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EXHIBIT 10.13
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") is made and entered into this
1st day of October, 1995, by and between TOMBSTONE PIZZA CORPORATION, a Delaware
corporation with its principal place of business at Kraft Court, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ("Tombstone") and MIKE'S ORIGINAL, INC., a New York corporation
with its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇
WHEREAS, Mikes is a manufacturer of cheesecake ice cream products, and
Tombstone is a manufacturer and distributor of food products; and
WHEREAS, Mike's' desires to engage the services of Tombstone to distribute
its products to certain accounts in the distribution area described herein, and
Tombstone desires to act in such capacity, all on the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein set forth the parties hereto agree as follows:
1. Nature and Scope of the Distribution Relationship.
a. Mike's hereby appoints Tombstone as its exclusive distributor of Mike's
products set forth on Exhibit A, attached hereto and incorporated herein by
reference (the "Products"), to the Distribution Area (the "Distribution Area")
set forth on Exhibit A, and Tombstone hereby accepts such appointment, all
according to the terms and subject to the conditions set forth herein. The
parties agree to modify Exhibit A from time to time to reflect changes in the
Products and/or Distribution Area. Notwithstanding the parties' failure to
timely modify Exhibit A, in the absence of a written agreement to the contrary,
the terms of this Agreement shall apply to Tombstone's distribution of any of
Mike's products in any territory to which the parties orally agree.
b. Mike's has previously contracted with various brokers for the sale of
Products. Tombstone may sell and deliver Product to such Broker(s)' accounts and
to other accounts in the Distribution Area. Tombstone has no obligation to any
such Broker, all obligations with such Brokers is the sole responsibility of
Mike's. Tombstone will provide direct store delivery of the Products and
merchandising of the Products.
c. Except as provided in Subparagraph 1(a), Tombstone shall not (i) sell or
deliver the Products outside the Distribution Area or (ii) assist any third
party in selling or distributing the Products outside the Distribution Area.
Mike's reserves the right to solicit and make direct sales of the Products to
any person, at any location, and to appoint such additional distributors in
other locations outside the Distribution Area, or brokers for Products, as in
Mike's sole judgment may be desirable, without obligation to Tombstone of any
kind, including, without limitation, for commissions or other charges based on
such sales.
2. Undertakings of Tombstone.
a. Tombstone shall use its best efforts to support and promote the sale of
the Products in the Distribution Area. This obligation shall include efforts to:
(i) fill, deliver, and handle all orders placed by Mike's customers,
including orders for new items and introductory offers, in accordance with
Mike's normal standards of doing business. Tombstone will not substitute
non-Mike's branded products for the Products ordered by customers;
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(ii) make every reasonable effort to maintain good trade relations
so that Mike's relationship with the trade is enhanced;
(iii) handle special orders or give special service when reasonably
necessary to the same extent provided by Tombstone with respect to other
products sold by it;
(iv) furnish a written list of customers and locations quarterly upon
Mike's request;
(v) provide quarterly sales data by customer and by route, as requested
try Mike's with respect to the Products;
(vi) meet periodically with Mike's to review performance;
(vii) Tombstone shall comply with all applicable federal, state and
local laws and regulations with respect to the distribution of the Products and
with all reasonable rules, regulations and policies established by Mike's and
communicated to Tombstone which relate in general to distributors of the
Products; and
(viii) Tombstone shall safeguard, promote and maintain the excellent
reputation for high quality now associated with the Products and with the Mike's
trademark.
b. Tombstone shall maintain adequate facilities for the warehousing and
timely distribution of the Products.
c. Tombstone shall permit Mike's personnel to make periodic audits of its
facilities and vehicles used for distribution of the Products to determine
compliance with this Agreement.
d. Tombstone shall not be liable for its failure to comply with the
provisions of this Agreement arising from causes beyond its control, including
without limitation fire, storm, flood, earthquake, explosion, accident, acts of
public enemies, war, rebellion, insurrection, sabotage, epidemic, quarantine
restrictions, labor disputes or shortages, transportation embargo, or failure or
delays in transportation, acts of God or acts of any governmental authority or
agency thereof.
3. Undertakings by Mike's.
a. Mike's shall supply full truck load orders (22 pallets) of the Products
ordered by Tombstone to Tombstone F.O.B. Tombstone's designated warehouse(s).
