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Exhibit 10.1 - Confidential Distribution Agreement

CONFIDENTIAL DISTRIBUTION AGREEMENT

This Confidential Distribution Agreement (the “Agreement”) is entered into this
22nd day of April 2014 (the “Effective Date”), by and between SPLASH BEVERAGE
GROUP, INC., a Nevada corporation with its principal place of business at One
East Broward Boulevard, Suite 700, Fort Lauderdale, Florida 33301
(“Distributor”) and KONARED CORPORATION, a Nevada corporation with registered
offices at 2829 Ala Kalanikaumaka Street, Suite F-133, Koloa, Hawaii, 96756
(“Supplier”).
 
WHEREAS, Supplier and Distributor are each in the business of developing,
producing, bottling, marketing, and selling beverage products in field and trade
channels;
 
WHEREAS, Supplier and Distributor executed a December 24, 2013 non-binding
Letter of Intent which set forth a tentative basis for their intended business
respecting Distributor’s exclusive distribution and sales of Supplier’s Products
(the “Product”) in the sales territory defined in Exhibit A (the "Territory");
and
 
WHEREAS, Supplier desires to grant to Distributor an exclusive right to
distribute Supplier’s consumer beverage products within the Territory (defined
in Exhibit A) according to and subject to the terms and conditions of this
Agreement, and Distributor desires to accept Supplier’s grant; and
 
WHEREAS, the parties agree that, upon the signing of this Agreement, Distributor
shall be eligible to earn vested equity in the form of restricted common shares
of the Supplier upon successfully meeting certain Sales Performance Goals, as
specifically set forth herein, and Supplier agrees to execute any and all
documents necessary or reasonably requested by Distributor to affect
Distributor’s interests according to this Agreement;
 
NOW THEREFORE, in consideration of the promises, binding recitals and mutual
covenants contained in this Agreement and the Letter and intending to be legally
bound thereby, Supplier and Distributor AGREE as follows:
 
TERMS
1.
Definitions. The following terms shall have the definitions set forth below:

 
 
a.
Distributor includes Distributor’s affiliates, successors and assigns.

 
b.
Supplier includes Supplier’s affiliates, successors and assigns.

 
c.
Marks means any names, trademarks, trade dress, logos, slogans, designs, or
works created, designed, or used by or for a party with respect to their
Products.

 
d.
Products means all Supplier’s beverages, including but not limited to KonaRed®
Hawaiian Superfruit Original 10.5oz, KonaRed® Hawaiian Superfruit with Organic
Green Tea 10.5oz, and KonaRed® Hawaiian Superfruit with Coconut

 
 
 
 

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e.
Water 10.5oz. The parties may agree to later add additional products produced by
Suppler to the Products covered by this Agreement by mutual written consent of
the parties.

 
f.
Case means a twelve (12) pack unit of a Product.

2.
Grant of Rights. Supplier grants to Distributor during the term of this
Agreement and pursuant to its terms, and Distributor accepts, the exclusive
right to distribute and sell Products in the Territory (the “Purpose”) during
the Term, and the license to use Supplier’s Marks in the Territory for this
Purpose.

 
3.
Distributor agrees that it will not directly or indirectly distribute or sell
Products outside of the Territory, including any party Distributor has
reasonable basis to believe will distribute or sell the Products outside of the
Territory. Supplier agrees that it will not directly or indirectly distribute or
sell Products inside the Territory, including to any party Supplier has
reasonable basis to believe will distribute or sell the Products inside the
Territory. Supplier shall transfer all sales and distribution accounts to Splash
(e.g. Wal-Mart, Vitamin Shoppe) within six (6) months after the Effective Date.
In addition, any sales by supplier within the Territory will count towards the
sales goals set forth herein as if Distributor had made those sales itself.

 
4.
Term. The term of this Agreement shall commence on the Effective Date and shall
continue for a period of five (5) years unless earlier terminated according to
this Agreement.

