EXHIBIT 10.7
DISTRIBUTORSHIP AGREEMENT
This Agreement made this 2nd day of May, 1995 by and
BETWEEN: TASTY FRIES, INC.
(hereinafter referred to as "TFRY")
with principal executive offices at:
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and TASTY FRIES, ISRAEL, LTD.
(hereinafter referred to as "Distributor")
with principal executive offices at:
WITNESSETH:
WHEREAS, TFRY is engaged in the development, production, distribution
and sale of a fully automated french fry vending machine; and
WHEREAS, TFRY has developed and adopted for its own use and for the use
of its Distributors a unique system of TFRY product preparation and vending
machine sale, consisting in part of the unique french fry vending machines
("TFRY French Fry Vending Machine" or "Machines"), distinctive advertising,
signs, dehydrated potato pellets, food presentation and formula secret recipes
(collectively the "Products"); and
WHEREAS, in addition to valuable goodwill, TFRY owns the valuable trade
name and design of TFRY in addition to various patents, trademarks, service
marks, copyrights, tradenames, slogans, designs, insignia, emblems, symbols,
package designs, logos and other proprietary identifying characteristics
(collectively, the "TFRY Marks") used in relation to and in connection with the
Products, and
WHEREAS, DISTRIBUTOR wishes, upon the terms and conditions hereinafter
set forth, to become a distributor of TFRY Products on an exclusive basis in the
territories of Israel, Jordan and Egypt (the "Territory"), as more specifically
set forth in Schedule A to this Agreement incorporated herein by this reference
and made a part hereof ("Schedule A"); and
WHEREAS, TFRY is willing to permit Distributor to use TFRY Marks as
aforesaid, together with the retail sale of TFRY French Fry Vending Machines and
TFRY Products upon the terms and conditions hereinafter set forth.
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NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, receipt of
which is hereby acknowledged, TFRY and Distributor (collectively referred to
herein as the "Parties") agree as follows:
ARTICLE I
DISTRIBUTORSHIP
(a) Subject to the provisions of this Agreement and the performance of
its covenants and obligations, TFRY hereby appoints Distributor as its exclusive
distributor to distribute all TFRY Products and Machines (both of which may
collectively be referred to herein as the "Products" unless the context or
language otherwise requires), and to use the TFRY Marks in the retail sale
thereof within the territorial boundaries set forth and more particularly
described in Schedule "A" on the "Effective Date." The "Effective Date" is the
ten (10) year period of the exclusive distributorship in the Territory which
shall commence on the earlier of (i) the date on which TFRY demonstrates its
capacity to ship Machines for use by consumers, other than a demonstrator
Machine for use by the Distributor, or (ii) the date on which Distributor places
its first order for a Machine or Machines.
(b) A demonstration Machine (the "Demonstration Machine") shall be
shipped to Distributor by TFRY within 30 days of the execution of this Agreement
by TFRY and the Distributor. The trial period for such Demonstration Machine
shall be three (3) months (the "Trial Period") from the date of delivery of the
Demonstration Machine. The purchase price of such Demonstration Machine is
$7,000 payable by Distributor to TFRY in U.S. cleared funds prior to shipment
thereof or a lease price of $500 per month payable immediately following
delivery of the Demonstration machine and on the first business day of each
month thereafter until the earlier of (i) the return of the Demonstration
Machine to TFRY in good working condition or (ii) the payment of $7,000.
Freight, insurance, duty and related charges shall be borne solely by
Distributor and shall be paid PRIOR to shipment. All prices referred to in this
Agreement shall refer to U.S. Dollars only.
(c) The Distributor may commence placing orders for Machines (other
than the Demonstration Machine) and Products commencing in May, 1996.
(d) The Parties specifically acknowledge and agree that the restriction
of operation to the Territory identified herein is an essential and
indispensable term of this Agreement.
(e) The initial down payment for the Distributorship is $40,000, of
which TFRY acknowledges that it has received $20,000. The balance of $20,000 is
due and payable upon execution of this Agreement by the Parties. The balance of
$160,000 for the Territory shall be payable in accordance with Schedule "A."
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ARTICLE II
SPECIFIC TERRITORIAL RIGHTS
(a) TFRY agrees to sell to the Distributor and the Distributor agrees
to purchase and shall have the exclusive right in its Territory to sell the TFRY
French Fry Vending Machine and Products to all users in the Territory.
(b) In the event that Machines are sold by TFRY for use in the
Distributor's Territory, the Distributor shall earn its full Distributors's
profit. This provision is contingent upon Distributor's agreement by this
Agreement to supply and service these Machines as required.
(c) The Distributor shall receive its full profit if Machines are sold
to clients in its Territory for installation in areas outside of its Territory,
except that in the event Machines are sold into another Distributor's Territory,
the Distributor profit shall be seventy (70%) percent to the originating
Distributor and thirty (30%) percent to the Territorial Distributor.
(d) TFRY and Distributor will continue good faith negotiations to allow
for a three phase implementation in the Territory: 1) direct export of Machines
and potato to the Distributor, as provided herein; 2) technology transfer
(potato pellet dehydration) and fabrication of potato product in Territory; and
3) Machine parts exported to Distributor for assembly of same.
(e) Distributor shall have the right to adapt operating procedures to
the reasonable conditions prevailing in the Territory, subject to the prior
written approval by TFRY, including, but not limited to, coin operation
mechanisms, use of tokens instead of coins or paper currency, electrical current
and different methods of handling materials and components.
(f) Distributor shall have the right to assign the rights and delegate
the duties herein to sub-distributors within the Territory subject to prior
written approval of TFRY in it sole and absolute discretion. Distributor shall
at all times be obligated to supervise the operations of all such
sub-distributors and such sub-distributors shall be required to execute any and
all documents which TFRY, in its sole and absolute discretion, deems necessary
prior to approval being granted by TFRY.
ARTICLE III
OBLIGATIONS OF TFRY
TFRY agrees to assist Distributor in distributing Products by way of
retail sale in the following manner:
(a) TFRY will conduct, at no charge, certain preliminary sales and
maintenance training programs in its headquarters training school which
Distributor and one key employee
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may attend. All costs and expenses incurred by Distributor in traveling to
and/or attending the training program shall be borne by Distributor.
(b) TFRY agrees to provide to Distributor, as and when it is available
from time to time, information relating to the Products and additional types of
products as may be authorized by TFRY from time to time for sale pursuant to
this Agreement, and which, when authorized, will also constitute "Products" for
all purposes herein, at such times and in such detail as TFRY shall, in its sole
discretion, deem appropriate.
(c) If TFRY, in its sole discretion, provides credit or financing to
Distributor, TFRY may, in its sole discretion, take a security interest in all
TFRY Products sold to Distributor, and Distributor shall take such actions and
execute and deliver such documents as TFRY may request in order to perfect and
protect such security interest.
ARTICLE IV
CONFIDENTIAL INFORMATION
(a) The Parties hereto covenant and agree that any confidential
information disclosed to the Distributor relating directly or indirectly to the
Machines and their component parts, including but not limited to the
ingredients, preparation or sale of any of the Products and any other
information which is proprietary in nature and has been disclosed to Distributor
in connection with this Agreement (collectively the "Confidential Information"),
will remain the property of TFRY at all times and will, if disclosed in any
tangible format, together with any and all originals, copies and duplications
thereof in any manner made, be returned to TFRY upon demand and, in any event,
immediately upon termination of this Agreement.
(b) It is expressly understood and agreed by Distributor that the
Confidential Information described above constitutes highly confidential trade
secrets and Distributor agrees that neither it nor any of its employees, agents,
representatives or affiliates will at any time reveal any of such Confidential
Information being disclosed or produced.
ARTICLE V
STANDARDS OF OPERATION AND SUPERVISION BY TFRY
(a) Distributor agrees to conduct its business in a manner consistent
with the standards set forth in this Agreement. It is expressly understood that
these standards may change from time to time, and are in addition to and not in
substitution of any standards set forth in this Agreement.
(b) In order to preserve the value and goodwill of TFRY and related
goodwill of other TFRY Distributors and to promote the purpose of this
Agreement, the Parties hereto agree as follows:
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(i) Distributor will use and distribute the Products as
herein contemplated strictly in accordance with the terms of this Agreement.
(ii) Unless earlier approved in writing by TFRY,
Distributor will not develop, produce, sell, advertise for sale or give away any
product which might reasonably compete with the Products and all food Products
will be prepared in accordance with the specific formulas and/or utilizing the
ingredients purchased from or specified by TFRY. It is expressly understood that
the conditions and restrictions expressed herein are for the purposes of
ensuring quality control, health and safety standards and uniformity of Products
sold in conjunction with the TFRY Marks.
(iii) TFRY may from time to time offer guidance to
Distributor relative to retail prices for Products offered for retail sale that
in the judgment of TFRY constitute good business practice.
(iv) Distributor will use its best efforts ensure the
compliance of its customers with the maintenance of suitable signs (the use of
which signs shall be subject to prior written approval by TFRY) at, on or near
the front of any premises within which its French Fry Vending Machines are
located, describing the premises having Products available for retail sale. Any
translation from the English language or deviation from TFRY approved designs
contained in such sign shall require the prior written approval of TFRY.
(v) Distributor shall be responsible for ensuring that all
food Products sold by Distributor hereunder will be of the highest and safest
quality, and the service relating to any such sale hereunder will strictly
comply with the instructions and standards provided by TFRY in preparing the
food Products, or with any other further written requirements of TFRY as they
are communicated to Distributor from time to time.
(vi) Distributor shall be responsible for ensuring that it
will maintain all French Fry Vending Machines in conformity with the standards
required by TFRY in connection with TFRY Marks and shall ensure that the
operation of such Machines by its customers be conducted in a clean, orderly,
legal and respectable manner of business including, without limitation, cleaning
and sanitation of the French Fry Vending Machines, disposal of stale, spoiled or
unmerchantable food Products, replacement of cooking oil at specified intervals,
replacement or repair of display merchandise, replacement of outdated or
obsolete Machines (including its component parts), equipment and signs.
Distributor shall ensure that its customers comply with all applicable
ordinances, health and safety regulations, laws and statutes governing the
operation of such premises and the sale of Products, including all criminal and
quasi-criminal laws and regulations.
(vii) Distributor's exclusive remedy for any damage to or
defect in any TFRY Product sold hereunder shall be limited to the repair or the
replacement of the damaged article, as determined by TFRY in its sole
discretion. In no event shall TFRY be liable for any
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incidental or consequential loss or damage, including but not limited to, loss
of profits or any other economic loss suffered or incurred by Distributor as a
result of or in connection with any defective or damaged Product sold hereunder.
(viii) Except as provided hereby, TFRY warrants that title
to all TFRY Products transferred hereunder will be free and clear of all liens,
security interests or other claims, and that such Products shall comply with the
terms and conditions of the limited warranty certificate included with each TFRY
Product and issued to original purchasers by TFRY.
(c) TFRY or TFRY supervisory personnel shall have the right to enter
upon any premises in which Distributor conducts its business at any reasonable
time for the purposes of examining, inspecting and checking perishable and
non-perishable food supplies, Machines, and other equipment and conferring with
Distributor's employees to determine whether the distribution of Products is
being conducted in accordance with the aforesaid standards and in accordance
with the terms of this Agreement. In the event any such inspection indicates a
deficiency or unsatisfactory condition or conditions, Distributor shall, correct
or repair the deficiency or unsatisfactory condition within forty-eight (48)
hours or, commence the correction and/or repair of same to be completed in as
expeditious manner as possible. In the event of the failure of Distributor to
comply with the foregoing obligations to correct and repair, TFRY, in addition
to any other remedies conferred in this Agreement, shall have the right to
promptly make or cause to be made, such corrections or repairs. The expenses of
such repairs, including but not limited to, board, lodging, wages and
transportation of TFRY personnel, attorneys' fees and other reasonable expenses,
shall be paid by the Distributor immediately upon billing by TFRY. Nothing in
this paragraph shall in any way limit any other rights of TFRY hereunder.
