EXHIBIT 10.7

 

EXCLUSIVE DISTRIBUTION AGREEMENT

 

THIS EXCLUSIVE DISTRIBUTION AGREEMENT (this “Agreement” or this “Exclusive
Distribution Agreement) is entered into effective as of September 25, 2014 (the
“Effective Date”) by and between Ivory Coco International, LLC (“Supplier”) and
Cannabis Kinetics Corporation (“Distributor”).

 

The parties agree as follows:

 

1.

APPOINTMENT.

 

 

a.

Subject to the terms and conditions of this Exclusive Distribution Agreement,
Supplier appoints Distributor, and Distributor accepts such appointment and
agrees to act as Supplier’s exclusive distributor of the Supplier Products as
defined herein, within the geographical territory defined as follows herein and
as referred to as (the “Territory”):

 

 

b.

Distributor agrees to exercise its best efforts to (a) promote the sale of and
obtain orders for the Supplier Products in the Territory; (b) abide by
Supplier’s procedures with regard to the purchase, sale and support of Supplier
Products; and (c) conduct its business in a manner that reflects favorably at
all times on the Supplier Products and the good name, goodwill and reputation of
Supplier or its affiliates.

 

2.

PRODUCTS AND PRICING.

 

Supplier Products consist of the items or classifications of items listed within
Exhibit A as attached within and hereto and the purchase price or license fee to
Distributor of all Supplier Products delivered pursuant to this Agreement shall
be as set forth as identified in Exhibit A as attached within and hereto.

 

 

3.

APPROVALS.

 

Distributor shall obtain, at its own expense, such approvals, consents,
certifications, permits and other authorizations, including all approvals as are
required to qualify the Supplier Products for sale and use in the Territory for
all purposes, both governmental and non- governmental (collectively, the
“Approvals”), as soon as is reasonably practicable; provided, however, that
Supplier shall not be obligated to deliver any Supplier Products unless and
until Distributor provides Supplier with satisfactory evidence that such
Approvals have been obtained. Supplier agrees to cooperate with Distributor to
obtain such Approvals.

 

 

4.

EXCLUSIVITY.

 

Supplier’s appointment of Distributor in Section 1 of this Agreement is an
exclusive appointment to distribute the Products in the Territory. Supplier
shall not independently advertise, solicit and make sales of Supplier Products,
support Supplier Products or appoint additional distributors for Supplier
Products in the Territory.

 

 
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5.

ORDERS.

 

All orders will be transmitted by Distributor to Supplier and shall be subject
to acceptance in writing by Supplier. Each order submitted shall constitute an
offer by Distributor to purchase or license the Supplier Products described in
such order and, upon acceptance by Supplier, shall give rise to a contractual
obligation of Distributor to purchase or license the said products on the terms
and conditions set forth in this Agreement. Conflicting, inconsistent or
additional terms or conditions contained in any order submitted by Distributor
shall not be binding unless Supplier specifically accepts such terms or
conditions in writing. All expenses arising out of the change or cancellation of
an order after acceptance by Supplier, including the cost of diversion,
cancellation or re-consignment of shipments, and any reasonable restocking
charge, shall be paid by Distributor to Supplier, on demand.

 

 

6.

PAYMENT AND DELIVERY.

 

The purchase price shall be quoted and payable in U. S. Dollars to Supplier at
the address specified on the invoice. Unless otherwise agreed by the parties in
writing, payment shall be made by Distributor by check or wire transfer in
advance of shipment from the Supplier facilities. If Supplier pays any shipping,
insurance or handling costs, such costs will be billed to Distributor and will
be reimbursed to Supplier by Distributor.

 

 

7.

SECURITY INTEREST.

 

Notwithstanding the passage of title, Supplier shall retain a security interest
in all Supplier Products delivered until amounts for which Distributor is
responsible under this Agreement have been received by Supplier. Distributor,
for itself and on behalf of its customers, hereby waives a prior hearing and
demand for Supplier’s exercise of such rights.

 

 

8.

RESALE PRICE AND EXPENSES.

 

Distributor shall set the selling price and license fees at which the Supplier
Products are sold or licensed by it in the Territory. Distributor shall be
solely responsible for the costs involved in the distribution of the Supplier
Products, including, packaging, sales costs, import duties, any and all banking
charges, shipping and handling costs, installation costs or other operating
expenses, letter of credit costs, wire transfer fees and other costs associated
with making payment, and taxes, however designated, except that Distributor
shall not be liable for taxes imposed that are based on Supplier’s income.