 
5.
Renewal. This Agreement shall automatically renew for four (4) successive five
(5) year periods, provided the parties first agree in writing as to the Earned
Equity Schedule, the Sales Performance Goals, and Product Pricing discount (see
Section 6(b)) for each such Renewal Term; and provided further that either party
may terminate this Agreement at the end of any term or renewal term with or
without cause, by delivery of written notice of cancelation to the other party
not less than 60 days prior to expiration of the then current term or renewal
term.

 
6.
Purchase of Products. Distributor shall order Products from Supplier unless
otherwise agreed in advance in writing by the parties. Distributor’s orders and
purchases shall be subject to and in accordance with the following terms and
conditions:

 
 
a.
Order Placement. Distributor shall place each order for Products by such
reasonable means as are consistent with industry standards, provided each order
includes forty-five (45) days lead time to deliver Products. Absent written
agreement by the parties, all orders shall be placed by the submission of a
purchase order by Distributor.

 
 
b.
Prices. All Products will be sold to Distributor at Supplier’s most preferred
standard wholesale prices as currently fixed by Supplier for wholesale trade,
and as may be adjusted by Supplier from time to time at the sole discretion of
Supplier.

 
 
 
 
 

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Supplier shall have no right to raise price without 90 days written notice
(wholesale or suggested retail). Attached is a schedule of Supplier’s current
most preferred standard wholesale prices.

 
 
c.
Delivery. All Products shall be delivered F.O.B. Distributor’s facility, and
Supplier shall be solely responsible for delivery of the Products to
Distributor. Supplier shall deliver Products within twenty-one (21) days of
receipt of Distributor’s purchase order or other authorized ordering document.
Where occasional circumstances arise that prevent delivery to be made within the
21-day period, Supplier will make best efforts to deliver product as promptly as
possible.

 
 
d.
Payment Terms. Unless otherwise agreed in advance and in writing signed by both
parties, payment for all purchases of Products by Distributor shall be due
within thirty (30) days of the date of delivery or invoice, provided that
payment terms shall be net sixty (60) days until July 31, 2014. Approved
bill-backs shall be credited against invoices.

 
 
e.
Inspection and Defects. Distributor shall inspect all deliveries of Product upon
delivery to identify errors in order fulfillment, breakage or damage during
shipment, defects in packaging or labeling, or other defects, and shall notify
Supplier within 24 hours after date and time delivery of any such issues, or
they shall be deemed waived; Upon timely notice of such errors, breakage,
damage, or defects delivered by facsimile or electronic mail transmission to
Supplier within 24 hours after delivery, and provided such damage was not the
fault of Distributor, Supplier shall promptly correct such errors or replace
damaged or defective Products at Supplier’s cost, or at Supplier's option, issue
a credit to Distributor for the invoiced cost of damaged or defective Products.

 
7.
Distributor’s Duties. At all times during the term of this Agreement,
Distributor shall use commercially reasonable efforts to promote and distribute
the Products throughout the Territory in field and trade channels and to pursue
increased sales of the Products with respect to both volume and outlets.
Distributor shall reasonably cooperate with and participate in Supplier’s
marketing campaigns by distributing marketing and advertising materials provided
by Supplier and encouraging the use and display of such materials by retail
outlets within the Territory. Distributor shall further maintain a minimum of
twenty-one (21) days of inventory of the Products and shall keep its inventory
properly stored, in accordance with all relevant regulatory standards, and at
adequate facilities for beverages such as the Products. Distributor further
agrees to reasonably comply with any recalls of Products and to reasonably
cooperate with Supplier with respect thereto. Distributor shall provide
quarterly, non-binding, good faith forecasts to guide Supplier in its production
efforts and end of month depletion reports. In the event Distributor adds a
Corporate Marketing Agreement (CMA) or Direct Store Delivery (DSD) distributor
to its distribution solution, it will provide Supplier with notice about the CMA
or DSD within a reasonable time.

