Document:

f8k070811ex10ii_dcbrands.htm

Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement ("Agreement"), dated July 08, 2011, is made by and between DC BRANDS INTERNATIONAL, INC., a Colorado corporation ("Company"), and SOUTHRIDGE PARTNERS II, LP, a Delaware limited partnership (the "Investor").

RECITALS

WHEREAS, upon the terms and subject to the conditions of the Equity Purchase Agreement ("Purchase Agreement"), between the Investor and the Company, the Company has agreed to issue and sell to the Investor shares (the "Put Shares") of its common stock, par value $0.001 per share (the "Common Stock") from time to time for an aggregate investment price of up to Ten Million Dollars ($10,000,000) (the "Registrable Securities"); and

WHEREAS, to induce the Investor to execute and deliver the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, "Securities Act"), and applicable state securities laws with respect to the Registrable Securities;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

1.           Definitions.

(a)         As used in this Agreement, the following terms shall have the following meaning:

 

(i)          "Subscription Date" means the date of this Agreement.

(ii)         "Investor" has the meaning set forth in the preamble to this Agreement.

(iii)        "Register," "registered" and "registration" refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a delayed or continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement by the United States Securities and Exchange Commission (the "SEC").

(iv)        "Registrable Securities" will have the same meaning as set forth in the Purchase Agreement.

(v)         "Registration Statement" means the Company’s registration statement on Form S-1, or any similar registration statement of the Company filed with SEC under the Securities Act with respect to the Registrable Securities.

 

  

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(vi)        "EDGAR" means the SEC's Electronic Data Gathering, Analysis and Retrieval System.

(vii)       “Allowed Extension” shall have the meaning ascribed to it in Section 3(n) below.

 

(b)         Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement.

2.           [RESERVED]

3.           Obligation of the Company.  In connection with the registration of the Registrable Securities, the Company shall do each of the following:

 

(a)   Prepare promptly and file with the SEC within  one hundred twenty days(120)  days after the date hereof, a Registration Statement with respect to not less than 100,000,000 of Registrable Securities, and thereafter use all commercially reasonable efforts to cause such Registration Statement relating to the Registrable Securities to become effective within five (5) business days after notice from the Securities and Exchange Commission that such Registration Statement may be declared effective, and keep the Registration Statement effective at all times until the earliest of (i) the date that is three months after the completion of the last Closing Date under the Purchase Agreement, (ii) the date when the Investor may sell all Registrable Securities under Rule 144 without volume limitations, or (iii) the date the Investor no longer owns any of the Registrable Securities (collectively, the "Registration Period"), which Registration Statement (including any amendments or supplements, thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; .

 

(b)   SEC SHARE REDUCTION. Notwithstanding the foregoing, if the Company is advised by the staff of the Commission in a written comment letter or otherwise that the Staff or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities that does not permit such Registration Statement to become effective and be used for resales by the Investor on a delayed or continuous basis under Rule 415 at then-prevailing market prices (and not fixed prices)(or as otherwise may be acceptable to the Investor), because of the number of shares sought to be included in the Registration Statement, then the Company may reduce (an “SEC Share Reduction”) the number of shares covered by such Registration Statement to the maximum number which would still enable the Staff and the SEC to allow the Company to conduct such offering in accordance with the provisions of Rule 415 and to permit such Registration Statement to become effective and be used as aforesaid.

 

  

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(c)   Prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective at all times during the Registration Period, and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until the expiration of the Registration Period.

(d)   With respect to the Registrable Securities, permit counsel designated by Investor to review the Registration Statement and all amendments and supplements thereto a reasonable period of time (but not less than two (2) business days) prior to their filing with the SEC, and not file any document in a form to which such counsel reasonably objects.

(e)   As promptly as practicable after becoming aware of the following facts, the Company shall notify Investor and Investor’s legal counsel identified to the Company and (if requested by any such person) confirm such notice in writing no later than one (1) business day thereafter (i): (A) when a prospectus or any prospectus supplement or post-effective amendment to the Registration Statement is filed; (B) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any proceedings for that purpose; and (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose.