 

 

9.

PROMOTIONAL LITERATURE.

 

Supplier agrees to furnish, in English, to Distributor (via email in pdf format)
such descriptive literature, advertising materials, technical manuals and sales
promotional materials concerning the Supplier Products as Supplier may, from
time to time, have available for such purposes. Distributor shall have the right
to translate such materials into the languages of the Territory at its own
expense. Supplier shall retain ownership of all proprietary rights, including,
intellectual property rights to the translated versions of the materials.
Distributor will be solely responsible for the accuracy of the translations and
will provide Supplier with a copy of each translated work. Distributor shall
promptly revise (at Distributor’s costs) the materials upon notice from
Supplier.

 

 
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10.

USE OF TRADEMARKS.

 

Distributor shall have the right to use the Trademarks, Copyright and other
marks associated with the Supplier and proprietary products. Distributor is
under no obligation to use Suppliers registered or non-registered Trademarks or
associate marks. Distributor hereby notifies Supplier as a term of this
Agreement that Distributor has every intention of establishing its own Mark for
the products to be distributed within the defined territory and Supplier hereby
acknowledges and accepts this term of this Agreement.

 

 

11.

INFRINGEMENT BY THIRD PARTIES.

 

Distributor will cooperate fully with and assist Supplier in its efforts to
protect Supplier’s intellectual property rights within the Territory and shall
exercise reasonable diligence to detect and shall immediately advise Supplier if
Distributor has knowledge of any infringement of any patents, trademarks,
copyrights or other intellectual property rights owned or used by Supplier.

 

 

12.

CONFIDENTIAL INFORMATION; NO REVERSE ENGINEERING.

 

Supplier may provide Distributor with certain confidential or proprietary
information (“Confidential Information”). Confidential Information includes
information, whether written, electronic or oral, which Distributor knows or
reasonably should know is proprietary, confidential or a trade secret of
Supplier, including any and all technical or business information, the Software
including its source codes and documentation, specifications and design
information for the Supplier Products, servicing information, customer lists,
pricing information, marketing information, policies, procedures and manuals
regarding Supplier’s distributors or distribution channels, research and
development and other proprietary matter relating to the Supplier Products or
business of Supplier. Distributor will refrain from using the Confidential
Information except to the extent necessary to exercise its rights or perform its
obligations under this Agreement.

 

 

 

Distributor will likewise restrict its disclosure of the Confidential
Information to those who have a need to know such Confidential Information in
order for Distributor to perform its obligations and enjoy its rights under this
Agreement.

 

 

13.

COMPLIANCE WITH LAWS.

 

In connection with its obligations under this Agreement, Distributor agrees to
comply with all federal, state, local and foreign laws, constitutions, codes,
statutes and ordinances of any governmental authority that may be applicable to
Distributor, its activities under this Agreement or the Supplier Products,
including all applicable import and export control laws and regulations.
Distributor agrees to take all such further acts and execute all such further
documents as Supplier reasonably may request in connection with such compliance.

 

 
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14.

PRODUCT WARRANTIES.

 

 

a.

Limited Manufacturing Warranty. Supplier warrants for a period of 60 days
following delivery of the Products (the “Warranty Period”) that the Products
shall be free from defects in materials and workmanship. Supplier’s sole
obligation under this warranty shall be to provide, at no charge to Distributor,
replacement Products. Defective Products must be returned to Supplier (at
Distributor’s cost) in order to receive warranty replacement (unless Supplier
determines such return is not necessary) and shall become Supplier’s property.

 

 

b.

Warranty of Good Title. Supplier agrees to indemnify Distributor from any
liability to any third party for infringement of United States patents,
copyrights, trademarks or trade secrets with respect to Supplier Products
sold/licensed by Distributor pursuant to this Agreement. This obligation does
not extend to any foreign patents, copyrights, trademarks, or trade secrets or
to any Supplier Products manufactured or modified by Supplier to meet
Distributor’s or a customer’s specifications. Supplier shall, at its option, be
allowed sole and exclusive control over the defense, settlement and compromise
of any claims of infringement. Supplier must be notified in writing by
Distributor within 10 days of any third party claim which, if upheld, might
result in a liability subject to indemnification under this Subsection. If the
distribution of the Supplier Products is threatened by a claim of infringement,
or is likely to be enjoined or liability for infringement is found, Supplier
may, in its discretion and at its sole option: (i) procure for Distributor the
right to continue distributing the Supplier Products; or (ii) modify the
Supplier Products so as to make them non-infringing; or (iii) substitute
non-infringing products; or (iv) refund the price paid by Distributor for the
Supplier Products in its possession subject to their return by Distributor and
terminate this Agreement with respect to the allegedly infringing products.

