("EYI") (through its office in Burnaby, British Columbia,
Canada).
All IBAs are independent business persons who have a
contractual
relationship with EYI, and who are compensated through EYII's
unique
binary compensation plan (the current plan a copy of which is
appended
as Schedule "A" hereto and any revisions thereto from time to time
are
hereinafter referred to as the "Payment Plan"), which is a system
for
compensating qualified distributors, including IBAs, through
commission
income for the sale of EYI Products, based on their position on
EYI's
binary sales program ("Binary");
C. EYII, through its subsidiary, 642706 B.C. Ltd. ("EYI
Management"),
manages the Network, the Payment Plan and Binary and provides
related
support services for its qualified distributors and IBAs, which
services
include customer service, sales tracking, management of the Binary,
and
inventory management of EYI Products ("Management Services");
D. EYII has granted to EYI International the exclusive territorial
rights
to distribute and market, through its Network, all EYI Products,
outside
North America, including the Philippines ("Territory") (for greater
clarity,
the term "Territory" refers only to the Philippines), and,
ancillary to
such grant, EYI Management has contracted with EYI International to
provide
it with Management Services for the sales of EYI Products through
its
qualified distributors;
E. EYI International is interested in supplying EYI Products on
consignment
to, and licensing, the ORIENTRENDS as its exclusive agent and
qualified
distributor to market EYI Products for it within the Territory, on
the terms
set forth herein, and ORIENTRENDS is interested in entering into
such
consignment arrangement and obtaining such exclusive agency license
from
EYI International;
F. The parties wish to memorialize the terms of their Agreement as
set
forth herein;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of
the premises and the respective covenants and agreements of the
parties
contained herein, the sum of one dollar paid by each party hereto
to each
of the other parties and other good and valuable consideration (the
receipt
and sufficiency of which is hereby acknowledged by each of the
parties
hereto) it is agreed as follows:
ARTICLE ONE: GRANT OF LICENSE
1.1 Grant of License. Subject to ORIENTRENDS fulfilling the conditions
precedent set out in Article Two of this Agreement, EYI
International
grants to the the exclusive license and right to distribute, market
and
sell (as permitted herein) through the Network those EYI Products
that EYI
International supplies to ORIENTRENDS on consignment, as provided
for
herein, within the Territory (being the Philippines) for the
"Term"
defined in Clause 1.2 of this Agreement ("License").
1.2 Term of License. Subject to ORIENTRENDS fulfilling its obligations
as set out in this Agreement and subject to the termination
provisions
set out in Article 7, the initial term of the License shall be for
five
(5) years, effective from the deemed commencement date of January
1, 2007,
and shall be renewed automatically for further successive terms of
one (1)
year each provided that ORIENTRENDS sells and remits to EYI
International
a minimum of $1,000,000 (based on "EYI's Wholesale Prices", as
hereinafter
defined) of EYI Products in the Territory in the calendar year
preceding
the renewal term. The initial term and any renewal thereof is
hereinafter
called the "Term".
ARTICLE TWO: PRECONDITIONS TO GRANT OF LICENSE
2.1 Obligations of ORIENTRENDS prior to Grant of License. As a
precondition
to the grant of License to it by EYI International, ORIENTRENDS
shall:
(a) open and establish to the satisfaction of EYI International an
office
in the Philippines at a location acceptable to EYI International,
on or
before October 1, 2006;
(b) open and establish to the satisfaction of EYI International a
warehouse
in the Philippines at a location and to a standard acceptable to
EYI
International to store the "Consigned Goods" in a manner
satisfactory to
EYI International, on or before October 1, 2006; and
(c) confirm in writing to EYI International, with documentary
verification
satisfactory to EYI International, that ORIENTRENDS has complied
with all
local licensing and business laws to enable sales of EYI Products
to occur
in the Territory, such confirmation to be received by EYI
International on
or before December 31, 2006.
ARTICLE THREE: CONSIGNED GOODS
3.1 Delivery on Consignment and Shipping Costs. Following the grant
of
License, EYI International will from time to time, and in
accordance with
and subject to the provisions of this Agreement, deliver to
ORIENTRENDS ,
as consignee, EYI Products for sale in the Territory, on
consignment
(herein collectively referred to as the "Consigned Goods"). For
greater
clarity, all EYI Products comprising the hereinafter-defined "SIP"
and
"New Products" that are shipped by EYI International to ORIENTRENDS
on
consignment are deemed to be Consigned Goods. The cost of shipping
the
Consigned Goods to EYI's manufacturing warehouse shall be borne by
EYI
International, and all costs of shipping from its manufacturing
warehouse
to the Philippines shall be borne by ORIENTRENDS (the latter costs being
referred to as the "Consignee's Shipping Costs").
3.2 Title and Consignment. Title to, ownership of and all property
rights
in the Consigned Goods shall remain in EYI International and the
parties
agree that the Consigned Goods shall at all times be held upon
consignment
by ORIENTRENDS for
sale, as bailee thereof and in trust for EYI International
under the conditions contained herein, until such time as the
Consigned Goods
may be disposed of by sale by ORIENTRENDS (a) through such direct sales
by ORIENTRENDS, or (b) through sales by qualified IBAs (registered
with
EYI) through the Network, as contemplated herein, or until the
Consigned
Goods are returned by ORIENTRENDS to EYI International as permitted
by this
Agreement. Title to, ownership of and all property rights in the
Consigned
Goods shall pass directly from EYI International to the third party
purchaser
who shall purchase the Consigned Goods from ORIENTRENDS or the
qualified IBAs
at the time
ORIENTRENDS or the
qualified IBAs effect a sale to such third
party as agent on behalf of EYI International under the Network.
