ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Third Amended and Restated Distribution Agreement
On
The purpose of the Third A&R Distribution Agreement is to modify various terms
and provisions to reflect the terms of the PMI Licensing Agreement (as defined
below) and also modify the terms between the Company and Bidi. Pursuant to the
Third A&R Distribution Agreement, Bidi granted the Company, and its designees,
an exclusive right to distribute electronic and non-electronic nicotine delivery
systems and related components (other than certain excluded products, the
"Products") for sale and resale to both retail level customers and non-retail
level customers worldwide, subject to a carve-out for, and exclusion, of the PMI
Markets (as defined below). The Company will pay Bidi
In addition, the Company has the exclusive right of first refusal of any and all
future Bidi products that: (a) arise out of or relate to electronic nicotine
delivery systems and related components to electronic nicotine delivery systems
(including any variations thereto (e.g., pods)); or (b) arise out of or relate
to the nicotine industry, but will exclude oral-based nicotine pouches,
e-cigarettes that produce a non-nicotine containing aerosol, and nicotine
e-cigarettes authorized for as medicinal or pharmaceutical products that do not
have the look and feel of the Bidi Stick. For the avoidance of doubt, future
products include all flavors and variants of a product, but only such products
as are, or are to be, distributed for commercial sale. Bidi and the Company
agree to engage in good faith negotiations regarding the terms and conditions of
future products to be sold, including but not limited to pricing and minimum
purchase thresholds, pursuant to which the Company will have the exclusive right
to distribute the future products. The minimum purchase thresholds will not
apply to any Product until Bidi receives a Marketing
Pursuant to the Distribution Agreement, the Company will promote, market, sell, and distribute the Products. Bidi will provide the Company with all branding, logos, and marketing materials to be used in connection with the promotion and marketing of the Products. The Company will perform the marketing and promotion of the Products at its own expense and will be responsible for all expenses incurred by it in connection with its obligations under the Distribution Agreement, including the salaries or other compensation for its personnel, costs and expenses associated with establishing and maintaining its sales organization and offices, and marketing, advertising, and promotion expenses. The Company is also responsible for the warehousing and storage of the Products, and, contemporaneous with the execution of the Distribution Agreement entered into the Lease (as defined below) to fulfill this obligation.
Further, the Distribution Agreement outlines the terms and conditions for submitting purchase orders for Bidi products. Product prices and minimum order requirements are set during the fourth quarter of the subsequent year by an agreement between Bidi and the Company. The Company is responsible to pay all shipping carrier invoices and assumes title and risk of loss upon the delivery of the products at their destination. However, Bidi may refuse, cancel, or delay any shipment of the products when the Company is delinquent in any payment for more than thirty (30) calendar days, or when the Company is in material breach of its obligations.
Pursuant to the Distribution Agreement, Bidi granted to the Company a revocable, sublicensable, non-transferable, non-exclusive, limited license to use Bidi's logos, trademarks, and trade names, together with all branding and marketing materials created by or on behalf of Bidi in connection with the Products, and the domain www.bidivapor.com (the "Intellectual Property"), solely in connection with the marketing, advertisement, and sale of the Products. The Intellectual Property will remain the sole and exclusive property of Bidi, as applicable, and the license will immediately terminate upon the expiration or termination of the Distribution Agreement. Bidi also granted the Company a non-exclusive, royalty-free license to use Bidi's logos, trademarks, and trade names ("Bidi's Marks") on the Company's web sites and marketing materials. Bidi's Marks will remain the sole and exclusive property of Bidi and Bidi's license will immediately terminate upon the expiration or termination of the Distribution Agreement.
The Distribution Agreement has a term of ten years and automatically renews for a successive ten-year term, unless earlier terminated pursuant to the Distribution Agreement. Either party is entitled to terminate the Distribution Agreement at any time in the event of material breach by the other party that remains uncured after thirty (30) calendar days following written notice thereof. In such event, termination is effective immediately and automatically upon the expiration of the applicable notice period, without further notice or action by either party. Either party may terminate the Distribution Agreement and any outstanding purchase orders immediately, at its option, upon written notice if the other party (i) becomes or is declared insolvent or bankrupt, (ii) is the subject of a voluntary or involuntary bankruptcy or other proceeding related to its liquidation or solvency, which proceeding is not dismissed within sixty (60) calendar days after its filing, (iii) ceases to do business in the normal course, or (iv) makes an assignment for the benefit of creditors.
Bidi is considered a related party to the Company because the Company's Chief
Executive Officer and director, Mr.
The above description of the Third A&R Distribution Agreement does not purport
to be complete and is qualified in its entirety by the full text of such
Agreement, which the Company intends to file as an exhibit to its Quarterly
Report on Form 10-Q for the quarter ended
Lease Agreement
On
The anticipated commencement date of the Lease is
ITEM 7.01 REGULATION FD DISCLOSURE
On
The information in Exhibit 99.1 shall not be deemed as "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such Section, nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.
FORWARD LOOKING STATEMENTS
This Current Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks, uncertainties, and assumptions that are difficult to predict. All statements other than statements of historical fact contained in this Current Report, including statements regarding future events, our future financial performance, business strategy, and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," or "should," or the negative of these terms or other comparable terminology. The forward-looking statements made herein are based on the Company's current expectations. Actual results could differ materially from those described or implied by such forward-looking statements as a result of various important factors, including, without limitation, its limited operating history, competitive factors in the Company's industry and market, and other general economic conditions. The forward-looking statements made herein are based on the Company's current expectations, assumptions, and projections, which could provide to be incorrect. The forward-looking statements made herein speak only as of the date of this Current Report and the Company undertakes no obligation to update publicly such forward-looking statements to reflect subsequent events or circumstances, except as otherwise required by law.
ITEM 9.01 FINANCIAL STATEMENTS
(d) Exhibits Exhibit Number Description of Exhibit 99.1 Press Release datedJune 13, 2022 . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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