Title shall pass to Tombstone and Tombstone shall bear all risks of loss with
respect to the Products upon delivery of the Products to Tombstone's dock.
b. Mike's shall not be liable for its failure to supply the Products
arising from causes beyond its control, including without limitation fire,
storm, flood, earthquake, explosion, accident, acts of public enemies, war,
rebellion, insurrection, sabotage, epidemic, quarantine restrictions, labor
disputes or shortages, transportation embargo, or failure or delays in
transportation, inability to secure ingredients, acts of God or acts of any
governmental authority or agency thereof. Mike's agrees, however, that in the
event of any such failure it shall use reasonable efforts to supply to Tombstone
any of the Products Mike's is able to supply on a proportionate basis with
Mike's other distributors and/or brokers.
c. Mike's shall produce and maintain adequate supplies of the Products to
fill Tombstone's orders.
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d. Mike's shall be solely liable for all obligations and any amounts due to
Mike's brokers in connection with the distribution of Products by Tombstone.
e. Mike's will ensure that Tombstone is apprised of all promotions (both
off invoice discounts and all fixed advertising allowances) no less than thirty
(30) days prior to the event.
4. Term and Termination.
a. Except as otherwise provided herein, this Agreement shall commence an
October 1, 1995, and continue in effect for an initial term of one (1) year.
Unless terminated upon 60 days prior notice, this Agreement will thereafter
continue provided that either party may terminate at any time by giving the
other party at least sixty (60) days written notice that it desires to terminate
this Agreement.
b Notwithstanding Section 4(a), this Agreement may be terminated
immediately by Mike's if there is a default, breach or failure of Tombstone to
perform any material covenant, warranty or representation of this Agreement
which is not cured within ten (10) days after Tombstone receives notice of such
condition from Mike's.
c. Notwithstanding Section 4(a), this Agreement may be terminated
immediately by Tombstone if there is a default, breach or failure of Mike's to
perform any material covenant, warranty or representation of this Agreement
which is not cured within ten (10) days after Mike's receives notice of such
condition from Tombstone.
d. Any delay in sending any of the notices specified herein shall not
constitute any waiver of the sending party's right to terminate this Agreement
upon compliance with the terms of this Agreement.
e. Tombstone shall have the right to distribute in the ordinary course of
its business the Products in its possession on the effective date of any
termination of this Agreement; provided, however, that any such sales shall be
in accordance with the provisions of this Agreement. In its sole discretion,
Mike's may elect to buy back all or any portion of such inventory of Products.
f. The termination of this Agreement will operate as a cancellation, as of
the date thereof, of all orders for Products which have not been delivered or
shipped by Mike's, and neither party shall thereafter be under any obligation to
the other with respect to orders so canceled.
g. Tombstone shall not be entitled to any compensation, damages, payment
for goodwill that may have been established, or any amount for any other cause
by reason of a rightful termination by Mike's pursuant to this Agreement.
h. Neither the expiration nor any termination of this Agreement for
whatever cause shall affect any rights or obligations of any party which have
accrued as of the effective date of such expiration or termination, nor shall it
affect any rights or obligations of any party under this Agreement which are
intended by the parties to survive such expiration or termination.
5. Pricing and Payment.
a. Mike's shall sell Products to Tombstone which will be distributed by
Tombstone. Mike's suggested retail list prices are set forth on Exhibit A,
attached hereto and incorporated herein by reference. Such prices may be amended
by Mike's at any time in its sole discretion upon written notice to Tombstone.
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In compensation for the distribution services provided herein, Mike's will pay
Tombstone 25% of such suggested retail list price, Mike's will invoice Tombstone
at the suggested retail price for such Products and Tombstone will deduct such
25%, plus all fixed costs previously deducted by Tombstone's customers, from
Mike's invoice before payment is made to Mike's.
b. Tombstone is entitled to offset any amounts owed by Mike's for
unsaleables or other matters from any other amounts that it owes to Mike's;
Tombstone may, at its option, invoice Mike's for such amounts rather than offset
such amounts.
c. All payments by Tombstone to Mike's shall be made within twenty-one (2
1) days of receipt of invoice.
d. At the conclusion of each accounting period (4 or 5 weeks), Tombstone
will invoice Mike's for all samples, demo samples, replacements, discounts or
allowances made to Mike's customers for that accounting period. All payments by
Mike's to Tombstone shall be made within twenty-one (21) days of receipt of
invoice.