 

 

 

THIS SUBSECTION STATES THE ENTIRE LIABILITY OF SUPPLIER WITH RESPECT TO
INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADEMARK, TRADE SECRET OR OTHER
INTELLECTUAL PROPERTY RIGHT BY ANY SUPPLIER PRODUCT.

 

 

c.

Disclaimer.

 

 

 

EXCEPT AS PROVIDED IN THIS SECTION, SUPPLIER MAKES NO OTHER WARRANTY, PROMISE OR
OBLIGATION WITH RESPECT TO THE SUPPLIER PRODUCTS, THEIR USE, REPAIR OR
PERFORMANCE. SUPPLIER DISCLAIMS ANY WARRANTY, PROMISE OR OBLIGATION THAT THE
SUPPLIER PRODUCTS SHALL BE FIT FOR ANY PARTICULAR USE OR PURPOSE, REGARDLESS OF
WHETHER SUCH USE OR PURPOSE IS MADE KNOWN TO SUPPLIER OR NOT. SUPPLIER DISCLAIMS
ANY WARRANTY, PROMISE OR OBLIGATION THAT THE SUPPLIER PRODUCTS CONFORM TO ANY
SAMPLES OR MODELS. SUPPLIER HEREBY DISCLAIMS ALL OTHER WARRANTIES, PROMISES AND
OBLIGATIONS, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTIES, PROMISES
AND OBLIGATIONS ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE. THE
WARRANTIES SET FORTH IN THIS SECTION ARE INTENDED SOLELY FOR THE BENEFIT OF
DISTRIBUTOR.

 

 
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15.

REPORTING.

 

Every 3-months Distributor shall e-mail to Supplier a rolling 3-month, income
statement and a 3-month, nonbinding sales forecast of the expected sales of
Supplier Products in the Territory.

 

 

16.

INSPECTION OF RECORDS.

 

Distributor shall keep accurate records of all its activities as reasonably
necessary to determine its compliance with the terms and conditions of this
Agreement, including accounting records, customer sales records and governmental
filings.

 

 

17.

TERM AND TERMINATION.

 

Unless earlier terminated as provided in this Agreement, the term of this
Agreement shall commence as of the Effective Date and shall automatically expire
at the end of five (5) years following the Effective Date. The initial term will
renew at an additional two (2) five (5) year terms, upon 30-days written notice
by Distributor prior to the effective termination date of each term as
identified herein. Either party may terminate this Agreement as follows:

 

 

(a)

Immediately, for any breach or default of this Agreement by the other party
which has not been cured within thirty (30) days after the delivery of notice
thereof to the party alleged to be in breach, specifying with particularity the
condition, act, omission or course of conduct asserted to constitute such breach
or default;

 

 

(b)

Immediately, upon the dissolution, insolvency or any adjudication in bankruptcy
of, or any assignment for the benefit of creditors by, the other party or if the
other party ceases to conduct business in the ordinary or normal course;

 

 

(c)

Immediately, if required by law or by any rule, regulation, order, decree,
judgment or other governmental act of any governmental authority; or (e)
Immediately by Supplier if Supplier reasonably suspects that Distributor
breached any of its obligations of confidentiality or protection of Supplier’s
proprietary rights.

 

 

(d)

If Supplier, in the exercise of its sole commercially reasonable judgment,
determines it no longer wishes to continue business operations, Supplier shall
provide Distributor with 60 days written notice of such intention. Upon receipt
of notice, Distributor shall have right of first refusal to purchase business or
assets thereof upon such terms and conditions as parties may agree within such
60 day period. In the event agreement is not reached within 60 days, Suppliers
obligations hereunder shall terminate.

 

 
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18.

EFFECT OF TERMINATION.