ARTICLE VI
COMMENCEMENT OF BUSINESS
(a) Distributor agrees to obtain, prior to commencement of its
distribution business, pursuant to this Agreement, all licenses, approvals,
inspections, permits or any other certification which may be required by any
competent public authority for the lawful operation of its business and to keep
the same in good standing during the term hereof.
ARTICLE VII
USE OF TFRY NAME, MARKS AND ADVERTISING
(a) During the term of this Agreement, and any renewals hereof,
Distributor shall advertise sale of the Products under the trade name of "Tasty
Fries Hot French Fries" or other name approved in writing by TFRY, or one or
more mutually agreed-upon non-English language substitutes within the Territory,
and will diligently promote and make every reasonable effort to steadily
increase sales of the Products by proper use of all advertising media.
(b) No design, advertisement, sign or form of publicity, including
form, color, number, location and size, shall be used by Distributor in
connection with sale of the Products
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unless the same shall have been first submitted to TFRY and approved prior
thereto in writing. Upon notification from TFRY, Distributor will promptly cause
to be removed any objectionable advertising material and, if required, cause to
be published any retraction in a form and manner consistent with that of the
objectionable advertising materials. In the event said materials are not removed
within seven (7) days after receipt of said notice, TFRY or its authorized
agents, may at any time, enter upon Distributor's premises, or elsewhere and
remove any objectionable advertising material and may keep or destroy such
materials without paying therefore and without being guilty of trespass or other
civil or criminal wrongdoing.
(c) All printed materials, including, but not limited to, product
carrying bags, product wrapping, cups, napkins, posters or other printed
material used in connection with the distribution by retail sale of the Products
shall bear TFRY Marks as suggested by TFRY, and such use will indicate that TFRY
Marks are registered Marks.
(d) Distributor shall act prudently and in conformity with all laws,
regulations, ordinances, or other requirements which may affect the utilization
of the Machine to ensure that the Marks are not jeopardized, diminished or
damaged in any manner and Distributor agrees to indemnify and save harmless TFRY
for any damage or expense occasioned directly or indirectly by Distributor's
improper use of said TFRY Marks.
(e) Any contractual arrangement of any kind for advertising under the
trade name "Tasty Fries Hot French Fries" or other approved name, or utilizing
the name "Tasty Fries", entered into by Distributor, shall expressly provide for
termination upon no greater than then (10) days prior written notice.
ARTICLE VIII
TFRY MARKS
(a) TFRY hereby grants to Distributor for the term of this Agreement
the exclusive right and license to use the TFRY Marks within the Territory but
only in connection with the distribution of TFRY Products which Distributor is
permitted to sell hereunder and the extent and manner of use of the TFRY Marks
shall (i) be subject to TFRY approval and (ii) the extent that such TFRY Marks
can be used legally in the Territory.
(b) Distributor shall be entitled to assign or sublicense its rights to
use the TFRY Marks only with the prior written consent and approval of TFRY in
its sole discretion.
(c) Upon execution of this Agreement, Distributor shall cooperate with
TFRY and shall do all things reasonably required in making whatever application,
if any, as required by law in the Territory, to register the TFRY Marks and/or
to register Distributor as a "Registered User" of the TFRY Marks, and
Distributor shall sign any and all documents necessary for such purpose.
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(d) Distributor shall promptly notify TFRY in writing of any
counterfeiting or infringement of the TFRY Marks which may come to Distributor's
attention. Should any such infringement or alleged infringement occur:
(i) The commencement, defense, and conduct of any such
proceedings shall be initiated by Distributor. If requested by TFRY, Distributor
will furnish all reasonable assistance to TFRY in such proceedings and agrees to
share equally with TFRY in the costs of any such proceedings.
(e) Distributor agrees not to use the words "TFRY" or any other work,
design or device forming any part of any of the TFRY Marks:
(i) During the term of this Agreement, otherwise than as
herein authorized; or
(ii) After termination of this Agreement, in any manner.
ARTICLE IX
UNIFORMITY OF PRODUCTS
(a) Distributor agrees that all food Products offered for sale in the
Machines shall be purchased directly from TFRY unless advised otherwise in
writing by TFRY. However, paper goods, packaging, cooking oil and other supplies
and materials utilized in connection with the food Products may be purchased by
Distributor from any supplier in the Territory with the prior written approval
of TFRY.
(b) In order to establish uniformity of taste and quality of the
Products, TFRY has developed and will continue to develop recipes and formulas
of ingredients, which ingredients will be made available to Distributor. Such
products will be purchased by Distributor at the prevailing prices from time to
time, FOB Shipping Point as TFRY determines, and will be utilized by Distributor
exclusively as specified by TFRY, unless such products are not supplied by TFRY
but are pre-approved in writing by TFRY and TFRY is compensated for its loss of
profit on such product.
(c) Distributor agrees that it will not offer any food Products or
utilize any equipment, signage, display cases or other items which may compete
with the TFRY Products and which are not purchased from TFRY or any supplier
that is not currently approved by TFRY except as may be set forth herein.
ARTICLE X
FEES AND FINANCIAL OBLIGATIONS
(a) In consideration of the right to distribute Products granted
herein, Distributor agrees to pay to TFRY the sum of $200,000.00 as
consideration solely for the right to distribute Products (less $20,000 which
has been previously paid and an additional $20,000 which shall be paid upon
execution of this Agreement). These amounts specifically exclude payment for the
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Demonstration Machine as more specifically described in Article I(b) herein.
Such fee shall be deemed fully earned and shall be non-refundable under any and
all circumstances and subject to the fee payment terms set forth on Schedule
"A." In addition, upon the written request of TFRY, at any time or from time to
time, Distributor shall provide any and all information related to Distributor's
creditworthiness to act as a Distributor which such creditworthiness shall be
determined by TFRY in its sole and absolute discretion. In this regard, credit
worthiness shall be determined by TFRY in accordance with but not solely by: (i)
evidence provided by Distributor in writing of its ability to meet its financial
obligations and commitments to TFRY, including, but not limited to, credit
reports, audited or similarly prepared financial statements of Distributor (as
is customary in Israel), certified by its accountants, (ii) bank and business
references, and (iii) written statement(s) by Distributor as to any pending or
threatened litigation and/or any judgment which could materially impair
Distributor's ability to conduct its business and/or have a material adverse
effect on its financial condition.
(b) In the event that Distributor is unable to meet TFRY's criteria to
establish creditworthiness, TFRY shall have the right to terminate Distributor
as a distributor, upon 30 days prior written notice without any liability.
(c) It is expressly agreed by and between the Parties that as
consideration for the grant of distribution rights hereunder by TFRY to
Distributor and as an express condition of such grant, Distributor shall
purchase from TFRY a minimum number of French Fry Vending Machines upon the
terms and conditions set forth on Schedule "A."
(d) All payments shall be made in U.S. Dollars and in such manner as is
specified from time to time by TFRY but may include, without limiting the
generality of the foregoing, bank wire transfer, or certified check delivered to
TFRY accounts at such place as TFRY may from time to time designate.
(e) Payment terms for the Machines and Products shall be quoted F.O.B.
from any shipping point that TFRY may determine. The exact terms of payment will
be mutually agreed to by the Parties before each Machine and/or Product order is
shipped. The Distributor shall pay the invoice according to terms set by TFRY.
Distributor shall also pay any and all applicable sales, use, import duties,
excise taxes, or any other taxes arising from the sale or transfer of TFRY
Products. All shipments are at Distributor's risk from the time of TFRY
conveyance to Distributor's shipper. Notwithstanding the forgoing, TFRY
specifically reserves the right to act at any time in accordance with the
provisions of the Uniform Commercial Code to protect its interests when
necessary. Any claim of discrepancies in shipments made by Distributor shall be
made in writing and sent to TFRY within ten (10) business days after receipt of
the shipment.
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ARTICLE XI
DISTRIBUTOR
(a) Distributor acknowledges that the TFRY Products are unique and
distinctive and have been developed by TFRY at great effort, time and expense;
that Distributor has regular and continuing access to valuable and Confidential
Information, training and trade secrets regarding the Products; and that
Distributor recognizes his obligation to fully develop his territory for sales
of the Products and accordingly agrees as follows:
(i) During the term of this Agreement and any renewal
thereof, Distributor shall not, in any capacity whatsoever, either directly or
indirectly, individually or as a member of any business organization, except
with the prior written consent of TFRY, engage in the sale of any Machines or
Products therefore, other than with TFRY.
(ii) During the term of this Agreement, or at any time
subsequent thereto upon expiration or termination of this Agreement, divulge any
aspect of the Products whether expressly stated to be confidential or otherwise
to any person.
(iii) Distributor shall at all times maintain an inventory
of TFRY Products sufficient to satisfy the reasonably anticipated demands of
customers located within the Territory. TFRY shall supply all of Distributor's
reasonable requirements of TFRY Products for distribution in the Territory,
subject to available supplies. TFRY shall not be liable for any delay in
shipment arising from or caused by any fire, flood, war, riot, civil
disturbance, labor dispute, act of God, material shortage, government regulation
or action, or any other cause beyond TFRY's reasonable control. TFRY reserves
the right to allocate its available supply of Products in such manner as it may,
in its sole discretion, from time to time, determine.
(iv) During the term of this Agreement and any renewal
thereof, Distributor shall maintain a sufficient inventory of parts to properly
maintain, repair, and service TFRY Machines and Products. Distributor shall only
use parts which meet the standards of quality established by TFRY from time to
time.
(v) Distributor shall provide prompt and courteous service
to all TFRY customers located within the Territory regardless of whether such
customers purchased TFRY Products from Distributor.
ARTICLE XII
TRANSFER OF INTEREST
(a) This Agreement shall enure to the benefit of the successors and
assigns of TFRY and may be so assigned at any time in TFRY's sole and absolute
discretion.
(b) TFRY shall not unreasonably withhold its consent to any full
transfer or assignment of this Agreement by Distributor, which is subject to the
restrictions of this Article,
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provided, however, that TFRY shall not be required to give its consent unless,
in addition to the requirements of Article V hereof, the following conditions
are met prior to the date of the assignment:
(i) For any such proposed full transfer or assignment:
1. Distributor shall not be in default under any
provision of the terms of this Agreement or any other agreement ancillary to
this Agreement, and shall have continuously distributed Products for a period of
not less than twelve (12) consecutive months;
2. Distributor has executed a general release in a
form prescribed by TFRY of any and all claims against TFRY;
3. The proposed assignee executes such other
documents as TFRY may require in order to assume all of the obligations of this
Agreement, to the same extent, and with the same effect, as previously assumed
by Distributor, including but not limited to proof of credit worthiness to act
as a Distributor, which such credit worthiness shall be determined by TFRY in
its sole and absolute discretion.
4. A transfer fee has been paid to TFRY in an amount
equal to five percent (5%) of the aggregate cash or cash value consideration
paid by the assignee to Distributor (assignor) for the distribution rights, to
defray its reasonable costs and expenses in connection with the transfer,
including without limitation, the cost of legal and accounting fees, credit and
investigation charges, evaluations, retraining and additional supervision. It is
agreed that the original cost of the Territory will be deducted from this
amount.
(c) Upon the death or permanent incapacity of a Distributor the
following shall apply:
(i) TFRY shall have the right, within thirty (30) days of
the date upon which TFRY is notified of such death or incapacity not to exceed
thirty (30) days from such date (if consistent with applicable local laws) to
purchase the interest or any part thereof for cash at the appraised value, such
purchase to be completed within sixty (60) days. Such appraised value shall be
determined by an independent appraiser selected by TFRY.
(ii) If TFRY declines to elect to purchase the interest,
within thirty (30) days of the date upon which TFRY is notified of such death or
incapacity, the interest may be transferred within a further sixty (60) days by
sale to a third party meeting TFRY's then current criteria for new distributors,
provided that the requirements of paragraph (b) of this Article are met. If a
transfer to an approved transferee cannot be effected within a further one
hundred and twenty (120) days, this Agreement shall terminate automatically and
TFRY shall have no obligations whatsoever to the Distributor, his successors,
heirs, assigns or transferees.