 
 
 
 
 

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8.
Supplier’s Duties. At all times during the term of this Agreement, Supplier
shall use commercially reasonable efforts to market and promote the Products
generally and shall provide, at Supplier’s expense, commercially reasonable and
relevant marketing and advertising materials to Distributor. Supplier shall
ensure that the Products comply with all relevant regulatory standards. Supplier
shall utilize best efforts to maintain commercially reasonable levels of
inventory of the Products and/or production capacity sufficient to meet
Distributor’s requirements. In the event that Supplier is unable to fulfill
Distributor’s orders due to a shortage of inventory or production of Products,
Supplier shall equitably fulfill Distributor’s orders such that (1) no other
distributor of Supplier’s receives a disproportionate volume of Product relative
to the size and population of the Territory and such other distributors’
territories and (2) no open orders of Distributor’s go unfilled for more than
fort-five (45) days after they are placed.

 
9.
Earned Equity. Distributor shall earn and be issued "restricted" common shares
in Supplier each calendar year over the term of this Agreement, if Distributor
successfully meets Product sales goals for such calendar year as set forth in
the "Case Sales Milestones" Schedule attached as Exhibit B. Common Shares shall
be awarded on December 31st in the year in which they are earned or upon
termination of this Agreement if prior to December 31st (pro-rated as to Goals
and time passed), and shall be fully vested when awarded. In 2014, Distributor’s
shares shall be awarded pro rata based on the percentage of the 2014 Case Sales
Milestone it achieves in calendar 2014, but not to exceed ­­­­­1,000,000 shares.
For example, if Distributor sells ­­­­­­­­150,000 cases during calendar year
2014, it shall be awarded 1,000,000 shares on December 31, 2014. Supplier agrees
to obtain all required permissions, generate all necessary documentation, and
execute all documents necessary or reasonably required or requested by
Distributor to perfect Distributor’s ownership of the Common Shares. The parties
may agree on reasonable restrictions on Distributor’s ability to transfer shares
beyond those imposed under applicable securities laws, provided that the
restrictions are not more restrictive than any other vendors’ or executive’s
shares. Upon issuance, the shares shall be restricted shares under the
Securities Act of 1933, and the share certificates shall bear a standard private
placement legend.
 
Any un-awarded shares that accrued during an earned equity fiscal period (i.e.
prior to the December 31st Award date) shall immediately and fully vest in the
event Supplier shall be the subject of a sale, merger, acquisition, or material
financial event prior to that December 31st.

 
10.
Warranties and Indemnification; Audit.

 
 
a.
Supplier. Supplier represents and warrants that all Products, on the date of
delivery to Distributor, will be merchantable, of good quality, and fit for
their particular purpose, and will not be impure, contaminated, or adulterated,
misbranded or mislabeled within the meaning of the Federal Food, Drug, and
Cosmetic Act, as amended, and the Food Additives Amendment of 1968, or otherwise
violative or noncompliant with any applicable laws or regulations. Supplier
agrees to indemnify and hold Distributor harmless from and against any
liability, loss, claim, damage, cost, or expense, including reasonable attorneys

 
 
 
 

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fees, of any kind or nature, arising out of or related to any breach of these
representations and warranties, including for any tortious act or omission of
Supplier or Supplier’s agents or authorized representatives, or the quality,
condition, contents, design, or any other attribute, including intellectual
property rights, of the Products, unless caused by Distributor’s gross
negligence, willful misconduct, or material breach of this Agreement. In the
event of a recall of any of the Products for any reason other than Distributor’s
tortious act or omission or material breach of this Agreement, Supplier shall be
solely responsible for the costs and expenses of such recall and shall promptly
reimburse Distributor for all reasonable costs, fees and expenses directly
incurred by Distributor provided such costs result the recall.

