CO-BRANDING SUPPLY AGREEMENT
This agreement ("Agreement") is made and entered into as of this
10th
day of February, 2005, ("Effective Date")
by and between Source Direct Holdings,
Inc., a Nevada corporation with its
principal office located at 2345 N.
Woodruff, Idaho Falls, Idaho 83401
(hereinafter referred to as "Distributor"),
and Fusion Packaging Solutions, Inc., an
Idaho corporation, with principal
offices located at 345 Karcher Road, Nampa,
Idaho 83687 (hereinafter referred to
as "Seller").
RECITAL
WHEREBY Seller and Distributor currently produce various
products used in connection with the
maintenance and upkeep of motorized
vehicles;
WHEREBY Seller and Purchaser hereby desire to enter into an
agreement whereby Seller manufacturers a
product which is co-branded and sold to
National Mass Merchandisers;
NOW, THEREFORE, in consideration of the foregoing and the
covenants and conditions set forth below,
on the terms and subject to the
conditions set forth herein, Distributor
and Seller agree as follows:
1.
Supply Relationship.
(a) Seller offers to sell and ship to
Distributor certain
products for
resale
as set forth on
Exhibit A,
attached hereto and incorporated herein by
reference.
The product shall be sold and marketed in connection with
Distributor's
products, as set forth on Exhibit B and
incorporated herein
by reference
(the product on Exhibit A and Exhibit B collectively referred
to herein as
"Product").
Distributor hereby agrees that the Products shall
be labeled as
mutually agreed upon by Seller and
Distributor
and Seller
shall be
responsible for
labeling such
Products. Exhibits A
and B may be
modified, in
writing, by the parties from time to time.
(b) Distributor hereby agrees to market and
distribute such
Products for sale
only to
National Mass Merchandisers ("Customers"). Distributor hereby
agrees that
Seller is the exclusive manufacturer of the Product.
(c) Distributor hereby agrees that all orders will be placed pursuant to a
written purchase
order delivered by Distributor to Seller by fax, e-mail or
US mail.
All orders must be in
truck load quantities
and all orders
must
have a minimum
order volume of 835 cases. Seller hereby agrees to use
commercially
reasonable
efforts to satisfy the volume placed in such
purchase orders;
provided, however, a failure on the part of
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Seller to be
able to supply all
Product ordered does not constitute a
breach
hereunder.
(d) Distributor hereby represents and warrants that it has all permits and
licenses
necessary
to distribute the Product. Distributor further
represents
and warrants
that it will comply
with all federal,
state and
local laws and
rules in its performance under this Agreement. Distributor
represents
and warrants that the
Products listed on
Exhibit B comply with
all federal, state and local laws and
regulations
and do not create
any
trademark,
trade
dress, copyright, or patent infringement. Seller
represents
and warrants that the
Products listed on
Exhibit A comply with
all federal, state and local laws and
regulations
and do not create
any
trademark, trade
dress, copyright, or patent infringement.
2. Payment. Seller shall provide an invoice to
Distributor setting
forth all
amounts due to
Seller from Distributor. The entire gross invoice amount
to
Distributor with
respect to Products shall be paid to Seller within 15 days
of Distributor
receipt of invoice.
Distributor shall pay
such invoices by
wire transfer or
check.
3. Pricing Terms.
(a) The prices to Distributor for Products shall be those set between
Distributor
and Seller and
memorialized
on Exhibit C. All
prices are FOB
plant.
After the Term,
Seller shall have the
right to change price on any
Products based
upon its business judgment and market conditions including,
but not limited
to, price fluctuations
in ingredient or packaging material
costs,
availability of raw ingredients or other materials necessary for
the
manufacture
of the Product,
or changes in
operating costs.
Such changes
shall be
effective no less than ninety (90 days) following the delivery of
said written
notice of any price change to Distributor.
(b) All charges for delivery and
freight shall be paid by Distributor directly
to the carrier.
The prices offered or quoted by Seller to Distributor shall
not include any
duties, sales,
excise, or similar
taxes and charges which
are now,
or may hereafter be, levied, imposed or charged (whether by
federal,
state, municipal or other public
authority) with
respect to the
sales of the
Product hereunder.
4. Payment Security. Prior to any placement of a Distributor order by
Distributor,
Distributor shall
secure an irrevocable letter of credit with
a financial institution, agreed to by Seller in its sole and absolute
discretion,
naming Seller as the
beneficiary
in the aggregate
amount of
Seventy-five
Thousand Dollars ($75,000) (the "Letter of Credit"). The
Letter of Credit
must permit partial and entire withdrawals. Seller shall
have the right
to draw on the Letter of Credit for all amounts set forth on
the unpaid
invoices which are not paid within the time
frame as set forth
in Section 2 hereof. In the event Seller draws on the Letter of Credit,
Seller
shall have the
option, in its sole and absolute discretion, to
immediately
terminate this Agreement and the timeframes set
forth herein
shall apply.
5. Deliveries. All shipments of Products will be by common or contract
carrier,
and title and risk of
loss or damage to
Products shall
pass to
Distributor upon
delivery thereof by Seller to the carrier.
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6. Forecasts and Lead Times. Distributor shall provide to Seller, on a
quarterly
basis based upon a
calendar year,
a rolling sixteen (16) week
forecast of
Products to be ordered
by Distributor.
As long as all
orders
comply with the
forecasts provided to
Seller by Distributor,
Seller shall
make Products
ordered by Distributor
available, F.O.B.
plant within four
(4) to Six (6)
weeks after Seller's acknowledgment of a purchase order.
7. Term. The term of this Agreement
shall be for one (1)
year commencing on
the Effective
Date ("Effective
Date") and shall
automatically
renew for
subsequent terms
thereafter unless terminated as provided below.
8. Ride to the Wall.
The parties
hereby agree that five percent (5%) of
the
gross sales
proceeds (less any taxes paid) from the product "Pig Spit"
shall be contributed to the
non-profit corporation, Ride to the Wall, Inc.
(the "Ride to
the Wall Donation").
Distributor shall report to S