NOTE: PORTIONS OF THIS EXHIBIT ARE THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST BY THE REGISTRANT TO THE SECURITIES AND EXCHANGE COMMISSION. SUCH
PORTIONS HAVE BEEN REDACTED AND ARE MARKED WITH A "[*]" IN PLACE OF THE REDACTED
AMENDED AND RESTATED
WORLDWIDE DISTRIBUTION AGREEMENT
AGREEMENT made as of the 16th day of April, 2001 (the "Agreement"), by
and between Great Spirits Company LLC (hereinafter referred to as "Great
Spirits"), a Delaware
limited liability company having its principal place of
business at 1331 Lamar, Suite 1125, Houston, Texas
77010, USA, and Gaelic
Heritage Corporation Limited (hereinafter referred to as the "Supplier"), an
Irish corporation having its principal place of business at Institute Road,
Bailieboro, Co. Cavan, Republic of Ireland.
1. Definitions: when used in this Agreement:
(a) "Products" shall mean all items sold under the name "Celtic Crossing"
including the current liqueur and any items subsequently added pursuant to
Paragraph 10(b) below.
(b) "Old Territory" shall mean the United States of America, Canada,
Mexico, Puerto Rico, the Caribbean, including all islands situated between
North and South America, and all United States territories and possessions,
including duty free shops located therein, U.S. military bases (wherever
located), and flights and cruises originating in any of the above-mentioned
(c) "New Territory" shall mean the remainder of the world such that the Old
Territory and the New Territory (collectively, the "Territory") shall mean
the world and all commercial disposition of Products.
(d) "Case" shall mean the various case sizes set forth in Exhibit A, which
is attached and made part of this agreement, and any other configurations
which Supplier and Great Spirits may subsequently agree to add.
(e) "Royalty" for the purposes of this Agreement shall mean a payment on a
per Case basis as set out in Exhibit B, which is attached to and made part
of this agreement, and shall be payable in accordance with Paragraph 5(f).
(f) "Brand" shall mean the Celtic Crossing brand and label, including
tradename, trademark and tradedress.
2. Sales of Ownership Rights and Product
(a) Supplier has heretofore sold to Great Spirits 65% of the ownership of
the Brand in the Old territory.
(b) In consideration for services rendered, Great Spirits and the Supplier
each assigned 5% of the Brand in the Old Territory to MHW, Ltd., with the
result that the
Brand in the Old Territory is owned 60% by Great Spirits, 30% by the
Supplier and 10% by MHW Ltd.
(c) For a period of three years from the execution of this Agreement, Great
Spirits will have the right, but not the obligation, to purchase 70% of the
ownership of the Brand in the New Territory for Irish L140,000 (the
"Purchase Option"). After the third anniversary of the execution of this
Agreement, Great Spirits shall continue to have the right, but not the
obligation, to purchase 70% of the ownership of the Brand in the New
Territory, but the option price shall be adjusted from Irish L140,000 by
the change from year to year of the Irish Consumer Price Index. In the
event of such purchase, Supplier will execute and deliver such instruments
as Great Spirits shall reasonably request to give full effect to such
purchase and prior purchases.
(d) In the event of the sale of the Brand rights by either Great Spirits or
the Supplier, the non-selling party shall have (i) a pre-emptive right of
first refusal to purchase the interest to be sold at the same price as the
proposed sale and (ii) the right to sell alongside the other and share pro
rata in the sales proceeds. MHW, Ltd. will not have the right to dispose of
its interest in the Brand except in conjunction with a sale by Great
Spirits and the Supplier. In the event of such sale, MHW, Ltd. will be
required to sell and will be entitled to receive its pro rata share of the
sales proceeds. In addition, upon a disposition of the Brand by the
Supplier where Great Spirits retains its interest, Supplier shall either
(i) continue to be fully obligated to supply Products hereunder without
amendment to this Agreement or (ii) terminate the Agreement upon six-month
notice and release the formula and right to produce the Products to Great
Spirits as described in Paragraph 18.
(e) Supplier shall not sell or encumber any interest in the Brand or make
any assignment or take any other action which would limit Great Spirits'
rights under this Section.