(f)   Unless available to the Investor without charge through EDGAR, the SEC's website or the Company's website, furnish to Investor,  promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one (1) copy of the Registration Statement, each preliminary prospectus and the prospectus, and each amendment or supplement thereto;

 

  

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(g)   Use all commercially reasonable  efforts to (i) register and/or qualify the Registrable Securities covered by the Registration Statement under such other securities or blue sky laws of such jurisdictions as the Investor may reasonably request and in which significant volumes of shares of Common Stock are traded, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof at all times during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualification in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions: provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (A) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (B) subject itself to general taxation in any such jurisdiction, (C) file a general consent to service of process in any such jurisdiction, (D) provide any undertakings that cause more than nominal expense or burden to the Company or (E) make any change in its charter or by-laws or any then existing contracts, which in each case the Board of Directors of the Company determines to be contrary to the best interests of the Company and its stockholders;

(h)   As promptly as practicable after becoming aware of such event, notify the Investor of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading ("Registration Default"), and promptly prepare a supplement or amendment to the Registration Statement or other appropriate filing with the SEC to correct such untrue statement or omission, and take any other commercially reasonable steps to cure the Registration Default, and, unless available to the Investor without charge through EDGAR, the SEC's website or the Company's website, deliver a number of copies of such supplement or amendment to the Investor as the Investor may reasonably request.  Upon such notification, Investor will immediately stop distribution of the prospectus included in the Registration Statement until such time as the supplement or amendment of other filing is made with the SEC to correct such untrue statement or omission.

(i)   INTENTIONALLY OMITTED];

(j)   Use its commercially reasonable efforts, if eligible, either to (i) cause all the Registrable Securities covered by the Registration Statement to be listed on a national securities exchange and on each additional national securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure designation of all the Registrable Securities covered by the Registration Statement as a National Association of Securities Dealers Automated Quotations System ("Nasdaq”) security within the meaning of Rule 11Aa2-1 of the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the quotation of the Registrable Securities on the Nasdaq Capital Market; or if, despite the Company’s commercially reasonable efforts to satisfy the preceding clause (i) or (ii), the Company is unsuccessful in doing so, to use its commercially reasonable efforts to secure authorization of the Financial Industry Regulatory Authority (“FINRA”) and quotation for such Registrable Securities on the over-the-counter bulletin board and, without limiting the generality of the foregoing;

 

  

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(k)   Provide a transfer agent for the Registrable Securities not later than the Subscription Date under the Purchase Agreement;

(l)   Cooperate with the Investor to facilitate the timely preparation and delivery of certificates for the Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates for the Registrable Securities to be in such denominations or amounts as the case may be but not less than denominations of 100,000 shares, as the Investor may reasonably request and registration in such names as the Investor may request; and, within five (5) business days after a Registration Statement which includes Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registrable Securities (with copies to the Investor) an appropriate instruction and opinion of such counsel, if so required by the Company’s transfer agent; and

(m)   Take all other commercially reasonable actions necessary to expedite and facilitate distribution to the Investor of the Registrable Securities pursuant to the Registration Statement.

(n)   Notwithstanding the foregoing, the Company may delay the initial registration of Registrable Securities pursuant to Section 3(a) hereof for the time periods described in this Section 2(n) hereof to the extent reasonably necessary due to the occurrence of any of the following (each an “Allowed Extension” ):

 

(i)   The Company shall have previously entered into an agreement or letter of intent contemplating an underwritten public offering on a firm commitment basis of Common Stock or securities convertible into or exchangeable for Common Stock and the managing underwriter of such proposed public offering advises the Company in writing that in its opinion such proposed underwritten offering would be materially and adversely affected by a concurrent registered offering of Registrable Securities (such opinion to state the reasons therefore);

 

(ii)   During the two (2) month period immediately preceding such request, the Company shall have entered into an agreement or letter of intent, which has not expired or otherwise terminated, contemplating a material business acquisition by the Company or its subsidiaries whether by way of merger, consolidation, acquisition of assets, acquisition of securities or otherwise;

 

(iii)   The Company is in possession of material nonpublic information that the Company would be required to disclose in the Registration Statement and that is not, but for the registration, otherwise required to be disclosed at the time of such registration, the disclosure of which, in its good faith judgment, would have a material adverse effect on the business, operations, prospects or competitive position of the Company;

 

  

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(iv)   The Company shall receive the written opinion of the managing underwriter of the underwritten public offering pursuant to which Common Stock has been registered within the three (3) month period prior to the receipt of a registration request that the registration of additional Common Stock will materially and adversely affect the market for the Common Stock (such opinion to state the reasons therefore); or

 

(v)   At the time of receipt of a registration request, the Company is engaged, or its board of directors has adopted by resolution a plan to engage, in any program for the purchase of Common Stock or securities convertible into or exchangeable for Common Stock and, in the opinion of counsel, reasonably satisfactory to the requesting Holders, the distribution of the Common Stock to be registered would cause such purchase to be in violation of Regulation M promulgated under the Exchange Act.

