EXHIBIT 10.1
 
MERCHANDISING LICENSE AGREEMENT
 
 

1. DATED: As of June 12, 2009,     2. LICENSOR:
PARAMOUNT LICENSING INC. ("PLI")
5555 Melrose Avenue
Los Angeles, California 90038
   
    LICENSEE:
HARBREW IMPORTS, LTD. ("Licensee")
1174 Route 109
Lindenhurst, NY 11757
Telephone: 631-991-3174
Attention: Mr. Richard DeCicco
    3. PROPERTY: The theatrical motion picture entitled "THE GODFATHER" (the
"Picture").     4. LICENSED ARTICLE(S): Italian organic Vodka and Scotch
whiskey, sold in bottles.     5. TERRITORY: United States.     6. TERM:
Begins upon execution hereof by Licensee and PLI and ends June 30, 2014, unless
sooner terminated as provided in Schedule "I" hereto.
 
Provided that (a) Licensee is not in breach of any terms of this Agreement; (b)
PLI has received by December 30, 2013 an amount equal to or greater than One
Million United States Dollars (US$1,000,000.00) in royalties earned and paid
from the actual sate of the Licensed Articles; (c) PLI receives, no later than
May 31, 2014, written notice from Licensee of Licensee's desire to extend the
Term, together with payment of Six Hundred Twenty Five Thousand United States
Dollars (US$625,000.00) as an additional advance payment against royalties,
which additional advance shall be the first installment of an additional
guarantee of Two Million Five Hundred Thousand United States Dollars
(US$2,500,000.00) (the "Additional Guarantee") due in connection with extending
the Term; and (d) Licensee and PLI have agreed upon a payment schedule for the
remainder of the Additional Guarantee no later than May 31, 2014; then the Term
shall be extended until June 30, 2019, unless sooner terminated as provided in
Schedule "I" attached hereto, subject to the terms of this Agreement. For the
avoidance of doubt, the Additional Guarantee may not be cross-credited against
any other payments which have already been paid or become due, and shall be
recoupable solely from royalties earned from sales of the Licensed Articles
which occur during the period from Jury 1, 2014 through June 30, 2019.
    7. LICENSES GRANTED:
In consideration of the payments set forth below, and of and subject to the
covenants, undertakings and agreements by Licensee in this Agreement, PLI hereby
grants to Licensee the non-exclusive license (except as specified below) to use
the Property only in connection with the Licensed Articles (per Paragraph 4
above), in the Channels of Distribution (per Paragraph 12 below), in the
Territory (per Paragraph '5 above), and during the Term (per Paragraph 6 above).
 
Notwithstanding anything to the contrary herein, it is agreed that, provided
Licensee has manufactured, distributed and commenced the marketing and sale of a
substantial number of items of the Licensed Articles not later than the
Marketing Date set forth below, then:
 
(a) PLI will not authorize third parties to distribute and sell vodka based on
the Picture in the Territory until August 31, 2011, subject to the terms of this
Agreement; and
   

 
 

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(b) provided PLI has received by August 31, 2011 an amount equal to or greater
than Two Hundred Fifty Thousand United States Dollars (US$250,000.00) in
royalties earned from the actual sale of the Licensed Articles, then PLI will
not authorize third parties to distribute and sell vodka based on the Picture in
the Territory until August 31, 2012.
     
Except as specified in the immediately preceding sentence, nothing in this
Agreement shall be construed to prevent or restrict PLI's or its affiliates'
rights to exploit or enter into agreements with third parties for the
exploitation of rights the same as or similar to the rights licensed to Licensee
hereinabove.

 

8. PAYMENT:  a. Advance:
Sixty Thousand United States Dollars (US$60,000.00) payable upon execution
hereof, and PLI's receipt of which shall be a condition precedent to the
effectiveness of this Agreement.
        b. Royalty Rate: Five percent (5%).        
c.  Guarantee:
Four Hundred Thousand United States Dollars (US$400,000.00), due and payable as
follows:
 
(i)  Sixty Thousand United States Dollars (US$60,000.00), payable as the
Advance;
 
(ii) One Hundred Thousand United States Dollars (US$100,000.00), due on or
before November 1, 2010;
 
(iii) One Hundred Thousand United States Dollars (US$100,000.00), due on or
before November 1, 2011; and
 
(iv) One Hundred Forty Thousand United States Dollars (US$140,000.00), due on or
before November 1, 2012.