(a) Supplier hereby appoints Great Spirits (itself or acting through Great
Spirits' agents) as the sole and exclusive importer and distributor of the
Products in the Territory. Supplier irrevocably grants Great Spirits (on
the terms of this Agreement) sole and exclusive rights to use the Brand in
(b) Great Spirits and Supplier shall devise mutually acceptable methods of
operation in order to expedite the production, shipment and handling of the
Products so as to provide Great Spirits with timely supply of Products. The
parties shall cooperate on other joint activities intended by this
This Agreement shall continue until terminated in accordance with Paragraph
5. Terms of Sale and Payment
(a) Great Spirits shall provide Supplier with annual forecasts of
requirements reflecting anticipated needs of Products by Case and type of
bottle, such forecasts to be delivered to Supplier on or before the last
day of February commencing with 2002. Great Spirits shall be obligated to
order the aggregate amounts set forth in each such forecast within the year
of such forecast. Payment shall be made as provided in (b) below.
(b) Except as provided, all sales of the Products by the Supplier to Great
Spirits shall be FOB Irish Port at the prices set in accordance with
subsections 5(c),(d) and (e) and payment by Great Spirits for the Products
shall be due 60 days from date of shipment by carrier designated by Great
(c) The prices at which Cases of Products will be sold by Supplier to Great
Spirits during 2001 are set forth on Exhibit C which is attached to and
made a part of this agreement.
(d) For each year after 2001, Supplier, based upon the annual forecasts,
shall seek to achieve reductions and savings in costs related to production
and bottling of the Products. All such costs, reductions and savings shall
be reflected in the price per Case of the Products. Supplier and Great
Spirits shall cooperate to achieve the least expensive cost for the
Products and shall mutually agree the prices at which Cases of Products
will be sold by Supplier to Great Spirits.
(e) At any time during the term of this Agreement, Supplier may decrease
the prices of the Products. Such decrease in prices shall become effective
upon Great Spirits receipt of written notice thereof.
(f) Royalty payments in respect of Products purchased by Great Spirits
pursuant to Paragraph 5 shall be paid at the same time as each purchase
invoice is payable in respect of such Products.
6. Marketing and Advertising; Additional Supplier Services
(a) Great Spirits will work with the Supplier to develop mutually
satisfactory marketing and advertising plans for the Products in the
Territory. However, final authority on all matters relating to this plan
will rest with Great Spirits. Marketing and advertising shall include all
selling, marketing, promotion, commissions and administrative expenses,
payments to MHW, Ltd. and travel and entertainment expenses related to the
Products ("Marketing and Advertising Expenses"). (Marketing and Advertising
Expenses related to other products which Great Spirits may sell will not
qualify as Marketing and Advertising Expenses under this Agreement.) In
2001 and 2002, Great Spirits will commit to expend at least 50% of gross
profits (gross profits is defined as gross margin per Case multiplied by
the number of Cases sold) from the sale of the Products in the Territory on
Marketing and Advertising Expenses except to the
extent necessary to pay members' tax obligations arising out of their
interests in Great Spirits and to pay financing obligations of Great
Spirits. Aside from the foregoing, Great Spirits shall have no other
obligation with regard to marketing and advertising.
(b) At the election of Great Spirits, Supplier will provide shipping and
invoicing services from bond to bond. Great Spirits shall provide Supplier
with customers' duty and excise number and all other relevant information
and documents as deemed necessary in order to execute shipment. Supplier
shall receive mutually agreed upon fees for such services. Great Spirits
shall indemnify Supplier from all duty and VAT liability for Products
shipped pursuant to this Section 6(b).
7. Representation and Warranties of Great Spirits
Great Spirits represents, warrants and covenants, during the term of this
Agreement, to Supplier as follows:
(a) Great Spirits or its agents shall be a duly licensed importer of
alcoholic beverages and shall have at the time of signing this Agreement,
in full force and effect, such federal, state and local licenses as may be
necessary to conduct its business as an importer and marketer of alcoholic
(b) Great Spirits shall submit to the Supplier:
(i) Annual sales reports showing the performance of each Product in
(ii) Annual reports showing the amount and allocation of expenditures
on Marketing and Advertising Expenses. Upon written request, the
Supplier shall have the right to verify these expenditures.