(iii) No sale or transfer of the interest shall be approved
by TFRY unless the incapacitated Distributor or, in the case of the deceased
Distributor, its personal representative
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has agreed to reimburse TFRY for the reasonable costs and expenses it has
incurred or may incur in providing, at TFRY's option, one or more interim
Distributors to manage the business until a transfer of the interest is
effected, if TFRY determines, in its sole and absolute discretion, that such
supervision is necessary or desirable.
(d) TFRY's consent to a transfer of any interest subject to the
restrictions of this Article XII shall not constitute a waiver by TFRY of the
right to distribute Products granted herein, nor shall it be deemed a waiver of
TFRY's right to demand exact compliance with any of the terms of this Agreement
by the transferee or assignee. The document effecting the transfer or assignment
of any interest subject to the restrictions of this Article XII shall
specifically provide that Distributor's obligations hereunder shall continue in
full force and effect notwithstanding any such disposition.
(e) If Distributor has received and desires to accept any bona fide
offer to purchase his or its distribution rights hereunder, Distributor or such
person shall notify TFRY in writing of the purchase price and terms of such
offer, and TFRY shall have the right and option, subject to any limitations of
applicable local laws exercisable within thirty (30) days after receipt of such
written notification, to send written notice to Distributor or such persons that
TFRY or its designee intends to purchase Distributor's interest on the same
terms and conditions offered by the third party. Any material change in the
terms of an offer prior to closing shall result in a new notification as in the
case of the initial offer.
ARTICLE XIII
DEFAULT
(a) In addition to those events hereinbefore stated to be events of
default, it is agreed that the rights granted to Distributor pursuant to this
Agreement may be terminated immediately with notice upon the happening of any
one or more of the following events:
(i) If the Distributor fails to comply with any of the
terms and conditions of this Agreement and such failure to comply continues for
a period of thirty (30) days after written notice thereof has been given to the
Distributor.
(ii) If the Distributor fails to comply with any of the
terms and conditions of any other agreements entered into pursuant to or
collateral to this Agreement, which shall, for the purposes of this Article
XIII, be deemed a part thereof.
(iii) If the Distributor shall be adjudicated a bankrupt or
become insolvent, or if a receiver or other person with like powers shall be
appointed (whether temporary or permanent) to take charge of all or
substantially all of the Distributor's assets, or if the Distributor shall make
a general assignment for the benefit of creditors or a proposal under the
Bankruptcy Act (or any similar or successor act), or commence any proceedings to
wind-up, liquidate, or dissolve the Distributor's business.
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(iv) If any final judgement or judgments in excess of
Twenty-five Thousand Dollars ($25,000.00) or any legal tax lien against the
Distributor remains unsatisfied or unbonded of record in excess of thirty (30)
days, or if the Distributor shall commit or suffer any default under any
security instrument.
(v) Other than amounts to be paid to TFRY wherein the
provisions of subsections (i) and/or (ii) above respecting default shall apply,
if the Distributor does not pay any other indebtedness incurred in connection
with the operation of the business contemplated hereby through which the
Products are maintained and sold and such indebtedness is not paid within seven
(7) calendar days of notice from TFRY.
(vi) If the Distributor fails for a period of more than ten
(10) calendar days to continuously and actively operate its distributorship
throughout the Territory in accordance with the terms of this Agreement as may
be amended in accordance herewith.
(vii) If the Distributor falsifies any statement or report
furnished to TFRY or otherwise deliberately provides false information to TFRY;
or if the Distributor is convicted of a felony or other crime or impairs the
goodwill associated with TFRY Marks.
(viii) If the Distributor does any act which constitutes an
event of default hereunder for which notices of default have been previously
served more than four times in any one calendar year during the term of this
Agreement, notwithstanding that any of such events of default may have been
cured.
(ix) If the Distributor does not order and complete the
purchase of the French Fry Vending Machines it is required to purchase pursuant
to the terms of this Agreement including any and all schedules attached hereto
and made a part hereof, in the manner and at the times therein specified.
(x) If the Distributor does not complete the training
course to be taken by the Distributor to the satisfaction of TFRY prior to
distributing food Products to the public.
(xi) If the Distributor fails to maintain the mandatory
insurance coverage as set forth in Article XV herein.
(b) Distributor agrees to pay all reasonable attorney's fees and costs
as between an attorney and his own client, and reasonable attorney and/or
accounting fees and court costs incurred by TFRY in the event of a violation by
Distributor of this Agreement.
(c) Distributor agrees that in the event of a default hereunder, it
shall immediately cease using the name Tasty Fries, Israel, Ltd. throughout the
Territory and any other geographic area in which such name is being used by
Distributor at which time such name shall immediately revert back to TFRY.
Distributor agrees to take any and all action and to execute any and all
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documents which may be required to facilitate the relinquishment and reversion
of the name Tasty Fries, Israel, Ltd. to TFRY.
(d) In case of a default or breach or a threatened default or breach of
the terms of this Agreement by Distributor, TFRY shall, in addition to any other
remedy it may have, and notwithstanding any other provision hereof, be entitled
to an injunction restraining Distributor from committing or continuing to commit
any breach of or default under this Agreement, without showing or proving any
actual damage sustained by TFRY, which damage is hereby conclusively
acknowledged.
ARTICLE XIV
RIGHTS AND OBLIGATIONS OF PARTIES
ON TERMINATION OR EXPIRATION
(a) Upon termination or expiration of this Agreement for any reason
whatsoever, including the events of default set forth herein, Distributor will
immediately discontinue use of all trade names, trademarks, signs, forms of
advertising, printed material (collectively referred to herein as the "TFRY
Marks") and all other indicia of operation as a TFRY Distributor from its
operations. In addition, Distributor will discontinue use of the TFRY color
scheme. If the Distributor shall fail or omit to make or cause to be made such
discontinuance within seven (7) calendar days after termination or expiration of
this Agreement, then TFRY, in addition to any other remedy it may have, shall
have the right to enter upon premises and to make or cause to be made such
removal of signs, trademarks, trade names and other indicia of operation subject
to removal and such removal shall be conducted at the sole expense of
Distributor (without being deemed guilty of trespass or any civil wrong), which
expense the Distributor agrees to pay on demand.
(b) TFRY shall retain all fees paid pursuant hereto.
(c) Any and all obligations of TFRY to Distributor under this Agreement
shall immediately cease and terminate.
(d) In no event shall termination or expiration of this Agreement for
any reason whatsoever affect Distributor's obligation to take or abstain from
taking action in accordance with this Agreement.
(e) It is understood by Distributor that rights in and to TFRY Marks
and any part thereof or addition thereto and the use thereof shall be and remain
the property of TFRY. Distributor shall confirm same in writing and shall
further assign, transfer and convey to TFRY by such instrument in writing as may
be requested, all additional rights which may be acquired, if any, by reason of
the use of said name of Distributor.
(f) TFRY shall have the option to purchase, at Distributor's cost less
twenty-five (25%) percent, all or any portion of inventory of any kind bearing
the TFRY Marks, including,
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but not limited to, French Fry Vending Machines, equipment, vehicles, and any
other items Distributor may have in stock at the time of such termination or
expiration.
(g) Distributor shall cause immediate discontinuance of all advertising
or other public display or publication of the words "Tasty Fries" or other
approved language and, in the event that such action is not taken by Distributor
as provided hereby, Distributor hereby irrevocably appoints TFRY as
Distributor's attorney in-fact to carry out such acts at Distributor's sole
expense.
(h) Distributor will immediately pay any and all amounts owing to TFRY
and its subsidiaries and affiliates.
(i) Distributor shall not, in any capacity whatsoever, either directly
or indirectly, individually or as a member of any business organization, engage
in the preparation or sale of any TFRY or other approved TFRY Product, or have
any employment or interest in a firm engaged in the preparation or sale of such
Products within the Territory or within thirty (30) miles of any other
Distributor's exclusive or non-exclusive territory for a period of three (3)
years following such termination. Distributor acknowledges and agrees that this
restriction upon subsequent activities is necessary in view of the Confidential
Information and expertise Distributor will acquire pursuant to the terms of the
Agreement and will cause TFRY irreparable and substantial damage in the event of
breach of these provisions. The Distributor has the option to cancel this
Agreement by giving six (6) months prior written notice. Notwithstanding such
notice, no refund shall be given of any payments made by Distributor to TFRY.
ARTICLE XV
INSURANCE
(a) Distributor agrees to place and keep in effect during the term of
this Agreement, with an insurance company approved by TFRY, public liability
insurance in an amount in U.S. dollars of no less than One Million Dollars
($1,000,000), in case of damage or injury to one person, no less than One
Million Dollars ($1,000,000), in case of damage or injury to more than one
person, property damage insurance of One Million Dollars ($1,000,000) in case of
damage or injury to one person. Proof of the requisite insurance coverage shall
be furnished to TFRY prior to the delivery of the first Machine. This insurance
requirement may be amended by TFRY in its sole and absolute discretion based on
the feasibility of obtaining such insurance in the Territory at reasonable
rates.
(b) Distributor shall secure and maintain workers' compensation and
employer's liability insurance covering all of its employees or similar
insurance as may be available in the Territory.
(c) It is specifically agreed that the insurance coverage required by
paragraph (c) be kept in effect and shall be subject to review by TFRY in order
to ensure adequate insurance protection throughout the term of this Agreement.
TFRY may, from time to time, and in its sole
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discretion, require Distributor upon thirty (30) days written notice, to obtain
additional insurance beyond the requirements of paragraph (a).
(d) All insurance shall be in amounts and with carriers acceptable to
TFRY, and shall be evidenced by certificates of insurance showing TFRY as a
named insured (or loss payee as the case may be) and providing that coverage
shall not be terminated or canceled without thirty (30) days prior written
notice to TFRY.
ARTICLE XVI
INDEMNIFICATION OF TFRY
(a) Distributor agrees to protect, indemnify, and save TFRY, its
affiliates, subsidiaries, partners, stockholders, directors, officers, agents
(other than Distributor) and employees of its partners harmless from any and all
loss, damage, liability, expenses, attorney's fees and costs incurred by any of
them because of any action, matter, thing, or conduct of Distributor and/or
Distributor's business or its agents, servants, employees, customers and guest
in, on, or connected with the storage, transport, installation, sale or
servicing, preparation, and cooking of Products.
ARTICLE XVII
APPEARANCE OF MACHINES
(a) Distributor shall see to it that all Machines in the Distributor's
Territory are in good repair, and shall refurbish, repair, and maintain each
French Fry Vending Machine as necessary or as required by TFRY in order to
ensure that at all times and in all instances, safe and reputable Products are
provided to the public.
ARTICLE XVIII
RENEWAL OF AGREEMENT
(a) Unless terminated as provided herein, Distributor shall have the
option, pursuant to such procedures as may be required by TFRY at the expiration
of the initial term of this Agreement, to renew the license granted hereunder at
each ten (10) year expiration date as long as all contractual conditions of such
new distributorship agreement are met in the sole and absolute discretion of
TFRY, by executing TFRY's then current form of Distributorship Agreement
provided that:
(i) Distributor gives TFRY written notice of its election
to renew not less than three (3) months nor more than nine (9) months prior to
the expiration of the then current term and, Distributor executes a general
release under seal, in a form prescribed by TFRY, of any and all claims against
TFRY, its affiliates, stockholders, directors, officers and employees, and
(ii) Distributor at the time of notice of election to renew
and at the end of the then-current term is not in default of any of the terms or
conditions of this Agreement or any
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other agreement between Distributor and TFRY or its affiliates, and has
materially complied with the terms and conditions of all such agreements during
the term of this Agreement, and
(iii) All of Distributor's accrued monetary obligations to
TFRY and its subsidiaries and affiliates have been satisfied prior to renewal,
and timely met throughout the term of this Agreement.