e. Tombstone is entitled to return to and invoice Mike's for all Products
which Tombstone is not able to distribute before the shelf-life code for such
Products has expired. The parties contemplate that such returned Products may
occur as a result of (i) anticipated sales to new and significant customers
which do not occur, (ii) promotional sales which are anticipated but not
achieved, and (iii) other such events which result in overstocking based upon
reasonable expectations of sales. The parties do not contemplate that such
returns will occur on a continuing basis; in such event, however, the parties
agree to work together to control such returns.
f. If Tombstone manages total annual variable expense (off-invoice discount
rate, replacement rate and sample rate) to less than six and one-half percent
(6.5%) of total gross sales (the "Target Spending Amount") for any calendar
year, Tombstone shall be entitled to receive as a bonus an amount equal to the
difference between actual total variable sales expense and the Target Spending
Amount, payable within thirty (30) days of the close of that year. By way of
example only, if Tombstone's total annual variable expense for an accounting
period was 5.5% of total gross sales, it would be entitled to a bonus of 1% of
total gross sales for that year.
g. Tombstone shall be entitled to a five percent (5%) commission on all
sales to subdistributors for which Tombstone acts as selling agent.
6. Confidentiality. All business information and materials and trade
secrets of one party provided to the other party hereunder in furtherance of
this Agreement will be treated by the receiving party as confidential, to be
used solely in connection with such party's performance under the terms of this
Agreement, and will not be disclosed to any persons other than the receiving
party's employees who have a reasonable need to know in connection with the
receiving party's performance hereunder. The receiving party agrees that any
breach of this section by the receiving party, its employees, agents or
subcontractors shall cause irreparable injury to the disclosing party, and that
the disclosing party shall be entitled to specific performance and injunctive
relief or other equitable relief as a remedy for any such breach.
7. Indemnification.
a. Mike's shall indemnify, defend and hold Tombstone harmless from all
liabilities, damages, injuries, claims ' suits, judgments, causes of action, and
expenses (including reasonable attorneys' fees, court costs and out-of-pocket
expenses) suffered or incurred by Tombstone as a result of (i) a breach of any
representation, warranty or covenant made hereunder, (ii) except with respect to
product liability, any act or deed, whether by way of tort or contract,
committed or omitted by Mike's, its employees or agents in the performance of
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this Agreement or (iii) a failure to comply with all valid federal, state, or
local laws, ordinances and regulations or a breach of warranty, express or
implied, as to the quality of the Product if such quality is detective through
causes arising in the production, packaging, delivery, or storage by Mike's or
for tort damages arising out of negligence or omission by Mike's or its
employees in producing, packing, or storing or delivering the Product.
b. Tombstone shall indemnify, defend and hold Mike's harmless from all
liabilities, damages, injuries, claims, suits, judgments, causes of action, and
expenses (including reasonable attorneys' fees, court costs and out-of-pocket
expenses) suffered or incurred by Mike's as a result of (i) a breach of any
representation, warranty or covenant made hereunder or, (ii) any act or deed,
whether by way of tort or contract, committed or omitted by Tombstone, its
employees or agents in the performance of this Agreement, except if such
liability arises as a result of Mike's breach of any of its obligations under
this Agreement.
8. Independent Contractor. Tombstone is an independent contractor
(hiring the term hereof. Neither Tombstone, its agents or its employees
shall under any circumstances be deemed agents, partners, joint venturers or
representatives of Mike's. No party hereto shall have the right to bind any
other party in any respect except as expressly provided herein.
9. Notice. Any notice, request, information or other document to be
given hereunder to any of the parties by any other party shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, return receipt requested, as follows:
If to Mike's: Mike's Original, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telecopy #: (▇▇▇) ▇▇▇-▇▇▇▇
If to Tombstone: Tombstone Pizza Corporation
Kraft Court
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Sales
Telecopy #: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may change the address to which notices are to be seat to
it by giving written notice of such change of address to the other party in the
manner herein provided for giving notice.
10. Trademarks. Trademarks and trade names used by Mike's or by any of
its subsidiaries or affiliates in connection with any of the Products shall be
used by Tombstone pursuant to this Agreement only with reference to such
Products in the manner approved in writing by Mike's. Tombstone shall
discontinue all use of such trademarks and trade names pursuant to this
Agreement immediately upon termination of this Agreement. Tombstone acknowledges
that it does not have nor will it obtain by this Agreement any proprietary
interest in any of such trademarks and trade names. Tombstone further agrees not
to use any of such trademarks and trade names as part of its corporate or
business name.
