Exhibit 10.1
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "Agreement") dated as of the 25th day of
November, 2013, is made by and between RED GIANT ENTERTAINMENT INC, a Florida
based company located at 614 Hwy 50 #235, Clermont, Florida 34711 ("Seller") and
DIAMOND COMIC DISTRIBUTORS, INC., a Maryland corporation located at 10150 York
Road, Hunt Valley, Maryland 21030 ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of publishing, manufacturing,
selling, and distributing (i) comic books (collectively, the "Comic Books"),
(ii) related graphic novel, trade paperback and hard-cover books and
compilations of the Comic Books (collectively, the "Graphic Novels"), (iii)
science fiction, fantasy and horror novels (collectively, the "Novels"), (iv)
miniature, role playing and collectible card playing games (collectively, the
"Games"), and (v) related merchandise (collectively, and together with the Comic
Books, the Graphic Novels, the Novels, the Games, the "Products.") All
references herein to "Products" shall refer only to the English-language version
thereof; and
WHEREAS, Buyer is engaged in the business of selling and distributing comic
books, graphic novels, novels, merchandise and other pop culture items; and
WHEREAS, Seller desires to appoint Buyer as Seller's distributor of the
Products in the Book Market (as defined herein) and Direct Market (as defined
herein) on the terms and conditions set forth in this Agreement; and
WHEREAS, Buyer desires to accept the appointments as distributor of the
Products for Seller in the Book Market and Direct Market on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, the sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. Appointment; Territory.
(a) Seller hereby appoints Buyer as its sole and exclusive distributor
worldwide for the sale and distribution of the Products in the Book Market.
"Book Market" shall mean chain book store retailers and their internet
affiliates; independent book stores (i.e., stores whose revenues are derived
primarily from the sale of books, as opposed to magazines, comic books, or other
items); mass-market merchandisers and their internet affiliates; libraries;
Amazon.com; and the wholesalers who service those accounts; warehouse clubs and
specialty mass merchandisers/retailers.
Seller shall retain the right to sell special edition product directly into
regional book fairs and events including Scholastic Book Fairs (collectively
referred to as the "Specialty Market"). Seller will notify Buyer of any
Specialty Market accounts that they wish to sell to.
(b) Seller hereby appoints Buyer as its sole and exclusive distributor
worldwide for the sale and distribution of Products in the Direct Market.
"Direct Market" shall mean hobby and specialty game and comic retailers and
wholesalers that generally buy on a non-returnable basis and those stores that
are presently being served, or of the type being served, through the direct
sales channel of distribution (as the term "direct sales" is commonly understood
in the comic book industry and which generally refers to sales to retail
customers which are solicited in advance and which typically purchase 25 or more
comic book titles per month on a non-returnable basis).
(c) Subject to the terms and conditions of this Agreement, Buyer
hereby accepts the appointments as Seller's sole and exclusive distributor for
the sale and distribution of the Products as set forth in Paragraphs 1(a) and
1(b) hereof (collectively, the "Appointments").
(d) As a part of Buyer's Appointment for the Book Market as set forth
in Paragraph 1(a) above, Seller hereby appoints Buyer as its sole and exclusive
distributor for the sale and distribution of Products to United Kingdom and
international book markets ("UK") Book Market customers under the purchase and
payment terms outlined on Exhibit C to this Agreement.
(i) With respect to Products shipped to Buyer's UK distribution
facility, which ultimately can not be sold to customers serviced by Buyer's UK
distribution facility, such Products will be returned to Buyer's Olive Branch,
Mississippi distribution facility and associated freight costs will be deducted
from the next Weekly Payment Amount due from Buyer to Seller. Buyer will give
Seller 10 days prior notification of the intent to return Products to the United
States, and Seller may elect to have Buyer either liquidate or destroy the
Products, rather than return them, at Buyers direct cost plus twenty (20)
percent.
(ii) Buyer will include all shipments of Products to its UK
distribution facility in its regular sales reporting to Seller. Additionally,
Buyer will provide Seller with an additional monthly report containing all sales
and returns activity of UK Book Market customers, in order to calculate the
appropriate additional UK Book Market fees outlined in Exhibit C of this
Agreement. Such additional UK Book Market fees will be deducted from the first
Weekly Payment Amount payable following the month for which such fees are
calculated.
2. Term. The initial term of this Agreement (the "Initial Term") is for
three years from the Commencement Date (as defined herein) with respect to
Products shipped as of such Commencement Date. Unless terminated earlier in
accordance with Paragraph 9 hereof, this Agreement will automatically renew for
one-year periods (each, a "Renewal Term"). This Agreement is effective with
Products available for shipment as of January 1, 2014, the "Commencement Date".
As used herein, "Term" shall mean collectively the Initial Term and any Renewal
Terms.
3. Supply.
(a) Subject to Paragraph 3(c) hereof, during the Term, Seller hereby
agrees to consign to Buyer, and Buyer hereby agrees to accept from Seller, such
amounts of Products as are required to meet Buyer's distribution needs, as such
amounts are determined by Buyer in its reasonable discretion.
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(b) Buyer shall place consignment orders (referred to herein as
"Shipping Requests") with Seller for all Products to be shipped to Buyer
pursuant to the terms of this Agreement through delivery to Seller of a written
or electronically transmitted document in the form attached hereto as Exhibit B
(the "Purchase Order Form") with such changes as Buyer may make from time to
time in its reasonable discretion. Buyer shall deliver such Shipping Requests to
Seller to the address provided for notices to Seller in this Agreement, or to
such other address as may be provided by Seller to Buyer from time to time. In
the event of any conflict between the terms of this Agreement and the Purchase
Order Form, the terms of this Agreement shall control.
(c) Buyer will warehouse Products on consignment in a clean, dry,
secure, and fire-protected facility.
4. Distribution Services; Additional Services.
(a) As Seller's distributor, Buyer shall perform each of the
distribution and marketing services specified on Exhibit A hereto (collectively,
the "Distribution Services"). Distribution Services shall be provided free of
charge to Seller, except as otherwise specifically set forth on Exhibit A and in
Paragraph 6 hereof.