 

(vi)   If an event described in clauses (i) through (iv) of Section 3(n) shall occur, the Company may, by written notice to the Investor, delay the filing of a Registration Statement with respect to the Registrable Securities to be covered thereby for a period of time not exceeding an aggregate of 60 days.  If an event described in clause (v) of this Section 3(n) shall occur, the filing of a Registration Statement with respect to the Registrable Securities to be covered thereby shall be delayed until the first date that the Registrable Securities to be covered thereby can be sold without violation of Regulation M of the Exchange Act.  

4.         Obligations of the Investor.  In connection with the registration of the Registrable Securities, the Investor shall have the following obligations;

(a)    It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of the Investor that the Investor shall timely furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall timely execute such documents in connection with such registration as the Company may reasonably request.

 

(b)   The Investor by such Investor’s acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder; and

 

  

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(c)   The Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(d)(ii) or (iii) or 3(g) above, the Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until the Investor receives the copies of the supplemented or amended prospectus contemplated by Section 3(d)(ii) or (iii) or 3(g) and, if so directed by the Company, the Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Investor’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

5.         Expenses of Registration.  All reasonable expenses incurred in connection with registrations, filings or qualifications pursuant to Section 3, including, without limitation, all registration, listing, and qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company shall be borne by the Company.  Investor shall bear all expenses of its own counsel.

6.         Indemnification.  After Registrable Securities are included in a Registration Statement under this Agreement:

(a)   To the extent permitted by law, the Company will indemnify and hold harmless, the Investor, the directors, if any, of such Investor, the officers, if any, of such Investor, each person, if any, who controls the Investor within the meaning of the Securities Act or the Exchange Act (each, an "Indemnified Person"), against any losses, claims, damages, liabilities or expenses (joint or several) incurred (collectively, "Claims") to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law (the matters in the foregoing clauses (i) through (iii) being collectively referred to as  "Violations").  Subject to Section 6(b) hereof, the Company shall reimburse the Investor, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.   Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a) shall not (i) apply to any Claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(b) hereof; (ii) with respect to any preliminary prospectus, inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, if such prospectus was timely made available by the Company pursuant to Section 3(b) hereof; (iii) be available to the extent such Claim is based on a failure of the Investor to deliver or cause to be delivered the prospectus made available by the Company; or (iv) apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the  Company, which consent shall not be unreasonably withheld.  The Investor will indemnify the Company, its officers, directors and agents (including legal counsel) against any claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company, by or on behalf of the Investor, expressly for use in connection with the preparation of the Registration Statement, subject to such limitations and conditions set forth in the previous sentence.

 

  

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(b)   Promptly after receipt by an Indemnified Person under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Person shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person, as the case may be; provided, however, that an Indemnified Person shall have the right to retain its own counsel with the reasonable fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person and any other party represented by such counsel in such proceeding.  In such event, the Company shall pay for only one separate legal counsel for the Investor selected by the Investor.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.  The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable.

7.         Contribution.   To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that (a) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (b) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation; and (c) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

 

  

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8.         Reports under Exchange Act.  With a view to making available to the Investor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to use its commercially reasonable efforts to:

(a)   make and keep public information available, as those terms are understood and defined in Rule 144;

(b)   file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act for so long as the Company remains subject to such requirements, and the filing of such reports is required for sales under Rule 144;

(c)   furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) unless available to the Investor without charge through EDGAR, the SEC's website or the Company's website, a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration; and

(d)   at the request of any Investor of Registrable Securities, give its Transfer Agent instructions (supported by an opinion of Company counsel, if required or requested by the Transfer Agent) to the effect that, upon the Transfer Agent’s receipt from such Investor of:

(i)   a certificate (a “Rule 144 Certificate”) certifying (A) that such Investor has held the shares of Registrable Securities which the Investor proposes to sell (the “Securities Being Sold”) for a period of not less than (1) year and a standard broker representation letter(B) as to such other matters as may be appropriate in accordance with Rule 144 under the Securities Act, and