(b) Upon renewal of this Agreement, no additional distributorship fee
will be due; however, it is specifically agreed that Distributor will, upon
renewal, be charged by TFRY a sum which shall be equal to TFRY's estimated costs
incurred in connection with such renewal plus an administrative fee equal to
fifteen (15%) percent of such costs.
ARTICLE XIX
RELATIONSHIP OF PARTIES
(a) The relationship between TFRY and Distributor is that of vendor and
purchaser and Distributor is an independent contractor and shall not have
authority to act for or to bind TFRY in any way or to in any way represent that
TFRY is responsible for any act of Distributor. TFRY and Distributor are not and
shall not be considered as joint venturers, partners, or agents of each other,
or anything other than manufacturer and Distributor and neither shall have the
power to bind or obligate the other than as set forth in this Agreement.
Distributor shall bear sole responsibility for any statements or claims of
Distributor regarding the Products which have not been authorized in advance and
in writing by TFRY. Distributor shall indemnify TFRY and save TFRY harmless from
and against any and all liability, loss, damages, costs or expenses which TFRY
may incur in the event Distributor does not comply with the obligations
specified in this Article XIX.
(b) The Parties further agree that the relationship created by this
Agreement is not a fiduciary, employer-employee, or franchisor-franchisee
relationship.
ARTICLE XX
DISTRIBUTOR'S RESPONSIBILITY
(a) Distributor acknowledges that his success in the distribution of
Products contemplated to be undertaken by Distributor pursuant to this Agreement
is speculative and depends primarily upon the ability of Distributor as an
independent business organization. Distributor acknowledges that neither TFRY
nor any other person has guaranteed or warranted that Distributor will succeed
in the operation of this business venture.
(b) Distributor further acknowledges that there have been no
representations, promises, or guarantees of warranties of any kind made by TFRY
or its agents or representatives to induce Distributor to execute this
Agreement, except as specifically set forth in this Agreement and further, that
Distributor has received all information which he has requested
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concerning the business operation of TFRY which, in the opinion of Distributor,
is necessary to decide whether to enter into this Agreement.
(c) Distributor further acknowledges that independent legal advice had
been sought in the preparation of this Agreement.
(d) Distributor further acknowledges that the Distributor warrants and
represents that it is duly organized under the laws of the jurisdiction in which
it will do business and the person executing this Agreement has the authority to
do so.
ARTICLE XXI
NOTICES
(a) All notices to TFRY required by the terms of this Agreement shall
be sent by registered mail, addressed to TFRY at its office at:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(or such other address as TFRY shall designate in writing) or
by telefax, telecopy or other electronic means of communication to such address.
(b) All notices to Distributor required by the terms of this Agreement
shall be personally delivered to or sent by registered mail, addressed to the
Distributor at:
or such other address as Distributor shall designate in
writing) or by telefax, telecopy or other electronic means of communication to
such address.
(c) All notices to either party required by the terms of the Agreement
shall be deemed to have been received:
(i) in the case of hand delivery or telefax, telecopy or
other electronic communication, upon actual receipt thereof and not the date of
receipt of confirming mail); and
(ii) in the case of notice sent by registered mail, ten
(10) business days after the date of mailing.
ARTICLE XXII
INTERPRETATION AND EXECUTION OF AGREEMENT
(a) This Agreement shall be construed and interpreted in accordance
with the laws of the State of Pennsylvania.
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(b) This Agreement (inclusive of any and all schedules attached hereto
and made a part hereof) contains the entire Agreement of the Parties and no
representations, inducements, promises, or agreements, oral or otherwise, not
embodied herein, were made by TFRY and none shall be of any force or effect.
(c) Nothing in this Agreement shall bar or restrict TFRY's right to
obtain injunctive relief under applicable law.
(d) Distributor, by execution of this Agreement, submits itself and its
officers, directors and/or principals to the jurisdiction of the state and
federal courts of ▇▇▇▇▇▇▇▇▇▇ County, Pennsylvania and waives any and all claims
of lack of jurisdiction, whether in personam,in rem or other.
ARTICLE XXIII
SEVERABILITY AND CONSTRUCTION
(a) Each section, part, term and provision of this Agreement, and any
portion thereof shall be considered severable, and if, for any reason, any
portion of this Agreement is determined to be invalid, contrary to or in
conflict with any applicable present or future law, rule, or regulation in a
final unappealable ruling issued by any court, agency, or tribunal with valid
jurisdiction in a proceeding to which TFRY is a party, that ruling shall not
impair the operation of, or have any other effect upon, such other portions of
this Agreement as may remain otherwise valid and which shall remain binding on
the Parties and continue to be given full force and effect.
ARTICLE XXIV
WRITTEN APPROVALS AND WAIVERS
(a) TFRY shall not be deemed to have waived or impaired any right,
power or option reserved by this Agreement (including, without limitation, its
right to demand Distributor's exact compliance with every term, condition, and
covenant herein, or to declare any breach thereof a default and to terminate
this license prior to the expiration of its term), by virtue of any custom or
practice of the Parties at variance with the terms hereof, any failure by TFRY
to demand strict compliance with this Agreement, any forbearance, delay, failure
or omission by TFRY to exercise any right, power or option, whether of the same,
similar or different nature, against Distributor or other Distributorships, or
the acceptance by TFRY of any payments due from Distributor after any breach of
this Agreement.
ARTICLE XXV
NON-PERFORMANCE DUE TO FORCE MAJEURE
(a) If the performance of any of the obligations set out in this
Agreement by any one of the Parties is interrupted or prejudiced by:
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(i) fire, explosion, collapse, strike, lockout, labor
dispute, failure or lack of transport, fortuitous or accidental, as well as,
floods, failure or lack of manpower or raw material; or
(ii) war, revolution, civil war, public calamity; or
(iii) any law, decree-law, regulation, government order or
other Government act; or
(iv) any other cause beyond the control of the parties, as
determined by TFRY in its sole and absolute discretion.
(b) The Party affected will be free of responsibility for not
fulfilling its obligation to the extent of the impediment it has suffered,
provided that the other Party is promptly notified of same in writing.
AS WITNESS the hands and seals of the duly authorized representatives
of the Parties hereto as of the day and year first above written.
TASTY FRIES, INC.
By:/S/
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, President
DISTRIBUTOR: TASTY FRIES, ISRAEL, LTD.
By:/S/
------------------------------------
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SCHEDULE A
TERRITORY: Israel, Jordan and Egypt1
PRICE: $200,000.00
DOWN PAYMENT: $ 40,000.00
BALANCE $160,000.00
To maintain Distributorship, Distributor must purchase a minimum of one hundred
(100) Machines per year for three (3) years with an option thereafter to
purchase additional Machines during the remaining seven (7) years of the
Agreement at the then current cost per Machine. This minimum purchase
requirement begins on the Effective Date as defined in Article I(a) hereof.
Any and all payments made to TFRY, Inc. are payable in U.S. Dollars only.
Payments will be issued by bank wire or certified cashiers' checks only. Payment
terms shall be in accordance with Article X(e) hereof.
An additional Five Hundred ($500.00) Dollars will be added to the cost of each
Machine sold into the Territory for the first three hundred (300) Machines. This
will reduce the cost of the Territory accordingly. The balance of $10,000 shall
thereafter be made by Distributor either (i) in one lump sum payment on the
first business day of the month preceding the purchase of the last Machine or
Machines, or (ii) by adding $500 to the cost of the next 20 Machines ordered if
the option to purchase additional Machines is exercised. If less than 20
Machines are ordered, any balance shall be paid in cash by Distributor prior to
shipment of such additional Machines.
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1
Such Territory currently includes the Golan Heights, the Gaza Strip and the West
Bank. If any one or more of such areas becomes one or more independent sovereign
states during the term of this Agreement or any renewal thereof, TFRY will
determine whether such independent sovereign state or states will be included as
part of the Territory going-forward based upon the investment made by the
Distributor in each of such areas during the term of the Agreement.
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DISTRIBUTORSHIP AGREEMENT
This Agreement made this 19th day of October, 1994.
BETWEEN: TASTY FRIES, INC.
(hereinafter referred to as "TFRY")
located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with principal executive offices at:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇▇ REPRESENTACOES INTERNACIONAIS LTDA., a Brazilian
limited company with principal offices at:
▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇. ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇
(hereinafter referred to as "Distributor"):
WITNESSETH:
WHEREAS, TFRY owns the rights to manufacture, distribute and sell a
fully automated french fry vending machine;
WHEREAS, TFRY is the owner of a distinctive type of marketing,
preparation and vending machine sale of TFRY french fry food products; and;
WHEREAS, TFRY has developed and adopted for its own use and for the use
of its Distributors a unique system of TFRY product preparation and vending
machine sale, consisting in part of the unique french fry vending machines,
distinctive advertising, signs, food presentation and formula secret recipes
(collectively the "Products"); and
WHEREAS, in addition to valuable goodwill, TFRY owns the valuable trade
name and design of TFRY in addition to various patents, trademarks, service
marks, copyrights, tradenames, slogans, designs, insignia, emblems, symbols,
package designs, logos and other proprietary identifying characteristics
(collectively, the "TFRY Marks") used in relation to and in connection with the
Products, and
WHEREAS, DISTRIBUTOR wishes, upon the terms and conditions hereinafter
set forth, to enter into the business of distributing TFRY Products on an
exclusive basis in the Territory of BRAZIL and to benefit from the expertise and
experience of TFRY in its field; and
WHEREAS, TFRY is willing to permit Distributor to use TFRY Marks as
aforesaid, together with the retail sale of TFRY French Fry Vending Machine and
its products upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants herein contained and promises herein expressed for other good and
valuable consideration, receipt whereof is hereby acknowledged, do hereby agree
as follows:
ARTICLE I
DISTRIBUTORSHIP AGREEMENT
A. Subject to the provisions of this Agreement and the performance of
its covenants and obligations, TFRY hereby grants Distributor an exclusive right
and license to distribute all TFRY Products and to use the TFRY Marks in the
retail sale thereof within the territorial boundaries set forth and more
particularly described in Schedule "A" attached hereto and forming part of this
Agreement (the "Territory") for a term of ten (10) years commencing on the
"Effective Date". The "Effective Date" is defined as the date on which TFRY
demonstrates its capacity to ship machines for use by consumers, other than
demonstrator machines for use by the Distributor.
The parties specifically acknowledge and agree that the
restriction of operation to the Territory identified herein is an essential and
indispensable term of this Agreement.
DISTRIBUTORS'S SPECIFIC TERRITORIAL RIGHTS
1. The Distributor shall have the exclusive right in his Territory to
sell the TFRY French Fry Vending Machine and TFRY's attendant Products to all
users in the Territory.
2. In the event that TFRY machines are sold by the parent company for
use in the Distributor's Territory, the Distributor shall earn its full
Distributors's profit. This provision is contingent upon his consent to supply
and service these machines.
3. The Distributor shall receive its full profit if machinery is sold
to clients in his Territory for installation in areas outside of his Territory.
Except that in the event the machinery is sold into another Distributor's
Territory, the Distributor profit shall be seventy (70%) percent to the
originating Distributor and thirty (30%) percent to the Territorial Distributor.
4. The Distributor in his exclusive Territory will receive thirty
percent (30%) of the full Distributor's profit in such event that there are
installed in his Territory TFRY machines resulting from any other type of sale
other than directly by Distributor. The Distributor, in order to earn the
Distributor's profit, is obligated to supply and service these machines.
5. TFRY and Distributor will continue good faith negotiations to allow
for a three phase implementation in the Territory: 1) direct export of machines
and potato to Brazil, as provided herein; 2) technology transfer (potato pellet
dehydration) and fabrication of potato product in Brazil; and 3) machine parts
export to Brazil for Brazilian assembly of same.