Except as
otherwise provided for herein, there is no obligation upon
ORIENTRENDS
to pay to EYI International any amount on account of any Consigned
Goods
until such Consigned Goods are sold by ORIENTRENDS to a third party on
behalf of EYI International in accordance with the terms
hereof.
3.3 Insurance.
ORIENTRENDS will
purchase insurance coverage in such form
and amounts that EYI International requires to adequately insure
and
maintain insurance for the Consigned Goods in its custody, such
insurance
to be with an insurer approved in writing by EYI International, and
with
loss payable to EYI International as "first loss payee". EYI
International shall not be obligated to ship any Consigned Goods
to
ORIENTRENDS unless and
until ORIENTRENDS
shall have first provided to
EYI International documentary verification acceptable to EYI
International
that the Consigned Goods have been adequately insured.
3.4 Initial Consignment Order. Within thirty (30) days from
the
commencement of the Term, ORIENTRENDS , after consulting with
EYI
International, shall place its initial order of those EYI
Products
that it wishes to receive on consignment, and EYI
International,
upon satisfying itself that ORIENTRENDS has established its
facilities and business to properly store and handle the
marketing
of such EYI Products and has made adequate provision to secure
the
payment of the Consignee's Shipping Costs, will deliver to
ORIENTRENDS
for its initial consignment ("Initial Consignment") the amounts
and
types of EYI Products requested by ORIENTRENDS, on consignment,
as
EYI International shall in its discretion deem appropriate.
3.5 Distributor's Standard Inventory Profile. The amounts and types
of
EYI Products that are shipped and designated by EYI International
as
the Initial Consignment shall constitute ORIENTRENDS' standard
inventory
profile ("SIP"). As ORIENTRENDS depletes its inventory, it may
request
a replenishment of, and EYI International shall replenish, such
inventory up to the limits of the SIP, at no charge to
ORIENTRENDS,
except for the Consignee's Shipping Costs. However, EYI
International
may, in its
discretion, exceed or reduce the limits of the SIP based
on its opinion and
confidence as to ORIENTRENDS ability to sell such
inventory.
3.6 New Products. If ORIENTRENDS wishes to order EYI Products
that
are of a type not included within the SIP (such products being
referred
to as "New Products"), it may request such New Products, and,
upon
ORIENTRENDS meeting
local laws for the labeling and selling of such
New Products, EYI International may supply such New Products on
a
consignment basis to the Distributor, upon the Distributor
paying
for the Consignee's Shipping Costs.
3.7 Pricing of Consigned Goods by EYI. The amounts to be remitted
to
EYI International by ORIENTRENDS for the Consigned Goods shall
be
based on EYI's published wholesale prices for each item ("EYI's
Wholesale Prices") as determined by EYI International, in its
discretion, and shall be specified on a per item basis by EYI
International to ORIENTRENDS on or before its delivery to
ORIENTRENDS
of the Consigned Goods. EYI International may, in its
discretion,
revise EYI's Wholesale Prices, upon written notice to
ORIENTRENDS,
and thereupon ORIENTRENDS may revise its own pricing (pursuant
to
Clause 3.8) of any unsold EYI Products held by it in
consignment
to reflect such revised EYI Wholesale Prices.
3.8 Pricing of Consigned Goods for Resale. The prices
("Distributor's
Wholesale Prices") to be paid to ORIENTRENDS for the sale by it
to EYI's registered IBAs of the Consigned Goods within the
Territory
shall be determined by ORIENTRENDS, after consultation with EYI
International.
ORIENTRENDS will be at liberty, with the guidance
and recommendations of EYI International, to determine its own
mark-up for the sale of EYI Products within its Territory, such
mark-up over EYI's Wholesale Prices ("Mark-Up") to include, at
its discretion, a charge for the cost of shipping, insuring and
stocking the Consigned Goods, and for network marketing
assistance
to its sales representatives or qualified IBAs. ORIENTRENDS
shall
notify EYI International in writing of such Distributor's
Wholesale Prices in effect from time to time, such notification
to be made monthly or
forthwith upon request by EYI International.
ORIENTRENDS may, in
its discretion and upon prior written
notification to EYI International, revise the Distributor's
Wholesale Prices from time to time.
3.9 Suggested Retail Prices. EYI International and ORIENTRENDS
shall jointly determine the prices ("Suggested Retail Prices")
at
which the IBAs shall be permitted to resell the Consigned Goods
purchased by them.
ARTICLE FOUR:
OBLIGATIONS OF EYI INTERNATIONAL
4.1 Shipment. EYI International will ship to ORIENTRENDS
Consigned
Goods as required under the terms of this Contract, and will
pay
for the shipping costs of the Consigned Goods up to EYI
International's warehouse. Any onward shipping costs shall be
charged by EYI International to ORIENTRENDS, and paid for by
ORIENTRENDS.
4.2 Training. EYI International will train ORIENTRENDS in its
system of network marketing so that it can sell through the
Network and maintain proper sales records in accordance with
the Binary, and will notify ORIENTRENDS of any revisions to the
Binary, and will provide guidance to enable ORIENTRENDS
to train
its own IBAs and to properly record sales in accordance with
the
Binary. Such training and guidance shall be available to
ORIENTRENDS'
personnel at such location as EYI International may specify
parties,
and the cost of attendance will be borne by ORIENTRENDS.
4.3 Sales Aids and Materials. EYI International will, through
EYI
Management, provide such product information for the EYI
Products,
and such network marketing assistance (under the Network) and
sales
aids to assist t