(ii)   an opinion of counsel acceptable to the Company (for which purposes it is agreed that the Company’s counsel shall be deemed acceptable) that, based on the Rule 144 Certificate, Securities Being Sold  may be sold pursuant to the provisions of Rule 144, even in the absence of an effective Registration Statement,

 

  

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the Transfer Agent is to effect the transfer of the Securities Being Sold and issue to the buyer(s) or transferee(s) thereof one or more stock certificates representing the transferred Securities Being Sold without any restrictive legend and without recording any restrictions on the transferability of such shares on the Transfer Agent’s  books and records (except to the extent any such legend or restriction results from facts other than the identity of the Investor, as the seller or transferor thereof, or the status, including any relevant legends or restrictions, of the shares of the Securities Being Sold while held by the Investor).   If the Transfer Agent requires any additional documentation at the time of the transfer, the Company shall deliver or cause to be delivered all such reasonable additional documentation as may be necessary to effectuate the issuance of an unlegended certificate.

9.         Miscellaneous.

(a)       Registered Owners.  A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities.  If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.

(b)       Rights Cumulative; Waivers.  The rights of each of the parties under this Agreement are cumulative.  The rights of each of the parties hereunder shall not be capable of being waived or varied other than by an express waiver or variation in writing.  Any failure to exercise or any delay in exercising any of such rights shall not operate as a waiver or variation of that or any other such right.  Any defective or partial exercise of any of such rights shall not preclude any other or further exercise of that or any other such right.  No act or course of conduct or negotiation on the part of any party shall in any way preclude such party from exercising any such right or constitute a suspension or any variation of any such right.

(c)       Benefit; Successors Bound.  This Agreement and the terms, covenants, conditions, provisions, obligations, undertakings, rights, and benefits hereof, shall be binding upon, and shall inure to the benefit of, the undersigned parties and their successors. This Agreement shall not be assignable.

(d)       Entire Agreement.  This Agreement contains the entire agreement between the parties with respect to the subject matter hereof.  There are no promises, agreements, conditions, undertakings, understandings, warranties, covenants or representations, oral or written, express or implied, between them with respect to this Agreement or the matters described in this Agreement, except as set forth in this Agreement and in the other documentation relating to the transactions contemplated by this Agreement.  Any such negotiations, promises, or understandings shall not be used to interpret or constitute this Agreement.

 

  

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(e)        Amendment.  Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investor.  Any amendment or waiver affected in accordance with this Section 9 shall be binding upon the Company.

(f)        Severability.  Each part of this Agreement is intended to be severable.  In the event that any provision of this Agreement is found by any court or other authority of competent jurisdiction to be illegal or unenforceable, such provision shall be severed or modified to the extent necessary to render it enforceable and as so severed or modified, this Agreement shall continue in full force and effect.

(g)        Notices.  Notices required or permitted to be given hereunder shall be in writing and shall be deemed to be sufficiently given when personally delivered (by hand, by courier, by telephone line facsimile transmission, receipt confirmed, email or other means) or sent by certified mail, return receipt requested, properly addressed and with proper postage pre-paid (i) if to the Company, at its executive office and (ii) if to the Investor, at the address set forth under its name in the Purchase Agreement, with a copy to its designated attorney, or at such other address as each such party furnishes by notice given in accordance with this Section 9(g), and shall be effective, when personally delivered, upon receipt and, when so sent by certified mail, five (5) business days after deposit with the United States Postal Service.

(h)        Governing Law.   This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without regard to the principles of conflicts of law. Each of the Company and Investor hereby submit to the exclusive jurisdiction of the United States Federal and state courts located in New York with respect to any dispute arising under this Agreement, the agreements entered into in connection herewith or the transactions contemplated hereby or thereby.

(i)        Consents.  The person signing this Agreement on behalf of each party hereby represents and warrants that he has the necessary power, consent and authority to execute and deliver this Agreement on behalf of that party.

(j)        Further Assurances.  In addition to the instruments and documents to be made, executed and delivered pursuant to this Agreement, the parties hereto agree to make, execute and deliver or cause to be made, executed and delivered, to the requesting party such other instruments and to take such other actions as the requesting party may reasonably require to carry out the terms of this Agreement and the transactions contemplated hereby.