 
 
b.
Distributor. Distributor represents and warrants that it is duly licensed to
distribute non-alcoholic beverages within the Territory or that it will
undertake commercially reasonable efforts to obtain such licenses according to
its business planning and growth strategies in those jurisdictions in which it
is not licensed. Distributor represents and warrants it will use commercially
reasonable efforts to promote and distribute the Products throughout the
Territory in field and trade channels and to pursue increased sales of the
Products with respect to both volume and outlets. Distributor agrees to
indemnify and hold Supplier harmless from and against any liability, loss,
claim, damage, cost, or expense, including reasonable attorneys fees, of any
kind or nature, arising out of or related to any tortious act or omission of
Distributor or Distributor’s agents or authorized representatives, unless caused
by Supplier’s gross negligence, willful misconduct, or material breach of this
Agreement.

 
 
c.
Either party may audit the other party at its own cost as to any obligation
under this Agreement on reasonable notice but not more than once per year during
the Term or for one year after the termination of this Agreement.

 
11.
Termination. This Agreement may be terminated by either party as follows:

 
 
a.
For Cause: Either party may terminate this Agreement for cause, provided written
notice specifying in detail the reason for termination is provided and the
alleged cause is not cured within sixty (60) days of receipt of the Notice of
Termination for Cause (except that only thirty (30) days notice is required for
non-payment). Termination for cause shall be effective thirty (30) days after
the cure period ends (except ten (10) days for non-payment). Notice must be
provided within one (1) month of having knowledge of the material breach or the
right to terminate based on that issue is waived. A corrective plan to cure
shall be treated as a cure if provided during the cure period and accepted by
the non-breaching party, so long as the breaching party commences activities
reasonably designed to cure the breach within the cure period.

 
 
b.
Cause defined: Cause shall include a material breach of this agreement or
violation of any warranty or representation contained in this Agreement.

 
 
 
 

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c.
Change in Control: Either party may terminate this Agreement on thirty (30) days
notice in the event of a material change in the other party’s executive
management.

 
 
d.
Failure to Meet Sales Performance Goals. Provided Supplier has Supplied all
Products ordered and has otherwise fully performed under all agreements between
the parties, Supplier may terminate this Agreement if during any single calendar
year Distributor fails to meet at least 60% of its sales goals, or if during any
two consecutive calendar years, Distributor fails to meet 100% of the "Sales
Performance Goals" set forth in Exhibit C. This termination right shall extend
only during the hundred and twenty (120) day period immediately following the
applicable calendar year or years in which goals are not met. As an alternative
to termination for not meeting Sales Performance Goals as stated here, Supplier
may in its sole discretion convert the License granted by this Agreement by
Supplier to Distributor from an Exclusive License to a Non-Exclusive License,
and/or discontinue the Earned Equity participation of Distributor.

 
 
e.
The parties may terminate this Agreement by mutual written agreement at any time
per the terms and conditions in this Agreement.

 
 
f.
A party wishing to terminate this Agreement without cause during the term may do
so with notice 180 days, provided that if a Party terminates without cause or
for convenience, it shall pay the other Party a sum equal to three dollars
($3.00) per case for each case distributed in the Territory during the twelve
(12) months immediately preceding the notice of termination.

 
12.
Effect of Termination. Upon termination of this Agreement, Distributor shall
immediately stop marketing Products and, within ten (10) days of the termination
date, Distributor shall provide Supplier with a complete list of Distributor’s
inventory of Products as of the date of termination, less inventory that will be
used to fulfill pending orders. Distributor will fulfill all pending orders.
Within thirty (30) days of the termination date, Supplier shall repurchase all
inventory at Distributor’s actual cost, F.O.B. Distributor’s facility.
Distributor shall destroy and certify destruction of any inventory that is not
re-purchased. The parties may agree to a sell off period for inventory that is
sellable but that Supplier does not wish to re-purchase (which must be complete
within sixty (60) days of the termination date unless otherwise agreed by the
parties in writing). Termination shall not affect Common Shares previously
earned or issued to Distributor, including earned but not issued shares during a
calendar year with termination prior to the December 31 Award date.

