Document:

ex10-2.htm

Exhibit 10.2

 

AMENDED AND RESTATED

EXCLUSIVE DISTRIBUTION AGREEMENT

 

 

     THIS AMENDED AND RESTATED EXCLUSIVE DISTRIBUTION AGREEMENT (the "Agreement") is made and entered into as of August __, 2010, to be effective as of August 31, 2009 (the “Effective Date”), by and between THE ELECTRIC BEVERAGE COMPANY, INC., a Florida corporation (the "Manufacturer"); TITLE BEVERAGE DISTRIBUTION, INC., a Florida corporation (the "Distributor"); and BLUE GEM ENTERPRISE, INC., a Florida corporation (“Blue Gem”), each a “Party” and collectively the “Parties.”

 

BACKGROUND

 

     Manufacturer is engaged in the manufacture and sale of certain enhanced water products specified in Section 2 below (as hereinafter further defined, the "Products");

 

     Manufacturer has the exclusive right to utilize the trademark "TITLE" (the "Marks") in connection with the Products.

 

     Manufacturer and Distributor previously entered into an Exclusive Distribution Agreement on or around June 1, 2009, a copy of which is attached hereto asExhibit A (the “Prior Agreement”), pursuant to which Distributor agreed to warehouse and distribute the Products to beverage wholesalers and retailers throughout the United States (the "Territory").

 

      On or around December 8, 2009, Blue Gem entered into a Letter of Intent to acquire Distributor, a copy of which is attached hereto as Exhibit B (the “LOI”).  Pursuant to the LOI Blue Gem and Distributor have negotiated and entered into a Share Exchange Agreement, pursuant to which Blue Gem will acquire ownership of Distributor and Distributor will become a wholly-owned subsidiary of Blue Gem (the “Share Exchange”), which Share Exchange is scheduled to close as soon as certain closing conditions are met, including an SEC approved audit of Distributor, which audit has not been completed to date.

 

      Distributor has been unable to meet certain minimum distribution requirements as set forth in the Prior Agreement (the “Minimum Requirements”) and Manufacturer has requested advance payment for certain Products from Distributor. 

 

      From May 1, through July 16, 2010, Blue Gem, on behalf of Distributor and in anticipation of the Share Exchange, both in an effort to secure and protect its future rights under the Prior Agreement, following the Share Exchange, and the relationship between Distributor and Manufacturer (the “Protective Reasons”), paid $1,015,000 to Manufacturer (the “Pre-Payment”), in consideration for the pre-payment of certain Products which Manufacturer has agreed to produce and supply to Distributor subsequent to the date of such payment (the “Pre-Paid Products”), which Pre-Paid Products will include Products as set forth on Schedule A, and such additional Products as may become subject to this Agreement as set forth in Section 2(b) below, in such proportions as determined by Distributor and Manufacturer in their mutual agreement in a total value (as calculated pursuant to the “Cost to Distributor” of such products as set forth on Schedule A, as it may be amended from time to time, the “Distributor’s Cost”) equal to the Pre-Payment.

 

 

 

 

      On or around _________, 2010, Blue Gem advanced $700,000 to Distributor in order for Distributor to meet its ongoing operating expenses for the Protective Reasons (the “$700,000 Advance”).

 

      Concurrent with the Parties entry into this Agreement, Blue Gem has advanced $75,000 in cash and Blue Gem or Distributor has or will advance an additional $25,000 in cash or Products (the “$100,000 Advance”, and together with the $700,000 Advance, collectively, the “Advance” and together with the Pre-Payment, the “Blue Gem Payments”) to Manufacturer on behalf of Distributor, and in consideration for Manufacturer agreeing to modify the Minimum Requirements and to make certain other changes, modifications and amendments to this Agreement as provided herein, including but not limited to the Right of First Refusal and the Right of Last Refusal and the extension of the Term of the Prior Agreement (the “Amendments”) as well as Manufacturer and Distributor agreeing to provide Blue Gem the Security Interest.

 

     This Amended and Restated Distribution Agreement hereby amends, restates and supersedes the Prior Agreement in its entirety, including the original “Effective Date” of the Prior Agreement 

 

     For the sake of clarity and in an abundance of caution, the “Effective Date” of the Prior Agreement shall be revised and amended to the Effective Date of this Agreement as provided above upon the Parties’  entry into this Agreement, which was the incorporation date of Distributor in the State of Florida.

 

     The Parties now desire to enter into this Agreement to amend and restate the Prior Agreement; to provide for the reduction in the Minimum Requirements (as modified in Section 3(h) below) and the Amendments in consideration for the Advance; to document the Blue Gem Payments; and to provide Blue Gem a security interest in the Distribution Rights and the Pledged Cases (as defined below) in consideration for agreeing to make the Blue Gem Payments prior to the closing of the Share Exchange 

 

     NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants herein set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

      The Agreement shall amend, replace and supersede the Prior Agreement and shall be effective for all purposes as of the Effective Date.  Manufacturer agrees that it has and will received valid consideration in connection with the Blue Gem Payments and the Parties’ entry into this Agreement.  Distributor agrees that it has and will receive valid consideration from the reduction of the Minimum Requirements and the Amendments, the Blue Gem Payments and the Parties entry into this Agreement.  Blue Gem agrees that it will receive valid consideration in connection with the Parties’ enter into this Agreement, the reduction in the Minimum Requirements and Amendments, and the grant of the Security Interest.

 

      1.  Exclusive Distributorship Appointment. Subject to the terms and conditions set forth herein, Manufacturer hereby appoints Distributor its exclusive and sole distributor during the term of this Agreement for the sale, marketing, promotion and distribution of the Products in the Territory, and Distributor hereby accepts such appointment (the “Distribution Rights”). If any inquiries for the Products are made from the Territory or for shipments into the Territory, the enquiring party will be referred to Distributor, Distributor shall supply Manufacturer with a complete and accurate list of customers that purchase the Products and shall, each month during the Term of this Agreement, or any renewal Term, update the list with the names of any new customers. Distributor shall be entitled to appoint sub-distributors within the Territory provided that the terms of such appointments shall not be inconsistent with the terms and conditions of this Agreement and shall be subject to Manufacturers rights hereunder. Distributor's appointment of sub-distributors shall be to supplement and augment but not to replace or substitute, wholly or partially, any of Distributor's obligations or any of Distributor's resources, performance capabilities and/or ability to fully perform all of Distributor's obligations under this Agreement, including without limitation, as provided in Section 3 below, in the Territory. Distributor will remain liable for the actions, omissions and performance of all of Distributor's sub-distributors.

  

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      2. Products, Right of First Refusal and Right of Last Refusal. 

 

            (a) The Products subject to this Agreement are the enhanced water and sports drinks products of the Manufacturer marketed under the name "TITLE" including, without limitation, those products listed on Schedule A, hereto, together with any replacements, enhancements, substitutions or additions made thereto from time to time (the "Products").

 

            (b) The Products and the term Products as used herein shall also include any food or beverage products (“Additional Products”) distributed by Manufacturer from time to time during the Term of this Agreement which are made subject to this Agreement pursuant to Section 2(c), below.

 

            (c) Distributor shall have the right of first refusal to distribute any Additional Products of Manufacturer (the “Right of First Refusal”) on such terms and conditions as mutually agreeable between Manufacturer and Distributor.

 

                  (i) In the event that Manufacturer and Distributor are unable to agree to mutually agreeable terms for the distribution of any Additional Products within thirty (30) days of being notified in writing by Manufacturer of such Right of First Refusal, or Distributor desires not to distribute such Additional Products in its sole discretion, Distributor shall be able to offer such distribution rights to third parties (or distribute such products itself, provided that as used in this Section, references to “third party” shall include the Manufacturer itself in the event it desires to distribute its own Additional Products), subject to this Section 2(c).  

 

                  (ii) In the event that any third party desires to distribute the Additional Products, Manufacturer shall promptly notify the Distributor in writing of the terms and conditions which have been agreed to for the distribution of such Additional Products by such Manufacturer and such third party (the “Conditions”), including but not limited to drafts of any distribution agreements or other material documents, and Distributor shall have a right of last refusal (the “Right of Last Refusal”) exercisable within fifteen (15) days from the date of its receipt of the Conditions to exercise such Right of Last Refusal and distribute such Additional Products pursuant to the Conditions, provided that it shall have no obligation to accept such Conditions, and further provided that if such Conditions are not accepted within fifteen (15) days of the Distributor’s receipt of such written Conditions, the Manufacturer shall be free to contract with such third party pursuant to the Conditions.  

 

                  (iii) In the event that there are any material changes to the Conditions subsequent to the Distributor’s failure to exercise such Right of Last Refusal and prior to the acceptance of such Conditions by the third party, the Distributor shall have additional Rights of Last Refusal as provided above, based on such modified terms.  

 

                  (iv) In the event that Manufacturer fails to enter into any definitive agreements with any third parties based on the Conditions within sixty (60) days of the expiration of Distributor’s Right of Last Refusal, such Right of First Refusal and Right of Last Refusal shall reapply and Manufacturer shall provide Distributor an additional Right of First Refusal and Right of Last Refusal (subject to the terms and conditions of this Section 2(c) before moving forward with any agreement based on the Conditions.

 

  

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3. Distributor's Obligations and Exclusivity.

 

	
  

	
a.

	
Distributor shall use commercially reasonable good faith efforts to promote the wide distribution and sale of the Products to Distributor's accounts in the Territory (“Distributor’s Accounts”). Distributor shall allocate and devote thereto at least such resources and efforts as are proportional to the volume that Distributor's sales of Products in the Territory represent to the volume of Distributor's sales of all products distributed by Distributor from time to time in the Territory.

 

	
  

	
b.

	
Distributor shall use commercially reasonable good faith efforts to develop new business opportunities for Products in Distributor's Accounts in the Territory.

 

	
  

	
c.

	
Distributor shall use commercially reasonable good faith efforts to manage all Distributor sub-distributors, if any, throughout the Territory to gain system alignment to promote the sale and distribution of Products.

 

	
  

	
d.

	
Distributor shall use commercially reasonable good faith efforts to secure extensive in-store merchandising and optimal shelf positioning in Distributor's Accounts in the Territory with respect to Products.

 

	
  

	
e.

	
Perform complete and efficient distribution functions to and in Distributor's Accounts throughout the Territory to the reasonable satisfaction of Manufacturer based on industry standards.

 

	
  

	
f.

	
During the Term, Distributor shall maintain ambient temperature warehouse facilities suitable for the short term storage and distribution of the Products as are standard or higher quality than those in the industry for enhanced water or sports drinks. In the event Manufacturer requires Distributor to store the Products in temperature controlled facilities, Manufacturer shall pay the cost of such facilities to the extent they exceed the costs being paid by Distributor for ambient temperature warehouse facilities, plus the freight costs, if any, required to transport existing inventory of Products to temperature controlled facilities.  Distributor shall keep accurate records of inventory, shipments, returns, accounts receivable and payments and shall retain such records for at least 5 years.

 

	
  

	
g.

	
Distributor shall make prompt shipments of the Products in accordance with customers' requirements. During the Term, and for a period of six months following the expiration of this Agreement for any reason, Distributor shall allow Manufacturer to inspect its books and records to the extent necessary to determine Distributor's performance and payments owed to Manufacturer under this Agreement.

 

  

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          (h)   Distributor's right to be the exclusive distributor in the Territory is conditioned upon Distributor purchasing Products from the Manufacturer amounting to, in the aggregate, a minimum of:

 

(i)  XXXXXXX cases of the Products from the Effective Date through December 31, 2010 (the “Initial Exclusivity Term”) (provided that Manufacturer agrees to waive any deficiency in Distributor not meeting such XXXXXXX case obligation during the Initial Exclusivity Term in connection with the Blue Gem Payments);

 

(ii)  XXXXXX cases of the Products during 2011 (i.e., January 1, 2011 through December 31, 2011);

 

(iii)  XXXXXXX cases of the Products during 2012 (i.e., January 1, 2012 through December 31, 2012);

 

(iv) XXXXXX cases of the Products during 2013 (i.e., January 1, 2013 through December 31, 2013);

 

(v) XXXXXXX cases of the Products during 2014 (i.e., January 1, 2014 through December 31, 2014); and

 

(vi) XXXXXXX cases of the Products during 2015 (i.e., January 1, 2015 through December 31, 2015). 

 

             Minimum purchases applicable to any renewal of this Agreement shall be determined by Manufacturer at the time of renewal. In the event Distributor fails to achieve the minimum purchase requirements, and the Pre-Payment has been fully satisfied, Manufacturer may, in its sole discretion, terminate Distributor's exclusive right to distribute the Products in the Territory, provided, however, that all other terms and conditions of this Agreement shall remain in full force and effect.