(b) Buyer may also elect, in its sole discretion, to offer services to
Seller not specified on Exhibit A hereto (collectively, the "Additional
Services"). Seller may elect to obtain any such Additional Services from Buyer
in its sole discretion. Seller and Buyer shall agree upon the cost to Seller for
such Additional Services in advance, but in no event shall Buyer offer the
Additional Services to Seller at a cost in excess of Buyer's direct cost for
providing such Additional Service plus 20%. Additional Services do not include
those services for which Seller establishes a published price (the "Rate Card
Services") that shall be provided based on such Rate Card less 15%.
5. Price for Products.
(a) Seller shall sell Products to Buyer at a discount of 60% off the
cover price and shall grant Buyer a freight rebate of 2% off of the retail price
for all Products picked up at Seller's domestic manufacturing/printing facility
(the "Freight Rebate"), or if Seller ships Products to each of Buyer's
distribution centers, Seller will be responsible for all freight and delivery
charges. If Seller prints its Products outside of North America, Seller will be
responsible for paying all freight, customs and duties charges to deliver the
Products to Buyer's Olive Branch, MS distribution center.
(b) In addition to the discounts set forth in Paragraph 5(a) hereof,
Seller shall provide Buyer an allowance of 2.5% of the retail price of all
Products sold to (i) the Book Market, or (ii) other non-Direct Market customers
that place orders after Buyer's sales representatives have solicited such
customers (the "Book Market Sales Allowance"). Buyer will provide Seller,
included with each Weekly Payment Amount calculation, a listing of Products sold
which are subject to the Book Market Sales Allowance along with a computation of
the calculated allowance.
6. Payment Terms; Book Market Returns; Etc.
(a) On a weekly basis and within 30 days after Buyer's unofficial
weekly "Release Date" to the Direct Market for each Product invoiced, Buyer
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shall pay Seller an amount equal to the Weekly Payment Amount (as defined
herein). On a weekly basis and within 60 days after Buyer's unofficial weekly
Release Date to the Book Market for each product invoiced, Buyer shall pay
Seller an amount equal to the Weekly Payment Amount. The Weekly Payment Amount
shall be equal to (i) the retail value of Net Products (as defined herein) sold
to Customers (as defined herein) multiplied by 40%, less (ii) the Book Market
Service Fee (as defined herein), less (iii) the Book Market Returns Fee (as
defined herein), if applicable, less (iv) the Book Market Sales Allowance, less
(v) the Freight Rebate, less (vi) a customer freight fee of 1.25% of retail for
those customers who require free freight for deliveries by Buyer, less (vii)
Customer "Documented Deductions" (as defined herein). No amounts shall be
deducted from the payment owing to Seller relating to uncollectible accounts.
Buyer will provide Seller, included with each Weekly Payment Amount a
Consignment Sales Report showing the foregoing calculation of the Weekly Payment
Amount, including all fee deductions
"Net Products" shall mean total Products sold less credits issued for
customer reported damages, shortages and actual returns. "Customers" shall mean
collectively Book Market customers and Direct Market customers. Products
returned to Buyer from Book Market customers (each a "Book Market Return") will
either be returned to the consignment inventory, or removed from inventory as
damaged goods, for full credit to Buyer of Buyer's original purchase price less
a "Book Market Service Fee" equal to 6% of the retail price of such Book Market
Return. In addition, if in any year of the Term of this Agreement Buyer
processes Book Market Returns with a credited value in excess of 30% of sales
made to the Book Market during such year (the "Trigger Amount"), Seller will pay
to Buyer an additional fee of 4% of the invoices credited for Book Market
Returns in excess of the Trigger Amount in such year (the "Book Market Returns
Fee").
"Documented Deductions" shall mean any deduction taken by a Book Market
customer on their remittance where the deduction is calculated based on the cost
or value of Products which deduction is not otherwise specifically enumerated in
section 6 (a)(i) thru 6 (a)(vi).
(b) In the event that Buyer provides Seller any Distribution Services
or other service with respect to which an additional charge is imposed in
accordance with Exhibit A, Buyer will send a monthly invoice to Seller for the
amount due for such service. Seller shall pay such invoice within 30 days of the
date of the invoice. If Seller fails to make payment within 45 days of the date
of an invoice, Buyer shall have the right to offset the invoiced amount against
any subsequent Weekly Payment Amounts.
(c) Buyer shall keep, maintain, and preserve at Buyer's principal
place of business accurate books of account and records covering transactions
relating to the Appointments and this Agreement. Seller and/or its duly
authorized representative shall have the right, once per year during normal
business hours, upon no less than 15 days written notice to Buyer, to examine
said books of account and, records for the immediately preceding twelve (12)
month period relating specifically to transactions covered by this Agreement.
This examination may only take place during the twelve month period following
the Agreement's anniversary date and is limited to the previous anniversary
year's activity. Seller shall have no right to examine any of said books of
account and records which relate to previous anniversary periods unless, for
whatever reason, adjustments were made during the current year to those prior
year periods. Seller, at Seller's sole expense, may copy any of the material
referenced in this Paragraph 6(c). Buyer shall keep all such books of account
and records available for at least one year following termination of this
Agreement. If any audit conducted by Seller as finally agreed in accordance with
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the terms hereof (including Paragraph 17 hereof) indicates a shortfall in
payments to Seller in excess of 5% of the amounts due Seller for any year of the
Term of the Agreement, its reasonable direct out-of-pocket costs of the audit
(not to exceed the amount of the shortfall) shall be paid by Buyer. In addition,
Buyer shall promptly pay the monies finally determined to be due Seller. If any
audit conducted by Seller as finally agreed in accordance with the terms hereof
(including Paragraph 17 hereof) indicates an overpayment by Buyer in payments to
Seller for any year of the Term of the Agreement, Buyer shall have the right to
offset the overpayment amount against any subsequent Weekly Payment Amounts.