6. Distributor shall have the right to adapt operating procedures to
the conditions prevailing in the Territory, subject to approval by TFRY,
including, but not limited to, coin
operation mechanisms, use of tokens instead of coins or paper currency,
electrical current and different methods of handling materials and components.
7. Distributor shall have the right to assign the rights and delegate
the duties herein to sub-distributors within the Territory. Distributor shall
maintain at all times the duty to supervise the operations of all such
sub-distributors.
ARTICLE II
OBLIGATIONS OF TFRY
TFRY agrees to assist Distributor in distributing Products by way of
retail sale in the following manner:
A. TFRY will conduct, at no charge, certain sales and maintenance
training programs in its headquarters training school which Distributor and one
key employee may attend. All costs and expenses incurred by Distributor in
traveling to or attending the training program shall be borne by Distributor.
B. TFRY agrees to provide to Distributor, as it is available from time
to time, exchange of information relating to the Products and additional types
of products as may be authorized by TFRY from time to time for sale pursuant to
this Agreement, and which, when authorized, will also constitute "Products" for
all purposes herein, at such times and in such detail as TFRY shall deem
appropriate.
C. If TFRY provides credit or financing to Distributor, the TFRY may
take a security interest in all TFRY products sold to Distributor, and
Distributor shall take such actions and execute and deliver such documents as
TFRY may request in order to perfect or protect such security interest.
ARTICLE III
CONFIDENTIAL INFORMATION
A. The parties hereto covenant and agree that any Confidential
Information disclosed to the Distributor relating directly or indirectly to the
vending machines and their component parts of the ingredients, preparation or
sale of any of the Products will remain the property of TFRY at all times and
will, if disclosed in any tangible format, be returned to TFRY upon demand and,
in any event, upon termination of this Agreement.
B. It is expressly understood and agreed by Distributor that the
confidential Information described above constitutes highly confidential trade
secrets and Distributor agrees that neither he nor any of his employees will
reveal any of such Confidential Information being revealed or reproduced.
ARTICLE IV
STANDARDS OF OPERATION AND SUPERVISION BY TFRY
Distributor agrees to conduct its business in a manner consistent with
the standards set forth in this Agreement. It is expressly understood that these
standards may change from time to time, and are in addition to and not in
substitution for any standards set forth in this Agreement.
In order to preserve the value and goodwill of TFRY and related
goodwill of other TFRY Distributors and to promote the purpose of this
Agreement, the parties hereto agree as follows:
1. Distributor will use and distribute the Products as herein
contemplated strictly in accordance with the terms of this Agreement.
2. Unless approved in writing by TFRY, Distributor will not develop,
produce, sell, advertise for sale or give away any product which might
reasonably compete with the Products and all food Products will be prepared in
accordance with the specific formulas or utilizing the ingredients purchased
from or specified by TFRY. It is expressly understood that the conditions and
restrictions expressed herein are for the purposes of ensuring quality control,
health and safety standards and uniformity of Products sold in conjunction with
the TFRY Marks.
3. TFRY may from time to time of her guidance to Distributor relative
to retail prices for Products offered for retail sale that in TFRY judgment
constitute good business practice.
4. Distributor will use its best efforts to see to it that its
customers maintain suitable signs (which signs shall be approved by TFRY) at, on
or near the front of any premises within which its french fry vending machines
are located, describing the premises having Products available for retail sale.
Any translation from the English language or deviation from
TFRY approved designs contained in such sign shall require the prior written
approval of TFRY.
5. It is the Distributor's responsibility to ensure that all food
products sold by Distributor hereunder will be of the highest and safest
quality, and the service relating to any such sale hereunder will comply with
the instructions and standards provided by TFRY in preparing the food Products,
or with any other further written requirements of TFRY as they are communicated
to Distributor from time to time.
6. It is the Distributor's responsibility to ensure that it will
maintain all french fry vending machines by which its business is conducted in
conformity with the high quality, style and cleanliness required of similar
french fry vending machines now operated in connection with TFRY Marks and will
be responsible that the operation of such machines by its customers be conducted
in a clean, orderly, legal and respectable standard of business including.
without limitation, cleaning and sanitation of the french fry vending machines,
disposal of stale, spoiled or unmerchantable food Products, replacement of
cooking oil at specified intervals, replacement
or repair of display merchandise, replacement of outdated or obsolete machines
(including its component parts), equipment and signs. Distributor shall see that
its customers comply with all applicable ordinances, health and safety
regulations, laws and statutes governing the operation of such premises and the
sale of products, including all criminal and quasi-criminal laws and
regulations.
7. Distributor's exclusive remedy for any damage to or defect in any
TFRY Product sold hereunder shall be limited to the repair or the replacement of
the damaged article, as determined by TFRY at its sole discretion. In no event
shall TFRY be liable for any incidental or consequential loss or damage,
including but, not limited to, loss of profits or any other economic loss,
suffered or incurred by Distributor as a result of or in connection with any
defective or damaged product sold hereunder.
8. TFRY warrants that title to all TFRY Products transferred hereunder
will be free and clear of all liens, security interests or other claims, and
that such products shall comply with the terms and conditions of the limited
warranty certificate included with each TFRY Product and issued to original
purchasers by TFRY.
C. TFRY or TFRY supervisory personnel shall have the right to enter
upon any premises in which Distributor conducts its business at any reasonable
time for the purposes of examining, conferring with Distributor's employees,
inspecting and checking perishable and nonperishable food supplies, vending
machines, and other equipment and in determining whether the distribution of
Product is being conducted in accordance with the aforesaid standards and within
the terms of this Agreement. In the event any such inspection indicates a
deficiency or unsatisfactory condition or conditions, Distributor shall, within
forty-eight (48) hours and, if not capable of being corrected or repaired within
such time, shall within such period of time commence such correction or repair
and thereafter diligently pursue the same to completion. In the event of failure
of Distributor to comply with the foregoing obligations to correct and repair,
TFRY, in addition to any other remedies conferred in this Agreement, shall have
the right to forthwith make or cause to be made, such corrections or repairs,
the expenses thereof, including board, lodging, wages and transportation of TFRY
personnel, attorneys' fees and other living expenses, shall be paid by the
Distributor immediately upon billing by TFRY. Nothing in this paragraph shall in
any way limit TFRY other rights hereunder.
ARTICLE V
COMMENCEMENT OF BUSINESS
A. Distributor agrees to obtain, prior to commencement of its
distribution business, pursuant to this Agreement, all licenses, approvals,
inspections, permits or any other certification which may be required by any
competent public authority for the lawful operation of its business and to keep
the same in good standing during the term hereof.
ARTICLE VI
USE OF TFRY NAME, MARKS AND ADVERTISING
A. During the term of this Agreement, and any renewals hereof,
Distributor shall advertise sale of the Products under the trade name of "Tasty
Fries Hot French Fries" or one or more mutually agreed-upon non-English language
substitutes within the Territory, and will diligently promote and make every
reasonable effort to steadily increase sales of the Products by proper use of
all advertising media.
B. No design, advertisement, sign or form of publicity, including form,
color, number, location and size, shall be used by Distributor in connection
with sale of the Products unless the same shall have been first submitted to
TFRY and approved in writing. Upon notification from TFRY, Distributor will
cause to be removed any objectionable advertising material and, if required,
cause to be published any retraction in a form and manner consistent with that
of the objectionable advertising materials. In the event said materials are not
removed within seven (7) days after notice, TFRY or its authorized agents, may
at any time, enter upon Distributor's premises, or elsewhere and remove any
objectionable advertising material and may keep or destroy such materials
without paying therefore and without being guilty of trespass or other civil or
criminal wrong.
C. All printed materials, including, but not limited to, product
carrying bags, product wrapping, cups, napkins, posters or other printed
material used in connection with the distribution by retail sale of the Products
shall bear TFRY Marks as suggested by TFRY, and such use will indicate that TFRY
Marks are registered Marks.
D. Distributor shall act prudently and in conformity with all laws,
regulations, ordinances, or other requirements which may affect the utilization
of the TFRY to ensure that the Marks are not jeopardized, diminished or damaged
in any manner and Distributor agrees to indemnity and save harmless TFRY for any
damage or expense occasioned directly or indirectly by Distributor's improper
use of said Marks.
E. Any contractual arrangement of any kind for advertising under the
trade name "Tasty Fries Hot French Fries" or utilizing the TFRY Name, entered
into by Distributor shall expressly provide for termination with no greater than
then (10) days written notice.
ARTICLE VII
TFRY MARKS
A. TFRY hereby grants to Distributor for the term of this Agreement the
exclusive right and license to use the TFRY Marks within the Territory but only
in connection with the distribution of TFRY Products which Distributor is
permitted to sell hereunder and the extent and manner of use of the TFRY Marks
shall be subject to TFRY approval and to the extent that such Marks can be used
legally in the Territory.
B. Distributor shall be entitled to assign or sublicense his rights to
use the TFRY Marks without the written consent and approval of TFRY.
C. Upon execution of this Agreement, Distributor shall cooperate with
TFRY and shall do all things reasonably required in making whatever application,
if any, as required by law in the Territory, to register the TFRY Marks and/or
to register Distributor as a "Registered User" of the TFRY Marks and Distributor
shall sign any document necessary for the purpose.
D. Distributor shall notify TFRY forthwith in writing of any
counterfeiting or infringement of the TFRY Marks which may come to Distributor's
attention. Should any such infringement or alleged infringement occur:
1. The commencement, defense, and conduct of any such
proceedings shall be initiated by Distributor. If requested by TFRY, Distributor
will furnish all reasonable assistance to TFRY in such proceedings and agrees to
share equally with TFRY in the costs of any such proceedings.
E. Distributor agrees not to use the words "TFRY" or any other work,
design or device forming or forming any part of any of the TFRY Marks:
1. During the term of this Agreement, otherwise than as
herein authorized; or
2. After termination of this Agreement, in any manner.
ARTICLE VIII
UNIFORMITY OF PRODUCTS
A. The reputation and goodwill of TFRY products is based upon, and can
be maintained and enhanced, only by the sale of consistently high quality
Products to the satisfaction of customers who rely upon the uniformly high
quality of such products. Distributor therefore agrees that all food Products
offered for sale in the vending machines shall be, initially, purchased directly
from TFRY. However, paper goods, packaging, cooking oil and other supplies and
materials utilized in connection with the food products may be purchased by
Distributor from any supplier in the Territory with TFRY approval.
B. In order to establish uniformity of taste and quality of the
Products, TFRY has developed and will continue to develop recipes and formulas
of ingredients, which ingredients will be made available to Distributor. Such
products will be purchased by Distributor at the prevailing prices from time to
time, FOB Shipping Point as TFRY determines, and will be utilized by Distributor
exclusively as specified by TFRY, unless products are not supplied by TFRY but
are approved by TFRY and TFRY is compensated for its loss of profit on such
product.
C. Distributor agrees that he will not offer any food product or
utilize any equipment, signage, display cases or other items which may compete
with the Products and which are not purchased from TFRY or any supplier that is
not currently approved by TFRY.
ARTICLE IX
FEES AND FINANCIAL OBLIGATIONS
A. In consideration of the right to distribute Products granted herein,
Distributor agrees upon execution of this Agreement, to pay to TFRY, the sum of
TWO HUNDRED FIFTY THOUSAND ($250.000.00), as consideration solely for the right
to distribute Products. Such right shall be acquired, in full, upon the
Effective Date of this Agreement, whereupon such fee shall be fully earned and
non-refundable under any circumstances whatsoever and subject to the fee payment
in Schedule "A".
B. It is expressly agreed b.;tween the parties that as consideration
for the grant of distribution rights hereunder by TFRY to Distributor and as an
express condition of such grant, that Distributor purchase from TFRY a minimum
number of french fry vending machines upon the terms and conditions set forth on
Schedule "A" attached hereto and forming a part of this Agreement.