 

  

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(k)       Section Headings.  The Section headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

(l)        Construction.  Unless the context otherwise requires, when used herein, the singular shall be deemed to include the plural, the plural shall be deemed to include each of the singular, and pronouns of one or no gender shall be deemed to include the equivalent pronoun of the other or no gender.

(m)      Execution in Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may be delivered to the other party hereto by email of a .pdf or telephone line facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.  A facsimile transmission or email of a .pdf of this signed Agreement shall be legal and binding on all parties hereto.

[SIGNATURES ON FOLLOWING PAGE]

 

  

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[SIGNATURE PAGE]

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

 

	 	
COMPANY:

 

DC BRANDS INTERNATIONAL

	 
	 	 	 	 
	 	
By: 

	/s/ Robert H. Armstrong	 
	 	 	Name:  Robert H. Armstrong	 
	 	 	Title:    CFO	 

	 	

INVESTOR:

 

SOUTHRIDGE PARTNERS II, LP

	 
	 	 	 	 
	 	
By: 

	/s/ Stephen Hicks	 
	 	 	Name: Stephen Hicks	 
	 	 	Title:   Manager	 

 

 

13f10k2011ex10i_rebornne.htm

Exhibit 10.1

   Rebornne (GuangZhou) Dairy Company Limited

Regional Distributor Agreement Contract

Contract Number:______________________

Name of Distributor:________

Distribute Region:________Province_______City_______County

Date:     Year    Month    Day

(Total    pages)

  

  

  

Parties

Party A:Rebornne (GuangZhou) Dairy Company  (hereinafter referred to as Party A)

Party B:                                                                            ( hereinafter referred to as Party B)

In order to clarify the rights and obligations of both parties to ensure the benefits of both parties, this agreement contract is prepared through friendly consultation between both parties. According to the agreement, Party B will become Party A’s 2011 Rebornne Product series regional distributors and comply with all conditions below.

	
1)  

	
Product Variety and Price

	
i.  

	
Party A provides products that could be sold according to price announced to Party B. During the contract period, Party A shall have the right to adjust the product selling price according to the market changes. Party A shall give 30 days’ written notice (including fax) to Party B regarding the adjustment of cost. The notice with Party A commercial seal stamped should include latest price quotation, and quotations stated period. After the quotations stated period, product price should back to as before (except the new price adjustment occurs).

	
ii.  

	
Party A set the product price in accordance with market conditions. Party B must strictly implement the relevant provisions on product price, raising or decreasing product selling price is prohibited.

	
2)  

	
Regional Distribution Right

Party A authorized Party B as _______________ products _____ channel/s exclusive distributor (not including magazines and Web directory e-commerce). Sales region: ___________ Province _________City __________ County, Party B shall only sell Party A’s products within the distribution area and channel/s that agreed by both parties.

	
3)  

	
The Term of the Agreement

	
i.  

	
The agreement is valid from the effective date of the contract till _______ year ______ month _____ day, a period of one year.

	
ii.  

	
After the expiration of this agreement, if both parties agreed to continue the cooperation, Party B could renew the agreement contract 30 days before the expiry date. Party B has a priority right to renew the contract under the same conditions.

  

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4)  

	
The Sales Target

	
i.  

	
After a full market investigation, the sales target from ____ year ____ month ____ day till ____ year ____ month ____ day for Party B is RMB              . Initial order amount is RMB           . The sales amount is calculated based on the product purchased by Party B within the contract period. Party B should go through a full market investigation 10 days before the effective date of the contract and then provide an annual sales plan in writing to Party A. If Party B provided a defective forecast or no annual plan, Party A can force the development of annual plans.

	
ii.  

	
Party B should make the purchase payment within 3 days from the contract effective date; otherwise Party A has the right to cancel the contract.

	
iii.  

	
Party B must follow the market operation process with Party A since the first arrival of good to Party B warehouse. If Party B cannot achieve the target or accumulated three months of unfinished tasks, then Party A has the right to terminate the contract.

	
iv.  

	
Party Bas the entry into force of this agreement, by virtue of subsection hoard good in advance to play the way to complete the agreed purchase quantity and hence lead the result of slow sales. If evaluation showed that there is amount of no return for two months in a row, or a quarter of the purchase agreement cannot be completed 50% of the amount in that case, Party B then has the right to cancel the distribution qualifications.

	
v.  