(d) In the event that at any time or from time to time during the
Term, one or more of Buyer's Book Market customers require that Buyer sell
Products to them at a higher base discount (for example, a customer requires a
55% discount rather than a 52% discount), Buyer shall notify Seller of such
requirement. Seller shall, within ten (10) days of such notification by Buyer,
notify Buyer of its election to either (i) have Buyer continue sales under this
Agreement to such customer, in which event Buyer may deduct such percentage
increase from the Weekly Payment Amount otherwise payable, or (ii) have Buyer
discontinue sales to such customer.
(e) In addition to the deductions made in calculating the Weekly
Payment Amount (as provided above), Buyer may deduct those amounts necessary for
Buyer to establish and maintain a reserve account for Product returns from the
Book Market channel only (the "Returns Reserve") in an amount which shall at all
times be at least equal to 30% of sales of Products during, at the option of
Buyer, either (i) the immediately preceding twelve (12) month period, or (ii)
the immediately succeeding (12) month period based on reasonable forecasts.
7. Title And Risk Of Loss; Inventory.
(a) All Products are to be held by Buyer on consignment, and remain
the property of Seller until sold by Seller through Buyer. Seller shall retain
title to Products while they are stored in Buyer's distribution center, which
title will pass to customers in accordance with Diamonds Terms of Sale. Buyer
will cooperate with Seller in the execution of any financing statements or
continuations or amendments to financing statements Seller reasonably deems
necessary to provide adequate notice of its rights as consignor hereunder,
naming Buyer as consignee or debtor, and identifying the Products as consigned
goods, and further authorizes Seller to file such financing statements in all
filing offices Seller reasonably deems appropriate, provided that Seller
provides Buyer with reasonable advance notice and copies of all such filings.
(b) Seller will be responsible for all personal property, inventory
and other taxes associated with Products distributed by Buyer under this
Agreement. Seller is also responsible for the quality of the Products and that
Products have been tested to comply with various local, state, national and
international laws.
(c) Seller shall retain all risk of loss or damage with respect to
Products while they are located in Buyer's distribution centers except where
such damage or loss results from Buyer's gross negligence and shall maintain all
insurance with respect thereto. Buyer shall have no obligation to insure
against, nor bear liability for, any loss due to damage to, destruction of, or
normal shrinkage and deterioration of, any Product during such time.
Notwithstanding anything to the contrary set forth herein, loss or damage to
Products resulting from normal shrinkage and deterioration shall be the
responsibility of Seller, provided, however, that in the event that "normal
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shrinkage and deterioration" exceeds two percent (2%) of the total units of
Products shipped to Buyer's distribution centers during any year, Buyer shall
reimburse Seller for the printing costs associated with the units subject to
shrinkage and deterioration in excess of the two percent (2%) threshold The
parties acknowledge and agree that the following shall not constitute shrinkage
or deterioration which would be factored into the calculation of the two percent
(2%) threshold above or for which Buyer would otherwise be liable: (i) disputed
shortages of Product; (ii) Products called in as damaged by customers; (iii)
returns of Products to the extent the amount of such returns are in dispute; and
(iv) books deemed as "hurts" and unsaleable in the normal course of business.
All loss or damage to the value of Products while in the custody of Buyer
resulting from Buyer's gross negligence will be the responsibility of Buyer,
provided that such loss or damage shall not exceed the printing costs associated
with sum of (i) the printing costs associated with the Products that are lost or
damaged [and (ii) Seller's actual cost of shipping such Products to Buyer's
distribution center].
(d) Products will be stored free of charge for 90 days from the
original on sale period. Following this initial 90 day period, all Products
maintaining sales of at least $1,000 at retail per month, will be stored in
reasonable quantities to be mutually agreed upon at no cost to Seller. Any
Product which falls below the level of $1,000 monthly sales at retail, Buyer
will charge Seller a fee of $.40 cents per carton.
(e) Buyer will not maintain in inventory books deemed as "hurts" and
unsaleable in the normal course of business. Hurt books will either, at the sole
discretion of Buyer be (i) sold at such price as determined by Buyer with the
proceeds from this sale divided equally 50/50 between Seller and Buyer, (ii)
disposed of, at the sole cost and expense of Seller, or (iii) returned to
Seller, at Seller's sole cost and expenses.
(f) If Buyer is requested by Seller to ship Product as a No Cost
Replacement (as defined herein) then Buyer will charge Seller $15.00 per order,
$2.00 per title and $.25 for each SKU shipped. "No Cost Replacement" shall mean
Products and items distributed on behalf of the Seller that are not purchased by
a Customer. Buyer agrees to distribute Seller's promotional comic line,
consisting of cartons of 50 books, to participating "Direct Market" retailers
for a cost of $6 per carton.
8. Intellectual Property.
(a) Seller hereby represents and warrants to Buyer that it owns or has
a valid license for all rights, including intellectual property rights, required
for the distribution of the Products by Buyer, including all required patents,
trademarks (registered or unregistered), service marks, trade names, assumed
names, copyrights and all applications therefor (collectively, the "Intellectual
Property"). The performance by Buyer of its obligations hereunder will not
infringe upon the Intellectual Property or any other rights of any third party.
The execution, delivery and performance of this Agreement by Seller will not
breach or conflict with any agreement between Seller and any third party.
(b) Buyer acknowledges Seller's exclusive right, title, and interest
in and to the Products and related trademarks, service marks, and any
registrations that have been issued or may be issued to Seller (collectively,
the "Trademarks") and Buyer will not at any time knowingly do or cause to be
done any act or thing contesting or impairing any part of such right, title, and
interest. All rights in the Trademarks are reserved to Seller for its own use
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and benefit. Buyer acknowledges that Buyer shall not acquire any rights
whatsoever in the Trademarks as a result of Buyer's use thereof, and that use of
the Trademarks by Buyer shall inure to the benefit of Seller.
(c) In connection with Buyer's use of the Trademarks, Buyer shall not
in any manner represent that Buyer has any ownership in the Trademarks, or in
any material supplied to Buyer or created by Seller pursuant to this Agreement.