C. Unless otherwise specified herein, all amounts stated herein or
payments to be made to TFRY under this Agreement shall be in U.S. Dollars. Such
payments shall be made in such manner as is specified from time to time by TFRY
but may include, but without limiting the generality of the foregoing, bank wire
transfer, or certified check delivered to TFRY accounts at such place as TFRY
may from time to time designate.
D. During the term of this Agreement and any renewal thereof,
Distributor agrees that all payments will be made in United States (U.S.)
Dollars. TFRY products shall be quoted F.O.B. from any shipping point that TFRY
may determine. Dealer shall pay the invoice according to terms set by TFRY.
Distributor shall also pay any and all applicable sales, use, import duties,
excise taxes, or any other taxes arising from the sale or transfer of TFRY
Products. All shipments are at Distributors risk from the time of TFRY
conveyance to Distributors shipper. Notwithstanding the forgoing, TFRY
specifically reserves the right to act at any time in accordance with the
provisions of the Uniform Commercial Code to protect its interests when
necessary. Any claim of discrepancies in shipments made by Distributor shall be
made in writing and sent to TFRY within ten (10) business days after receipt of
the shipment.
ARTICLE X
DISTRIBUTOR
A. Distributor acknowledges that the TFRY Products are unique and
distinctive and have been developed by TFRY at great effort, time and expense;
that Distributor has regular and continuing access to valuable and confidential
information, training and trade secrets regarding the Products; and that
Distributor recognizes his obligation to fully develop his territory for sales
of the Products and accordingly agrees as follows:
1. During the term of this Agreement and any renewal thereof,
Distributor shall not, in any capacity whatsoever, either directly or
indirectly, individually or as a member of any business organization, except
with the prior written consent of TFRY, engage in the sale of any french fries
vending machine or supplies therefore, other than TFRY.
2. During the term of this Agreement, or upon expiration or termination
of this Agreement, divulge any aspect of the Products whether expressly stated
to be confidential or otherwise to any person.
3. Distributor shall at all times maintain an inventory of TFRY
Products sufficient to satisfy the reasonably anticipated demands of customers
located within the Territory. TFRY shall supply all of Distributors reasonable
requirements of TFRY Products for distribution in the Territory, subject to
available supplies. TFRY shall not be liable for any delay in shipment arising
from or caused by any fire, flood, war, riot, civil disturbance, labor dispute,
act of God, material shortage, government regulation or action, or any other
cause beyond TFRY reasonable control.
4. During the term of this Agreement and any renewal thereof,
Distributor shall maintain a sufficient inventory of parts to properly maintain,
repair, and service TFRY Products. Distributor shall only use parts which meet
the standards of quality established by TFRY from time to time. Distributor
shall provide prompt and courteous service to all TFRY customers located within
the Territory regardless of whether such customers purchased TFRY products from
Distributor.
ARTICLE XI
TRANSFER OF INTEREST
This Agreement shall enure to the benefit of the successors and assigns
of TFRY and may be so assigned at any time.
TFRY shall not unreasonably withhold its consent to any full transfer
or assignment of this Agreement, which is subject to the restrictions of this
Article, provided, however, that TFRY shall not be required to give its consent
unless, in addition to the requirements of Article IV hereof, the following
conditions are met prior to the date of the assignment:
1. For any such proposed full transfer or assignment:
(a) Distributor shall not be in default under any provision of
the terms of this Agreement or any other agreement ancillary to this Agreement,
and shall have continuously distributed products for a period.of not less than
twelve (12) months;
(b) Distributor has executed a general release in a form
prescribed by TFRY of any and all claims against TFRY;
(c) The proposed assignee executes such other documents as
TFRY may require in order to assume all of the obligations of this Agreement, to
the same extent, and with the same effect, as previously assumed by distributor;
(d) The proposed assignee executes such other documents as
TFRY may require in order to assume all of the obligations of this Agreement, to
the same extent, and with the same effect, as previously assumed by distributor;
(e) A transfer fee has been paid to TFRY in an amount equal to
five percent (5%) of the aggregate cash or cash valued consideration paid by the
assignee to assignor for the distribution rights, to def ray its reasonable
costs and expenses in connection with the transfer, including without
limitation, the cost of legal and accounting fees, credit and investigation
charges, evaluations, retraining and additional supervision. It is agreed that
the original cost of the territory will be deducted.
C. Upon the death or permanent incapacity of a Distributor the
following shall apply:
1. TFRY shall have the right, within thirty (30) days of the
date upon which TFRY is notified of such death or incapacity (if consistent with
applicable local laws) to purchase the interest or any part thereof for cash at
the appraised value, such purchase to be completed within sixty (60) days.
2. If TFRY declines to elect to purchase the interest, within
thirty (30) days of the date upon which TFRY is notified of such death or
incapacity, the interest may be transferred within a further sixty (60) days by
sale to a third party meeting TFRY's then current criteria for new distributors,
provided that the requirements of paragraph D of this Article are met. If a
transfer to an approved transferee cannot be effected within a further one
hundred and twenty (120) days, this Agreement shall terminate and automatically.
3. No sale or transfer of the interest shall be approved by
TFRY unless the incapacitated Distributor or personal representative has agreed
to reimburse TFRY for the reasonable costs and expenses it has incurred or may
incur in providing fat TFRY option) one or more interim Distributors to manage
the business until a transfer of the interest is effected, if TFRY determines,
in its discretion, that such supervision is necessary or desirable.
D. TFRY's consent to a transfer of any interest subject to the
restrictions of this Article shall not constitute a waiver by TFRY of the right
to distribute products granted herein, nor shall it be deemed a waiver of TFRY
right to demand exact compliance with any of the terms of this Agreement by the
assignee. The document effecting the transfer or assignment of any interest
subject to the restrictions of this Article shall specifically provide that
Distributor's obligations hereunder shall -continue in full -force and effect
notwithstanding any such disposition.
E. If Distributor has received and desires to accept any bona fide
offer to purchase his or its distribution rights hereunder, Distributor or such
person shall notify TFRY in writing
of the purchase price and terms of such offer, and TFRY shall have the right and
option subject to any limitations of applicable local laws exercisable within
thirty (30) days after receipt of such written notification), to send written
notice to Distributor or such persons that TFRY or its designee intends to
purchase Distributor's interest on the same terms and conditions offered by the
third party. Any material change in the terms of an offer prior to closing shall
result in a new notification as in the case of the initial offer.
ARTICLE XII
DEFAULT
A. In addition to those events herein before stated to be events of
default, it is agreed that the rights granted to Distributor pursuant to this
Agreement may be terminated forthwith with notice upon the happening of any one
or more of the following events, except that TFRY must be in compliance with the
terms and conditions of this distribution agreement:
1. If the Distributor fails to comply with any of the terms
and conditions of this Distributorship Agreement and such failure to comply
continues for a period of thirty (30) days after written notice thereof has been
given to the Distributor.
2. If the Distributor fails to comply with any of the terms
and conditions of any other agreements entered into pursuant to or collateral
to this Agreement.
3. If the Distributor shall be adjudicated a bankrupt or
become insolvent, or if a receiver or other person with like powers shall be
appointed (whether temporary or permanent) to take charge of all or
substantially all of the Distributor's assets, or if the Distributor shall make
a general assignment for the benefit of creditors or a proposal under the
Bankruptcy Act for any similar or successor Act), or commence any proceedings to
wind-up, liquidate, or dissolve the distributor's business.
4. If any judgement or judgments in excess of ONE THOUSAND
DOLLARS ($1,000.00) or any legal tax lien against the Distributor remains
unsatisfied or unbonded of record in excess of thirty (30) days, or if the
Distributor shall commit or suffer any default under any security instrument.
5. Other than amounts to be paid to TFRY wherein the
provisions of subsections (a) and (b) above respecting default shall apply, if
the Distributor does not pay any other indebtedness incurred in connection with
the operation of the business through which the products are maintained and sold
and such indebtedness is not paid within seven (7) days of notice from TFRY.
6. If the Distributor fails to continuously and actively
operate its distributorship throughout the Territory.
7. If the Distributor falsifies any statement or report
furnished to TFRY or otherwise deliberately provides false information to TFRY;
or if the Distributor is convicted of a felony or other crime or impairs the
goodwill associated with TFRY Marks.
8. If the Distributor commits acts of default for which
notices of default have been served more than four times in any one calendar
year during the term, notwithstanding that such defaults may have been cured.
9. If the Distributor does not order and complete the purchase
of the french fry vending machines it is required to purchase pursuant to the
terms of this Agreement in the manner and at the times therein specified.
10. If the Distributor does not complete the training course
to be taken by the Distributor prior to distributing food product to the public
to the satisfaction of TFRY.
11. Distributor will pay all attorney's fees as between an
attorney and his own client, accounting fees and court costs incurred by TFRY in
the event of a violation by Distributor of this agreement.
12. In case of a breach or a threatened breach of the terms of
this Agreement by Distributor, TFRY shall, in addition to any other remedy it
may have, and notwithstanding any other provision hereof, be entitled to an
injunction restraining Distributor from committing or continuing to commit any
breach of this Agreement, without showing or proving any actual damage sustained
by TFRY, which damage is hereby conclusively acknowledged.
ARTICLE XIII
RIGHTS AND OBLIGATIONS OF PARTIES
ON TERMINATION OF EXPIRATION
A. Upon termination or expiration of this Agreement for any reason
whatsoever, Distributor will immediately discontinue use of all trade names,
trademarks, signs, forms of advertising, printed material and all other indicia
of operation as an TFRY Distributor from its operations. In addition,
Distributor will discontinue use of the TFRY color scheme. If the Distributor
shall fail or omit to make or cause to be made such discontinuance within seven
(7) days after termination or expiration of this Agreement, then TFRY, in
addition to any other remedy it may have, shall have the right to enter upon
premises and to make or cause to be made such removal of signs, trademarks,
trade names and other indicia of operation subject to removal and such removal
shall be conducted at the sole expense of Distributor (without being deemed
guilty of trespass or any civil wrong) which expense the Distributor agrees to
pay on demand.
B. TFRY may retain all fees paid pursuant hereto.
C. Any and all obligations of TFRY to Distributor under this Agreement
shall immediately cease and terminate.
D. In no event shall termination or expiration of this Agreement for
any reason whatsoever affect Distributor's obligation to take or abstain from
taking action in accordance with this Agreement.
E. It is understood by Distributor that rights in and to TFRY Marks and
any part thereof or addition thereto and the use thereof shall be and remain the
property of TFRY and Distributor shall confirm same in writing and shall further
assign, transfer and convey to TFRY by such instrument in writing as may be
requested, all additional rights which may be acquired, if any, by reason of the
use of said name of Distributor.
F. TFRY shall have the option to purchase, at Distributor's cost less
twenty-five (25) percent, all or any portion of inventory of any kind bearing
the TFRY Marks, including, but not limited to, french fry vending machines,
equipment, vehicles, and any other items Distributor may have in stock at the
time of such termination or expiration.
G. Distributor shall cause immediate discontinuance of all advertising
or other public display or publication of the words "Tasty Fries" and, in the
event that such action is not taken by Distributor, Distributor hereby
constitutes irrevocably TFRY as Distributor's attorney to carry out such acts at
Distributor's sole expense.
H. Distributor will immediately pay any and all amounts owing to TFRY
and its subsidiaries and affiliates.
I. Distributor shall not, in any capacity whatsoever, either directly
or indirectly, individually or as a member of any business organization, engage
in the preparation or sale of any TFRY or other approved TFRY product, or have
any employment or interest in a firm engaged in the preparation or sale of such
products within the Territory or within thirty (30) miles of any other
Distributor's exclusive or non-exclusive territory for a period of three (3)
years following such termination. Distributor acknowledges and agrees that this
restriction upon subsequent activities is necessary in view of the Confidential
Information and expertise Distributor will acquire pursuant to the terms of the
Agreement and will cause TFRY irreparable and-substantial damage in the event of
breach of these provisions. The Distributor has the option to cancel this
Agreement by giving notice of six (6) months without refund if payments for
Distributorship already paid.
