Exhibit 10.25
ROYALTY AGREEMENT
The Royalty Agreement the "Agreement") is made and is effective July 12, 1999
between Chet's Gourmet Foods, Inc. ("Chet's"), a Nevada corporation located, at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Monterey Pasta Company
(the "Company"), a Delaware corporation, located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1. SERVICES PROVIDED
Chet's shall provide the Company input on the development and marketing of a
soup line. Services shall include, but not be limited to, input on recipe
development, flavors to market, marketing strategy, information on the market
conditions and competitive environment, packaging design, and developing
relationships with buyers for major chains. Chet's input to be more specifically
defined at a later date according to each parties written agreement.
2. TERM
Chet's shall provide services to Company pursuant to the Agreement commencing on
July 12, 1999 and continuing for two years from the effective date of this
Agreement, provided that the gross sales on the soup products listed on Exhibit
A ("Gross Sales") annually exceed two million dollars. If Gross Sales do not
exceed two million dollars per year commencing with the first year running from
the Effective Date, then this contract shall terminate or the parties shall
renegotiate its provisions. Should the contract terminate, Article six shall
remain in effect on all sales prior to the end of the contract. Chet's reserves
the right, upon discontinuance of the Agreement, to market any of these products
under his own name.
3. CONFIDENTIALITY
During the term of this agreement, the confidentiality provisions of this
agreement shall remain in full force and effect. Chet's, Company, their agents
or representatives shall not, without prior permission of the Company, disclose
any confidential information including any proprietary information such as
formulas, specifications, manufacturing methods, documentation produced,
business affairs, future plans, process information, customer lists, or any
other information which is a unique asset of the Company, and will include any
other information Chet's or Company is told is confidential.
Confidential information shall not include information that is disclosed by
Company without restriction, becomes publicly available through no act of the
other party, is received rightfully from a third party without a duty of
confidentiality, was in Chet's possession before receipt from Company, is
disclosed under operation of law, or is disclosed with the prior written
approval of Company.
Chet's agrees that it will not at any time or in any manner, either directly or
indirectly, use any such information for Chet's own benefit. Chet's will protect
such information and treat it as strictly confidential. A violation of this
paragraph shall be a material violation of this Agreement.
If it appears that Chet's has disclosed (or has threatened to disclose)
information in violation of this Agreement, the Company shall be entitled to an
injunction to restrain Chet's from disclosing, in whole or in part, such
information, or from providing any services to any party to whom such
information has been disclosed or may be disclosed. The Company shall not be
prohibited by this provision from pursuing other remedies, including a claim for
loss and damages.
4. NON-COMPETITION
Chet's and ▇▇▇▇ ▇▇▇▇▇▇ agree that they will not directly engage in own, manage,
operate, finance, or participate in as an employee, officer, director, agent,
consultant or seller of refrigerated soups for two years commencing on the
effective date of this agreement without the written permission of Company.
5. REFERRALS
During the term of this agreement Consultant agrees to promptly refer to Company
all orders and inquiries he may receive for Company's refrigerated soups.
6. PAYMENT TERM
Company shall pay Chet's the following royalty rates based on Gross Sales for
those items listed on Schedule A and attached.
MARKETED PRIMARILY MARKETED PRIMARILY
MARKET SEGMENT BY COMPANY BY CHET'S
-------------- ---------- ---------
-------------- % Royalty ----------------
Retail stores 2.8% 5%
Club stores 2.8% 5%
Convenience stores 2.8% 5%
Food Service establishments 5.0% 5%
The Payment term will continue from the effective date of the Agreement for a
term of two years or as long as this contract is in effect. At the termination
of this contract payment to Chet's on existing accounts will continue. Payment
shall be made to Chet's 30 days after the end of the first accounting period of
the Company, which is a thirteen-week period, and every thirty days after each
successive accounting period. Company's soups sales records will be open for
reasonable inspection for Chet's accountants to review with two weeks notice any
time after the Company's first quarter accounting period.
7. DEFINITION OF MARKETING EFFORT
A five percent royalty shall be paid by Company based on gross sales for those
customers or chains acquired by the Company primarily thorough the efforts of
Chet's or ▇▇▇▇ ▇▇▇▇▇▇, after receiving written order(s) from the CEO or other
authorized personnel. For all other customers and chains for which Company
personnel have expended the primary marketing effort, Chet's will be paid a 2.8%
royalty. Any contract rejected by Company based on Chet's marketing efforts
subsequently entered into within a 12 month period pays 5%.
8. MARKETING ALLOWANCES
All marketing allowances will be approved by the Company in writing in advance
and will be paid by the Company.