Buyer agrees that Buyer shall not at any time apply for any registration of any
copyright, trademark, service mark, or other designation, nor file any document
with any governmental authority, or to take any action that would affect the
ownership of the Trademarks or Seller's copyrights or other intellectual
property.
(d) Except as otherwise provided herein, upon termination of this
Agreement, Buyer will not at any time thereafter adopt or use without Seller's
prior written consent, any word or mark which is identical or confusingly
similar to the Trademarks.
(e) Buyer shall, or shall cause to be, permanently affixed to all
advertising, promotional, and display material incorporating or relating to the
Products and/or their contents in a reasonably prominent position in the
following order and in the manner specified in the following clause:
"(C)and(TM)2013 RED GIANT ENTERTAINMENT INC, All Rights
Reserved."
(f) Buyer shall use no markings, legends, or notices on or in
association with the Products, including advertising, other than as specified
above and any notices as may from time to time be specified by Seller, without
obtaining Seller's prior written approval.
(g) The obligations set forth in this Paragraph 8 shall survive the
termination of this Agreement.
9. Termination.
(a) Either party may terminate this Agreement by providing the other
party with at least 90 days prior written notice of its intent to terminate this
Agreement upon the expiration of the Initial Term or the then current Renewal
Term.
(b) Either party may terminate this Agreement prior to the expiration
of the Term upon 45 days prior written notice to the other party if the other
party has materially defaulted under the terms of this Agreement and has not
cured such default during such 45-day notice period. Notwithstanding the
foregoing, in the event of any material default by a party hereunder, which
default is incapable of cure during such 45-day period, the defaulting party
shall have an additional 75 days to cure such default, provided, however, that
such defaulting party is diligently attempting to cure such default. Such
extended cure period shall not apply to the payment of amounts owed by a party
under this Agreement.
(c) Notwithstanding Paragraph 9(b) hereof, this Agreement shall
immediately terminate, upon receipt of written notice if:
(1) Buyer fails to abide by the terms of Paragraph 8 within 15
days after receipt of written notification of a violation of Paragraph 8;
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(2) Buyer fails to pay amounts owed to Seller within the time
stated in this Agreement and such failure continues for more than 15 days after
Seller provides written notice to Buyer that such amounts are owing to Seller;
(3) A party attempts to assign or sublicense any or all of the
rights or obligations under this Agreement, other than to an affiliate, without
the prior written approval of the other party;
(4) Buyer consummates a transaction or series of related
transactions which cause the holders of the ownership interests in Buyer as of
date of this Agreement to beneficially own less than fifty percent of the voting
rights in Buyer; or
(5) Either Buyer or Seller files a petition in bankruptcy, is
adjudicated a bankrupt, has a petition in bankruptcy filed against it (which is
not dismissed within 60 days), becomes insolvent, makes an assignment for the
benefit of its creditors or an arrangement pursuant to any bankruptcy law or
other similar laws regarding insolvency, discontinues its business, or has a
receiver appointed for it or its business, or any similar event has occurred
with respect to Buyer or Seller.
10. Effect of Termination.
(a) Upon termination of this Agreement, all rights granted to Buyer
hereunder shall immediately terminate, Seller shall be free to appoint others to
act as distributor for Seller in the sale and distribution of Products, Buyer
shall have no right to remainder Products, and Buyer shall have no further right
to exploit or in any way deal with the Products, including, without limitation,
the distribution of Products to Customers who have submitted orders to Buyer
prior to the termination of this Agreement
(b) If this Agreement is terminated as a result of a default by Buyer
under this Agreement, all amounts owed to Seller shall become due and payable in
the normal course. Seller shall have no further obligations to Buyer, monetarily
or otherwise, other than for credits, allowances and payments otherwise due
under this Agreement as of the date of termination. Seller reserves the right of
offset of what is due Seller from Buyer against what Buyer owes Seller.
(c) If this Agreement is terminated as a result of a default by the
Seller under this Agreement, all amounts owed to Buyer shall become due and
payable in the normal course. Buyer shall have no further obligations to Seller,
monetarily or otherwise, other than for credits, allowances and payments
otherwise due under this Agreement as of the date of termination. Buyer reserves
the right of offset of what is due Buyer from Seller against what Seller owes
Buyer.
(d) Except as provided herein, the termination of this Agreement shall
not relieve or release any party from any of its obligations existing prior to
such termination. Upon termination of this Agreement, title to all material
containing the Trademarks, or Seller's copyrights, service marks, or similar
rights shall be deemed to have automatically vested in Seller. Unless otherwise
agreed to by Seller, Buyer shall immediately deliver such material to Seller, at
Seller's cost. Buyer, at Seller's option, may destroy such material at Seller's
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cost, and upon such destruction furnish Seller a certificate of destruction
satisfactory to Seller and signed by an officer of Buyer.
(e) In the event of expiration or termination of this Agreement by
either party, Buyer shall accept returns of Sellers Products distributed to Book
Market customers (including U.K. Book Market customers) for ninety (120) days
following the effective date of termination (the "Returns Period"). In no event
shall Buyer have any right or obligation to accept any returns after the Returns
Period. Buyer may withhold, from amounts otherwise due with respect to sales of
Sellers Products to Book Market customers made in each of the three (3) full
calendar months immediately preceding the effective date of termination or
expiration, a percentage of such amounts otherwise due, such percentage to serve
as a reserve for returns (the "Returns Reserve") that Buyer may receive from
Book Market customers during the Returns Period. The percentage referred to in
the preceding sentence shall be equal to the following fraction:
(i) returns of Publisher Books, based on credit value, for the twelve
(12) months immediately prior to the effective date of
termination or expiration; divided by
(ii) gross sales to Bookstores for such twelve-month period.
