EXHIBIT 10.7
Sales and Marketing Contract Page 1
[Japanese Writing]CLEMENTS Brand
Frozen Concentrated Fruit Juices
Sales and Marketing Contract
This [Japanese Writing]CLEMENTS Brand Frozen Concentrated Fruit Juices
Sales and Marketing Contract (this Contract") is entered into on October 8, 2000
between the following parties:
Party A: Clements Citrus Sales of Florida, Inc.
PO Box 2594
Stuart, Florida, USA
Tel: 1-561-219-0132
Fax: 1-561-219-3712
Party B: Tianjin Hongrun Trading Co. Ltd.
No. 11 Zhigujie, Hedong District
Tianjin, People's Republic of China
Tel: 022-24125708
Fax: 022-24313798
Following friendly discussions, Party A and Party B have voluntarily agreed
to set out the terms and conditions of their cooperation relating to the sales
and marketing of [Japanese Writing]CLEMENTS Brand Frozen Concentrated Fruit
Juices (the "Products") and other related matters as follows:
1 Scope.
(a) Party A agrees to appoint Party B, on an independent contractor basis,
as the [Japanese Writing] CLEMENTS Brand Distributor to handle the distribution,
marketing and sales of the Products in the following territory in the People's
Republic of China: Beijing, Tianjin, Dalian, Shenyang, Chongqing, Wuhan and
Taiyuan (the "Hongrun Distribution Territory"). Party A reserves the right to
accept any customer orders for the Products and Party B does not have authority
to accept orders on behalf of Party A. Party A acknowledges that with the
exception of Beijing, Party B shall be Party A's exclusive distributor in the
designated territory within the Hongrun Distribution Territory. Party A may
appoint other distributors for Beijing if it so wishes. If Party B's performance
as distributor satisfies the requirements of both Parties, Party A will consider
expanding the distribution territory designated to Party B. In consideration of
the appointment as Distributor by Party A, Party B agrees to purchase certain
quantities of the Products from Party A and to permit Party A to use Party B?
company name and address as Distributor on certain product labels,
advertisements and displays as set out in Paragraph 3 below.
20
Party B agrees to assist Part A, on an independent contractor basis, in the
preparation and implementation of advertising efforts in the following territory
in the People's Republic of China: XXXXXXXXXXXXXXX (the "Hongrun Advertising
Territory") as set out in Paragraph 4 below. In consideration of Party B's
advertising assistance, Party A agrees to request its other distributors and/or
marketing agents (if any) of the Products to use Party B, whenever possible, in
their advertising of the Products in China.
2 Representations of Party B. Party B represents and warrants to Party A
that it is duly authorized by the relevant Chinese governmental entities to
engage in the purchase and trade of citrus-related products, including the
distribution, marketing, sales and advertising of the Products as provided for
under this Contract. Party B further represents and warrants that it possesses
the necessary resources to satisfy its obligations under this Contract.
3. Responsibilities of Party B as Distributor. Party B agree to use its
best efforts to promote the sales of the Products in the Hongrun Distribution
Territory at both the wholesale and retail levels. Party B's responsibilities as
Distributor shall include, but are not limited to the following:
Initial Purchase Commitment.
Within Thirty (30) days of the execution of this Contract by both Parties,
Party B shall place an order in writing with Party A for the purchase of the
Products (the "Initial Order") . This Initial Order shall be to purchase one
40-Foot container of [Japanese Writing] CLEMENTS Brand Frozen Concentrated Fruit
Juices. Any purchase price and delivery terms shall be mutually agreed by the
Parties in writing.
Subsequent Purchase Orders.
Unless Party A agrees in writing, the size of any subsequent purchase order
placed by Party B shall be at least one 40-Foot container size of the Products.
(c) Payment Method and Time Limit. Within Sixty (60) day of the date of any
purchase order, Party B shall pay the purchase price in full to Party A in the
form of an irrevocable Letter of Credit or by telegraphic transfer ("TT") into a
bank account designated by Party A. During the term of this Contract, any other
methods of payment must be mutually discussed by Parties A and B and confirmed
in writing;
(d) Sales Development. Party B may, at its own costs, develop customers,
build branch offices and establish sales locations to sell the Products within
the Hongrun Distribution Territory;
(e) Commitment to the [Japanese Writing] CLEMENTS Brand . Without Party A's
written authorization, Party B shall not sell any other brands of frozen
concentrated fruit juice or other fruit-related concentrated products.