 

Upon notice of termination of this Agreement for any reason, the following
provisions shall apply: (a) Supplier shall have the right to immediately appoint
another distributor to serve existing customers and continue sales efforts in
the Territory; (b) Supplier may continue to fill any orders from Distributor
that have been accepted by Supplier prior to the termination of this Agreement
under the terms and conditions of this Agreement; (c) All outstanding balances
owed by Distributor to Supplier shall become immediately due and payable to
Supplier; (d) Both parties shall at all times thereafter refrain from any
conduct that would be inconsistent with or likely to cause confusion with
respect to the nature of their business relationship; (e) All rights granted to
Distributor under this Agreement shall cease, and where appropriate, revert to
Supplier; and (f) Supplier, in its sole discretion, shall have the right, but
shall in no way be obligated (unless otherwise required by law), to inspect and
repurchase all or any quantity of the Supplier Products (including Supplier
Products for demonstration and parts to service the Supplier Products) then
owned or ordered by Distributor at the lesser of (i) the original price paid by
Distributor for such Supplier Products, or (ii) at the then-current price to
Distributor, and under both (i) or (ii), less any applicable restocking or
refurbishing charge. Supplier shall have the right to assign such option to
repurchase to any other person whom it may designate. No consideration or
indemnity shall be payable to Distributor either for loss of profit, goodwill,
customers or other like or unlike items, nor for advertising costs, costs of
samples or supplies, termination of employees, employees’ salaries and other
like or unlike items. In no event shall Distributor continue to represent itself
as a Supplier distributor or representative after termination of this Agreement.
Supplier shall have no liability to Distributor by reason of any termination by
Supplier. Distributor shall indemnify and hold harmless Supplier from and
against any and all liability, loss, damages and costs (including reasonable
attorneys’ fees) arising out of any claim by Distributor or any third party
standing in the right of Distributor to any right of entitlement contrary to the
express terms of this Section.

 

 

19.

INDEMNIFICATION.

 

Distributor agrees to indemnify and hold Supplier harmless from any and all
actions, awards, claims, losses, damages, costs and expenses (including
reasonable attorneys’ fees) attributable to Distributor’s breach of this
Agreement or to any negligent, grossly negligent, willful or unlawful acts or
omissions of Distributor, its employees, officers, agents, subcontractors,
dealers or representatives.

 

 

20.

RELATIONSHIP OF THE PARTIES.

 

Distributor is an independent contractor and not an employee, agent, affiliate,
partner or joint venture with or of Supplier. Neither Distributor nor Supplier
shall have any right to enter into any contracts or commitments in the name of,
or on behalf of the other or to bind the other in any respect whatsoever, except
insofar as is allowed by this Agreement.

 

 
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21.

FORCE MAJEURE.

 

Neither party shall be liable in the event that its performance of this
Agreement is prevented, or rendered so difficult or expensive as to be
commercially impracticable, by reason of an Act of God, labor dispute,
unavailability of transportation, goods or services, governmental restrictions
or actions, war (declared or undeclared) or other hostilities, or by any other
event, condition or cause which is not foreseeable on the Effective Date and is
beyond the reasonable control of the party. It is expressly agreed that any
failure of the United States Government to issue a required license for the
export of any Supplier Product ordered by Distributor shall constitute an event
of force majeure. In the event of non-performance or delay in performance
attributable to any such causes, the period allowed for performance of the
applicable obligation under this Agreement will be extended for a period equal
to the period of the delay. However, the party so delayed shall use its best
efforts, without obligation to expend substantial amounts not otherwise required
under this Agreement, to remove or overcome the cause of delay. In the event
that the performance of a party is delayed for more than 6 months, the other
party shall have the right, which shall be exercisable for so long as the cause
of such delay shall continue to exist, to terminate this Agreement without
liability for such termination.

 

 

22.

LIMITATION OF LIABILITY.

 

SUPPLIER SHALL IN NO EVENT BE LIABLE FOR ANY INDIRECT, SPECIAL, EXEMPLARY,
INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE OR FOR ANY LOST PROFITS, LOST SAVINGS
OR LOSS OF REVENUES SUFFERED BY DISTRIBUTOR ARISING FROM OR IN ANY WAY CONNECTED
WITH THIS AGREEMENT OR THE SALE, DISTRIBUTION OR USE OF SUPPLIER PRODUCTS.
DISTRIBUTOR SHALL INDEMNIFY SUPPLIER AND HOLD IT HARMLESS FROM ANY CLAIMS,
DEMANDS, LIABILITIES, SUIT OR EXPENSES OF ANY KIND ARISING OUT OF THE SALE,
SUBLICENSE OR USE OF SUPPLIER PRODUCTS IN THE TERRITORY OR BY DISTRIBUTOR’S
CUSTOMERS. THIS SECTION SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT FOR ANY
REASON.