 

           (i)  Notwithstanding the minimum purchase requirements to maintain exclusivity set forth in Section 3(h) above, the minimum purchase requirements shall be adjusted to reasonably correspond to that percentage of the major markets for the Products in which Manufacturer is fulfilling its obligation to promote the Products in accordance with Section 4(a) below. In the event Distributor's purchases of the Products do not, in any given year, equal or exceed the minimum purchase requirements to maintain exclusivity, Distributor may, within 10 business days following the expiration of such year, (a) remit to Manufacturer in immediately available funds an amount equal to the difference between Distributor's purchases for the year and the minimum purchase requirement (the “Exclusivity Extension Fee”) as set forth in Section 3(h), as adjusted as set forth in the previous sentence, as documented in writing and provided to Distributor prior to the due date of such payments, or (b) at Distributor’s option, credit the amount of the Exclusivity Extension Fee against any remaining balance due in connection with the Pre-Payment.

 

  

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           (j)  Distributor shall supply Manufacturer with quarterly projections for its and any sub-distributor's requirements during the term.

 

           (k)  Distributor shall not sell the Products to any customer for a price below that set forth on Schedule A without the Manufacturer's consent.

 

4. Manufacturer's Obligations,

 

	
  

	
a.

	
Manufacturer shall make commercially reasonable efforts to promote the Products to the public in the Territory to support Distributor's sales and distribution efforts and, pay any slotting, advertising or similar fees to retailers with which Manufacturer, in its sole discretion, agrees to participate in such fashion.

 

	
  

	
b.

	
Manufacturer shall, at its expense, supply Distributor with promotional literature, signage, display racks and other marketing tools.

 

	
  

	
c.

	
Manufacturer shall make prompt delivery of the Products in accordance with Distributor's or any sub-distributor's requirements; provided that all Products ordered and/or requested by Distributor shall be manufactured and delivered to Distributor within sixty (60) days of such order.

 

	
  

	
d.

	
Manufacturer shall repay the Pre-Payment to Blue Gem in cash or Products as provided herein.

 

	
5.

	
Ownership by Manufacturer. The Manufacturer acknowledges and agrees that the list of customers that purchase the Products from the Distributor including names, addresses, telephone and fax numbers, email addresses, sales information, payment record and other contact information of such persons shall be deemed to be owned exclusively by Distributor (the “Distributor Customers”).  The Distributor agrees that all sales materials provided to the Distributor shall be deemed to be owned exclusively by the Manufacturer. Upon termination of this Agreement for any reason, the Distributor shall immediately deliver all sales and promotional materials relating to the Products to the Manufacturer.  In the event this Agreement is terminated by Manufacturer for Cause, the Distributor shall deliver to the Manufacturer, a listing of the Distributor Contacts, which shall thereafter become the mutual property of the Manufacturer and the Distributor.  In the event this Agreement is terminated for any other reason, the Distributor Customers shall remain the property of Distributor and the Manufacturer shall have no right to use or contact such Distributor Customers.

 

  

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6.

	
Term. Unless sooner terminated as hereinafter provided, the term of this Agreement shall be for the period from the Effective Date until December 31, 2015 and shall be renewable thereafter for additional periods, by the mutual agreement of the Parties (collectively the “Term”).

 

7. Termination for Cause. 

 

           (a)  Either party may terminate this Agreement for Cause. For purposes of this Agreement, “Cause” shall mean if the non-terminating party has failed to perform one or more of its material obligations hereunder, which failure or default shall not have been cured within thirty (30) days after written notice specifying the nature of such failure or default by the terminating party has been received by the non-terminating party; or any event of egregious misconduct involving serious moral turpitude to the extent that, in the reasonable judgment of the terminating party, the non-terminating party’s credibility and reputation no longer conform to the terminating party’s standards. 

 

           (b) Manufacturer may terminate this Agreement in the event the Manufacturer enters into an agreement to sell all or substantially all of its assets that comprise its Products business or the controlling ownership interest of the Manufacturer is sold in an arm's length transaction to a third party, in which event Manufacturer shall pay to Distributor the fair market value of Distributor’s distribution rights in the Products.

 

           (c) Notwithstanding the above right to terminate this Agreement for Cause, such terminating party shall have any and all other rights, claims, and causes of actions in law or equity following such termination to seek damages from the breaching Party in the event of any breach hereunder.

 

8. Representations and Warranties of Manufacturer: Manufacturer represents and warrants to Distributor as follows:

 

	
  

	
a.

	
The Manufacturer is a duly organized and active corporation in good standing under the laws of Florida.

 

	
  

	
b.

	
Neither the execution and delivery of this Agreement nor the consummation of the actions contemplated hereby will (i) violate any provisions of the articles of incorporation or bylaws of the Manufacturer; (ii) violate, or be in conflict with or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under any contract to which Manufacturer is a party; or (iii) violate any laws, statutes, ordinances, regulations, decrees, judgments to which the Manufacturer is subject.

 

	
  

	
c.

	
Manufacturer has the full and unrestricted right, power and authority to enter into and perform the terms, covenants and conditions of this Agreement and to be bound thereby during the entire term of this Agreement. This Agreement constitutes a legal, valid and binding obligation of Manufacturer, enforceable against Manufacturer in accordance with its terms.

 

  

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           (d) No representations or warranties of Manufacturer contained in this Agreement, and no other information provided by Manufacturer to Distributor or Distributor's agents or representatives, contains or will contain an untrue statement of material fact, or omits or will omit to state a material fact, necessary to make the statements herein or therein not misleading.

 

9. Representations and Warranties of Distributor. Distributor represents and warrants to Manufacturer as follows:

 

	
  

	
a.

	
Distributor is a duly organized and validly existing corporation, in good standing under the laws of the State of Florida. Distributor is duly qualified to do business and is in good standing in each jurisdiction in which the conduct of its business or the ownership, leasing or use of its properties makes such qualification necessary.

 

	
  

	
b.

	
Neither the execution and delivery of this Agreement nor the consummation of the actions contemplated hereby will (i) violate any provisions of the charter documents or bylaws of Distributor; (ii) violate, or be in conflict with or constitute a default (or an event that, with notice or lapse of time or both would constitute a default) under any contract to which Distributor is a party; or (iii) violate any Law binding upon Distributor,

 

	
  

	
c.

	
Distributor has the full and unrestricted right, power and authority to enter into and perform the terms, covenants and conditions of this Agreement and to be bound thereby during the entire term of this Agreement. This Agreement constitutes a legal, valid and binding obligation of Distributor, enforceable against Distributor in accordance with its terms.

 

	
  

	
d.

	
No consent, approval or authorization of, or filing or registration with, any governmental entity or third party is required in connection with the execution, delivery and performance of this Agreement by Distributor.

 

	
  

	
e.

	
Distributor has (i) complied with all laws, and Distributor has not received any notice asserting or alleging any noncompliance with any Laws; (ii) filed with the proper authorities each statement, report, information and form required by each Law; and (iii) maintained in full force and effect each license, permit, registration and similar entitlement necessary or proper in the conduct of its business and operations, and, to the best knowledge of Distributor, no revocation or limitation thereof is threatened or pending.

 

	
  

	
f.

	
No representations or warranties of Distributor contained in this Agreement, and no other information provided by Distributor to Manufacturer or to Manufacturer's agents or representatives, contain or will contain an untrue statement of material fact, or omits or will omit to state a material fact, necessary to make the statements herein or therein not misleading.

 

  

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10. Prices and Terms of Payment.

 

           (a)  The prices (in U.S. Dollars) to be paid by Distributor for the Products shall be as set forth in Schedule A. Distributor shall purchase Products and resell the Products at the prices shown on Schedule A. Prices paid by Distributor to Manufacturer are FOB Distributor's warehouse. Manufacturer shall have the right to change the prices of the Products at any time upon thirty (30) days prior written notice to Distributor, provided, however, that Manufacturer shall not increase the prices of the Products until the Pre-Payment has been fully satisfied.

 

           (b)  Invoices shall be due and payable Forty-five (45) days after Distributor delivers the Products to its wholesale or retail customer.

 

           (c) Manufacturer shall promptly pay or credit to Distributor’s account, when due, but in no event less frequently than monthly, all credits, discounts, allowances, promotional concessions made to retailers, incentive payments, bill backs or other reimbursements due Distributor pursuant to any program or sales guarantee offered by Manufacturer to retailers or any other program to which the parties now or hereafter agree or are otherwise obligated to adhere.  Manufacturer and Distributor agree that time is of the essence with respect to this duty.

 

11. Delivery; Return of Products.

 

	
  

	
a.

	
Distributor shall place written orders for its requirements of Products with Manufacturer, each of which orders shall be acknowledged and confirmed in writing by Manufacturer (“Orders”).

 

	
  

	
b.

	
Manufacturer shall not be liable to Distributor for any inability or failure to meet shipment requirements due to force majeure. An event of force majeure shall be deemed to have occurred if Manufacturer is unable to deliver Products to Distributor or Distributor is unable to deliver Products to its customers by reason of any war (declared or undeclared), act of public enemy, riot, epidemic, fire, hurricane, flood, casualty, accident, labor controversy (including, without limitation, any lockout, walkout, strike, or threat thereof), government order or regulation, judicial order or decree (including, without limitation, any grant of injunctive relief, whether imposed on an industry-wide basis or affecting only Manufacturer or act of God).

 

  

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c.

	
Distributor shall inspect all Products promptly upon receipt, and may reject any Products that, upon receipt or at any future time, fail in any material way to meet the specifications for the Products due to quality deficiencies, packaging problems or other errors or defects. To reject a Product, Distributor shall, within five (5) days of receipt of the Products, notify Manufacturer in writing, by fax, or by e-mail of its rejection. Thereafter, Distributor shall return the rejected Products to Manufacturer at Manufacturer’s cost, or destroyed at Manufacturer’s option, in either case for full credit or replacement.

 

           (d) Right to Self Produce.  In the event that Distributor Orders any Products from Manufacturer during the term of this Agreement, and Manufacturer fails to manufacture and provide such Products to Distributor or fails to replace Products that are in Distributor’s reasonable judgment defective, unfit for sale or which do not meet the specifications of the Products, for a period of sixty (60) days from the date of such Order (each a “Failure to Distribute”), which Failure to Distribute is not the result of Section 11(b), above, Distributor shall have the right to and shall automatically be granted a license to (i) produce such Products itself at its own cost and expense (“Self Production”); (ii) use Manufacturer’s Marks, trademarks, copyrights and other intellectual property, including but not limited to logos, labels and slogans and use any boxes, cases, cartons or bottles that Distributor may have on hand in connection with such Self Production, free of charge or liability; and (iii) sell such Products itself pursuant to such Orders in the ordinary course of business.  In the event that the Distributor affects a Self Production, it shall not be liable to Manufacturer for any intellectual property infringement of any kind and shall not be required to pay Manufacturer any part of the proceeds Distributor receives in connection with such Self Production. Distributor’s right to Self Production shall automatically cease at such time as Manufacturer has complied with and supplied Products for all outstanding Orders, provided that Distributor shall be able to continue to sell, until such supply is exhausted, any products produced by such Self Production

 

	
12.

	
Trade Names and Trademarks. Distributor acknowledges the validity of any registrations or registration applications for the Marks (as applicable) and further acknowledges and agrees that Manufacturer has the sole and exclusive right to utilize the Marks (including all goodwill associated therewith), in the Territory. All use by Distributor of the Marks shall be deemed to inure exclusively to the benefit of the Manufacturer.

 

	
13.

	
Confidential Information.

 

           (a)  Distributor acknowledges that, in order to effectuate this Agreement, Manufacturer may reveal to Distributor certain trade secrets or proprietary information that are the property of Manufacturer. Distributor shall not divulge or use for its own benefit any information with respect to the business of Manufacturer except as may be required by law or as necessary to perform its duties under this Agreement. In addition, Manufacturer agrees to use its best efforts to ensure that no related entity shall divulge such information. This obligation shall survive the expiration or other termination of this Agreement.

 

  

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           (b)  Distributor expressly agrees that the Manufacturer, in addition to any other rights or remedies which it may have, shall be entitled to injunctive and other equitable relief to prevent a breach by Distributor of this section.

 

      14. Security Interest in the Distribution Rights.

 

	
  

	
a.

	
In the event that either (a) the Share Exchange does not close; or (b) the Distributor does not become a wholly-owned subsidiary of Blue Gem, prior to September 30, 2010 (the “Required Date”), Blue Gem shall automatically, and without any required action by any party be transferred and own all of Distributor’s right, title and interest in and to the Distribution Rights (which shall include Distribution Rights to any Additional Products made part of this Agreement as provided in Section 2(c), above) and have such other rights, obligations and liabilities as set forth in the other terms and conditions of this Agreement (the “Rights Transfer”). 

 

	
  

	
b.

	
Prior to the Required Date, Distributor shall not sell, pledge or otherwise transfer (whether voluntarily, involuntarily, by operation of law, or by gift or for consideration) its rights under this Agreement, including but not limited to the Distributor Rights  Any such sale, pledge or other transfer shall be null and void and shall confer no rights on the purported transferee. 

 

	
  

	
c.

	
Distributor shall take commercially reasonable efforts to preserve and protect the Distribution Rights and shall notify Blue Gem in writing at least five (5) days prior to the occurrence of any event which would jeopardize, limit or terminate the Distribution Rights.

 

	
  

	
d.