	
Party B needs to make the payment in time when agreement comes into effect. If Party B who caused out of stock products, such as deliberately delaying on making payment, resulting Party A’s out of stock products in the market for more than three days, Party A may revoke Party B distributor qualifications.

	
vi.  

	
Party B should cooperate with Party A to build distribution network to promote high market network distribution and establish a perfect distribution system.

	
5)  

	
Planning and Ordering Goods

	
i.  

	
To ensure the rational organization of production and logistics supply products to meet market demand, Party A should complete “Order Application” form 45 days ahead when making order each time. The form requires information including specific product name, size specifications, quantity, unit price and the amount of each fill out. After finishing fill in the form, Party B needs to deliver or fax the original form to Party A office with its signature and commercial seal stamped. At the same time, Party B should make the advance payment 30% of the amount in “Order Application”. If Party A cannot reach Party B requirements on delivery date, Party B will make compensation up to thirty thousand goods price per order.

	
ii.  

	
Party A supplies goods is according to Party B final order. It is Party B own responsibility with liabilities and losses result from “Order Application”, it’s nothing to do with Party A.

 

  

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6)  

	
The Settlement with the Carrier Mode

the settlement payment is implementation of advance payment and delivery. That is, Party B makes advance payment through bank transfer or cash, and Party A will delivery stocks after verifying payment.

	
i.  

	
Rail Transport: Party B as consignee, commissioned Party A to consign the shipment, the goods are transported to the station or the railway following routines:

Delivery Location: City  Station;

Receiving People: ___________ ;Mobile:__________________。

	
ii.  

	
Motor Transport: Party B as consignee, commissioned Party A to consign the shipment, Party B should specify the goods transported to the following locations:

Place of Delivery: ;

Receiving People:___________ ;Mobile:__________________。

	
iii.  

	
Other Transport Options:              _____________

	
iv.  

	
Both parties agree that, Party A bears the freight and insurance of shipment till reach the warehouse that specified by Party B. Bear the cost of risk is not associated with the goods. Party B should bear the costs incur due to the reason that no representative attend to pick up goods.

	
v.  

	
Party B should notify Party A through phone call and present a written document within one working day if goods stolen or damaged during transport. After both parties A and B confirm, and then will hold the responsibility of the parties.

	
vi.  

	
Party B should provide a written notice on the following day to Party A if had not received goods within 10 days after Party A shipping out the goods. If Party B fails to inform Party A in time, Party A will take no responsibilities for the goods.

	
7)  

	
Authority to Change Place of Receipt and Receiving Unit

	
i.  

	
Party B’s delivery address and managers should respect to information in Article V. if Party B decided to change delivery address, he/she must fill out the “Authorization to Change Receiving Unit (Address) Letter”, stated the new shipping address, managers and their new contact information and the official seal and signature of people in charge. It will be processed after verify by Party A. as a result of above matter is not promptly notify Party A causing the goods are not normally reach, Party B has its own responsible for all losses.

 

  

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ii.  

	
If Party B decided to change the receiving unit, in addition to the receiving party at the address specified in the new managers “Authorization to Change Receiving Unit (Address) Letter” present official seal and signature of people in charge, but also need to present stamp of new receiving unit/people in charge official seal and signature and verify by Party A later.

	
iii.  

	
All original copy of “Authorization to Change Receiving Unit (Address) Letter” need to be sent to Party A office that specified.

	
iv.  

	
Any shipping address changes or consignees should be limited to this Party B distribution agreement contract and does not affect Party B in accordance with the payment obligations assumed by contract.

	
v.  

	
Party A may request an increase of the full amount of compensation from Party B if additional transportation costs caused by shipping address or unit change.

	
vi.  

	
The impact of shipping address/unit changes to original logistics, implementation plans and the deployment of transportation of goods might occur unforeseen delays or difficulties, therefore both parties should make joint efforts to reduce or overcome the resulting impact.

	
8)  

	
Product Quality and Inspection Methods

	
i.  

	
Party A must ensure the product quality in line with national health standards and the enterprise quality standards in product shelf-life period responsible for the quality of their products.

	
ii.  