 
13.
Notices. Notices under this Agreement shall be delivered by certified or
registered mail at the following addresses (or at such other address as
Distributor or Supplier may identify in writing during the term of this
Agreement), and shall be effective upon delivery:

 
 
 
 

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If to Supplier:        KonaRed Corporation
P.O. Box 701
Kalaheo, Hawaii 96741
Electronic copies to: ...
 
If to Distributor:   Splash Beverage Group, Inc.
One E. Broward Blvd. Suite #700
Ft. Lauderdale, FL 33301
Electronic copies to:  ...
 
14.
Independent Contractor Relationship. The parties expressly agree and acknowledge
they are independent contractors and are not partners, joint venturers, or
agents of one another. Each party will maintain complete control over its
respective employees and agents and its relationships with its respective agents
and contractors. Nothing in this Agreement creates any contractual relationship
between a party and any agents or contractors of the other party. Each party
will perform its obligations in accordance with its own methods and procedures,
subject only to compliance with this Agreement. Neither party will be liable for
any debts, acts, or obligations of the other or the other’s agents, employees,
or contractors.

 
15.
Confidentiality. During the term of this Agreement, the parties acknowledge that
they may disclose to one another certain non-public information concerning their
respective businesses or operations and/or the Products, including but not
limited to trade secrets, other proprietary or confidential information, and
this Agreement (collectively, “Confidential Information”). Each of the parties
acknowledges and agrees that, without prior written consent, it will treat the
other party’s confidential information to maintain its confidentiality in at
least a strict a manner as its own confidential information, to not disclose the
Confidential Information of the other party to any third party, and to use the
other party’s Confidential Information only for the Purpose or, if necessary, to
enforce of this Agreement (which shall be done in a manner that preserves the
confidential nature of Confidential Information).

 
16.
Additional Terms and Conditions. The additional terms and conditions set forth
in the attached Exhibits, the Letter, and the recitals are incorporated and a
material part of this Agreement.

 
17.
Miscellaneous.

 
 
a.
Entire Agreement. This agreement constitutes the entire agreement of the parties
regarding its subject matter. There are no agreements or understandings, written
or oral, between Supplier and Distributor regarding the Products, Territory, or
any other subject of this Agreement. The parties have not relied on any
representations of one another in entering into this Agreement. This Agreement
may only be modified by a writing signed by the party against whom such
modification is sought to be enforced.

 
 
 
 

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b.
Force Majeure. Supplier and Distributor shall be excused for the period of any
delay in the performance of any non-monetary obligations under this Agreement
when substantially prevented from so doing by labor disputes beyond the party’s
control, civil commotion beyond the party’s control, war, unforeseeable
governmental regulations or controls, fire or other casualty, inability to
obtain any necessary material or service beyond the party’s control, or acts of
God.

 
 
c.
Binding Effect. This Agreement shall be binding upon, and shall inure to the
benefit of, Supplier, Distributor and their respective successors, legal
representatives, and assigns.

 
 
d.
Interpretation; Headings. No rules of interpretation shall apply regardless of
who drafted this Agreement – it shall be construed as if it were written jointly
or by both Supplier and Distributor. Headings used in this Agreement are
included solely for convenience.

 
 
e.
Severability; Waiver. In the event any provision or sub-provision of this
Agreement shall be held invalid, illegal, or unenforceable, the remaining
provisions or sub-provisions of this Agreement shall remain in full force and
effect and, if possible, the invalid, illegal, or unenforceable provision or
sub-provision re-formed by the Court or Arbitrator to give effect to its
intended meaning. Any waiver by Supplier or Distributor of any of rights,
claims, or remedies shall be in writing signed by the party waiving and shall
not operate as a subsequent waiver of the same thing or as a waiver of any other
right, claim or remedy.

 
 
f.
Governing Law. This Agreement shall be governed and construed for all purposes
under and in accordance with the laws of the State of Nevada, without regard for
choice of laws principles.