(c) Great Spirits or its agents shall file such price schedules and reports
as may be prescribed by applicable laws and regulations.
(d) During the period of this Agreement, Great Spirits shall not
distribute, within the Territory, any other Irish liqueur (cordial) product
not bottled in Supplier's facilities without the written consent of the
8. Representations and Warranties of Supplier
Supplier represents, warrants and covenants, during the term of this
Agreement, to Great Spirits as follows:
(a) Supplier has the authority to enter into and carry out its obligations
under this Agreement.
(b) The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement will not breach any
contract or agreement to which Supplier is a party, or violate any law or
regulation by which it is bound.
(c) Supplier has the right to designate and appoint Great Spirits as the
exclusive importer and distributor of the Products in the Territory and,
subject to Section 2, is the sole owner of the Brand free and clear of any
lien or encumbrance.
(d) The Products to be sold to Great Spirits under this Agreement shall be
merchantable and fit for human consumption. The Products shall be
manufactured, packaged and labeled in Ireland in conformity with applicable
U.S. federal, state and local laws, rules and regulations and the rules and
regulations of the United States Bureau of Alcohol, Tobacco and Firearms or
the laws and regulations of other governments regarding bottles and labels
for the Products, as advised by Great Spirits to the Supplier from time to
time. In addition, all Cases of Products sold to Great Spirits shall be
coded in such a manner that Supplier and Great Spirits are able to identify
production lots. The Products shall have a shelf life of a minimum of five
years from date of manufacture.
(e) The formulation and quality of ingredients and the packaging of the
Products to be sold in the Territory will not change without Great Spirits'
(f) The Products to be sold to Great Spirits shall be free and clear of all
liens. Neither the execution and delivery of this Agreement or compliance
with its terms and provisions will result in the creation or imposition of
any lien, charge, encumbrance, or restriction of any nature upon the
Products and other assets to be sold to Great Spirits.
(g) Supplier shall not sell or otherwise transfer Products to any other
9. Product Liability and Returns
(a) During the term of this Agreement, Supplier shall maintain in full
force and effect public liability insurance and product liability insurance
covering the Products purchased by Great Spirits in the amount of not less
than five million Irish Pounds (IRL5,000,000). With respect to the public
liability insurance, the sum insured shall be IRL5,000,000 for any one
occurrence. With respect to the product liability insurance, the sum
insured shall be IRL5,000,000 for all occurrences in any twelve-month
period. Great Spirits shall be named an additional insured on all such
policies and such policies shall provide for 30 days prior notice to Great
Spirits of cancellation. It is the responsibility of Great Spirits to
ensure that marine insurance is in force.
(b) Any Products not merchantable due to obvious quality deficiencies,
packaging problems, or to errors committed by Supplier may be returned to
Supplier for full credit plus cost of shipping provided that notice of such
deficiency, problem, or error has been given to Supplier within sixty (60)
days after the date of receipt by Great Spirits of the Products. Any
Products not merchantable due to quality deficiencies or packaging
problems which are not obvious, may be returned to Supplier for full credit
plus cost of shipping provided that notice of such latent defect has been
given to the Supplier within six (6) months after the date of receipt of
the Products by Great Spirits.
(c) The Supplier will indemnify Great Spirits against all claims relating
to commissions and fees resulting from actions or events which occurred
prior to the date of this Agreement.
(d) The Supplier irrevocably agrees to protect, indemnify and hold harmless
Great Spirits, its officers, members, employees and agents from any claims,
demands, causes of action, damages, liabilities, losses or suits brought by
third parties arising out of, relating to or resulting from any negligent
act or omission of Supplier in respect of the manufacture of the Products.
(e) During the term of the Agreement, Great Spirits agrees to maintain
general liability insurance (including umbrella) with respect to its
activities in an amount of not less than U.S. $5,000,000.