ARTICLE XIV
INSURANCE
A. Distributor agrees to place and keep in effect during the life of
this Agreement, with an insurance company approved by TFRY, public liability
insurance in amounts no less than One Million Dollars ($1,000,000.00), in case
of damage or injury to one person, no less than One Million Dollars
($1,000,000.00), in case of damage or injury to more than one person, property
damage insurance of One Million Dollars ($1.000.000.00) in case of damage or
injury to one person (Proof of insurance coverage will be furnished to TFRY
prior to the delivery of the first machine). This insurance requirement may be
altered based on the feasibility of obtaining such insurance in Brazil at
reasonable rates.
B. Distributor shall secure and maintain workers compensation and
employer's liability insurance covering all of its employees.
C. It is specifically agreed that insurance coverage required to be
kept in effect by the terms of this paragraph shall be subject to review by TFRY
in order to ensure adequate insurance protection throughout the term of this
Agreement. TFRY may, from time to time, and in its sole discretion, require
Distributor upon thirty (30) days written notice to obtain additional insurance
beyond the aforementioned requirements of this paragraph.
All insurance shall be in amounts and with carriers acceptable
to TFRY, and shall be evidenced by certificates of insurance showing TFRY as a
named insured and providing that coverage shall not be terminated or canceled
without thirty (30) days prior written notice to TFRY.
ARTICLE XV
INDEMNIFICATION OF COMPANY
Distributor agrees to protect, indemnify, and save TFRY, its
affiliates, subsidiaries, partners, stockholders, directors, officers and
employees of its partners harmless from any and all loss, damage, liability,
expenses, attorney's fees and costs incurred by any of them because of any
action, matter, thing, or conduct relating to Distributor and Distributor's
business or its agents, servants, employees, customers and guest in, on, or
connected with the storage, transport, installation, sale or servicing,
preparation, and cooking of Products.
ARTICLE XVI
APPEARANCE OF MACHINES
Distributor shall see to it that all machines in the Distributor's
Territory are in good repair, and shall refurbish, tidy, and maintain each TFRY
french fry vending machine as necessary or as required by TFRY in order to
ensure that at all times a first class, safe and reputable Product is provided
to the public.
ARTICLE XVII
RENEWAL OF AGREEMENT
Unless terminated as herein otherwise provided, Distributor shall have
the option, pursuant to such procedures as may be required by TFRY at the
expiration of the initial term of this Agreement, to renew the license granted
hereunder at each ten (10) year expiration date as long as all contractual
conditions are met hereof by executing TFRY then-current form of Distributorship
Agreement provided that:
1. Distributor gives TFRY written notice of its election to renew not
less than three (3) months nor more than nine (9) months prior to the expiration
of the then current term and, Distributor executes a general release under seal,
in a form prescribed by TFRY, of any and all claims against TFRY, its
affiliates, stockholders, directors, officers and employees, and
2. Distributor at the time of notice of election to renew and at the
end of the then- current term is not in default of any of the terms or
conditions of this Agreement or any other
Agreement between Distributor and TFRY or its affiliates, and has substantially
complied with the terms and conditions of all such agreements during the term of
this Agreement, and
3. All of Distributor's accrued monetary obligations to TFRY and its
subsidiaries and affiliates have been satisfied prior to renewal, and timely met
throughout the term of this Agreement.
Upon renewal of this Agreement, no additional distributorship fee will
be due. However, it is specifically agreed that Distributor will, upon renewal,
be charged by TFRY a sum which shall be equal to TFRY estimated costs incurred
in connection with such renewal plus an administrative fee equal to fifteen
(15%) percent of such costs. Furthermore, Distributor acknowledges the terms of
the TFRY then current form of Distributorship Agreement.
ARTICLE XVIII
RELATIONSHIP OF PARTIES
A. TFRY and Distributor are not and shall- not be considered as joint
venturers, partners, or agents of each other, or anything other than
Manufacturer and Distributor and neither shall have the power to bind or
obligate the other as set forth in this Agreement.
B. The parties further agree that their relationship created by this
Agreement is not a Fiduciary relationship.
ARTICLE XIX
DISTRIBUTOR'S RESPONSIBILITY
A. Distributor acknowledges that his success in the distribution of
products contemplated to be undertaken by Distributor pursuant to this Agreement
is speculative and depends primarily upon the ability of Distributor as an
independent business organization. Distributor acknowledges that neither TFRY
nor any other person has guaranteed or warranted that Distributor will succeed
in the operation of this business venture.
B. Distributor further acknowledges that there have been no
representations, promises, or guarantees of warranties of any kind made by TFRY
or its agents or representatives to induce Distributor to execute this
Agreement, except as specifically set forth in this Agreement and further that
Distributor has received all information which he has requested concerning the
business operation of TFRY which, in the opinion of Distributor, is necessary to
decide whether to enter into this Agreement.
C. Distributor further acknowledges that independent legal advice had
been sought in the preparation of this Agreement.
D. Distributor further acknowledges that nothing contained within this
Agreement shall be construed or interpreted as creating an employer/employee,
agency, joint venture, or any other such relationship between the parties, and
the only relationship created hereunder is
that of independent contractor. Distributor shall not have the authority, and
shall not represent itself as having the authority, to bind or to obligate TFRY
in any manner.
E. Distributor further acknowledges that the Distributor warrants and
represents that it is duly organized under the laws of the jurisdiction in which
it will do business and the person executing the agreement has the authority to
execute this Agreement.
ARTICLE XX
NOTICES
A. All notices to TFRY required by the terms of this Agreement shall be
sent by registered mail, addressed to TFRY at its office at:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ #▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(or such other address as TFRY shall designate in writing) or by
telefax, telecopy or other electronic means of communication to such address.
B. All notices to Distributor required by the terms of this Agreement
shall be personally delivered to or sent by registered mail, addressed to the
Distributor at:
▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇. ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇
and
▇▇▇▇▇ ▇▇▇▇▇▇, attorney at law
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
for such other address as Distributor shall designate in writing) or by
telefax, telecopy or other electronic means of communication to such address.
C. All notices to either party required by the terms of the Agreement
shall be deemed to have been received:
(i) in the case of hand delivery or telefax, telecopy or
other electronic communication, upon actual receipt thereof and not the date
of receipt of confirming mail); and
(ii) in the case of notice sent by registered mail, ten (10)
business days after the date of mailing.
ARTICLE XXI
INTERPRETATION AND EXECUTION OF AGREEMENT
A. This Agreement shall be construed and interpreted in accordance with
the laws of the State of Pennsylvania.
B. This instrument contains the entire Agreement of the parties and no
representations, inducements, promises, or agreements, oral or otherwise, not
embodied herein, were made by TFRY and none shall be of any force or effect.
C. Nothing in this Agreement shall bar or restrict TFRY right to obtain
injunctive relief under applicable law.
ARTICLE XXII
SEVERABILITY AND CONSTRUCTION
Each section, part, term and provision of this Agreement, and any
portion thereof shall be considered severable, and if, for any reason, any
portion of this Agreement is determined to be invalid, contrary to or in
conflict with any applicable present or future law, rule, or regulation in a
final unappealable ruling issued by any court, agency, or tribunal with valid
jurisdiction in a proceeding to which TFRY is a party, that ruling shall not
impair the operation of, or have any other effect upon, such other portions of
this Agreement as may remain otherwise intelligible fall of which shall remain
binding on the parties and continue to be given full force and agreement as of
the date upon which the ruling becomes final).
ARTICLE XXIII
WRITTEN APPROVALS AND WAIVERS
A. TFRY shall not be deemed to have waived or impaired any right, power
or option reserved by this Agreement (including, without limitation, its right
to demand Distributor's exact compliance with every term, condition, and
covenant herein, or to declare any breach thereof a default and to terminate
this license prior to the expiration of its term), by virtue of any custom or
practice of the parties at variance with the terms hereof, any failure by TFRY
to demand strict compliance with this Agreement, any forbearance, delay, failure
or omission by TFRY to exercise any right, power or option, whether of the same,
similar or different nature, against Distributor or other Distributorships, or
the acceptance by TFRY of any payments due from Distributor after any breach of
this Agreement.
ARTICLE XXIV
NON-PERFORMANCE DUE TO FORCE MAJEURE
If the performance of any of the obligations set out in this Agreement
by any one of the parties is interrupted or prejudiced by:
i fire, explosion, collapse, strike, lockout, labor dispute, failure or
lack of transport, fortuitous or accidental, as well as, floods, failure or lack
of manpower or raw material; or
ii war, revolution, civil war, public calamity; or
iii any law, decree-law, regulation, Government order
or other Government act; or
iv any other cause beyond the control of the parties,
the party affected will be free of responsibility for not fulfilling its
obligation to the extent of the impediment it has suffered, provided that the
other party is promptly notified.
AS WITNESS the hands and seats of the duly authorized representatives
of the parties hereto as of the day and year first above written.
TASTY FRIES, INC.
By: /S/
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇
Chairman of the Board
By:/S/
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, President
▇▇▇▇▇▇ ▇▇▇▇▇▇ REPRESENTACOES INTERNACIONAIS LTDA.
By:/S/
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Managing Quotaholder
SCHEDULE A
TERRITORY: Brazil
PRICE: $250,000.00
DOWN PAYMENT: $100,000.00
BALANCE $150,000.00
To maintain Distributorship, Distributor must sell a minimum of two hundred
fifty (250) machines per year. This minimum begins on the Effective Date.
Any and all payments made to TFRY, Inc. are payable in U.S. Dollars only.
Payments will be issued by bank wire or certified cashiers' checks only.
An additional Five Hundred ($500.00) Dollars will be added to the cost of each
machine sold into the Territory for the first three hundred (300) machines. This
will reduce the cost of the Territory accordingly.
DISTRIBUTORSHIP AGREEMENT
This Agreememt made this 4th day of April, 1995
BETWEEN:
TASTY FRIES, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇, ▇.▇.▇. ▇▇▇▇▇
(hereinafter referred to as "TFI")
AND :
CANADIAN TASTY FRIES, INC.
#▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇, ▇.▇.▇. ▇▇▇▇▇
(hereinafter referred to as "Distributor")
WITNESSETH:
WHEREAS, TFI owns rights to manufacture, distribute and sell a fully
automated french fry vending machine;
WHEREAS, TFI is the owner of a distinctive type of marketing,
preparation and vending machine sale of TFI french fry food products; and;
WHEREAS, TFI has developed and adopted for its own use and for the use
of its Distributors a unique system of TFI product preparation and vending
machine sale, consisting in part of the unique french fry vending machines,
distinctive advertising, signs, food presentation and formula secret recipes
(collectively the "Products"); and
WHEREAS, in addition to valuable goodwill, TFI owns the valuable trade
name and design of TFI in addition to various patents, trademarks, service
marks, copyrights, tradenames, slogans, designs, insignia, emblems, symbols,
package designs, logos and other proprietary characteristics (collectively, the
"TFI Marks") used in relation to and in connection with the Products; and
WHEREAS, Distributor wishes, upon the terms and conditions hereinafter
set forth, to enter into the business of distributing TFI Products on an
exclusive basis in the Territory herein defined and more particularly described
in Schedule "A" attached hereto and forming part ofthis Agreement (the
"Territory") and to benefit from the expertise of TFI in its field; and
WHEREAS, TFI is willing to permit Distributor to use TFI Marks as
aforesaid together with the retail sale of TFI French Fry Vending Machine and it
products upon the terms and conditions hereinafter set forth; and
WHEREAS, TFT is willing to permit Distributor to register the TFI Marks
to secure their exclusive use in that Territory.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants herein contained and promises herein expressed for other good and
valuable consideration, receipt whereofis hereby acknowledged, do hereby agree
as follows:
ARTICLE 1
DISTRIBUTORSHIP AGREEMENT
A. Subject to the provisions of this Agreement and the performance of its
covenants and obligations, TFI hereby grants Distributor an exclusive right and
license to distribute all present and future:TFI Products and to use the TFI
Marks in the retail sale thereof within the territorial boundaries set forth as
described in Schedule "A" attached hereto (the "Territory") for a term of ten
(10) years.