21
(f) Territorial Restrictions. Without Party A's written authorization,
Party B shall not sell any Products outside of the Hongrun Distribution
Territory; and
(g) Periodic Reports. Party B shall make periodic reports of its sales
progress to Party A and assist Party A in making sales forecasts for the Hongrun
Distribution Territory.
4 Responsibilities of Party B in Providing Advertising Assistance. Party B
agrees to use its best efforts to assist Party A in the advertising of the
Products within the Hongrun Advertising Territory, including but not limited to
the following areas:
(a) Party B shall, in coordination with Party A, prepare and implement an
advertising and marketing plan to promote customer and consumer awareness of the
Products in the Hongrun Advertising Territory. The costs of this advertising and
marketing plan shall be shared between Party A and Party B jointly on a basis to
be agreed between the two Parties in writing;
(b) Party B shall be responsible for obtaining the necessary Chinese
governmental approval(s) for advertising the Products in the Hongrun Advertising
Territory, including but not limited to obtaining the relevant "Food Products
Advertising Certificate;"
(c) Party B irrevocably agrees to permit Party A to use Party B? company
name and address as the Distributor on any product labels, advertising displays,
marketing materials and/or advertisements for any [Japanese Writing] CLEMENTS
Brand frozen concentrated fruit juice products, containers and/or packaging
intended for the Chinese market for a period of Three (3) years from the date of
this Contract or from the date of any subsequent extension and/or renewal;
(d) As requested by Party A, Party B shall "trouble-shoot" any advertising
and marketing problems as related to the Products; and
(e) Party B agrees that it shall not delegate or subcontract out any of its
responsibilities and obligations under this Paragraph and/or this Contract
unless it has consulted with Party A in advance and has received Party A's
consent in writing.
5. Responsibilities of Party A.
(a) Price, Product Specifications and Delivery. Party A agrees to supply
Party B the Products on price and delivery terms as may be agreed by both
Parties from time to time. Any shipment of the Products from Party A must meet
the product specifications set out in Attachment A. This Attachment A may be
amended by the Parties in writing from time to time. Party B acknowledges that
the product specifications set out in Attachment A meet or exceed the relevant
Chinese Governmental requirements governing imported frozen concentrated fruit
juices as of the date of the Contract. Party B undertakes to promptly notify
Party A in writing of any changes in the relevant Chinese Governmental
requirements for the Products and both sides shall amend Attachment A
accordingly. In general, Party A
22
will arrange shipment of any order within fourteen (14) days of full payment of
the order, unless there is Force Majeure;
(b) Relating to Quality Control. Party A shall provide the relevant product
information on quality standards, hygiene inspection reports and commodity
inspection reports in compliance with U.S. governmental regulations. Party A
shall guarantee that the Products supplied pursuant to this Contract meet the
relevant requirements for food hygiene and technical supervision regulations of
the United States and China. Party A shall provide documents and requirements
for the storage, transportation and quality assurance of the Products so that
Party B may be in strict compliance and to guarantee Products and fruit quality.
Party A shall be responsible for providing relevant technical quality assurance
and training to Party B; and
(c) Relating to Advertising. Party A agrees to provide Party B with the
necessary product information for use in the advertising and marketing plan set
out in Paragraph 4 above, including appropriate advertising and promotion items
and related information currently used in the U.S. market. Party A agrees to
share in the costs of advertising and marketing the Products in the Hongrun
Advertising Territory on a basis to be agreed between the two Parties in
writing.
6. Sales and Market Management
a) Party B shall use its best efforts to expand the sales of the Products
within the Hongrun Distribution Territory;
b) On a regular basis, Party B shall provide inventory records, pricing,
sales and promotions situation reports to Party A;
c) Party B shall develop a complete record of any Products retailers and
secondary distributor customers;
d) On a regular basis, Party B shall provide promotion plans and marketing
expense plans to Party A for examination and approval;
e) Party A shall be responsible for providing to Party B training relating
to the business of selling the Products;
f) Party B shall coordinate with Party A in the area of market management.
g) Party A has the responsibilit to provide to Party B, at no additional
cost, information about any customers and potential customers within the Hongrun
Distribution Territory.