Any portion of the Returns Reserve that is not applied to credits issued for
actual returns received by Buyer during the Returns Period shall be owed to
Seller, and any amount by which the Returns Reserve is insufficient to cover
credits issued for actual returns received by Buyer during the Returns Period
shall be owed to Buyer. Buyer shall produce a final settlement statement within
sixty (60) days after the end of the Returns Period and the appropriate party
will settle the balance within sixty (60) days after such final statement is
sent by Buyer. After the Returns Period, Seller shall pay Buyer any amounts
which any customer refuses to pay to Buyer on account of Sellers Products
shipped to such customer by Buyer due to any deduction claimed by such customer
for returns which such customer makes after the Returns Period or in connection
with any dispute over the customer's right to return any Sellers Product after
the Returns Period, but only to the extent that Buyer has not been able to
recoup such amount from the Returns Reserve or through a credit against amounts
due to Seller from Buyer.
(f) In the event of termination of the Agreement by either party,
Buyer shall have the right to offset any amount owed to Seller under this
Agreement against any amounts owed to Buyer or any affiliate of Buyer under any
other agreements with Seller or its affiliates. If Buyer feels Seller will not
be able to compensate Buyer for outstanding amounts due for which offset is not
possible (including exposure for Book Market customer returns) Buyer has the
right to sell or remainder consignment inventory to recoup monies owed.
(g) Promptly upon termination of this Agreement, Seller will remove at
its own expense all Products held on consignment ("Inventory") from Buyer's
distribution center. If Seller fails to remove such Inventory within sixty (60)
days after the later of the termination of this Agreement and written demand
from Buyer that such Inventory be removed, Buyer shall have the right either to
dispose of such Inventory as it deems best or to destroy such Inventory. Upon
termination of this Agreement and in accordance with Section 1.d, Buyer will
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return the UK consignment and returned Book Market Products to Buyer's Olive
Branch center. If Seller prefers this UK Product to be destroyed, Buyer will do
so at Seller's request and at Seller's sole cost and expense.
11. Notices. All notices given to a party hereunder must be given in
writing and (a) delivered in person, (b) mailed by certified or registered mail,
postage prepaid, return receipt requested, or (c) sent by recognized overnight,
express, or other prepaid receipted courier delivery service, as follows:
If to Seller:
RED GIANT ENTERTAINMENT INC
614 E Hwy 50 #235
Clermont, FL 34711
Attention: ???
Fax: (352 989-4521
If to Buyer:
Diamond Comic Distributors, Inc.
10150 York Rd
Hunt Valley, Maryland 21030
Attention: Chief Operating Officer
Fax: (410) 560-7151
or to such other address as either party shall have designated in a notice to
the other party. Each such notice shall be effective (i) if given by
telecommunication, when transmitted to the appropriate number and the
appropriate answer back is received, or (ii) if given by any other means, upon
receipt.
12. Release. By signing this Agreement, Seller waives and releases any
claims it has against Buyer as of the date of this Agreement. In addition, as of
the commencement of any Renewal Term under this Agreement, Seller waives and
releases any claims it has against Buyer as of the commencement of such Renewal
Term (except those claims of which Buyer has received written notice from Seller
prior to the commencement of the Renewal Term and any claims arising from Seller
auditing the last twelve months books and records of Buyer as described in
section 6.c).
13. Independent Contractors; No Third Party Rights. Seller and Buyer are
contractors independent of one another, and neither has the authority to bind
the other to any third person or otherwise to act in any way as the
representative of the other, unless otherwise expressly agreed to in writing
signed by both parties hereto. Nothing set forth herein shall constitute a joint
venture, partnership or similar relationship between Buyer and Seller. Nothing
contained in this Agreement shall give or is intended to give any rights of any
nature to any third party.
14. Force Majeure. Neither party shall be liable to the other for any
failure of or delay in the performance of this Agreement for the period that
such failure or delay is due to acts of God, public enemy, civil war, strikes or
labor disputes or any other cause beyond that party's control. The party limited
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by a force majeure agrees to notify the other promptly of the occurrence of any
such cause and to carry out the terms of this Agreement as promptly as
practicable after such cause is terminated.
15. Assignment; Binding Effect. Seller may assign the right to receive
payments under this Agreement to any other person or entity upon written notice
to Buyer and may assign this Agreement to any affiliate organized for the
purpose of publishing the Products. Buyer may assign this Agreement to any
affiliate of Buyer organized for the purpose of conducting substantially all of
Buyer's distribution activities. Notwithstanding the foregoing, this Agreement,
and the rights and obligations of each party hereto, shall not be assigned
without the prior written consent of the other party, which consent shall not be
unreasonably withheld. Any purported assignment by a party in contravention of
this Paragraph 15 shall be void and shall constitute material breach of this
Agreement. All terms and provisions of this Agreement shall be binding upon, and
inure to the benefit of, and be enforceable by Seller and Buyer and their
respective successors, permitted assigns, and legal representatives.
16. Entire Agreement; Modification. This Agreement and any Exhibits
attached hereto constitute the entire Agreement between the parties with respect
to the subject matter hereof, and supersede all other prior oral and written
representations, agreements, or understandings between them relating thereto.
This Agreement and any Exhibits attached hereto (other than Buyer's Purchase
Order Form, which may be modified by Buyer from time to time) may not be
modified, altered or changed except by an instrument in writing signed by both
parties. The failure of either Seller or Buyer to enforce, or the delay by
Seller or Buyer in enforcing any of said party's rights under this Agreement
shall not be deemed a waiver or continuing waiver, and said party may, within
such time as is provided by applicable law, commence appropriate suits, actions,
or proceedings to enforce any or all such rights.
17. Applicable Law. This Agreement shall be deemed to have been entered
into in the State of Maryland and shall be interpreted and construed in
accordance with the laws of the State of Maryland applicable to agreements
executed and to be fully performed therein. Both parties will attempt to resolve
disputes and other problems regarding this Agreement with communication and
respect for the interests of the other party. In the event of a dispute which
the parties are unable to resolve, the parties will attempt to agree on a single
arbitrator. Such disputes will be submitted to the selected arbitrator and will
take place in Baltimore, Maryland in accordance with the rules and regulations
of the American Arbitration Association. The decision of such arbitrator will be
final and binding on the parties hereto, and it may be enforced in any court of
jurisdiction. In the event that the parties are unable to agree on a single
arbitrator within thirty (30) days after a request by a party for an agreement
on an arbitrator, the parties shall be entitled to all rights and remedies to
which such parties may be entitled at law or in equity
18 Survival. All payment obligations hereunder and all obligations under
Paragraphs 8 and 21 hereof shall survive the termination of this Agreement.