(f) Notwithstanding any provision of this Agreement to the contrary, the
provisions of Paragraph 9(a), (c) and (d) shall survive the termination of
10. Production Modification and Future Products
(a) The Supplier agrees that it will cooperate in modifying the formula for
the Product to be sold in the Territory and the packaging of same, such
cooperation to be based upon the good faith anticipation by Great Spirits
that modifications to the formula or packaging will increase sales and upon
such modifications the price per Case shall be adjusted to reflect any
increased costs to Supplier.
(b) Great Spirits shall have the right of first refusal regarding any
future product which Supplier desires to distribute in the Territory. In
the event that Great Spirits exercises its first right of refusal hereunder
to distribute additional products produced or sold by Supplier or the
parties otherwise agree to include additional products hereunder, the term
"Products" as used in this Agreement shall be deemed to include such
additional products. Great Spirits shall have ninety (90) days from notice
by Supplier to exercise that right of first refusal.
Great Spirits or the Supplier shall be entitled to terminate this Agreement
by written notice to the other if:
(a) that other party commits any continuing or material breach or violation
of any of the provisions of this Agreement and, in the case of such a
breach or violation which is capable of remedy, fails to remedy the same
within sixty (60) days after receipt of a
written notice giving full particulars of the breach or violation and
requiring it to be remedied;
(b) an encumbrance takes possession or a receiver is appointed over the
property or assets of that other party except in the case of liens to
financing institutions under arrangements not in default;
(c) that other party makes any voluntary arrangement with its creditors or
becomes subject to an administration order;
(d) that other party goes into liquidation (except for the purpose of an
amalgamation, reconstruction or other reorganization made in such manner
that the company resulting from the reorganization effectively agrees to be
bound by or assume the obligations imposed on that other party under this
(e) an examiner or equivalent is appointed to that other party whether
under Section 2 of the Companies (Amendment) Act of 1990 of Ireland.
Supplier represents and warrants that it has the exclusive and unrestricted
right to sell the trademark, tradename, brand name and label included in
the Brand to Great Spirits as contemplated by 2(a) and (c) and further
confirms that it has not received any notice contesting the entitlement of
the Supplier to use and sell same. The tradename and trademark for the
Product is currently registered in the USA and certain other countries.
Trademark registration in the Territory shall become the responsibility of
Great Spirits, provided Great Spirits shall have no obligation to register
same in any given country. In addition, Great Spirits shall have no
obligation to police or enforce the Brand in the Territory.
13. Choice of Law and Disputes
(a) This Agreement shall be governed by and construed in accordance with
the laws of the Republic of Ireland.
(b) In the event of any controversy or claim (whether such controversy
involves a dispute, disagreement or difference of interpretation and
whether such claim sounds in contract, tort or otherwise) arising out of or
relating to (i) this Agreement, (ii) the actual or alleged breach hereof or
(iii) the commercial or economic relationship of the parties hereto (a
"Dispute"), the party hereto alleging the existence of a Dispute shall give
to the other written notice setting out the material particulars of such
Dispute. A senior executive officer or senior official with settlement
authority (a "Senior Official") from each party hereto shall agree to meet
personally in New York
or such other location as the parties may mutually
agree, or to conduct a telephonic meeting within five business days of the
date of receipt of such notice (the "Notice Date") by the relevant party to
attempt in good faith, and using their reasonable endeavors at all times,
to resolve such Dispute.
(c) If (i) such Dispute is not resolved within fifteen business days (or
such longer period as to which the parties may agree) after the applicable
Notice Date or (ii) any party hereto fails or refuses to meet as required
by the notice described in Section 13(b), the Dispute shall be mediated
through non-binding mediation through the Centre for Dispute Resolution in
(d) If the Dispute is not resolved within 60 days after the commencement of
the mediation, the Dispute shall be referred to litigation in which case
the Courts of the Republic of Ireland are to have exclusive jurisdiction to
hear and determine the dispute.
14. Force Majeure
If either party is prevented from performing any of its obligations
hereunder by an occurrence beyond its reasonable control such as, but not
limited to, acts of God, fire, flood, war, insurrection, riot, government
regulations, raw material shortage, strikes, or lack of common carrier
facilities, then the affected party shall be excused from performance for
so long as such occurrence exists.