 

 

23.

GOVERNING LAW.

 

This Agreement shall be governed in all respect by the laws of the State of
Colorado USA, which shall be applied without reference to any conflict-of-laws
rule under which different law might otherwise be applicable. The United Nations
Convention on Contracts for the International Sale of Goods shall not apply to
any purchases or transactions entered into pursuant to this Agreement. Venue for
any lawsuits brought by the parties to this Agreement against each other
regarding or as a result of this Agreement shall be proper in the State of
Colorado. Distributor hereby submits itself to the exclusive jurisdiction of
said courts.

 

 
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24.

ASSIGNMENT AND DELEGATION.

 

Distributor may have the right to assign any or all of its rights or delegate
its obligations under this Agreement with the prior written consent of Supplier.
Any assignment or delegation attempted without such written consent shall be
void and of no legal effect whatsoever. This Agreement shall be binding upon the
parties’ respective successors and permitted assigns.

 

 

25.

SEVERABILITY.

 

In the event that any provision of this Agreement shall be unenforceable or
invalid under any applicable law or be so held by applicable court or
arbitration decision, such unenforceability or invalidity shall not render this
Agreement unenforceable or invalid as a whole, and, in such event, such
provisions shall be changed and interpreted so as to best accomplish the
objectives of such unenforceable or invalid provision within the limits of
applicable law or applicable court or arbitration decision.

 

 

26.

ENTIRE AGREEMENT; MODIFICATIONS; NO WAIVER; COUNTERPARTS AND SURVIVAL.

 

This Agreement and the Exhibit A (“The Exhibit”) attached hereto (which is
specifically incorporated herein by this reference) contain the full and entire
agreement between the parties with respect to the subject matter hereof. It
supersedes all prior negotiations, representations and proposals, written or
otherwise, relating to its subject matter. Any modifications, revisions or
amendments to this Agreement must be set forth in a writing signed by authorized
representatives of both parties. Distributor acknowledges and agrees that any
failure on the part of Supplier to enforce at any time or for any period of
time, any of the provisions of this Agreement shall not be deemed or construed
to be a waiver of such provisions or of the right of Supplier thereafter to
enforce each and every provision. This Agreement may be made in several
counterparts, each of which shall be deemed an original. The provisions of this
Agreement that, by express terms of this Agreement, will not be fully performed
during the term of this Agreement, shall survive the termination of this
Agreement to the extent applicable.

 

IN WITNESS WHEREOF the parties have caused this Exclusive Distribution Agreement
to be executed and delivered by their duly authorized representatives.

 

 

Cannabis Kinetics Corporation           [img001.jpg]     September 25, 2014  
Eric M. Hagen     Date  

President and CEO

         

Ivory Coco International, LLC

      [img002.jpg] September 25, 2014 Phil Welch Date

 

 
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Exhibit A

 

Provided herein are the additional agreed upon terms of this Exclusive
Distribution Agreement:

 

1.

The product(s) to be exclusively distributed include, but are not limited to
Coco Coir (“the Product”) and its related and associated products.

 

 

2.

The Territory is identified as Global; anywhere on planet earth.

 

 

3.

It is expected that all future manufacturing and branding related to the
distribution and sale of the Products will be branded with the name Monarch and,
or Monarch America, Inc.

 

 

4.

It is understood that Supplier is currently producing each 1.5cu ft. bag (the
“Product Bag”) at a manufactured cost of approximately $6.67 USD per unit.

 

 

5.

It is understood and agreed to by Supplier and Distributor that Supplier will
sell each Product Bag to Distributor at a delivered cost of $7.50 USD per unit.

 

 

6.

It is understood by Supplier that Distributor possesses established
international sourcing and logistics contacts and relationships that may assist
in the lowering of the overall delivered cost of the product(s).

 

 

7.

It is understood and agreed to by Supplier and Distributor that in the event
Distributor can deliver economies due to its international sourcing and
logistics relationships, related to cost savings in manufacturing, supply and,
or production, that Supplier agrees to share equally (50-50) in those derived
cost savings.

 

 

8.

It is understood and agreed by Supplier and Distributor that Distributor will
furnish and deliver to Supplier all printed bags as needed for manufacturing,
production and assembly of each Product Bag.

 

 

9.

It is understood that the initial annual sales target is to be set at 24,000
units (2,000 units/month). Annual Target may be modified at any time, in
writing, by mutual consent.

 

 

 

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