19. Severability. In the event that any provision of this Agreement, or any
portion hereof, shall be declared invalid or unenforceable by a court of
competent jurisdiction in any jurisdiction, such provision, or portion thereof,
shall, as to such jurisdiction, be ineffective to the extent declared invalid or
unenforceable without affecting the validity or enforceability of the other
provisions of this Agreement, or any portion thereof, and the remainder of this
Agreement shall remain binding on the parties hereto. However, in the event that
any such provision, or any portion thereof, shall be declared unenforceable
because of its scope, breadth, or duration, then it shall be automatically
modified to the scope, breadth, or duration permitted by law and shall be fully
11
enforceable in such jurisdiction as so modified as if such modification was made
upon the effective date of this Agreement.
20. Limitation of Liability. In no event shall BUYER be liable for any
indirect, special, consequential or punitive damage of any kind or nature,
including lost profits, arising out of this Agreement, whether based in
contract, tort (including negligence) or strict liability, EXCEPT AS SET FORTH
IN PARAGRAPH 21 HEREOF.
21. Confidentiality.
(a) The parties agree to use reasonable commercial efforts to keep
confidential and not disclose the existence or terms of this Agreement without
the prior written consent of the other party.
(b) In connection with the performance of its obligations hereunder,
Buyer will be provided with access to certain information regarding Seller,
including oral and written legal, business, financial and other information,
ideas and data, in written, oral, electronic, photographic and/or other forms
concerning Seller (collectively "Seller Confidential Information"). Such Seller
Confidential Information shall be used by Buyer solely for the purpose of
performing its obligations hereunder. The Seller Confidential Information is
proprietary and confidential to Seller and is, and shall remain, the property of
Seller. Buyer and its employees and agents shall hold the Seller Confidential
Information in strict confidence and shall not, without the prior written
consent of Seller, disclose or release the Seller Confidential Information to
either (a) persons within its organization not having a legitimate need to know,
or (b) persons outside its organization. Upon written request from Seller, Buyer
will and will cause its employees and agents to deliver promptly to Seller all
documents (and all analyses, copies, extracts or summaries thereof) furnished to
Buyer or its employees or agents by or on behalf of Seller pursuant hereto. All
other Seller Confidential Information not returned to Seller, including all
Seller Confidential Information prepared by Buyer or its employees or agents,
shall be destroyed and no copy thereof shall be retained and, upon request,
Buyer shall certify in writing to Seller that such action has been taken.
Notwithstanding the return or destruction of the Seller Confidential
Information, Buyer and its employees and agents will continue to be bound by its
obligations of confidentiality hereunder.
(c) In connection with the performance of its obligations hereunder,
Seller will be provided with access to certain information regarding Buyer,
including oral and written legal, business, financial and other information,
ideas and data, in written, oral, electronic, photographic and/or other forms
concerning Buyer (collectively "Buyer Confidential Information" and, together
with Seller Confidential Information, the "Confidential Information"). Such
Buyer Confidential Information shall be used by Seller solely for the purpose of
performing its obligations hereunder. The Buyer Confidential Information is
proprietary and confidential to Buyer and is, and shall remain, the property of
Buyer. Seller and its employees and agents shall hold the Buyer Confidential
Information in strict confidence and shall not, without the prior written
consent of Buyer, disclose or release the Buyer Confidential Information to
either (a) persons within its organization not having a legitimate need to know,
or (b) persons outside its organization. Upon written request from Buyer, Seller
will and will cause its employees and agents to deliver promptly to Buyer all
documents (and all analyses, copies, extracts or summaries thereof) furnished to
Seller or its employees or agents by or on behalf of Buyer pursuant hereto. All
other Buyer Confidential Information not returned to Buyer, including all Buyer
Confidential Information prepared by Seller or its employees or agents, shall be
12
destroyed and no copy thereof shall be retained and, upon request, Seller shall
certify in writing to Buyer that such action has been taken. Notwithstanding the
return or destruction of the Buyer Confidential Information, Seller and its
employees and agents will continue to be bound by its obligations of
confidentiality hereunder.
(d) Notwithstanding anything to the contrary set forth in this
Paragraph 21, the obligations of Paragraph 21 do not apply to the following:
(1) disclosures (A) required by law, required to implement the
terms of this Agreement, or necessary to enforce a party's
rights under this Agreement, or (B) to the parties'
respective counsel, accountants and financial advisors,
provided that (y) in the case of the foregoing clause (A)
the non-disclosing party shall be provided with notice and
an opportunity to review any disclosure required by
applicable law or regulation prior to its publication and
(z) in the cases of the foregoing clauses (A) and (B) the
receiving party is informed of the confidential nature of
such matters, is instructed to keep them confidential and is
liable for any unauthorized disclosure; and
(2) Confidential Information that (A) at the time of an alleged
breach hereof is part of the public domain (other than as a
result of a breach of confidentiality obligations by the
disclosing party), (B) has been disclosed, at the time of an
alleged breach hereof, by the non-disclosing party to third
parties without restrictions on disclosure, (C) has, at the
time of an alleged breach hereof, been received by the
disclosing party from a third party without breach of a
nondisclosure obligation of the third party, or (D) has been
independently developed by the disclosing party without
access to the non-disclosing party's Confidential
Information.
(e) The parties acknowledge and agree that there would be no adequate
remedy at law for, and that irreparable harm would result from, any material
breach of the provisions of this Paragraph 21. Accordingly and notwithstanding
the provisions of Paragraph 17 hereof, in the event of such a breach by one
party, the other party shall be entitled to injunctive relief and to specific
enforcement of the terms and provisions hereof, in addition to any other remedy
to which such other party may be entitled at law or in equity. It is further
understood and agreed that no failure to exercise, or delay in exercising, any
right, power or privilege hereunder shall operate as a waiver thereof, and no
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise of any such right, power or privilege. If
any action is initiated to enforce any of the provisions hereof, the prevailing
party shall be entitled to reimbursement of all costs and expenses, including
the reasonable fees and expenses of legal counsel, incurred by it in connection
therewith.