 
 
g.
Enforcement. In the event of the breach of or a default under this Agreement by
either party, the other party, in addition to any other rights or remedies under
this Agreement, shall be entitled to injunctive relief and/or specific
performance of this Agreement, either of which shall be sought from a court of
competent jurisdiction within the State of Nevada. In the event either party’s
Marks are in jeopardy of reputation, dilution, tarnishment, or other harm or
damage that money damages cannot remedy alone, that party shall be entitled to
temporary, preliminary, or permanent injunctive relief without bond. Any other
dispute for breach of contract shall be brought by binding arbitration in Clark
County, Nevada under the American Arbitration Association Rules. Arbitration
shall not be commenced until expiration of a sixty (60) day cooling off period
after notice of default, during which time the parties shall act in good faith
to (1) resolve the dispute and (2) continue to perform under the Agreement. In
any proceedings brought to enforce this Agreement or enjoin improper action or
to recover damages, the prevailing party shall be entitled to recover its
reasonable attorneys’ fees incurred with respect to those proceedings, in
addition to any other damages or remedies allowed under applicable law.

 
 
 
 

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h.
Jurisdiction.  The parties hereby submit to the exclusive jurisdiction of the
Courts of Clark County, Nevada, in respect of any dispute for breach of contract
or default arising under or in connection with this Agreement to seek injunctive
relief and/or specific performance of this Agreement and to arbitration in Clark
County, Nevada, under the American Arbitration Association Rules, for any other
dispute, as specified in Section 16(g), above.

 
i.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.

 
 
j.
Intellectual Property. All intellectual property, including Marks, marks,
trademarks, trade dress, logos, slogans, images, music, videos, etc. (“IP”), are
the sole property of the respective party (or its licensors). The other party
may not reproduce any IP without the written consent of the party that owns the
IP. Supplier shall provide guidelines and pre-approvals to facilitate
Distributor in its efforts to market Products to the field and trade.

 
IN WITNESS WHEREOF, the parties executed this Agreement effective as of the
Effective Date as follows:
 

DISTRIBUTOR:
 
Splash Beverage Group, Inc., by:
 
 
 
SUPPLIER:
 
KonaRed Corporation, by:
  /s/ Robert Nistico   /s/ Shaun Roberts   Name: Robert Nistico   Name: Shaun
Roberts   Title: Chief Executive Officer  
Title: Chief Executive Officer
 

 
 
 
 
 
 
 
 
 
 
 

 
 
 

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EXHIBIT A

Territory

The “Territory” is the United States and its Territories. Additional territories
and distribution opportunities shall be discussed in good faith between the
parties.

 
 
 

 

 
 

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EXHIBIT B

Earned Equity Schedule & Bonus
 
 
 
Calendar Year
  Case Sales Milestone   Common Share Award
2014
 
150,000 cases
 
1,000,000 shares
2015
 
300,000 cases
 
1,000,000 shares
2016
 
750,000 cases
 
1,000,000 shares
2017
 
1,000,000 cases
  1,800,000 shares
2018
 
1,750,000 cases
 
1,000,000 shares

Bonus Earned Equity: In addition to each of the milestones set forth above,
Distributor shall receive an additional 500,000 shares if it reaches the
1,000,000 case milestone in 2016, and additional 500,000 shares if it reaches a
1,500,000 case milestone in 2017, and an additional 500,000 shares if it reaches
the 2,500,000 case milestone in 2018. All other Awards in the Earned Equity
Schedule shall also be made to Distributor.
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 

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EXHIBIT C

SALES PERFORMANCE GOALS

 
CALENDAR YEAR
 
AGGREGATE CASE SALES GOALS
     
2014
 
No Goal
2015
 
50% of 2014 cases sold (not prorated)
2016
 
60% of 2015 cases sold
2017
 
70% of 2016 cases sold
2018
 
80% of 2017 cases sold
2019
 
Average of total cases sold during 2017-2018

 
 
 
 
 
 
 
 
 
 
 
 
 

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