	
In the event any Rights Transfer occurs, Blue Gem shall have all rights, ownership in and title to the Distribution Rights, and agrees to otherwise be bound by the terms and conditions of this Agreement (as such are modified by the Parties from time to time).  Distributor and Manufacturer agree that in the event of a Rights Transfer, Blue Gem shall have all rights, obligations and liabilities of Distributor hereunder and for the purposes of the relationship of Manufacturer and Blue Gem moving forward, each reference herein to Distributor shall be replaced by a reference to Blue Gem, provided that Blue Gem shall not have any liability for any obligations or outstanding debts of Distributor owed to Manufacturer prior to the effective time of the Rights Transfer.  Effective immediately upon the Rights Transfer, Distributor shall have no further rights, obligations or interest under this Agreement.

 

	
  

	
e.

	
As further security for the Blue Gem Payments and the terms and conditions of this Agreement, Distributor hereby grants Blue Gem a first priority security interest over 10,000 cases of Products currently owned by Distributor and held at Distributor’s principal place of business and Manufacturer hereby grants Blue Gem a first priority security interest over the first additional cases of Products produced by Manufacturer pursuant to this Agreement in total value (based on the Distributor’s Cost) equal to the Pre-Payment (collectively the “Pledged Cases”).  In the event of any Rights Transfer, Blue Gem shall automatically be provided all right and ownership over the Pledged Cases (and/or the right to ownership of such Pledged Cases as manufactured by Manufacturer from time to time), and Distributor and Manufacturer agree to take whatever steps necessary and execute whatever documents necessary to affect the transfer to Blue Gem of the ownership of and rights to such Pledged Cases (which shall include, but not be limited to the production by Manufacturer of any Pledged Cases not then manufactured by Manufacturer).  In the event any of the Pledged Cases are sold or distributed by Distributor from the date of the Parties’ entry into this Agreement until the Required Date, such funds shall be paid to Blue Gem as a partial repayment of the Pre-Payment and shall proportionally reduce the required value of the Pledged Cases.  

 

  

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f.

	
Following a Rights Transfer and the transfer of the Pledged Cases to Blue Gem, Blue Gem shall have no other rights against either Distributor or Manufacturer in connection with such Blue Gem Payments, and such Blue Gem Payments shall be considered satisfied in full in consideration for such Rights Transfer and transfer of such Pledged Cases, provided that this Agreement and the terms and conditions hereof shall remain in full force and effect as between Blue Gem (taking the place of Distributor as provided above) and Manufacturer.

 

	
  

	
g.

	
In the event of the consummation of the Share Exchange, Blue Gem agrees to waive and forgive the repayment of the Advance; however, the Pre-Payment shall still apply as a pre-payment towards the full value of additional Products produced by Manufacturer based on the Distributor’s Cost, and Manufacturer agrees to supply Distributor on behalf of Blue Gem Products equal in value (based on the Distributor’s Cost) to the Pre-Payment at no cost to Distributor or Blue Gem.

 

	
  

	
h.

	
For the purposes of this Agreement, the Rights Transfer and the pledge of the Pledged Cases shall be defined herein as the “Security Interest”

 

15. Indemnification.

 

	
  

	
a.

	
Manufacturer shall indemnify and save harmless Distributor from and against all losses, claims, damages or other costs of any nature or kind whatsoever arising directly or indirectly out of or relating to (i) the breach of any warranty, representation or agreement made by Manufacturer to Distributor in this Agreement; (ii) Distributor’s use in the Territory of any intellectual property associated with the Products; (iii) the negligence or intentional misconduct of Manufacturer or its officers, employees, agents or contractors; or (iv) the quality or condition of, or inherent defect in, the Products, at the time of their delivery to Distributor, including, but not limited to, any imperfection, substandard quality, contamination, packaging, processing or other condition relating to the Products.  Such indemnity shall include, but not be limited to, reasonable expenses, costs of Product recalls, attorneys’ fees and disbursements, court costs and other expenses of investigation, litigation or settlement, of any such losses, claims, damages or other costs.

 

	
  

	
b.

	
Distributor shall indemnify and save harmless Manufacturer from and against all losses, claims, damages or other costs of any nature or kind whatsoever arising directly or indirectly out of or relating to (i) the breach of any warranty, representation or agreement made by Distributor to Manufacturer in this Agreement; or (ii) the negligence or intentional misconduct of Distributor or its officers, employees, agents or contractors.  Such indemnity shall include, but not be limited to, reasonable expenses, attorneys’ fees and disbursements, court costs and other expenses of investigation, litigation or settlement of any such losses, claims, damages or other costs.

 

	
16.

	
Terms of Repayment of Pre-Payment.

 

      (a)  Until such time as the Pre-Payment has been fully satisfied, Blue Gem shall credit the total dollar amount of each delivery of Products to Distributor by Manufacturer against the outstanding balance of the Pre-Payment based on the Distributor’s Cost.

 

      (b) The Parties acknowledge and agree that the Pre-Payment was made, in part, in anticipation of certain orders for Products procured by Manufacturer (e.g. Publix and others) (the “Direct Orders”).  Accordingly:

 

            (i) in the event any Pre-Paid Product is shipped from the Manufacturer directly to retail customers pursuant to Direct Orders, Manufacturer shall assign all revenues received or to be received by Manufacturer from the Direct Orders to Blue Gem and Blue Gem shall in turn credit those amounts against the outstanding balance of the Pre-Payment. 

 

  

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            (ii) in the event any Pre-Paid Product is delivered to Distributor (or Blue Gem in the event the Rights Transfer has occurred) pursuant to Section 16(a) above and subsequently delivered by Distributor (or Blue Gem in the event the Rights Transfer has occurred) to retail customers pursuant to Direct Orders, Manufacturer shall assign all revenues received or to be received by Manufacturer from the Direct Orders to Blue Gem, provided, however, Blue Gem shall not credit those amounts against the outstanding balance of the Pre-Payment

 

      (c) Manufacturer hereby authorizes Blue Gem to file a UCC-1 Financing Statement in the State of Florida to perfect its security interest in the Pledged Cases and the accounts receivable and proceeds of any sale of the Pledged Cases in conjunction with the Direct Orders. In the event any of the Pledged Cases are sold or distributed by Distributor from the date of the parties’ entry into this Agreement until the Required Date, such funds shall be paid to Blue Gem as a partial repayment of the Pre-Payment. 

 

 17. Insurance.  During the Term of this Agreement and for five (5) years thereafter, Manufacturer shall maintain in full force and effect commercial general liability insurance on an occurrence, and not a claims made basis, with product liability coverage respecting the sale of the Products in an amount of not less than three million dollars (US $3,000,000) in the aggregate and three million dollars (US $3,000,000) per occurrence, with Distributor as an additional named insured, and shall provide Distributor with proof of such coverage.  During the Term of this Agreement and for five (5) years thereafter, Distributor shall maintain in full force and effect commercial general liability insurance on an occurrence, and not a claims made basis, with product liability coverage respecting the sale of the Products in an amount of not less than three million dollars (US $3,000,000) in the aggregate and three million dollars (US $3,000,000) per occurrence, with Manufacturer as an additional named insured, and shall provide Manufacturer with proof of such coverage.   

 

18. Notices. All notices required or permitted by this Agreement shall be sent in writing to the other party by hand, over-night courier, telefax or registered or certified mail, postage paid, return receipt requested, as follows:

 

	  	
If to Manufacturer, to:

 

	  	
Robert Friedopfer

	  	
The Electric Beverage Company

	  	
4770 Biscayne Blvd., Suite 1460

	  	
Miami, FL 33137

	  	
Fax: 305-572-9851

 

	  	
If to Distributor, to:

 

	  	
Allan Sepe

	  	
Title Beverage Distribution, Inc.

	  	
12805 N.W. 42 Ave.

	  	
Opa-Locka, Florida, 33054

	  	
Fax: 305-572-9851

	
 

	  
	 	
If to Blue Gem, to:

	 	  
	 	
Allan Sepe

	 	
Blue Gem Enterprise, Inc.

	 	
12805 N.W. 42 Ave.

	 	
Opa-Locka, Florida, 33054

	 	
Fax: 305-_______________

 

  

-13-

  

 

     The foregoing addresses and telefax numbers shall be deemed valid until the party whose address or telefax number is listed above notifies the other party in writing of any change thereto. Notice will be deemed to have been given on the date the notice has been delivered by hand or by over-night courier or sent by telefax, or the date which is three U.S. business days after deposit in the U.S. mail to the address or telefax number (as applicable) listed above for the party to whom it is sent.

 

	
  

	
19.

	
Parties' Relationship. Nothing contained in this Agreement shall be construed to create a partnership or joint venture between the parties or to make either party the agent of the other.

 

	
  

	
20.

	
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida without regard to its conflicts of laws provisions.

 

	
  

	
21.

	
Entire Agreement: Amendments. This Agreement (including the Exhibits and Schedules hereto) contain the entire agreement between the parties hereto and there are no representations, warranties, inducements, promises, covenants, agreements or undertakings between the parties other than those set forth herein or which may be subsequently entered into and recorded in a writing executed by both parties hereto. No amendments to this Agreement shall be binding unless such amendments shall be in writing and duly executed by both parties hereto.

 

	
  

	
22.

	
Assignment. This Agreement may not be assigned by Distributor without the written consent of Manufacturer, which may be granted or withheld in Manufacturer's sole and absolute discretion.

 

	
  

	
23.

	
Waiver. No waiver by either party hereto of any provision of this Agreement shall operate or be construed as a continuing waiver or as a waiver of any other provision hereof, whether or not similar, or as a waiver of any subsequent breach of any provision hereof. No waiver shall be binding unless executed in writing by the party making the waiver.

 

  

-14-

  

	
  

	
24.

	
Severability. Any provision of this Agreement which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this Section 24, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal or unenforceable in any other jurisdiction. If any covenant is deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable.

 

	
  

	
25.

	
Submission to Jurisdiction. Each of the parties hereto consents to the jurisdiction of the state and federal courts located in Miami-Dade County, Florida, and irrevocably agrees that all actions or proceedings relating to this Agreement or any agreement or instrument executed hereunder shall be litigated in such forum, and each of the parties waives any objection which it may have based on improper venue or forum non-conveniens to the conduct of any such action or proceeding in any such forum and waives personal service of any and all process upon it, and consents to all such service of process made in the manner set forth in the notice section of this Agreement. Nothing contained in this Section 25 shall affect the right of either party to serve legal process on the other party in any other manner permitted by law.

 

	
  

	
26.

	
Construction. This Agreement shall, in all cases, be construed simply, according to its fair meaning, and not strictly for or against either party. Any section and paragraph headings contained in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

 

	
  

	
27.

	
Incorporation. All Exhibits and Schedules to this Agreement and any other documents to be delivered hereunder are incorporated herein by this reference.

 

	
  

	
28.

	
Attorneys’ Fees. In any judicial action, arbitration or proceeding between the parties hereto to enforce any of the provisions of this Agreement or in connection with the defending of such judicial action or proceeding brought by the other party hereto, regardless of whether such action or proceeding is prosecuted to judgment and in addition to any other remedy, the successful party in such legal action shall be entitled to receive from the unsuccessful party all costs, expenses and fees (including reasonable attorneys' fees) incurred by the successful party in connection with such action or proceeding, including any appeal thereto.

 

	
  

	
29.

	
WAIVER OF JURY TRIAL. THE PARTIES EXPRESSLY AND KNOWINGLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY ACTION ARISING UNDER OR RELATING TO THIS AGREEMENT.

 

	
  

	
30.

	
Counterparts. This Agreement may be executed in several counterparts, each of which is an original.  It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts.  A copy of this Agreement signed by one Party and faxed or scanned and emailed to another Party (as a PDF or similar image file) shall be deemed to have been executed and delivered by the signing Party as though an original.  A photocopy or PDF of this Agreement shall be effective as an original for all purposes.

 

 

 

  

-15-

  

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date above first written to be effective as of the Effective Date.

 

	  	
MANUFACTURER:

 

	  	
THE ELECTRIC BEVERAGE COMPANY

	  	  
	  	
By: /s/ Robert Friedopfer

	
      

	
Robert Friedopfer, CEO

   

	  	
DISTRIBUTOR:

 

	  	
TITLE BEVERAGE DISTRIBUTION, INC.

	  	  
	  	
By: /s/ Allan Sepe

	  	
Allan Sepe, CEO

	  	  
	  	
BLUE GEM

	  	
BLUE GEM ENTERPRISE, INC.

	  	  
	  	
By: /s/ Allan Sepe

	
     

	
Allan Sepe, CEO

 

 

 

 

 

 

 

  

-16-

  

 

SCHEDULE A

 

 

DELIVERED PRICES

 

 

 

 

 

 

 

 

TITLE Sports Drink:

 

 

Cost to Distributor (20oz, 24 pack) $XX.XX

 

Cost to Distributor (32oz, 12 pack) $XX.XX

 

Cost to Distributor (20oz, 8 pack per case (24 total))) $XX.XX

 

 

 

 

  

-17-ex10-3.htm

Exhibit 10.3

 

ABBOTT NUTRITION

 

DISTRIBUTION AGREEMENT

 

This Distribution Agreement (“Agreement”) is entered into to be effective as of the 25th  day of June, 2010 (the “Effective Date”), between Abbott Nutrition, Abbott Laboratories Inc., a Delaware corporation with a principal place of business at 3300 Stelzer Road, Columbus, Ohio 43219, hereafter referred to as “Abbott Nutrition”, and Blue Gem Enterprise hereinafter referred to as “Distributor”.