7 Product Packaging
Concentrated Fruit Juice, Frozen
23
Can Packaging: 46,080 cans (1,920 cases, 1 X 24 12 oz. cans) per 40-foot
Container (about 44,000 lb. in weight)
Drum Packaging: 55 Gallon Drums (about 600 lb. in weight)
8. Transportation and Promotion Expenses:
(a) Destination CIF Tianjin Xingang
Method of Transportation: 45 day cold storage shipping container (by sea
freight) for frozen concentrated fruit juice.
(b) Promotion Expense Allowance. After receipt and acceptance of the
Initial Order and subject to Party A's written approval of an advertising and
marketing budget submitted by Party B which shall include details on the use of
funds ("Budget Approval"), Party A will provide Thirty-Five Thousand US Dollars
(US$35,000) to Party B as a Promotion Expense Allowance . In addition, subject
to the relevant Budget Approval, Party A will provide a Promotion Expense
Allowance of Fifteen Thousand US Dollars (US$15,000) for the second purchase
order placed by Party B. Upon the relevant Budget Approval, each Promotion
Expense Allowance will be disbursed according to the following timetable:
(i) Within three (3) days of its receipt of the Irrevocable Letter of
Credit or payment by TT, Party A will pay 50% of the allowance to an US$ account
designated by Party B; and
(ii) Within three (3) days of the arrival of the shipment in Tianjin, Party
A will pay 50% of the allowance to an US$ account designated by Party B.
9. Protection of Intellectual Property Rights. Party B understands that the
Products and Party A's other fruit products are marketed under the [Japanese
Writing] CLEMENTS trademark. Party B acknowledges that the [Japanese Writing]
CLEMENTS trademark and the corresponding trade dress and advertising and product
promotion material are the exclusive property of Party A. Party B shall not
imitate, infringe or register or cause others to imitate, infringe or register
the [Japanese Writing] CLEMENTS trademark /trade dress in China or anywhere else
in the world and shall assist Party A in any actions against unauthorized
infringement of the CLEMENTS trademark/trade dress. Party B further agrees that
any intellectual property rights developed or derived from the advertising and
marketing plan set out in Paragraph 4 above shall be the exclusive property of
Party A.
10. Term of Contract. This Contract is effective for one yea from the date
of signing of the contract. It may be renewed annually with the written consent
of both Parties. Notwithstanding the term of this Contract, the permission given
by Party B in Paragraph 4(c) above regarding the use of its name and address is
valid for a period of Three (3) years from the date of this Contract or any
extension and is irrevocable.
24
11. Other Provisions.
(a) Any provision of this Contract shall not be interpreted as a
partnership or joint venture relationship.
(b) Any changes to this Contract shall be approved by mutual consent of
both Parties and confirmed in writing.
(c) This Contract shall inure to the benefit of and be binding upon the
successors and assigns of the Parties hereof.
(d) Both Parties reaffirm that they will act in full compliance of all
applicable laws and regulations, including but not limited to the United States
Foreign Corrupt Practices Act.
(e) Both Parties agree that the subject matter and the rights and
obligations set out in this Contract relate to private commercial activities.
Each Party shall irrevocably waive to the fullest extent possible and shall not
claim in any jurisdiction any immunity (including but not limited to "Sovereign
Immunity") from any action relating to this Contract taken by one Party against
the other Party.
(f) Both Parties agree to resolve any dispute relating to or arising under
this Contract through friendly discussions. In the event that a mutually
satisfactory resolution cannot be reached within thirty (30) days after a
dispute has arisen, both Parties agree that any Party may refer any dispute to
arbitration. Any arbitration shall be final and binding on both Parties and
shall be conducted by a panel of three arbitrators in Hong Kong under the
applicable rules of the Hong Kong International Arbitration Centre according to
the substantive laws of the State of New York, USA, without regard to any choice
of law principles therein.
Party A: Party B:
CLEMENTS CITRUS SALES TIANJIN HONGRUN
OF FLORIDA, INC. TRADING CO. LTD.
Signature/Company Seal: Signature/Company Seal:
[Company Seal]
/s/ Samuel T. Mok
for Clements Citrus Sales of Florida
to be ratified by ccsf
Board & CEO
Representative: Representative:
/s/ signature
Date: Date:
October 8, 2000 2000.10.8
/s/ signature
CEO
25
ATTACHMENT A
PRODUCT SPECIFICATIONS
26