22. Headings and Construction.Captions and headings contained in this
Agreement have been included for ease of reference and convenience and will not
be considered in interpreting or construing this Agreement. This Agreement will
not be interpreted or construed in any particular manner based on considerations
as to which party drafted this Agreement.
13
23. Counterparts; Facsimile Signature Pages. This Agreement may be executed
in counterparts, each of which will be deemed to be an original and all of which
together will be considered one and the same instrument. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually signed counterpart of this Agreement.
{SIGNATURES APPEAR ON THE FOLLOWING PAGE}
14
IN WITNESS WHEREOF, the parties have caused this Supply Agreement to be
executed and effective as of this 25th day of November 2013 and do each hereby
warrant and represent that their respective signatory whose signature appears
below has been and is on the date of this Agreement duly authorized by all
necessary and appropriate corporate action to execute this Agreement.
RED GIANT ENTERTAINMENT INC
By: /s/ Benny R. Powell
-----------------------------------------
Name: Benny R. Powell
----------------------------------------
Title: CEO
------------------------------------------
DIAMOND COMIC DISTRIBUTORS, INC.
By: /s/ Larry R. Swanson
-----------------------------------------
Name: Larry R. Swanson
----------------------------------------
Title: Treasurer
------------------------------------------
15
EXHIBIT A
Buyer agrees to exercise commercially reasonable efforts in the performance
of distribution and marketing services on behalf of Seller during the Term. All
defined terms used in this Exhibit A shall have the same meaning as defined in
the Supply Agreement by and between Buyer and Seller of even date herewith (the
"Agreement"), unless otherwise specified herein. Unless otherwise specified
herein, (a) all terms used herein to describe distribution and marketing
services shall have the meaning customarily ascribed to them in the business of
distributing Products to Customers; and (b) Buyer shall receive no fee or other
compensation for any such Distribution Services other than the allowances
specified in this Agreement. In addition to the items set forth below, Buyer
shall provide Seller with a wide range of core distribution, marketing and
consulting services in a manner consistent with industry standards, including
communicating Customer feedback and market information to Seller. In addition,
Buyer shall assist Seller in the development of programs and products and other
similar services, at no fee, provided that (i) the service does not require
customized computer programming and (ii) can reasonably be performed by the
Brand Manager (as described in Section 4 below).
1. Buyer shall perform the following marketing services:
(a) Produce, publish and distribute a monthly catalog currently known
as Diamond Previews), suitable for consumers and retailers of Products offered
by Buyer to the Direct Market. With respect to each such catalog, Buyer shall
reserve space for the listing of Products in the appropriate sections of each
such catalogue during the Term.
(b) Seller may purchase additional advertising space in the
publication referred to in Paragraph 1(a) above at 15% off Buyer's published
advertising rates.
2. Buyer will assign a brand manager (the "Brand Manager") to act as a
liaison between Seller and all Buyer departments. Buyer will also assign a sales
representative to act as Seller's sales representative to the Book Market
("Sales Rep"). The Brand Manager and Sales Rep may be the same person. Buyer
shall make a reasonable effort to accommodate Seller's request for the person to
act as the Sales Rep.
3. To the extent Buyer has a presence at major comic industry trade show
events or book industry trade show events in North America (such as the San
Diego Comic Con, New York Comic Con, Chicago Comic Con, American Library
Association Conference, and Book Expo America convention), Buyer, at no charge
to Seller, shall have present a sales rep and shall display and promote selected
Products as appropriate for the type of event.
4. To the extent Buyer produces a catalog or advertising booklet for
distribution in the Book Market or for book industry trade show events, Buyer
shall provide Seller, at no charge to Seller, a reasonable amount of editorial
content to be provided by Seller as determined in Buyer's sole discretion.
5. The Supply Agreement, including all amendments, attachments, and
exhibits thereto, is hereby incorporated by reference into this Exhibit A.
RED GIANT ENTERTAINMENT INC
By: /s/ Benny R. Powell
-----------------------------------------
Name: Benny R. Powell
----------------------------------------
Title: CEO
------------------------------------------
Date: November 25, 2013
-----------------------------------------
DIAMOND COMIC DISTRIBUTORS, INC.
By: /s/ Larry R. Swanson
-----------------------------------------
Name: Larry R. Swanson
----------------------------------------
Title: Treasurer
------------------------------------------
Date: December 6, 2013
-----------------------------------------
EXHIBIT B
PURCHASE ORDER TERMS
Diamond Comic Distributors, Inc.'s Purchase Order Terms are to be maintained by
Vendor in its permanent file and all orders placed by Diamond Comic
Distributors, Inc. with Vendor shall be accepted by Vendor under the terms and
conditions of this document. These Purchase Order Terms supersede all prior
written or oral agreements.
Diamond Comic Distributors, Inc. ("DCD") shall place all orders with Vendor by
any number of means including, but not limited to, mail, courier, facsimile
transmission or other electronic means, and all such orders shall be construed
as being subject to this document.
Vendor shall be deemed to have accepted Diamond's Purchase Order under the terms
and conditions stated herein unless Vendor notifies the DCD Order Processing
Department in writing within five (5) days of its receipt of the Purchase Order.
Upon notification DCD will either cancel the existing Purchase Order and decide
whether to place a new Purchase Order, or accept the product on a returnable
basis subject to fees and conditions outlined below.
If the product and/or invoice is received with a different retail price, terms,
or other documentation than stated on the Purchase Order, DCD may accept the
most favorable terms and/or pay the lower of the two prices, and all products
will be fully returnable.
In the event DCD accepts products on a returnable basis, DCD reserves the right,
at its sole discretion, to withhold payment for such products, for up to 120
days from receipt of goods, and impose on Vendor a processing fee of $100.