In the event any of the terms and provisions of this Agreement are in
violation of, or prohibited by, any applicable law or regulation, such
terms and provisions shall be deemed amended or deleted to conform to such
law or regulation without invalidation or amending or deleting any of the
other terms or conditions of this Agreement.
This Agreement shall not be assignable by any party without the written
consent of the other and shall be binding upon the parties and their
respective successors and permitted assigns.
17. Relationship of the Parties
The parties acknowledge that no joint venture or partnership has been
created by this Agreement, and that no party can take any action which is
legally binding on the other without the prior written consent of the party
to be charged.
18. Deposit Formula
The Supplier has deposited the full formula and production instructions for
the Products, together with irrevocable and exclusive right to produce same
for sale and the right to use the Brand within the Territory, with a
mutually agreeable escrow agent pursuant to a
mutually acceptable escrow agreement providing for release of the
aforementioned items to Great Spirits (i) upon failure of Supplier to
supply timely the Products or (ii) upon termination of this Agreement by
Great Spirits pursuant to Paragraph 11.
(a) Any demand, notice, or request provided for by this Agreement shall be
in writing, and shall be made by delivery or by ordinary airmail addressed
to the party to whom notice is to be given or to whom a demand or request
is to be made.
The addresses of the parties are as follows:
Great Spirits: Great Spirits Company LLC
1331 Lamar, Suite 1125
United States of America
Supplier: Gaelic Heritage Corporation Limited
Bailieboro, Co. Cavan
Republic of Ireland
(b) This Agreement represents the entire agreement between Great Spirits
and Supplier, supersedes all their prior oral and written arrangements and
agreements including, but not limited to, the National Distribution
Agreement, dated as of March 17, 1998, by and among the parties hereto, and
may not be changed except by a further written agreement or by an amendment
to this Agreement signed by both parties.
(c) Any failure by a party hereto to exercise any of its rights under this
Agreement shall not be construed as a waiver of such rights; any such
failure shall not preclude exercise of such rights at any later time.
(d) Section headings are for convenience only and are not to be construed
as part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
GAELIC HERITAGE CORPORATION LIMITED
By /s/ Patrick McKevitt
Name: Patrick McKevitt
GREAT SPIRITS COMPANY LLC
By /s/ Mark Andrews
Name: Mark Andrews
For purposes of joinder with respect to Paragraphs 2(d):
By /s/ John F. Beaudette
Name: John F. Beaudette
Standard US Case 12 X 750ml
Standard International Case 12 X 70cl
Litre Case 12 X 1 Litre
Glass Mini Case 120 X 50ml
Plastic Mini Case 120 X 50ml
Gift Pack (US) 6 X 750ml
Gift Pack (International) 6 X 70cl
Standard Case *
Litre Case *
Glass Mini Case *
Plastic Mini Case *
Gift Pack *
Standard and Litre *
Glass Mini Case *
Plastic Mini Case *
Gift Pack *
* Commencing with purchases ordered subsequent to March 2002, the Old
Territory Royalties shall be increased or decreased by the same percentage
that the standard price charged by Great Spirits to its distributors is
increased or decreased (excluding special promotional pricing) in the Old
Territory, subject to a minimum Royalty of $ * . Great Spirits shall
inform Supplier when changes in that standard price occur and provide
Supplier with documentation supporting such changes.
** If Great Spirits exercises its Purchase Option, the New Territory Royalties
as set out in this exhibit will no longer apply to Cases purchased by Great
Spirits for distribution in the New Territory and the Royalty for such
Purchases will become L * (Irish) per Case. (L * per gift packs of 6
bottles.) Further, it is agreed that, if Great Spirits has purchased a
portion of the Brand in the New Territory pursuant to Section 2(c), the
parties will review the Royalties in the New Territory in 2003 and, if a
standard FOB has been established, implement an adjustment mechanism
similar to the one established in the Old Territory.
FOBs IRISH PORT
Standard US Case *
Standard International Case *
Litre Case *
Glass Mini Case *
Plastic Mini Case *
Gift Pack (US) *
Gift Pack (International) *