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11. Survival. The provisions of Sections 4, 6, 7 and 11 hereof
shall survive any expiration or termination of this Agreement.
12. Miscellaneous.
a. The failure of any party hereto at any time to require performance
by any other party of any provision of this Agreement shall in no way affect the
right of such party to require performance of that provision, and any waiver by
any party of any breach of any provision as this Agreement shall not be
construed as a waiver of any continuing or succeeding breach of such provision,
a waiver of the provision itself, or a waiver or any right under this Agreement.
b. This Agreement is to be construed and governed by the substantive
laws, but not the laws of conflict, of the State of Illinois.
c. Tombstone acknowledges that the services to be rendered by it to
Mike's are unique and personal. Accordingly, Tombstone may not assign any of its
rights or delegate any of its obligations under this Agreement without the prior
written consent of Mike's, except that this Agreement may at any time be
assigned as a part of a sale or reorganization of all or substantially all of
Tombstone's business. This Agreement shall inure to the benefit of Mike's and to
Mike's successors, assigns or affiliates.
d. This document and any documents incorporated by reference herein
constitute the entire agreement and understanding between the parties regarding
the subject matter hereof, and supersedes and merges all prior discussions and
agreements between them relating thereto. No waiver, modification or amendment
to this Agreement shall be valid unless in writing, signed by the parties
hereto. No usage of trade or course of dealing between or among any persons
having any interest in this Agreement will be deemed effective to modify, amend
or discharge any part of this Agreement or any rights or obligations of any
party hereunder.
e. This Agreement may be executed in counterparts, including by means
of telecopied signature pages, any one of which need not contain the signature
of more than one party, each of which shall be deemed an original, but all of
which together shall constitute tire entire agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MIKE'S ORIGINAL, INC.
By:__________________________________
Its:__________________________________
TOMBSTONE PIZZA CORPORATION
By:_________________________________
Its:__________________________________
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EXHIBIT A
Distribution Area: The State of California
The following counties in the State of Washington:
Skamania, ▇▇▇▇▇ and Cowlitz.
The State of Oregon except for the following counties:
Union, ▇▇▇▇▇, Umatilla and Wallowa.
The City of Las Vegas, Nevada
Classes of Trade: All (military, club and C-stores with approval of both
parties).
Product description:Pints of Cheesecake Ice Cream
Flavors: Strawberry Fantasy
▇▇▇▇▇▇ Cracker Delight
Chocolate Tidbits
Costs: $16.00 per case
$2.00 per unit
Product Description: Novelties
Flavors- ▇▇▇▇▇▇ Cracker Crunch Bar
Strawberry Sorbet Bar
Grahamwich Sandwich
Costs: $27.00 per case
$2.25 per unit
However, the cost for Novelties for sale in those portions of the
Distribution Area serviced by Tombstone's Seattle office only shall be as
follows:
$25.80 per case
$2.15 per unit
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November 21, 1995
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Mike's Original, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Mike's/Tombstone Distribution Agreement - Exhibit A-1
Dear ▇▇▇:
This letter will confirm that we have added the areas set forth in the attached
Exhibit A-1 to the Territory for Distibution Agreement between Tombstone and
Mike's Orignial. All of the terms of the Agreement shall apply to the expanded
Territory. Please sign below an on the enclosed duplicate original and return
one copy to me to confirm your agreement. We look forward to continued success
in this venture and thank you for your cooperation.
Very truly yours,
▇▇▇▇ ▇▇▇▇▇
Agreed and Accepted
Mike's Original, Inc.,
By:______________________
Its:_______________________
▇
▇▇▇▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇: The States of:
Maine Massachusetts New York
Vermont Rhode Island New Jersey
New Hampshire Connecticut Pennsylvania
Class of Trade: All (Military, Cluband C-Stores and Foodservicewith
approval of both parties
Product Description: Pints of Cheeesecake ice Cream
Flavors Strawberry Fantasy
▇▇▇▇▇▇ Cracker Delight
Chocolate Tidbits
Costs: $16.00 per case
$2.00 per Unit
Product Description: Novelties
Flavors
▇▇▇▇▇▇ Cracker Crunch Bar
Strawberry Sorbet Bar
Grahamwich Sandwich
Costs: $25.00 per case
$2.083 per unit
Service: D.C. and I.C.S storage facilities will be serviced twice per month
by bonded, dedicated driver via Prime Trucking. Tombstone will
provide security access to all I.C.S. units to Prime Trucking
dedicated driver.