 

In consideration of the mutual promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

 

1.  DEFINITIONS

 

1.1  “Affiliate” means, with respect to either party, a corporation or any other entity that directly, or indirectly through one or more intermediaries, controls, is controlled, or is under common control with, such party.  As used herein, the term “control” means possession of direct or indirect power to order or cause the direction of the management and policies of a corporation or other entity whether (i) through the ownership of more than fifty percent (50%) of the voting securities of the other entity, or (ii) by contract, statute, regulation or otherwise.

 

1.2   “Contract Year” means the twelve months immediately following the Effective Date, and each consecutive twelve-month period thereafter.

 

1.3  “Intellectual Property” means the Trademarks of Abbott Nutrition and its Affiliates, whether or not registered, patents and patent applications, copyrights, trade secrets and know how (“Know How”) or other intangible property which Abbott Nutrition may have at any time created, adopted, used, registered, owned or otherwise been issued in the United States and any other location in connection with Abbott Nutrition’s business.

 

1.4  “Licensed Products” means the Abbott Nutrition products Distributor is authorized to distribute pursuant to this Agreement; the initial Licensed Products and their SKU's are listed on Schedule 1.

 

1.5  “SKU's” means stock keeping units that identify the Licensed Products by flavor and package or container type, design and size.

 

1.6  “Territory” means the outlets in the geographic territory in which Distributor is authorized to distribute Licensed Products described on Schedule 2.

 

1.7  “Trademarks” means the trademarks EAS® and Myoplex®, and such trademarks, trade dress, trade names and Licensed Product names as Abbott Nutrition has directed be used on or in respect of the Licensed Products sold within the Territory.

 

1.8  “Outlets” means all retail stores within the assigned territory as defined on Schedule 2

 

  

  

  

2.  APPOINTMENT

 

2.1  Appointment.  Abbott Nutrition hereby grants Distributor the exclusive right to distribute and sell Licensed Products only in the Territory for resale in a Cold Box in any retailer or in both the Cold Box and dry merchandise sections of Outlets, during the Term of this Agreement and does not grant Distributor any other rights of any kind to distribute or sell other Abbott Nutrition Licensed Products; provided, however, nothing in this Agreement shall be construed to limit the right of Abbott Nutrition and its Affiliates to directly or indirectly market, distribute, or sell the other Abbott Nutrition Licensed Products in the Territory to Outlets.  Distributor shall not receive any compensation for sales of the other Abbott Nutrition Licensed Products made directly or indirectly by Abbott Nutrition, or any Affiliate of Abbott Nutrition. Acceptance.  Distributor hereby accepts the foregoing appointment and agrees to use its best efforts to:

 

(i)  promote, sell, deliver and assure customer satisfaction for the Licensed Products within the Territory;

 

(ii) develop new business opportunities for Licensed Products to Outlets in the Territory;

 

(iii) secure extensive in-store merchandising and optimal shelf positioning for Licensed Products in the Territory, except for those National Accounts otherwise serviced pursuant to Section 2.6

 

(iv) permit Abbott Nutrition representatives to work sales routes with Distributor’s salesmen in the Territory, upon reasonable advance notice to Distributor;

 

(v) provide the resources necessary for the sale, delivery, marketing, promotion and servicing of the Licensed Products within the Territory, except for those National Accounts otherwise serviced in accordance with Section 2.6;

 

(vi) at least once per year, or more frequently as agreed between the parties, Distributor shall present to Abbott Nutrition its business plans in which are established targets for volume, market share and marketing plans for the Licensed Products, which targets shall not be binding on Distributor;

 

(vii) sell only appropriately dated Licensed Product and any out-of-date product Distributor finds in their possession or in-store cannot be sold and must be destroyed; and

 

(viii) comply with all of its other duties and covenants set forth herein.

 

2.2  Distribution Requirements.  Distributor shall achieve by the end of the first Contract Year and thereafter maintain (i) distribution levels in the independently owned Outlets as mutually agreed upon in the annual business plan, and (ii) 90% distribution in the Authorized National Accounts (“Distribution Requirements”).

  

-2-

  

2.3  Additions to Licensed Products.  Distributor shall purchase Licensed Products for distribution and sale in the Territory exclusively from Abbott Nutrition.  If Abbott Nutrition internally develops any other beverage products not currently included in the definition of Licensed Products that Abbott Nutrition intends to sell in the refrigerated beverage container at retail through direct store delivery by independent distributors within the Territory (“Additional Beverages”), Abbott Nutrition grants Distributor the first right of refusal to distribute such Additional Beverages on an exclusive basis within the Territory, on terms and conditions substantially identical to the terms and conditions set forth herein and applicable with respect to the Licensed Products.  Abbott Nutrition will provide Distributor with written notice of any Beverage Products available for distribution within the Territory (“New Product Notice”).  Within thirty days after the New Product Notice, Distributor may elect to include the products stated in the New Product Notice in the definition of Licensed Products by executing the New Product Notice and thereby amending Schedule 1 of this Agreement.  If Distributor does not execute the New Product Notice Abbott Nutrition will have the unrestricted right to enter into a distribution agreement for the product(s) included in the New Product Notice through other distributors.

 

 

2.4  Compliance with Applicable Law.  Distributor expressly agrees to comply with and abide by, all applicable federal, state and local laws, rules, ordinances, codes and regulations (including returnable container or deposit laws), as amended and all rules and regulations now existing or that may be promulgated under and in accordance with any such law or laws, as may be applicable to the Licensed Products and Distributor's activities in connection with the distribution and sale of the Licensed Products. Further, Distributor shall obtain and maintain at its own expenses all permits, licenses and other approvals necessary to enable Distributor to perform fully under this Agreement, and Distributor shall provide copies thereof to Abbott Nutrition promptly upon request.

 

2.5  National Accounts.  “National Account” means a group of Affiliated, centrally managed Outlets which are designated by Abbott Nutrition for national account treatment. Except as otherwise provided by applicable law, Abbott Nutrition retains the right to exclusively manage and unilaterally establish policies for any such National Accounts. So long as Distributor complies with any National Account policies and otherwise sells to and services the National Account Outlets in the Territory on terms mutually agreeable to Abbott Nutrition and the National Account, Distributor will retain the exclusive right to sell Licensed Products to National Account Outlets in the Territory. However, in the event Distributor's distribution network in the Territory does not meet the National Account requirements, Abbott Nutrition may, in its sole discretion, cease such sales through Distributor and arrange for alternate sources of supply to that National Account's Outlets in the Territory. Abbott Nutrition retains the right to manage and establish policies for such National Accounts; provided, however that Abbott Nutrition shall not require, unless the parties mutually agree, Distributor to sell Licensed Product to National Accounts at a price that is less than $5.56 cents per case above the delivered price as set forth on Schedule 3, as same may be modified from time to time pursuant to the terms of Section 4.3 of this Agreement. 

 

2.6  Territory Limitation.  Distributor agrees not to actively, either directly or indirectly, advertise, solicit orders for, or otherwise actively promote, market or sell Licensed Products outside the Territory, Cold Box, or Outlets, without the prior written consent of Abbott Nutrition, and shall not establish, locate or utilize an office, branch, or distribution depot or utilize the Internet for the sale of the Licensed Products outside the Territory or Outlets (each, a “Transfer”). Distributor hereby further agrees not to Transfer any Licensed Products, either directly or indirectly, to any persons and/or entities within the Territory for Transfer, or to persons or entities with regard to whom Distributor has knowledge or reasonable belief will distribute and/or sell the Licensed Products outside of the Territory or Outlets, except that, subject to all of the terms and conditions of this Agreement, Distributor may Transfer Licensed Products to the extent authorized in writing by Abbott Nutrition.  Distributor shall promptly direct to Abbott Nutrition all inquiries that are related to any Transfer.

  

-3-

  

2.7  Distributor’s Representations and Warranties.  Distributor represents and warrants to Abbott Nutrition that (i) it has the right and lawful authority to enter into this Agreement, and (ii) the execution, delivery and performance of this Agreement will not cause or require Distributor to breach any obligation to, or agreement or confidence with, any other person or entity.

 

3.  MARKETING, DISTRIBUTION AND SALES

 

3.1  Highest Quality Positioning. An essential element of the consideration Abbott Nutrition has bargained for in granting the exclusive distributorship under this Agreement is Distributor's agreement to position, and market, deliver, and set up the displays for all point of sale materials provided at no charge by Abbott Nutrition, in its discretion, and to promote, merchandise and distribute the Licensed Products as high quality premium products. Distributor agrees to keep Abbott Nutrition aware of product sales and trends, product performance, customer satisfaction, market shifts and trade conditions, market potential, sales forecast and recommended product changes, and, in general, to assist Abbott Nutrition in implementation of product and marketing improvements for the mutual benefit of the parties.

 

3.2  Promotion and Trade Marketing of Licensed Products.  Distributor shall be responsible for promotion and “trade” marketing of the Licensed Products to Outlets within the Territory; provided, however, that Distributor may not produce any written material promoting, describing or marketing the Licensed Product without Abbott Nutrition’s prior written consent.  Distributor shall aggressively distribute and encourage the utilization of merchandising aids and promotional materials provided at no charge by Abbott Nutrition, in its discretion, in all Outlets throughout the Territory.  Without in any way detracting from the foregoing, Distributor shall reasonably participate in and diligently implement all “trade” marketing and promotional programs that are mutually agreed upon by Abbott Nutrition and Distributor from time to time.  Distributor acknowledges that Abbott Nutrition makes no, and hereby disclaims any, express or implied warranty, representation, or covenant relating to or in connection with Abbott Nutrition’s discretionary marketing and promotional activities, including without limitation, as to the value, performance, extent, effectiveness, quantity, quality, success or results of any such activities or the lack thereof.  Distributor shall have no claim against Abbott Nutrition and its Affiliates and hereby releases Abbott Nutrition and its Affiliates from all and any claims by, and/or liability to, Distributor of any nature for Abbott Nutrition’s failure to successfully market and promote, or adequately market and promote, the Licensed Products or arising from or relating to or in connection with any marketing activities procured, provided or performed by Abbott Nutrition or Abbott Nutrition’s decision, in its discretion, not to procure, provide or perform such activities.

  

-4-

  

3.3  Reports. Distributor will maintain accurate and complete books and records concerning its performance in connection with this Agreement. Abbott Nutrition may inspect such books and records during Distributor's regular business hours. Within fifteen (15) days after the end of each calendar month, within thirty (30) days after the end of Distributor's fiscal year, and within thirty (30) days after termination of this Agreement, Distributor will furnish to Abbott Nutrition a statement setting forth its purchases, and aggregate sales (on a depletion basis) to Outlets of Licensed Products, expressed in actual case sales (SKU's) for such period, including the name, address, zip code and quantity of the Licensed Products (“Reports”).

 

4.  PURCHASE OF PRODUCT

 

4.1  Purchase and Sale of Licensed Products. Distributor will purchase Licensed Products only from or as directed by Abbott Nutrition. Abbott Nutrition will sell to Distributor such quantities of Licensed Products as Distributor shall require to fulfill its obligations hereunder for the price and on the shipment terms set forth in Section 4.4. Abbott Nutrition shall use reasonable efforts to accommodate Distributor's request to ship the Licensed Products on the requested shipment dates. Abbott Nutrition shall use reasonable efforts to notify Distributor if it is unable or will fail to comply with such requested shipment dates.

 

4.2  Payment. Payment is due in full to Abbott Nutrition within thirty (30) days after delivery of the Licensed Products, with a two percent (2%) discount if payment is received within ten (10) days after receipt of goods (two percent (2%) ten (10) days, net thirty-five (35) days). Abbott Nutrition has the right to change the credit terms applicable to Distributor's future purchases at any time upon reasonable notice, provided that any such changes in credit terms are consistent with credit policies that are generally applicable and consistently applied by Abbott Nutrition.

 

 

4.3  Prices for Licensed Products. The initial delivered wholesale prices for Licensed Products (including freight and shipping terms and charges) are set forth on Schedule 3. Abbott Nutrition reserves the right to change prices on no less than sixty (60) days' prior written notice to Distributor. Distributor's orders will be honored at the price in effect at the time they are received by Abbott Nutrition, provided Distributor takes delivery prior to the effective date of the price changes.

 

4.4  Forecasts, Purchase Orders and Delivery.

 

(a)  Forecasts.  No later than the first day of the month following the Effective Date, Distributor shall provide Abbott Nutrition with a quarterly forecast of Distributor’s requirements for each SKU of the Licensed Products for the subsequent 12 month period.