 

9. MARKETING DATE(S):
August 31, 2009.
    10. PLACE OF MANUFACTURE: Italy (for the Vodka) and Scotland (for the Scotch
whiskey).     11. APPROVALS:
All Licensed Articles and any related packaging and advertising must be approved
by PLI in writing before distribution or sale by Licensee. Such approvals or
disapprovals are within PLI's sole discretion, and any submission not approved
in writing is deemed disapproved.
    12. CHANNELS OF DISTRIBUTION:
Notwithstanding anything to the contrary in Paragraphs 3 and 4.c. of Schedule
"I" attached hereto, the Licensed Articles may be sold to distributors and
wholesalers, and shall be distributed and made available for sale solely through
the following Channels of Distribution: airport and duty-free stores, bars and
taverns, club stores, grocery stores, restaurants, and specialty stores.

 

13. ADDITIONAL TERMS:      
(a)   The balance of the terms shall be PLI's Schedule "I", attached hereto and
incorporated herein by this reference,
     
(b)  Warrants: In addition to all payments due to PLI from Licensee hereunder,
Licensee shall grant PLI (or an affiliate designated by PLO the following
warrants ("Warrants") to acquire shares of Licensee's common stock (or the
common stock of any successor entity to Licensee by merger or consolidation or
otherwise, as set forth in Exhibit "C" hereto):
     
(i)    a warrant (the "First Warrant') with an exercise price of One Million
Dollars ($1,000,000.00), at One Dollar ($1.00) per share, for One Million
(1,000,000) shares; and
     
(ii)   a warrant (the "Second Warrant") with an exercise price of Two Million
Dollars ($2,000,000.00), at One Dollar and Fifty Cents ($1.50) per share, for
One Million Three Hundred Thirty-Three Thousand and Three Hundred Thirty-Four
(1,333,334) shares. In the event PLI exercises the Second Warrant, it agrees
that it shall exercise no fewer than Three Hundred Thirty-Three Thousand Three
Hundred Thirty Three (333,333) shares.
   

 
 

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The Warrants shall be issued together within thirty (30) days following the
execution of this Agreement, and shall each vest over a five (5) year period,
with the first one-fifth (1(5) vesting on the date of issue, and the remaining
four-fifths (415) vesting in four (4) equal installments on the first, second,
third and fourth anniversary dates of the execution of this Agreement. Licensee
shall grant PLI (or its affiliated designee) the Warrants as set forth herein
under such terms as shall be set forth in one or more separate agreements
containing reasonable and customary provisions, including, without limitation,
anti-dilution protections and registration tights, to be evidenced in a form as
attached hereto as Exhibit "C" and incorporated herein as reference (the
"Warrant Agreement"). With respect to the anti-dilution provisions specifically,
the Warrant Agreement shall provide for adjustments of the First and Second
Warrant shares and/or exercise price in connection with stock dividends, stock
splits, reverse stock splits, reclassification of shares, combinations or
mergers. The First Warrant and Second Warrant shall each expire five (5) years
from the date of issue. For the avoidance of doubt, PLI shall be under no
obligation to exercise either Warrant.
     
(c)   Samples: In line 1 of Paragraph 7.f, of Schedule "I", the words "fifty
(50) samples" shall be deleted and replaced with "six (6) cases".
     
(d)  Warrantees and Indemnification: The following shall be added at the end of
Section 9.a. of Schedule "I": "Licensee further represents and warrants that (a)
the Licensed Articles shalt meet the highest quality of beverage industry
standards in the Territory, and shall be in full conformity with all applicable
laws, standards, regulations, and guidelines relating to health, product safety,
labeling, and the importation, manufacture, production, distribution, and
advertising of alcoholic beverages, including without limitation those of the
United States Food and Drug Administration and all applicable federal, state,
and local laws; and (b) Licensee has obtained all necessary approval(s) and
certification(s) throughout the Territory for the importation, manufacture,
production, distribution, and advertising of the Licensed Articles. In addition,
Licensee represents and warrants that the Licensed Articles shall not be
marketed for sale to minors "
      (e)  Paragraph 12 d. of Schedule "I" shall be deleted in its entirety.    

 
ACCEPTED AND AGREED TO:
 
 

HARBREW IMPORTS, LTD.
("Licensee")
 
 PARAMOUNT LICENSING , INC.
("PLI")
          By: /s/ Richard John
Decicco                                                           By: /s/ N.
Becker                                                                         
        Print Name: Richard John
Decisso                                                     Print Name:N.
Becker                                                                          
Title: President/
CEO                                                                          
Title:
SVP                                                                                  
  Contract No. 280162