	
Party B should follow the inspection of goods quality standards provided by Party A

a)Railway Transportation: If quantity did not match or damage found, Party B should contact the railway sector in the field immediately to show the shipment record or general cargo records that indicating all items and receive goods items. The “Freight Accident Seal” must stamp at the same time and both consignees and delivery must sign to confirm the record. The records need to be sent to Party A logistics department without any delay. Party B must present the records include Railway tickets within a week time to Party A Logistics Department. Party A will arrange replenishment under the full range of information.

b)Motor Transport: Deliver the goods to the consignment carriers address, receipt and acceptance by Party B. The logistics companies will count the quantity of items with Party B before sign off the consignment note. If the consignment does not match with the situation or damage found, Party B must indicate the actual items and quantity of goods received, indicating the shortage of reasons, the reason for the return and signed by both Party B and Logistics Company. The record/receipt should return to Party A without any delay. Party A Logistics Department will arrange replenishment according to the content of consignment receipt.

 

  

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c)Party B do not need Party A to arrange transport. Party B will pick up goods from Party A warehouse and deliver itself. Therefore Party B has its own responsibility to take care of goods after loading goods onto logistics company transport that arrange by it. 
d)  Party A has nothing to do with the loss borne by Party B such as inspection oversight, delay to apply goods return procedure, no communication with our logistics department in time.

	
iii.  

	
During Party B distribution period, if there are quality issues of products occurred within product shelf life, Party A has responsibility to compensate the loss, i.e. provide number of actual loss of product exchange.

	
iv.  

	
Any damage or quality issues occur due to product storage, handling, transportation during sales period, Party B should bear the responsibility, nothing to do with Party A.

	
9)  

	
Product Ownership

	
1、  

	
Rail Transport: the product ownership will transfer from Party A to Party B after Party B receiving goods from the railway sector or delivery date show on bill of lading expiry.

	
2、  

	
Motor Transport: the product ownership will transfer from Party A to Party B after Party B sign the waybill.

	
3、  

	
Party B Pick up Goods at Warehouse: the product ownership will transfer from Party A to Party B after goods load onto Party B logistics company transport.

After product ownership transfer to Party B, the losses incurred by Party B, Party A no longer bear the responsibility.

	
10)  

	
Marketing Support and Management

	
i.  

	
Party A is responsible for the unified planning of marketing activities, Party B must cooperate the implementation requirements.

	
ii.  

	
Activities organized by Party B in related region or city need pre-approval by Party A through “Promotion Application Form” and signed authorization.

	
iii.  

	
Local implementation of all sales and marketing policies must be approved in writing by Party A. Do not take any oral promise as Party A company act. Any damage caused by implementation of sales based on written document signed by non-Party A authorization, Party A should not be liable.

 

  

6

  

 

	
iv.  

	
Party B have to provide verification information on promotional activities that specified by Party A after the end of the market activities. Party A should comply verification inspection within 7 days, and the Party A Ministry of Finance Headquarters will directly allocate the activity costs to Party B balance. The balance will offset in the next order that Party B place. Party A will not approve activity expenses if Party A did not provide verification information. If the specified information that Party A required is not provided, Party A could give the write-off or not to support related sales promotion.

	
v.  

	
The amount of the activity costs should not exceed a unified marketing policies in accordance with Party A actual expenditures or the reasonable amount of actual expenditures reported by Party B. Party A should have the right to verify the information and look into inconsistent with the actual situation, then suspend the return until verified with Party B. If Party B refused to co-verification, it could take as a waiver of verification activities.

	
vi.  

	
If Party B stranded Party A’s promotional resources, Party A is entitled to deduct the purchase price or rebate promotion party withholding costs. If Party B violates promotions management requirements, Party A will terminate the implementation of promotional activities and refuse to pay promotional costs, a punishment from Party A according to market regulations.

	
vii.  

	
For market sound development, protect both parties’ benefits, Party A will check sales accounting and inventory reports with Party B on 5th of each month and obtain signature from representative of both parties as record. If Party B do not cooperate this work, resulting in the backlog of goods, such as the consequences of poor sales and the expiration, Party A will not bear any responsibility.。

	
viii.  

	
Party A work hard to maintain the market order and protect benefits for Party B; and hence Party B should assist Party A to control the product market circulation area:

	
Ø  

	
The impact of damage caused by other distributors that not belong to Party B selling region, Party A will take responsibility to execute sanctions to related distributor in accordance to market regulations;

	
Ø  

	
If Party B or Party B breaches customer cross-regional sales, Party A will also take responsibility to execute sanctions according to market regulations.