 

(ii)  Purchase Orders.  All purchase orders for Licensed Products shall be transmitted in writing or electronically, shall specify a reasonable date and time for delivery with a lead time of at least ten (10) days.  Each order shall be for a minimum of one (1) pallet and each pallet shall contain only one (1) SKU.  Each order shall be subject to written or electronic acceptance by Abbott Nutrition at its discretion, and shall not be binding upon Abbott Nutrition unless and until so accepted.  Any purchase order issued by Distributor is for administrative convenience only.  In the event of any conflict between the provisions of this Agreement (including the Schedules) and any purchase order, the provisions of this Agreement (including the Schedules) shall prevail and govern and any additional terms in the purchase order shall be inapplicable.

  

-5-

  

4.5  Abbott Nutrition’s Warranty.  Abbott Nutrition’s Warranty.  Abbott Nutrition warrants to Distributor that its Licensed Products will substantially conform to Abbott Nutrition's published specifications for such Licensed Products for a reasonable period of time from the date of shipment of Licensed Product to Distributor by Abbott Nutrition, but not to exceed the Licensed Product expiration date, and when delivered to Distributor, shall have a remaining shelf life of not less than six (6) months. Abbott Nutrition warrants that all Licensed Products, all food additives in the Licensed Products, or all substances for use in, with, or for the Licensed Products, comprising each shipment or other delivery hereby made by Abbott Nutrition to, or on the order of, Distributor are hereby guaranteed as of the date of such shipment to be, on such date, not adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as amended, including the Food Additives Amendment of 1958 (the “Act”) or within the meaning of any substantially identical and applicable state food and drug law, if any, and are not articles which may not under the provisions of Sections 404, 505, or 512 of the Act, be introduced into interstate commerce. ABBOTT NUTRITION WILL REPLACE ANY LICENSED PRODUCT CONFIRMED BY ABBOTT NUTRITION AS DEFECTIVE OR REFUND THE PURCHASE PRICE PAID BY DISTRIBUTOR FOR SUCH DEFECTIVE LICENSED PRODUCT, AT ABBOTT NUTRITION'S SOLE OPTION, DURING SAID PERIOD.  THIS WARRANTY IS CONTINGENT UPON PROPER WAREHOUSING, SHIPMENT AND USE OF LICENSED PRODUCTS IN THE APPLICATION FOR WHICH THEY WERE INTENDED AS INDICATED IN THE LICENSED PRODUCT LABEL CLAIMS, AND ABBOTT NUTRITION MAKES NO WARRANTY (EXPRESS, IMPLIED, OR STATUTORY) FOR LICENSED PRODUCTS THAT ARE MODIFIED, REPACKAGED, RELABELED OR SUBJECTED TO UNUSUAL PHYSICAL OR ENVIRONMENTAL STRESS.  Except as required by law, Distributor shall not pass on to its customers a warranty or limitation of liability which is more protective of such customers than the warranty (including the limited remedy and exclusions) set forth in this Section 4.5 and the limitations of warranty and liability set forth in this Agreement, including without limitation Sections 4.6 and 15.  The foregoing is in lieu of all other warranties.

 

4.6  LIMITATION OF WARRANTY.  EXCEPT FOR THE LIMITED WARRANTY PROVIDED IN SECTION 4.5 OF THIS AGREEMENT, ABBOTT NUTRITION GRANTS NO OTHER WARRANTIES OR CONDITIONS, EXPRESS OR IMPLIED, BY STATUTE, IN ANY COMMUNICATION WITH DISTRIBUTOR OR CUSTOMERS, OR OTHERWISE REGARDING THE LICENSED PRODUCTS, THEIR FITNESS FOR ANY PURPOSE, THEIR QUALITY, OR THEIR MERCHANTABILITY.  ABBOTT NUTRITION NEITHER ASSUMES NOR AUTHORIZES ANY OTHER PERSON TO MAKE OR ASSUME ANY OTHER LIABILITIES ARISING OUT OF OR IN CONNECTION WITH THE SALE OR USE OF ANY LICENSED PRODUCT. THE REMEDIES OF THE DISTRIBUTOR SET FORTH HEREIN SHALL BE THE ONLY REMEDIES AVAILABLE. IN NO EVENT SHALL ABBOTT NUTRITION BE LIABLE FOR THE COST OF PROCUREMENT OF SUBSTITUTE GOODS BY THE DISTRIBUTOR. ABBOTT NUTRITION SHALL IN NO EVENT BE LIABLE FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION LOST REVENUES OR PROFITS, WHETHER A CLAIM FOR SUCH DAMAGES IS BASED UPON WARRANTY, CONTRACT, TORT, COMMON LAW, STATUTE OR OTHERWISE.

 

4.7  Distributor Warranty Indemnity.  Distributor shall indemnify, defend and hold Abbott Nutrition harmless against all claims, liabilities, costs and expenses (including the reasonable fees of attorneys and other professionals) incurred by, or threatened against, Abbott Nutrition in connection with any representation or warranty by Distributor or Distributor's personnel inconsistent with the foregoing limited warranty and disclaimer and publications of Abbott Nutrition concerning the Licensed Products.

 

  

-6-

  

4.8  Product Returns. Except as expressly set forth in Section 4.9 of this Agreement, Abbott Nutrition will not accept any returned Licensed Product, for any reason, from Distributor.  All expired Licensed Products shall be the sole responsibility of the Distributor.

 

4.9  Defective and Improper Delivery; Returns.  The following provisions shall apply:

 

(i)  Distributor shall inspect all Licensed Products upon delivery in a commercially reasonable manner.

 

(ii)  In the event that (a) any Licensed Product delivered to Distributor is patently defective and thereby fails to meet the relevant specifications and such defect is a result of Abbott Nutrition’s manufacture or packaging, or (b) a delivery is short or is not made, Distributor shall notify Abbott Nutrition within fifteen (15) days of receipt of such shipment or lack thereof.  Upon receipt of such notice, and at Abbott Nutrition’s option, Abbott Nutrition’s sole obligation shall be to: (1) replace any defective Licensed Product, (2) make up the shortfall, or (3) refund any invoiced purchase price to Distributor.

 

(iii)  Failure by Distributor to give notice of defective or damaged Licensed Product within fifteen (15) days of receipt, or in the case of a latent defect, within fifteen (15) days of discovery of such defect, shall be deemed a waiver by Distributor of Abbott Nutrition’s obligations as stated herein.

 

5. HANDLING OF LICENSED PRODUCTS

 

5.1  Quality Control.  Distributor will be responsible for maintaining the quality of all Licensed Products in its possession or under its control. Distributor agrees to use the warehousing practices, inventory control, product rotation (including at Outlets), handling and other quality control procedures which Abbott Nutrition reasonably may specify or, if not so specified, which are consistent with national brand industry standards in effect in the Territory. Distributor will promptly notify Abbott Nutrition of any quality problems that come to its attention, and of the steps being taken to correct each such problem. Distributor agrees to keep complete and accurate records of the disposition and location of all Licensed Products distributed by it in order to facilitate tracing.

 

  

-7-

  

5.2  Customer Complaints.  Distributor will give Abbott Nutrition prompt written notice of any complaints involving Licensed Products it has distributed. In recognition of the importance of protecting the Trademarks, Abbott Nutrition’s business, and associated goodwill, Distributor agrees to consult with Abbott Nutrition before taking any steps to resolve any complaint.

 

5.3  Inventory.  Distributor shall maintain, at its own expense, an adequate inventory of reasonable quantities of Licensed Products, for the proper sale, promotion and delivery of the Licensed Products and for assuring customer satisfaction with and needs for the Licensed Products in the Territory.  Such inventory shall be stored in accordance with the provisions of Schedule 4.

 

6.  INTELLECTUAL PROPERTY RIGHTS

 

6.1  Intellectual Property Rights.  Distributor shall have a non-exclusive license to use the Trademarks for the sole purpose of promoting, selling and distributing Licensed Products.   Distributor acknowledges that exclusive ownership of and title to the licensed Trademarks and other Intellectual Property shall at all times remain with Abbott Nutrition.

 

6.2  Distributor Covenants.  Distributor shall comply with the following provisions:

 

(i)  Distributor shall not dispute or contest or assist others to dispute or contest the validity of any of Abbott Nutrition's Intellectual Property.  In addition, if Distributor so disputes or contests or assists others to dispute or contest the validity of any of the foregoing rights of Abbott Nutrition, Abbott Nutrition shall have the right to terminate this Agreement immediately upon written notice to Distributor.  This covenant not to contest shall not, however, apply to the validity of any U.S. letters patent owned by Abbott Nutrition or to the extent this covenant is invalid under applicable law.

 

(ii) Distributor shall not omit or alter patent numbers, trade names or trademarks, indications of copyright numbers or series or any other Abbott Nutrition markings affixed on the Licensed Products obtained from Abbott Nutrition, or alter Licensed Product labeling.  Distributor shall not tamper with or alter the packaging of Licensed Products as provided by Abbott Nutrition.  Distributor shall sell the Licensed Products in the Territory under Abbott Nutrition's name.  Distributor shall not take any action which would, or fail to take any action where such failure would, directly or indirectly, have an adverse effect upon the Trademarks or goodwill of Abbott Nutrition.  Upon any termination of this Agreement, Distributor shall cease all use of the Trademarks of Abbott Nutrition and its Affiliates, shall not employ in any way any other word, mark, sign, symbol or name associated with the Licensed Products, and shall not use any trademarks, copyrights, trade names, or product names which are confusingly similar to the Trademarks.  Distributor shall in no event use any such Trademarks in connection with any products other than the Licensed Products.

 

(iii)  Distributor shall acquire no rights or other interest in the Trademark and Abbott Nutrition’s trade name, trade dress or any other trademark or other Intellectual Property right owned or otherwise controlled by Abbott Nutrition except as explicitly provided by this Agreement.  All uses by Distributor of the Trademarks shall inure solely to the benefit of Abbott Nutrition.  Distributor understands and agrees that it is not authorized to use the Abbott Nutrition name in connection with its general business or to imply to third parties that its relationship with Abbott Nutrition is other than as a sales distributor under this Agreement.  Distributor may only use the Trademarks in strict accordance with Abbott Nutrition’s policies and instructions, and Abbott Nutrition reserves the right, from time to time and at any time, at its discretion, to modify such policies and instructions then in effect.  Distributor shall hold Abbott Nutrition harmless and indemnify it against any liability, including attorney's fees and other costs of defense, resulting from actions of third parties claiming injury or loss as a result of the failure by Distributor to honor this Section.

 

  

-8-

  

(iv)  All representations of Abbott Nutrition's Trademarks that Distributor intends to use apart from as provided to Distributor from Abbott Nutrition shall first be submitted to Abbott Nutrition for written approval, particularly, but not limited to review of design, color, and other details.  If any of Abbott Nutrition's Trademarks are to be used in conjunction with another trademark on or in relation to Licensed Products, then Abbott Nutrition's mark shall be presented equally legibly, equally prominently, and of greater size than the other but nevertheless separated from the other so that each appears to be a mark on its own right, distinct from the other mark.  In advertising, promotions, or in any other manner so as to identify Licensed Products, Distributor shall clearly indicate Abbott Nutrition’s ownership of the Trademarks.

 

(v)  Distributor agrees to protect Abbott Nutrition's Licensed Products against all suspected limitations and unfair competition by others, and will give Abbott Nutrition written notice of any such conduct. Distributor agrees to cooperate with Abbott Nutrition, at Abbott Nutrition's request and expense, and take whatever action is required to cause the termination of such conduct including but not limited to the execution and delivery in accordance with Abbott Nutrition’s request of such documents and instruments as may be necessary or appropriate in such proceedings.  Abbott Nutrition reserves the right to take whatever action it deems appropriate to protect its Trademarks.

 

(vi)  Distributor shall not use the name of Abbott Nutrition in any manner, including in its advertising or business name.  Distributor shall not use any of Abbott Nutrition’s Trademarks in its business name.

 

7.  RECALLS

 

7.1  Recall or Advisory Actions.  In the event Abbott Nutrition elects, or any governmental action requires, the recall, withdrawal, destruction, or withholding from market of any Licensed Product sold hereunder (a “Recall”), then in each instance Abbott Nutrition will promptly notify Distributor of same in writing or by electronic means, and Distributor shall fully cooperate with Abbott Nutrition and take all reasonable measures to Recall the Licensed Products.  Abbott Nutrition will determine the manner, text and timing of a Recall and any publicity to be given such matters in time to comply with any applicable regulatory requirements.  Abbott Nutrition shall have the right to control the arrangement of any Recall, and Distributor shall cooperate with respect to the reshipment, storage or disposal of recalled Licensed Products, the preparation and maintenance of relevant records and reports, and notification to any recipients or end users.  Distributor shall promptly refer to Abbott Nutrition, for exclusive response by Abbott Nutrition, all customer or consumer complaints involving the health, safety, quality, composition or packaging of the Licensed Products, or which in any way could be detrimental to the image or reputation of Abbott Nutrition or the Licensed Products, and shall notify Abbott Nutrition of any governmental, customer or consumer inquiries regarding the Licensed Products about which Distributor becomes aware.  To the extent the Recall results from any cause or event attributable to Distributor, its Affiliates or agents, including without limitation, the overlabeling, marketing, advertising, warehousing, packaging, or shipment thereof, Distributor shall be responsible for the expense of the Recall.  To the extent a Recall results from the manufacture, warehousing, or distribution of Licensed Product by Abbott Nutrition or its Affiliates, or other cause or event attributable to Abbott Nutrition or its Affiliates, Abbott Nutrition shall be responsible for the expense of the Recall.