Vendor shall include a packing list with each shipment to include title, DCD
item code, quantity shipped and DCD's purchase order number.
Upon shipment of product, an invoice must be sent to:
Diamond Comic Distributors, Inc.
1966 Greenspring Drive - Suite 300
Timonium, MD 21093
(Invoices should not be included with shipments, as this will result in delay of
payment.)
Notwithstanding orders for Themed Products (as hereinafter defined), any
Purchase Order for a product which Diamond is ordering for the first time
("Initial Order") shall be valid for a period of thirty (30) days after the
Vendor solicited ship month, after which date the Purchase Order shall be void
and of no further force or effect.
If a Purchase Order is placed after the Initial Order for the same product
("Reorder") the Reorder must ship within fourteen (14) days of delivery of the
Initial Order shipment, or within fourteen (14) days of the order date printed
on the Reorder, whichever is later. Any such reorders that do not ship within
the above described time frame will be canceled, or if indicated by DCD in
writing, accepted on a fully returnable basis.
DCD requires that any and all items that are related to holidays or other media
events ("Themed Products") must ship at least twenty one (21) days prior to said
holiday or event. Any such Themed Products that do not ship within the above
described time frame will be canceled, or if indicated by DCD in writing,
accepted on a fully returnable basis.
In the event Vendor ships product to DCD which has not been ordered by DCD,
Vendor assumes all risk for the product. DCD shall be under no obligation to
receive, store, secure, inventory, or return such unsolicited product to Vendor.
DCD shall not be obligated to make any payment for such unsolicited product
under any circumstances.
By accepting DCD's Purchase Order, Vendor hereby warrants to DCD that (i) it
owns all rights to market and sell the products to DCD as described in the
Purchase Order; (ii) said products will be of good and salable quality; and are
free of all liens, claims and encumbrances; (iii) said products conform to
affirmations of fact made by Seller in its solicitations, catalogs and product
descriptions; and (iv) said products are adequately contained, packaged and
labeled in compliance with law and conform to the promises and affirmations of
fact made on the container and label. Vendor further agrees to indemnify and
hold DCD, its agents, affiliates and subsidiaries (collectively "DCD") harmless,
from and against any loss, damage or expense suffered by DCD, including
reasonable attorneys' fees and costs, by reason of breach by Vendor of the
warranties contained herein or any act or omission of Vendor or allegation of
trademark, copyright or patent infringements, defects in material, workmanship
or design, personal injury, property damage, unfair competition, obscenity,
libel or other invaded right, either alone or in combination, and any
settlement, judgment or payment with respect to any claim, lawsuit or cause of
action against DCD as a result thereof. In addition to and not in limitation of
any rights DCD may have under this paragraph, by law or statute, in the event a
claim or allegation is made against DCD regarding any of the above or if Vendor
breaches the warranties contained herein, DCD shall have the right, in its sole
discretion, to either receive quantities DCD ordered, cancel the Purchase Order
without further obligation on its part, or return the products to the Vendor for
a full refund. Vendor shall reimburse DCD for all costs incurred due to the
above.
Shipments of product shall be delivered F.O.B. to the location(s) designated on
the Purchase Order, unless other arrangements have been agreed to by DCD, in
writing.
Shipments from International Vendors must be shipped "delivered duty paid
(DDP)".
Should failure of Vendor to follow DCD's shipping instructions result in freight
cost in excess of what would have been incurred using the given instructions,
Vendor shall reimburse DCD for the difference in cost.
The Purchase Order shall be governed by the laws of the State of Maryland,
excepting the conflict of law rules of the State. In the event of any litigation
arising out of the Purchase Order, Vendor hereby agrees that jurisdiction and
venue shall rest exclusively within the courts of the State of Maryland,
including the United States District Court for the District of Maryland.
If any term or provision of these Purchase Order Terms are held by a court to be
invalid, void, or unenforceable, the remainder of the terms and provisions of
these Purchase Order Terms shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
Vendor shall not assign or transfer the Purchase Order or any part thereof or
any right here/thereunder without DCD's prior written consent.
These Purchase Order Terms are intended by the parties to be a final, exclusive
and complete statement of the terms of their agreement, and acceptance is
expressly limited to the terms stated herein. Neither trade usage nor any terms
and conditions that may be contained in any acknowledgment, invoice or other
documentation of Vendor, nor course of prior dealing between the parties shall
be relevant to supplement or explain any terms used in the Purchase Order.
Should Vendor have any questions as to the meaning of any terminology or
phrasing used in these Purchase Order Terms, Vendor shall get clarification from
DCD. DCD's Purchase Order Terms shall constitute the entire agreement between
the parties and may not be modified or rescinded except by a writing signed by
both parties.
EXHIBIT C
Red Giant Summary of Key Deal Points
US & UK US Non-Direct UK Book
Direct Market Market Market
------------- ------ ------
Product Category All All All
Section 5 (a)
Base Discount 60% 60% 60%
Section 6 (a)
Base Days 30 30 30
Section 6 (a)
Early Pay Discount
Seller's Option 0 0 0
Section 6 (a)
Early Pay Days Seller's
Option 0 0 0
Section 5 (a)
Freight Rebate 2% 2% 2%
Section 5 (b)
Section 6 (a) Book
Market Sales
Allowance 0 2.5% 2.50%
Section 6 (a) Book
Market Service
Fee (Retail) 0 6% 6%
Section 6 (a)
Returns Cap N/A 30% 30%
Section 6 (a)
Returns Fees N/A 4% 4%
RED GIANT ENTERTAINMENT INC
By: /s/ Benny R. Powell
-----------------------------------------
Name: Benny R. Powell
----------------------------------------
Title: CEO
------------------------------------------
Date: November 25, 2013
-----------------------------------------
DIAMOND COMIC DISTRIBUTORS, INC.
By: /s/ Larry R. Swanson
-----------------------------------------
Name: Larry R. Swanson
----------------------------------------
Title: Treasurer
------------------------------------------
Date: December 6, 2013
-----------------------------------------