	
11)  

	
Distributor Management

	
i.  

	
Party B must sign the “ Rebornne Distributor Agreement” with all dealers within the region. Party B should be responsible for economic ties with dealers; any dispute between Party B and dealers should handle by Party B itself and cannot become exemption of the contractual obligations or liability reasons.

 

  

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ii.  

	
Party B and dealers must present a written agreement with dealers agreed rights and obligations in related to any product marketing or promotional activities or benefits advanced such as prepay and the return of products involved. Disputes result from promotional activities includes marketing products or benefits advanced are nothing to do with Party A.

	
12)  

	
Contract Rebates

	
i.  

	
The annual sales mission to implement the annual assessment, the task completion rate of 80% to 100% (including 80%, 100%) can enjoy the 1% total sales reward; task completion rate of 100% or more can enjoy the 2% total sales reward; over-reach tasks completion rate of 20% can enjoy the 3% total sales reward; over-reach tasks completion rate of 50% can enjoy the 5% total sales reward. Reward will be announced within 30 days after year end.

	
ii.  

	
Promotional activities in the implementation of the cash advanced by the dealer, after confirmation by company, could transfer into the customer’s advance payment and included in the year’s actual sales.

	
iii.  

	
The form of rebates is goods.

	
13)  

	
Cross-Region Selling

Party B guarantees that will sell Party A products at the appointed region, will not cross-region. Any violation will be punished according to the following terms:

	
i.  

	
If Party B was found in cross-region selling, its cross-selling forfeited classified area and the cross-region sales will exclude in rebates.

	
ii.  

	
When Party B is confirmed to have cross-region sales, each carton should deduct RMB1000; if second time was found to cross-region sales, Party A has the rights to terminate the contract and each carton should deduct RMB2000; punishment above will be executed when identified by marketing staff.

	
iii.  

	
Cross-region quantity defined: 100 for the sector, more than 100 considered as a whole order, less than 100 are subject to actual verification.

	
iv.  

	
Regional distributor for malicious trouble will cancel the year-end rebates; deduct the deposit, until the abolition of the regional distribution of qualifications.

	
14)  

	
Agreement Changes and Termination

	
1、  

	
In compliance with national laws, regulations or both parties in the case of consensus, changes or termination of agreement is allowed (excluding breaches).

	
2、  

	
Since the date of termination of this Agreement within 15 days, both parties should carry out financial settlement.

 

  

8

  

 

	
15)  

	
Dispute Resolution Methods

	
i.  

	
In the course of implementation of this agreement, such dispute shall be amicably settled through negotiation. If negotiation fails, should seek for jurisdiction at the Agreement signing region.

	
ii.  

	
This Agreement is signed in ShenZhen City, Guangdong Province.

	
16)  

	
Others

	
i.  

	
Matters that are not covered in this agreement could be negotiated in writing and treat as a supplementary agreement to this Agreement, and the supplementary agreement has the same legal effect.

	
ii.  

	
Due to force majeure happened on either party and can not perform the agreement, a written document need to be provided within 30 days after the end of force majeure and also a valid certificate issued by local authorities.

	
iii.  

	
This Agreement (including attachments) is effective from the date of Party A signed and sealed.

	
iv.  

	
This Agreement has three copies, Party A keeps two copies, Party B keeps one copy, have the same legal effect.

Other conditions:

 

 

 

Party A:    Rebornne (GuangZhoug) Dairy Company Limited                                                           Party B:

Address:  Industrial Park, Zengjiang, Zengcheng, Guangzhou,                                                       Address:

                  Guangdong, China

Phone:      020-82716623                                                                                                                           Phone:

Fax:           020-82743678/0755-82211369                                                                                                 Fax:

Postcode:511300                                                                                                                                       Postcode:

Bank:        Bank of China, ZengCheng Branch                                                                                     Bank:

Account: 865056985608091001                                                                                                               Account:

Tax Code:                                                                                                                                                   Tax Code:

Commercial Seal:                                                                                                                                       Commercial Seal:

Agent Signature:                                                                                                                                      Agent Signature:

Manager Signature:                                                                                                                                  Manager Signature:

Date:                                                                                                                                                            Date:

 

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