 

  

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8.  ASSIGNMENT

 

8.1  Assignment by Abbott Nutrition.  Abbott Nutrition may assign this Agreement to any person or entity without the consent of Distributor.

 

8.2  No Assignment or Transfer by Distributor; Sub-Distributors.

 

(i)  No Assignment. This Agreement is being entered into by Abbott Nutrition on the basis of careful investigation of Distributor's reputation and experience and the know-how of its personnel.  This Agreement and Distributor's duties and privileges may not be transferred or assigned, in whole or in part, directly or indirectly, including, without limitation, by assignment, pledge or hypothecation, merger, consolidation, reorganization or similar event, or control of Distributor, sale or transfer of securities, or otherwise by operation of law, or sale of all or a substantial portion of Distributor's business or assets, or otherwise without the prior written approval of Abbott Nutrition.  Abbott Nutrition will not unreasonably withhold assignment.

 

(ii)  Sub-distributors. No sub-distributor for any Licensed Products or portions of the Territory may be appointed without Abbott Nutrition's prior written approval.   Any request for approval of a sub-distributor must be made in writing at least thirty (30) business days prior to the proposed appointment. Distributor agrees to promptly furnish such information as Abbott Nutrition reasonably may request to assess such request.  Abbott Nutrition acknowledges that Distributor intends to appoint certain sub-distributors with respect to certain specified portions of the Territory, all as identified on Exhibit B hereto. Distributor’s appointment of sub-distributors, other than the sub-distributors identified on Exhibit B as of the Effective Date, shall be to supplement and augment but not to replace or substitute, wholly or partially, any of Distributor’s obligations or any of Distributor’s resources, performance capabilities and/or ability to fully perform all of Distributor’s obligations under this Agreement.  Distributor's agreement with any sub-distributor must be approved by Abbott Nutrition in writing, and must provide Distributor with the ability to exercise all of the rights and powers with respect to such sub-distributor as this Agreement provides Abbott Nutrition with respect to Distributor, so that if Abbott Nutrition exercises a right hereunder, Distributor will have the power to comply with respect to all Licensed Products and all of the Territory by exercising corresponding rights with respect to each sub-distributor. Distributor will be responsible for monitoring and regulating the conduct of all sub-distributors and/or Distributor-appointed owner operators.  Distributor will ensure that any approved sub-distributor meets the quality, financial, legal, ethical and technical requirements to sub-distribute the Licensed Products in accordance with applicable laws and with the standard of care that is commercially reasonable and that could be reasonably expected in the nutritional beverage industry. The approved appointment of sub-distributors under this Section will not release the Distributor from any of its rights and obligations under this Agreement and Abbott Nutrition will continue to hold the Distributor responsible for, and the Distributor will hold Abbott Nutrition harmless from, any acts of its sub-distributors in the performance of this Agreement.

 

  

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9.  TERM

 

The period during which this Agreement remains in effect is referred to as the “Term”. The initial Term will commence on the Effective Date and will continue for three (3) years, unless terminated sooner pursuant to Sections 10 or 11. Thereafter, provided neither party is in default, this Agreement will automatically renew for separate, successive one (1) year renewal periods, unless (i) earlier terminated pursuant to Sections 10 or 11 or, (ii) either party is notified in writing of the other party's decision that the Agreement shall be terminated at least ninety (90) days in advance of the end of the Term or then-current renewed Term, or such longer notice period as may be required by applicable law.

 

10.  TERMINATION FOR CAUSE

 

10.1  Termination for Cause.  Unless otherwise provided by applicable law, this Agreement may be terminated by either party if the other party breaches or fails to perform or observe any of its representations, covenants or obligations hereunder, upon written notice stating the nature and character of such failure and allowing the breaching party thirty (30) days to cure such failure; provided, however, if such failure is of such a nature that it can not reasonably be cured within thirty (30) days, then the breaching party shall have an additional thirty (30) day period to cure such breach, providing it immediately commences, and thereafter diligently prosecutes, in good faith, its best efforts to cure such breach.  If such failure has not been corrected within the applicable cure period, the party that delivered such notice may terminate this Agreement immediately upon further written notice to the breaching party to such effect.

 

10.2  Automatic Termination. This Agreement will immediately terminate, without further act or notice, upon the happening of any of the following events, unless otherwise provided by applicable law:

 

(i)  A party hereto becomes insolvent, or files a voluntary petition, or acquiesces to an involuntary petition, pursuant to any bankruptcy act or law, or an order is entered in any involuntary proceeding which remains unstayed for more than thirty (30) days, or a petition is filed for, or a party consents to the appointment of, or possession is taken by, a trustee, receiver or similar official for a party or all or a substantial part of its business, or an order is entered appointing any such official which remains unstayed for more than thirty (30) days; or

 

  

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(ii)  A party ceases all or a material part of, or makes a material change in, its business, or an order is entered by a court of competent jurisdiction decreeing the dissolution of a party (otherwise than in the course of a bona fide reorganization or restructuring previously approved in writing by the other party) or the administration or the occurrence of any analogous event.

 

10.3  Abbott Termination Rights. Unless otherwise provided by applicable law, this Agreement may be terminated by Abbott Nutrition immediately upon giving notice to Distributor, if (i) Distributor transfers or attempts to transfer, directly or indirectly, any of its rights or privileges hereunder in violation of Section 8; (ii) Distributor negligently or fraudulently acts or fails to act with respect to its reporting obligations hereunder, including Reports as provided in Section 3.3; (iii) Distributor fails to perform any advertising, promotional, merchandising, funding, rebate or similar program established by Abbott Nutrition; (iv) Distributor fails to obtain by the end of the first Contract Year or thereafter maintain the Distribution Requirements in Section 2.3; or (v) there is any material change in the control of Distributor or Distributor sells all or substantially all of its assets, without the prior written consent of Abbott Nutrition.

 

10.4  Other.  Certain other provisions of this Agreement address additional termination rights of the parties.

 

11.  TERMINATION WITHOUT CAUSE

 

11.1  By Agreement or Upon Notice.  By mutual written agreement, the parties may terminate this Agreement at any time.  In addition, the parties acknowledge that either of them may wish to terminate this Agreement without reference to or the need to document the occurrence of defaults, breaches or shortcomings of the other. Accordingly, either party may terminate this Agreement without compensation to the other, for any reason or no reason at all, upon ninety (90) days' prior written notice in writing with mutually signed agreement that both parties agree to terminate this agreement with no compensation to the other, or such longer notice period as may be required by applicable law, effective as of the expiration of such notice period or, if terminated by Distributor, such earlier date (if any) as Abbott Nutrition may specify.

 

11.2  Liquidated Compensation to Distributor for Termination Without Cause.  (i) If Abbott Nutrition terminates this Agreement without cause as provided in Section 11.1, Distributor shall, provided it complies in all material respects with its obligations below, be entitled to receive Liquidated Compensation. The payments of such Liquidated Compensation conclusively shall be deemed to be in full and complete satisfaction of all claims and causes of action Distributor may have relating in any way to the termination hereof, and, to the extent allowable by law, to supersede any applicable statute or rule regulating termination of distribution agreements or similar matters, or otherwise. Distributor agrees to confirm the foregoing in a written instrument reasonably acceptable to Abbott Nutrition as a condition to payment of such Liquidated Compensation.

 

(ii)       As used herein:  (a) “Liquidated Compensation” means 2 times the Gross Profit actually earned by the Distributor from the sale of the Licensed Products during the twelve (12) full calendar months immediately preceding the effective date of termination; (b) "Gross Profits" means Distributor's Net Selling Price of all Licensed Products less the Net Invoice paid by Distributor to Abbott Nutrition; (c) "Net Invoice" means Abbott Nutrition’s total invoice price for all Licensed Products sold to Distributor during such period, net of all discounts, allowances and rebates; (d) "Net Selling Price" means Distributor’s average selling price for all Licensed Products sold to Distributor's customers during such period, net of all discounts, allowances and rebates, plus all bill-backs and marketing or promotional support payments paid or payable to Distributor from Abbott Nutrition during such period.

 

  

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(iii)  Distributor shall provide to Abbott Nutrition the following information to support its calculation of Liquidated Compensation:  (a) a detailed schedule enumerating each and every account served by the Distributor, and/or as available by owner operator, with Abbott Nutrition products directly  (b) detailed information relating to each account indicating servicing, prices, delivery frequency, promotions and all other relevant information necessary to continue servicing said account in an orderly fashion; and (c) detailed financial statements/records supporting the claim for Gross Profits to also include sales by volume and dollars, by account for the immediately preceding six (6) month period, upon which Liquidated Compensation is to be based.

 

(iv)  Abbott Nutrition shall have sixty (60) days after Abbott Nutrition receives such information to review Distributor’s books and records in accordance with Section 3.3.  Provided such review supports the Distributor’s calculation of Liquidated Compensation, Abbott Nutrition shall have thirty (30) days to make such payment to Distributor.

 

 

12.  EFFECT OF TERMINATION; POST-TERMINATION

 

12.1  Cessation of Privileges; Accounting; Right of Set-Off. Upon termination of this Agreement:

 

(i)  all rights and privileges of Distributor hereunder will cease and Distributor will immediately discontinue the sale of Licensed Products and the use of the Marks, including, but not limited to use of the Marks in domain names, URL's, websites, business names, directory listings, or any other printed or digital media;

 

(ii)  Abbott Nutrition may cancel unfilled orders and stop any shipment to Distributor; and

 

(iii)  the parties promptly will do an accounting of and settle all outstanding amounts owed one another on account of promotions, discounts, charge-backs, cooperative or other optional advertising programs.

 

12.2  Distributor Inventory. Upon notice of termination of this Agreement, Distributor will furnish Abbott Nutrition with an itemized list of its inventory of all Licensed Products by SKU's, and of all packaging, advertising, promotional and other materials bearing any of the Marks, wherever located. Abbott Nutrition may make an inspection of such inventory. Within forty-five (45) days after the effective date of termination, Abbott Nutrition will purchase (a) all of Distributor's saleable and unopened inventories of Licensed Products with at least six months of shelf-life remaining, which are in good and merchantable condition, in the reasonable opinion of Abbott Nutrition, at Distributor's floor cost plus agreed handling costs, not to exceed One Dollar ($1.00) per case, and (b) all other inventories of visible materials related to the Licensed Products that cannot otherwise be utilized by the Distributor, at Abbott Nutrition’s net book value.

 

  

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12.3  Continued Supply of Licensed Products After Termination.  In the event Abbott Nutrition continues to supply Licensed Products to Distributor for any reason following the termination of this Agreement, Distributor acknowledges and agrees that any such action shall not constitute a waiver of Abbott Nutrition’s rights under this Agreement or a reinstatement, renewal or continuation of the term of this Agreement.  Abbott Nutrition and Distributor agree that if Abbott Nutrition, in its discretion, continues to supply Licensed Products to Distributor following the termination of this Agreement on a mere purchase order basis, (a) Distributor shall be prohibited from selling or otherwise transferring Licensed Products except to Outlets within the Territory, (b) Distributor shall promptly pay the prices of the Licensed Products in full (without deduction or set-off for any reason) in accordance with the payment terms set forth in Abbott Nutrition’s invoice, (c) such continued supply by Abbott Nutrition shall not in any way constitute a renewal or reinstatement of this Agreement, and (d) Abbott Nutrition shall have the right, in its sole discretion, to discontinue supplying Licensed Products to Distributor at any time, with a 15 day  notice to Distributor.

 

12.4  Survival. Sections 3.3, 4.7, 4.8, 6.2, 7, 12, 14, 15, 17, 18, 20 and 30 will survive termination of this Agreement.

 

12.5  Sole Remedy.  The express provisions of this Agreement providing for certain rights and obligations of each party upon termination shall constitute the sole and exclusive remedy for any termination of this Agreement, subject to the limitations expressly set forth in this Agreement.

 

13.  FORCE MAJEURE

 

Any delay in the performance of any of the duties or obligations of any party (except the payment of money due hereunder) caused by an event outside the affected party’s reasonable control, shall not be considered a breach of this Agreement, and unless provided to the contrary herein, the time required for performance shall be extended for a period equal to the period of such delay.  Such events shall include, without limitation, acts of God; acts of the public enemy; terrorist acts; insurrections; riots; injunctions; embargoes; labor disputes, including strikes, lockouts, job actions, or boycotts; fires; explosions; floods; earthquakes; shortages of material or energy; delays in the delivery of raw materials, or other unforeseeable causes beyond the reasonable control and without the fault or negligence of the party so affected.  The party so affected shall give prompt notice to the other party of such cause, and shall take whatever reasonable steps are necessary to relieve the effect of such cause as rapidly as reasonably possible.