9. NO AUTHORITY TO BIND COMPANY
Chet's has no authority to enter into contracts or agreements on behalf of
Company without Company's written permission.
10. EXPENSES
Company shall not be liable for any expenses incurred by Chet's without prior
written approval.
11. BROKERAGE
Company's existing brokerage network will be utilized and compensated by
Company, except by mutual agreement between Company and Chet's to use another
broker. In the event another broker is used, Company will still have liability
for broker compensation, subject to Company's prior written consent.
12. TERMINATION
Either party shall have the right to terminate this Agreement, prior to the
expiration of the term hereof, upon the occurrence of the following event:
Breach or default of the other of any of the terms, obligations, convenants, or
representations under this Agreement which is not waived in writing by the
non-defaulting party. In such case, the non-defaulting party shall notify the
other of such alleged breach or default and the other party shall have a period
of thirty (30) days to cure the same. Chet's shall return to Company within
thirty days of termination of this agreement any records, reports, documents or
other materials disclosed by Company. Royalties shall continue on existing
accounts as long as items in attachment A are sold subject to the provisions of
Section 2 of this Agreement.
13. ASSIGNMENT
This Agreement will bind and inure to the benefit of each party's permitted
successors and assigns. Neither party may assign this Agreement, in whole or in
part, without the other party's written consent; PROVIDED, HOWEVER, that Company
may assign this Agreement without such consent to a successor in interest or in
connection with any merger, consolidation, any sale of all or substantially all
of such party's assets or any other transaction in which more than fifty percent
(50%) of such party's voting securities are transferred. Any of the above
transactions do not affect Chet's royalty rights and Chet's royalty rights as
set forth in this agreement which continue with the above named new parties.
14. NOTICES
All notices required or permitted under this Agreement shall be in writing. All
notices of a significant nature affecting either parties rights and
responsibilities shall be certified mail, return receipt requested and receipt
must be in sender's possession
To Company:
Monterey Pasta Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention : R. ▇▇▇▇▇ ▇▇▇▇▇▇
Chief Executive Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Chet's:
Chet's Gourmet Foods, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
15. AMENDMENT
This Agreement may be modified or amended if the amendment is made in writing
and is signed by both parties.
16. SEVERABILITY
If any provision of this Agreement shall be held to be invalid or unenforceable
for any reason, the remaining provisions shall continue to be valid and
enforceable. If a court finds that any provision of this Agreement is invalid or
unenforceable, but that by limiting such provision it would become valid and
enforceable, then the court prevails.
17. WAIVER OF CONTRACTUAL RIGHT
The failure of either party to enforce any provision of this Agreement shall not
be construed as a waiver or limitation of that party's right to subsequently
enforce and compel strict compliance with every provision of this Agreement.
18. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of California.
19. AUTHORITY
Each individual executing this Agreement on behalf of a corporation hereto
represents and warrants that he or she is duly authorized to execute and deliver
this Agreement on behalf of such corporation in accordance with the Bylaws of
the corporation, and this Agreement is binding upon said corporation.
20. NO PARTNERSHIP OR JOINT VENTURE
This Agreement does not constitute and shall not be construed as constituting a
partnership or joint venture between Company and Chet's. Neither party shall
have any right to obligate or bind the other party in any manner whatsoever, and
nothing contained in this agreement shall give or is intended to give, any
rights of any kind to any third parties.
21. INTERPRETATION
Chet's, as well as Company, have been given the opportunity to retain counsel of
their own choosing for purposes of this transaction and has either done so or
has elected not to do so, as each sees fit. This Agreement shall be construed in
accordance to the fair meaning of its language. The rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be employed in interpreting this Agreement.
22. ACKNOWLEDGEMENT
Contribution and Development by Chet's Gourmet Foods or a like phrase to be
located anywhere Company chooses on the sleeve surrounding the container or
label. Company shall have 90 days from the date of signing this Agreement to
locate said phrase on its new labels.
In witness whereof, the parties have executed this Agreement effective as of the
date set forth above.
Monterey Pasta Company
By: /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇ Date: 8/21/99
-------------------------------------- -----------------------
Name: R. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
Chet's Gourmet Foods, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ Date:
-------------------------------------- -----------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
Schedule A
List of Soups
Tuscan Minestrone
Monterey Clam Chowder
Autumn Classic Butternut Squash
Old Fashioned Chicken Noodle
Southern Style Corn Chowder
Ripe Red Tomato with ▇▇▇▇▇
▇▇▇▇▇▇ Split Pea with Ham
Potato with Black Forest Ham