 

  

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14.  INDEMNIFICATION

 

14.1  By Distributor.  Distributor agrees to defend, indemnify and hold Abbott Nutrition harmless for any and all claims, demands, costs, liabilities, damages and expenses (including reasonable attorneys’ fees and expenses), incurred by, or threatened against, Abbott Nutrition, regardless of the claimant or the claimant’s place of filing a claim, resulting from or any way associated with a claim in connection with: (i) the breach of any representation or warranty by Distributor or Distributor's officers, directors, employees, sub-distributors, or agents acting on behalf of Distributor, (ii) any act or omission of Distributor relating to Distributor’s distribution, storage, marketing, selling or supply of Licensed Products, and/or (iii) Distributor’s other breach of this Agreement.

 

14.2  No Joinder.  Distributor agrees not to join Abbott Nutrition or any Abbott Nutrition employee as a party in any action at law or in equity or in any other proceeding, arising out of the liabilities, duties and responsibilities that Distributor assumes or performs pursuant to this Agreement.  Distributor shall promptly notify Abbott Nutrition of any and all actions at law or equity or claims or governmental administrative proceedings of which it becomes aware, arising out of the operation or performance of this Agreement.

 

14.3  By Abbott Nutrition.  Abbott Nutrition shall defend and/or settle third party claims brought against Distributor alleging personal injury liability that is proximately and solely caused by defects in Licensed Products supplied to Distributor by Abbott Nutrition and shall pay any damages finally awarded in connection therewith, provided that (i) such defect existed at the time the Licensed Product was shipped by Abbott Nutrition; (ii) the Licensed Product has not been subject to misuse, negligence or accident; and (iii) Distributor promptly notifies Abbott Nutrition of such claims, gives Abbott Nutrition sole control over the defense and/or settlement of such claims, and provides Abbott Nutrition with full information and reasonable assistance in the defense of such claims.

 

14.4  Third Party Claim.  If any action or proceeding (a “Third Party Claim”) is brought by a person or entity not a party to this Agreement against either party hereto which, if proven and paid by such party, would give such party a right of indemnity under Section 14.1 or 14.3 (the “Indemnified Party”), the Indemnified Party shall promptly notify the party required to provide indemnification (the “Indemnifying Party”) in writing to that effect.  If the Indemnified Party fails to promptly notify the Indemnifying Party, the Indemnified Party shall be deemed to have waived any right of indemnification with respect to such Third Party Claim to the extent (but only to the extent) any delay in such notice prejudices the Indemnifying Party’s ability to defend same.  The Indemnifying Party shall have the right to defend the Third Party Claim at the Indemnifying Party’s sole cost, by counsel satisfactory to Indemnifying Party.  If the Indemnifying Party fails to promptly defend or otherwise settle or finally resolve the Third Party Claim, Indemnified Party may defend the Third Party Claim using counsel selected by Indemnified Party, and the Indemnifying Party shall reimburse Indemnified Party for any resulting loss, damages, costs, charges, attorney’s fees, and other expenses and the related costs of defending the Third Party Claim.

 

14.5  Survival.  The indemnification obligations of the Parties set forth in this Section 14 shall apply during the Term and for a period of five (5) years after the expiration or other termination of this Agreement, after which time they shall terminate, except with respect to claims notified to the indemnifying party prior to the expiration of said five year period.

 

  

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15.  LIMITATION OF LIABILITY

 

15.1  LIMITS AND EXCLUSIONS.  ABBOTT NUTRITION'S LIABILITY ARISING OUT OF THIS AGREEMENT, THE TERMINATION THEREOF, AND/OR SALE OF THE LICENSED PRODUCTS SHALL BE LIMITED TO THE AMOUNT PAID BY THE DISTRIBUTOR FOR THE PRODUCT.  ABBOTT NUTRITION SHALL NOT BE LIABLE TO DISTRIBUTOR OR ANY OTHER PARTY FOR ANY DAMAGES CAUSED BY FAILURE TO MAKE SHIPMENT ON ANY ORDER OR CONTRACT OR FOR DELAY IN DELIVERY OF ANY PRODUCT.  IN NO EVENT SHALL ABBOTT NUTRITION BE LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS, LOST PROFITS, LOSS OF GOODWILL, BUSINESS INTERRUPTION, OR ANY OTHER SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY ARISING OUT OF THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND/OR THE USE OF OR INABILITY TO USE OR SELL THE LICENSED PRODUCTS, AND/OR FROM ANY OTHER CAUSE WHATSOEVER, AND WHETHER OR NOT ABBOTT NUTRITION HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.  THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED HEREIN OR IN THE LIMITED WARRANTY APPLICABLE TO THE LICENSED PRODUCTS.

 

15.2  SEVERABLE PROVISIONS.  EACH AND EVERY PROVISION OF THIS AGREEMENT WHICH PROVIDES FOR A LIMITATION OF LIABILITY OR WARRANTIES, DISCLAIMER, OR EXCLUSION OF DAMAGES, IS EXPRESSLY INTENDED TO BE SEVERABLE AND INDEPENDENT FROM ANY OTHER PROVISION, SINCE THOSE PROVISIONS REPRESENT SEPARATE ELEMENTS OF RISK ALLOCATION BETWEEN THE PARTIES, AND SHALL BE SEPARATELY ENFORCED.

 

16.  RELATIONSHIP OF PARTIES

 

The parties are independent contractors and not agents, partners or joint venturers of one another. Each party will maintain complete control over its respective employees and agents and over its relationship with its respective agents and contractors. Nothing herein creates any contractual relationship (whether employment or otherwise) between a party and any agents or contractors of the other party. Each party will perform its obligations hereunder in accordance with its own methods, subject only to compliance with this Agreement.  Neither party has any express or implied right under this Agreement to assume or create any obligation on behalf of or in the name of the other party, or to bind the other party to any contract, agreement or undertaking with any third party, and no conduct of a party shall be deemed to infer such right. Neither party will be liable for any debts, acts, obligations or torts of the other or its agents, servants or employees. Distributor has not paid nor agreed to pay any direct or indirect fee, royalty or other consideration for the rights conferred on it hereby, and agrees that it is not a franchisee nor the purchaser of a business opportunity within the meaning of, and hereby expressly waives, to the fullest extent permitted by law, the benefits of and any claim under, any statute or rule regulating franchises, business opportunities, dealerships, distribution agreements or similar matters, or any so-called franchisee or distributor protection, or business opportunity or dealership, laws. It is specifically acknowledged that Distributor is not required to maintain an office, warehouse, or place of storage or other facility within the Territory.

 

  

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17.  INSURANCE

 

17.1  Distributor Insurance.  On or prior to the Effective Date, Distributor shall, at its own cost and expense, obtain and thereafter maintain in full force and effect the following insurance during the Term and for a period of not less than two (2) years following termination of this Agreement:

 

(i)  Worker’s Compensation and Occupational Disease Insurance with statutory limits and Employer’s Liability coverage with a minimum limit of Five Hundred Thousand Dollars (US$500,000) per occurrence or (if greater) per state requirements;

 

(ii)  Automobile Liability Insurance with a single limit of liability per occurrence of Two Million Dollars (US$2,000,000) covering all owned, non-owned and hired vehicles; and

 

(iii)  General Liability Insurance including Professional Liability Insurance naming Abbott Nutrition and its subsidiaries as additional insureds with a minimum limit of Two Million Dollars (US$2,000,000) per occurrence and Ten Million Dollars (US$10,000,000) in aggregate with a recognized insurer rated by A.M. Best “A (IX)” or better.

 

17.2  Abbott Nutrition, its Affiliates and their respective directors, officers, employees and agents shall be named as an “additional insured” under this general liability coverage.  Within ten (10) days of the after execution of this Agreement, Distributor shall provide Abbott Nutrition with a certificate of insurance evidencing such insurance, in a form satisfactory to Abbott Nutrition.  The evidence of insurance shall include a statement by the insurer that the policy or policies will not be cancelled or materially altered without giving at least thirty (30) days' prior written notice to Abbott Nutrition.  Distributor shall obtain the prior written consent of Abbott Nutrition before implementing any material change or cancellation of the insurance coverage agreed upon herein.  Distributor shall not make any changes to coverage thresholds that bring Distributor’s required coverage below the minimum requirements stated in this Agreement.  Unapproved reductions in any coverage threshold may result in termination of this Agreement.  Should Distributor, for any reason, fail to procure or maintain the insurance required by this Agreement a breach of this Agreement shall result.  Abbott Nutrition shall then have the right and authority (but not the obligation) to procure such insurance and to charge same to Distributor, which charges shall be payable by Distributor immediately upon notice from Abbott Nutrition.

 

18.  CONFIDENTIALITY

 

18.1  Confidential Information. During the Term, the parties will from time to time disclose to one another non-public information concerning their respective businesses and operations (including plans and trade secrets and the terms of this Agreement) which is confidential and proprietary (“Confidential Information”). Without the prior written approval of the other party, each of the parties agrees that Confidential Information disclosed by the other will not be disclosed or used by it except in connection with this Agreement, other than disclosure to those of its employees, agents and representatives on a reasonable need-to-know basis and who agree to honor the provisions of this Section. Distributor and Abbott Nutrition further agree to hold all information and materials provided to each other, and the terms of this Agreement strictly confidential and shall not disclose such information and materials to any third party (except as to Distributor and Abbott Nutrition's business advisors, legal counsel, tax advisors, and the like) without the prior written consent of the other party. No press releases, publicity statements or other information regarding this Agreement shall be released by the other party hereto without the prior written approval of the other party. Each of the parties will be responsible for any breach of this Section by, and jointly and severally liable with, its employees, agents and representatives.

 

  

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18.2  Exclusions.  Notwithstanding the foregoing, with regards to obligations of nondisclosure or limitations as to use, no party hereto shall have any liability to the other party with respect to the disclosure and/or use of any information or materials which one party can establish to have (i) become publicly known without breach of this Agreement; (ii) been known to such party, without any obligation of confidentiality, prior to disclosure of such information by the other party; (iii) been received in good faith by such party from a third party source having the right to so disclose; or (iv) been required by law to be disclosed, or necessary to enforce a party’s rights hereunder.

 

18.3  Duration of Confidentiality Obligation. The confidentiality obligations described herein shall commence on the date of disclosure of the Confidential Information and shall continue (i) for Confidential Information which qualifies as a trade secret under applicable law, at all times thereafter so long as such Confidential Information so qualifies as a trade secret; and (ii) for all other Confidential Information, for a period of five (5) years following expiration or termination of the Agreement.

 

18.4  Return of Confidential Information. Upon termination of this Agreement, neither party thereafter will use or disclose any Confidential Information received from the other, and will promptly (i) return each and every copy thereof, whether in written or electronic form, or (ii) upon request of the other party, destroy the same together with all documents and materials which contain or are based upon such Confidential Information provided, however, that the receiving party may retain one archival copy thereof, to be stored in a secure location in accordance with this Section 18, for the purposes of determining and enforcing any continuing confidentiality obligations.

 

19.  NO OTHER COMPENSATION; NO INCOME OR PROFITS REPRESENTATION

 

(i)  Distributor and Abbott Nutrition hereby agree that the terms of this Agreement fully define all consideration, compensation and benefits, monetary or otherwise, to be paid, granted or delivered by Distributor to Abbott Nutrition and by Abbott Nutrition to Distributor in connection with the transactions contemplated herein. Neither Abbott Nutrition nor Distributor previously has paid or entered into any other commitment to pay, whether orally or in writing, any Abbott Nutrition or Distributor employee, directly or indirectly, any consideration, compensation or benefits, monetary or otherwise, in connection with the transaction contemplated herein.

 

  

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(ii)  Abbott Nutrition makes no representation, warranty or guarantee whatsoever regarding sales, profits, income, or earnings that the Distributor may realize from this distribution relationship.  Distributor acknowledges same and hereby assumes all risk of business success or failure of the Distributor in the sales of the Licensed Products under this Agreement.

 

20.  DEBARMENT AND EXCLUSION

 

20.1  Distributor represents and warrants that neither it, nor any of its employees nor agents performing hereunder, have ever been, are currently, or are the subject of a proceeding that could lead to it or such employees or agents becoming, as applicable, a Debarred Entity or Debarred Individual, an Excluded Entity or Excluded Individual or a Convicted Entity or Convicted Individual.  Distributor further covenants, represents and warrants that if, during the Term, it, or any of its employees or agents performing hereunder, become or are the subject of a proceeding that could lead to a person becoming, as applicable, a Debarred Entity or Debarred Individual, an Excluded Entity or Excluded Individual or a Convicted Entity or Convicted Individual, Distributor shall immediately notify Abbott Nutrition, and Abbott Nutrition shall have the right to terminate this Agreement immediately. For purposes of this provision, the following definitions shall apply:

 

(i)  A “Debarred Individual” is an individual who has been debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from providing services in any capacity to a person that has an approved or pending drug or biological product application.

 

(ii)  A “Debarred Entity” is a corporation, partnership or association that has been debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from submitting or assisting in the submission of any abbreviated drug application, or a subsidiary or Affiliate of a Debarred Entity.

 

(iii)  An “Excluded Individual” or “Excluded Entity” is (a) an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal health care programs such as Medicare or Medicaid by the Office of the Inspector General (OIG/HHS) of the U.S. Department of Health and Human Services, or (b) is an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal procurement and non-procurement programs, including those produced by the U.S. General Services Administration (GSA).

 

(iv)  A “Convicted Individual” or “Convicted Entity” is an individual or entity, as applicable, who has been convicted of a criminal offense that falls within the ambit of 21 U.S.C. §335a (a) or 42 U.S.C. §1320a - 7(a), but has not yet been excluded, debarred, suspended or otherwise declared ineligible.

 

20.2  Distributor further covenants, represents and warrants that if, during the Term, it, or any of its employees or agents providing services under this Agreement, becomes or is the subject of a proceeding that could lead to that person becoming, as applicable, a Debarred Individual or Debarred Entity, Distributor shall immediately notify Abbott Nutrition, and Abbot Nutrition shall have the right to immediately terminate this Agreement.

 

  

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21.  GOVERNING LAW

 

21.1  This Agreement or the performance, enforcement, breach or termination hereof shall be construed, governed, and interpreted in accordance with the laws of the State of Ohio, United States of America, without regard to conflict of laws principles and the provisions of the United Nations Convention on the International Sale of Goods, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted.  The parties agree that the venue for any claims or proceeding relating to the provisions of this Agreement or in any way arising out of or relating to the relationship of the parties hereunder shall be the federal and state courts located in Franklin County, State of Ohio. The parties irrevocably waive trial by jury in any action, proceeding or counterclaim, whether at law or in equity, brought by either party.

 

22.  NOTICE

 

Any notices required or permitted under this Agreement shall be in writing, shall refer specifically to this Agreement, and shall be sent by recognized national or international overnight courier, confirmed facsimile transmission, confirmed electronic mail, or registered or certified mail, postage prepaid, return receipt requested, or delivered by hand to the following addresses or facsimile numbers of the recipient.

 

If to Distributor:

 

With a copy to:

If to Abbott Nutrition:

Abbott Laboratories Inc.

Abbott Nutrition

3300 Stelzer Road

Columbus, Ohio 43214

Attn: Jeffrey Fischer

Fax:  (614) 727-5722

with a copy to:

Abbott Laboratories

Nutrition Legal Operations

3300 Stelzer Road

Columbus, Ohio 43214

Attn: Senior Counsel

Fax:  (614) 624-3074

  

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Notices under this Agreement shall be deemed to be duly given: (a) when delivered by hand; (b) one (1) business day after confirmed facsimile or electronic mail transmission; or (c) two (2) business days after deposit with a recognized national or international overnight courier; or (d) on the delivery date indicated in the return receipt for registered or certified mail.  A party may change its contact information immediately upon written notice to the other party in the manner provided in this Section.

 

23.  ENTIRE AGREEMENT

 

This Agreement, and the Exhibits and Schedules hereto, contain the entire agreement between the parties with respect to the subject matter hereof, and supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter.

 

24.  SEVERABILITY

 

If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby or thereby, as the case may be, is not affected in any manner adverse to any party.  Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the parties.

 

25.  AMENDMENTS

 

No provisions of this Agreement shall be deemed amended, supplemented or modified unless such amendment, supplement or modification is in writing and signed by an authorized representative of both parties.

 

26.  WAIVER

 

No waiver will be implied from conduct or failure to enforce rights.  No provisions of this Agreement shall be deemed waived unless such waiver is in writing and signed by the authorized representative of the party against whom it is sought to be enforced.  Waiver by either party of any default by the other party of any provision of this Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default.

 

27.  CONSTRUCTION OF AGREEMENT

 

Each party has cooperated in the drafting and preparation of this Agreement and, in any construction to be made of this Agreement, it shall not be construed against any party.

 

  

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28.  COUNTERPARTS

 

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same agreement.  Each party acknowledges that an original signature or a copy thereof transmitted by facsimile shall constitute an original signature for purposes of this Agreement.

 

29.  PUBLIC ANNOUNCEMENTS

 

Neither party shall issue any public announcement, press release or other public disclosure regarding this Agreement or its subject matter, nor use the name of the other party in any publicity, advertising or announcement, without the other party’s prior written consent, except for any such disclosure that is, in the opinion of the disclosing party’s counsel, required by law or the rules of a stock exchange on which the securities of the disclosing party are listed.  In the event a party is, in the opinion of its counsel, required to make a public disclosure by law or the rules of a stock exchange on which its securities are listed, such party shall submit the proposed disclosure in writing to the other party as far in advance as reasonably practicable so as to provide a reasonable opportunity to comment thereon.

 

30.  DISPUTE RESOLUTION

 

If a dispute arises between the parties, the parties shall follow the alternative dispute resolution provisions provided for in Exhibit A.

 

31.  THIRD-PARTY BENEFICIARIES

 

Nothing in this Agreement, express or implied, except as regards permitted sub-distributors of Distributor which are approved by Abbott Nutrition, is intended or shall be construed to give any person or entity, other than the parties to this Agreement and their successors and permitted assigns, any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained in this Agreement.

 

32.  FURTHER ASSURANCES

 

Each party to this Agreement will execute all instruments and documents and take all actions as may be reasonably required from time to time to effectuate this Agreement.

 

 

 

  

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IN WITNESS WHEREOF, each of the parties hereto has caused this Distribution Agreement to be executed by its duly authorized representative as of the Effective Date.

 

 

 

ABBOTT LABORATORIES INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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SCHEDULE 1

LICENSED PRODUCTS

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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SCHEDULE 2

TERRITORY

Counties in the state of Florida consisting of:

Nassau, Duval, Baker, Union, Bradford. Clay, St. John's, Putnam, Flagler, Volusia, Pasco, Pinellas, Hillsborough, Manatee, Hardee, Sarasota, Desoto, Highlands, Glades, Charlotte, Lee, Hendry, Collier, Okeechobee, Indian River, St. Lucie, Martin, Palm Beach, Broward, Dade and Monroe

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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SCHEDULE 3

PRICES AND FREIGHT TERMS

$XXXX/case for all Licensed Product SKUs

SHIPMENT; TRANSFER OF TITLE AND RISK OF LOSS

Abbott Nutrition will be responsible for freight charges to the destination specified by Customer in its order, reserves the right to select the mode and the carrier, and reserves the right to determine the shipping point.

 

Title of the Products and risk of loss will transfer to Customer at the FOB Point upon signature of undamaged product.  but Abbott Nutrition will make such claims on behalf of Customer.  In the event of such a claim against the carrier, payment by Customer to Abbott Nutrition for that portion of the order to which the claim pertains is due five (5) days after resolution of the claim with the carrier.

 

 

 

 

 

 

 

 

 

 

 

  

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SCHEDULE 4

STORAGE INSTRUCTIONS

	
§  

	
Cannot double stack pallets

	
§  

	
Store in food grade warehouse or better

	
§  

	
Avoid extreme temperatures (over 95 degrees Fahrenheit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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EXHIBIT A

ALTERNATIVE DISPUTE RESOLUTION

The parties recognize that from time to time a dispute may arise relating to either party’s rights or obligations under this Agreement. The parties agree that any such dispute shall be resolved by the Alternative Dispute Resolution (“ADR”) provisions set forth in this Exhibit, the result of which shall be binding upon the parties.

 

To begin the ADR process, a party first must send written notice of the dispute to the other party for attempted resolution by good faith negotiations between their respective presidents (or their designees) of the affected subsidiaries, divisions, or business units within twenty-eight (28) days after such notice is received (all references to “days” in this ADR provision are to calendar days). If the matter has not been resolved within twenty-eight (28) days after the notice of dispute, or if the parties fail to meet within such twenty-eight (28) days, either party may initiate an ADR proceeding as provided herein. The parties shall have the right to be represented by counsel in such a proceeding.

 

1.           To begin an ADR proceeding, a party shall provide written notice to the other party of the issues to be resolved by ADR. Within fourteen (14) days after its receipt of such notice, the other party may, by written notice to the party initiating the ADR, add additional issues to be resolved within the same ADR.

 

2.           Within twenty-one (21) days following the initiation of the ADR proceeding, the parties shall select a mutually acceptable independent, impartial and conflicts-free neutral to preside in the resolution of any disputes in this ADR proceeding. If the parties are unable to agree on a mutually acceptable neutral within such period, each party will select one independent, impartial and conflicts-free neutral and those two neutrals will select a third independent, impartial and conflicts-free neutral within ten (10) days thereafter.  None of the neutrals selected may be current or former employees, officers or directors of either party, its subsidiaries or affiliates.

 

3.           No earlier than twenty-eight (28) days or later than fifty-six (56) days after selection, the neutral(s) shall hold a hearing to resolve each of the issues identified by the parties. The ADR proceeding shall take place at a location agreed upon by the parties. If the parties cannot agree, the neutral(s) shall designate a location other than the principal place of business of either party or any of their subsidiaries or Affiliates.

 

4.           At least seven (7) days prior to the hearing, each party shall submit the following to the other party and the neutral(s):

 

(a)           a copy of all exhibits on which such party intends to rely in any oral or written presentation to the neutral;

 

(b)           a list of any witnesses such party intends to call at the hearing, and a short summary of the anticipated testimony of each witness;

 

  

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(c)           a proposed ruling on each issue to be resolved, together with a request for a specific damage award or other remedy for each issue. The proposed rulings and remedies shall not contain any recitation of the facts or any legal arguments and shall not exceed one (1) page per issue. The parties agree that neither side shall seek as part of its remedy any punitive damages.

 

(d)           a brief in support of such party’s proposed rulings and remedies, provided that the brief shall not exceed twenty (20) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding.

 

Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery shall be required or permitted by any means, including depositions, interrogatories, requests for admissions, or production of documents.

 

5.           The hearing shall be conducted on two (2) consecutive days and shall be governed by the following rules:

 

(a)           Each party shall be entitled to five (5) hours of hearing time to present its case. The neutral shall determine whether each party has had the five (5) hours to which it is entitled.

 

(b)           Each party shall be entitled, but not required, to make an opening statement, to present regular and rebuttal testimony, documents or other evidence, to cross-examine witnesses, and to make a closing argument. Cross-examination of witnesses shall occur immediately after their direct testimony, and cross-examination time shall be charged against the party conducting the cross-examination.

 

(c)           The party initiating the ADR shall begin the hearing and, if it chooses to make an opening statement, shall address not only issues it raised but also any issues raised by the responding party. The responding party, if it chooses to make an opening statement, also shall address all issues raised in the ADR. Thereafter, the presentation of regular and rebuttal testimony and documents, other evidence, and closing arguments shall proceed in the same sequence.

 

(d)           Except when testifying, witnesses shall be excluded from the hearing until closing arguments.

 

(e)           Settlement negotiations, including any statements made therein, shall not be admissible under any circumstances. Affidavits prepared for purposes of the ADR hearing also shall not be admissible. As to all other matters, the neutral(s) shall have sole discretion regarding the admissibility of any evidence.

 

6.           Within seven (7) days following completion of the hearing, each party may submit to the other party and the neutral(s) a post-hearing brief in support of its proposed rulings and remedies, provided that such brief shall not contain or discuss any new evidence and shall not exceed ten (10) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding.

 

  

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7.           The neutral(s) shall rule on each disputed issue within fourteen (14) days following completion of the hearing. Such ruling shall adopt in its entirety the proposed ruling and remedy of one of the parties on each disputed issue but may adopt one party’s proposed rulings and remedies on some issues and the other party’s proposed rulings and remedies on other issues. The neutral(s) shall not issue any written opinion or otherwise explain the basis of the ruling.

 

8.           The neutral(s) shall be paid a reasonable fee plus expenses. These fees and expenses, along with the reasonable legal fees and expenses of the prevailing party (including all expert witness fees and expenses), the fees and expenses of a court reporter, and any expenses for a hearing room, shall be paid as follows:

 

(a)           If the neutral(s) rule(s) in favor of one party on all disputed issues in the ADR, the losing party shall pay one hundred percent (100%) of such fees and expenses.

 

(b)           If the neutral(s) rule(s) in favor of one party on some issues and the other party on other issues, the neutral(s) shall issue with the rulings a written determination as to how such fees and expenses shall be allocated between the parties. The neutral(s) shall allocate fees and expenses in a way that bears a reasonable relationship to the outcome of the ADR, with the party prevailing on more issues, or on issues of greater value or gravity, recovering a relatively larger share of its legal fees and expenses.

 

9.           The rulings of the neutral(s) and the allocation of fees and expenses shall be binding, non-reviewable, and non-appealable, and may be entered as a final judgment in any court having jurisdiction.

 

10.           Except as provided in paragraph 9 or as required by law, the existence of the dispute, any settlement negotiations, the ADR hearing, any submissions (including exhibits, testimony, proposed rulings, and briefs), and the rulings shall be deemed Confidential Information. The neutral(s) shall have the authority to impose sanctions for unauthorized disclosure of Confidential Information.

 

11.           All ADR hearings shall be conducted in the English language.

 

 

 

 

 

  

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