The parties specifically acknowledge and agree that the restriction of
operation to the Territory identified herein is an essential and indispensable
term of this Agreement.
DISTRIBUTOR'S SPECIFIC TERRITORIAL RIGHTS
1. The Distributor shall have the exclusive right in its Territory to sell
the TFI French Fry Vending Machine and TFI attendant Products to all users in
the Territory.
2. The Distributor shall have the right to subdivide its Territory as
Distributor in its sole discretion sees ftt and to grant additional
distributorships for these subdivided areas on similar terms as contained in
this Agreement and all compensation for said additional distributorships shall
be for the benefit of Distributor without any fee, royalty or deduction to be
paid to TFI.
ARTICLE II
OBLIGATIONS OF TFI
TFI agrees to assist Distributor in distributing Products by way of
retail sale in the following manner:
A. TFI will conduct, at no charge, certain sales and maintenance training
programs in its headquarters training school which Distributor and one key
employee may attend and up to two individuals from each additional
distributorship granted by Distributor in its Territory may attend.
B. TFI agrees to provide to Distributor, as it is available from time to time,
exchange of information relating to the Products and additional types of
products as may be authorized by
TFI from time to time for sale pursuant to this Agreement, and which, when
authorized, will also constitute "Products" for all purposes herein, at such
times and in such detail as TFI shall deem appropriate.
C. TFI will take all steps necessary to ensure the Products meet the
standards of the Territory for import and resale therein and if necessary will
license the Products in the Territory for that purpose.
ARTICLE III
CONFIDENTIAL INFORMATION
A. The parties hereto covenant and agree that any Confidential Information
disclosed to the Distributor relating directly or indirectly to the vending
machines and their component parts of the ingredients, preparation or sale of
any of the Products will remain the property of TFI at all times and will, if
disclosed in any tangible format, be returned to TFI upon demand and, in any
event, upon termination ofthis Agreement.
B. It is expressly understood and agreed by Distributor that the Confidential
Information described above constitutes highly confidential trade secrets and
Distributor agrees that neither he nor any of his employees will reveal or
reproduce any of such Conftdential Information except as is necessary to
describe the operations to employees and staff and additional distributors
within the Territory so they can safely use the vending machines and Products.
Such employees, staff and additional Distributors shall be required to execute
appropriate confidentiality agreements.
ARTICLE IV
STANDARDS OF OPERATION
AND SUPERVISION BY TFI
A. Distributor agrees to conduct its business in a manner consistent with the
standards set forth in this Agreement. It is understood that these standards may
change from time to time, and are in addition to and not in substitution for any
standard as set forth in this Agreement.
B. In order to preserve the value and goodwill of TFI and related goodwill of
other TFI Distributors and to promote the purpose ofthis Agreement, the parties
hereto agree as follows:
1. Distributor will use and distribute the Products as herein
contemplated strictly in accordance with the terms of this Agreement.
2. Unless approved in writing by TFI, Distributor will not
develop, produce, sell, advertise for sale or give away any products
under the TFI Marks which might reasonably compete with the Products
and all food Products will be prepared in accordance with the specific
formulas or utilizing the ingredients purchased from or specified by
TFI.
3. TFI may from time to time offer guidance to Distributor relative
to retail prices for Products offered for retail sale that in TFI's
judgment constitute good business practice.
4. Distributor will use its best efforts to see it that its
customers maintain suitable signs (which signs shall be approved by
TFI), at, on or near the front of any premises within which its french
fry vending machines are located, describing the premises having
Products available for retail sale.
Any translation from the English language or deviation from
TFI approved designs contained in such sign shall required the prior
written approval of TFI.
5. It is the Distributor's responsibility to ensure that all food
products sold by Distributor hereunder will be of the highest and
safest quality, and the service relating to any such sale hereunder
\iill comply with the instructions and standards provided by TFI in
preparing the food Products, or with any other further written
requirements of TFI as they are communicated to Distributor from time
to time.
6. It is the Distributor's responsibility to ensure that it will
maintain all french fry Vending machines by which its business is
conducted in conformity with the high duality, style and cleanliness
required of similar french fry vending machines now operated in
connection with the TFI Marks, component parts, equipment and signs.
Distributor shall see that its customers comply with all applicable
ordinances, health and safety regulations, laws and statutes governing
the operation of such premises and the sale of products, including all
criminal and quasi-criminal laws and regulations.
C. TFI or TFI's supervisory personnel shall have the right to enter upon any
premises in which Distributor conducts its business at any reasonable time for
the purposes of examining, conferring with Distributor's employees, inspecting
and checking perishable and non-perishable food supplies, vending machines, and
other equipment and in determining whether the distribution of Product is being
conducted in accordance with the aforesaid standards and within the terms of
this Agreement.
ARTICLE V
COMMENCEMENT OF BUSINESS
A. Distributor agrees to obtain, prior to commencement ofits distribution
business, pursuant to this Agreement, all licenses, approvals, inspections,
permits or any other certification which may be required by any competent public
authority for the lawful operation of its business and to keep the same in good
standing during the term hereof.
ARTICLE VI
USE OF TFI NAME, MARKS AND ADVERTISING
A. During the term of this Agreement, and any renewals hereof, Distributor
shall advertise sale of the Products under the trade name "Tasty Fries" and
will diligently promote and make
0137\95-1005
every reasonable effort to steadily increase sale of the Products by proper use
of all advertising media.
B. No design, advertisement, sign or form of publicity, including form, color,
number, location and size, shall be used by Distributor in connection with sale
ofthe Products unless the same shall have been first submitted to TFI and
approved in writing.
C. All printed materials, including, but not limited to, Product carrying
bags, product wrapping, cups, napkins, posters or other printed material used in
connection with the distribution by retail sale ofthe Products shall bear TFI
Marks as suggested by TFI, and such use will indicate that TFI Marks are
registered Marks.
D. Distributor shall act prudently and in conformity with all laws,
regulations, ordinances, or other requirements which may affect the utilization
ofthe TFT Marks to ensure that the Marks are not jeopardized, diminished or
damaged in any manner and Distributor agrees to indemnify and save harmless TFI
for any damage or expense occasioned directly or indirectly by Distributor's
improper use of said Marks.
E. Any contractual arrangement of any kind for advertising under the trade
name "Tasty Fries" or utilizing the TFI Marks, entered into by Distributor shall
expressly provide for termination with no greater than ten (10) days written
notice.
ARTICLE VII
TFI MARKS
A. TFI hereby grants to Distributor for the term of this Agreement the
exclusive right to register the TFI Marks for use by the Distributor in the
Territory but only in connection with the distribution of TFI Products which
Distributor is permitted to sell hereunder, and the extent and manner ofuse
ofthe TFI Marks shall be subject to TFI approval. The cost of such registration
to be born by the Distributor.
B. TFI hereby agrees to provide all necessary consents and original artwork
for the TFI Marks to assist the Distributor in the registration thereof in the
Territory.
C. Upon registration of the TFI Marks by Distributor, Distributor shall be
responsible for pursuing any counterfeiting or infringement of the TFI Marks
which may come to Distributor's attention.
ARTICLE VIII
UNIFORMITY OF PRODUCTS
A. Distributor agrees that all food Products offered for sale in the vending
machines and paper goods, supplies and other materials utilized in connection
with the food products shall be purchased directly from TFI or suppliers
specified by TFI.
B. In order to establish uniformity of taste and quality of the Products, TFI
has developed and will continue to develop recipes and formulas of ingredients,
which ingredients will be made available to Distributor. Such Products will be
purchased by Distributor at the prevailing prices from time to time, and will be
utilized by Distributor exclusively as specified by TFI. TFI may from time to
time agree with Distributor on an alternate supplier of Products, in which case,
TFI shall be entitled to a reasonable royalty on any Products so produced to
compensate TFI for loss of profit.
C. Distributor agrees that he will not offer any food product or utilize any
paper goods, supplier or other materials, or any equipment, signage, display
cases or other items under the TFI Marks which may compete with the Products and
which are not purchased from TFI or any supplier that is not currently approved
by TFI.
D. Should at any time TFI be unable to supply the Products to Distributor as
contemplated in this Agreement and as required by Distributor to conduct its
business, Distributor shall be entitled with the consent of TFI, such consent
not to be unreasonably withheld, to arrange for its own alternate supply of the
Products, in which case, TFI shall be entitled to a reasonably royalty on any
Products so produced to compensate it for loss of protit.
ARTICLE IX
FEES AND FINANCIAL OBLIGATIONS
A. In consideration of the right to distribute Products granted herein, and
subject to TFI satisfying the requirements of Article II C. herein concerning
acceptability of the Products for import and resale in the Territory and further
subject to the Distributor being able to register the TFI Marks for exclusive
use in the territory, Distributor shall purchase from TFI, and TFI supply to
Distributor, a minimum number of french fry vending machines upon the terms and
conditions set forth on Schedule "B" attached hereto and forming a part ofthis
Agreement.
B. Unless otherwise specified herein, all amounts stated herein or payments to
be made to TFI under this Agreement shall be in U.S. Dollars.
ARTICLE X
DISTRIBUTOR
A. Distributor acknowledges that the TFI Products are unique and distinctive
and have been developed by TFI at great effort, time and expense; that
Distributor has regular and continuing access to valuable and confidential
information, training and trade secrets regarding the Products; and that
Distributor recognizes his obligation to fully develop its Territory for sales
of the Products and accordingly agrees as follows:
1. During the term of this Agreement and any renewal thereof,
Distributor shall not, in any capacity whatsoever, either directly or
indirectly, individually or as a member of any business organization,
except with the prior written consent of TFI, engage in the sale of any
french fries vending machine or supplies therefore, other than TFI's.
2. During the terms of this Agreement, or upon expiration or
termination of this Agreement, divulge any aspect of the Products
whether expressly stated to be confidential or otherwise to any person.
ARTICLE XI
TRANSFER OF WHOLE INTEREST
A. This Agreement shall enure to the benefit of the successors of TFI and may
be so assigned at any time.
B. For purposes of clarity, the provisions of this Article XI apply solely to
the transfer by Distributor or its personal representatives of the whole of the
Distributor's interest in this Agreement and shall have no application to the
granting of additional distributorships by Distributor for subdivided areas
within its Territory, as previously described in Article II paragraph 2.
C. TFI shall not unreasonably withhold its consent to any transfer or
assignment which is subject to the restrictions ofthis Article, provided,
however, that TFI shall not be required to give its consent unless, in addition
to the requirements of Article IV hereof, the following conditions are met prior
to the effective date ofthe assignment:
1. For all proposed transfers or assignments:
(a) Distributor shall not be in default under any
provision of the terms of this Agreement or any other
agreement ancillary to this Agreement, and shall have
continuously distributed products for a period of not less
than three (3) months;
(b) Distributor has executed a general release in a form
prescribed by TFI of any and all claims against TFI;
(c) The proposed assignee executes such other documents as
TFI may require in order to assume all of the obligations of
this Agreement, to the same extent, and with the same effect,
as previously assumed by Distributor;
(d) A transfer fee has bee paid to TFI in an amount equal
to five percent (5%) of the aggregate cash or cash valued
consideration paid by the assignee to assignor for the
distribution rights, to defray its reasonable costs and
expenses in connection with the transfer, including without
limitation, the cost of legals and accounting fees, credit and
investigation charges, evaluations, retraining and additional
supervision. It is agreed that the original cost ofthe
Territory will be deducted.
D. Upon the death or permanent incapacity of a Distributor the following shall
apply:
1. TFI shall have the right, within thirty (30) days of the date upon
which TFI is notified of such death or incapacity (if consistent with
applicable local laws) to purchase
the interest or any part thereof for cash at the appraised value, such
purchase to be completed within sixty (60) days.
2. If TFI declines to elect to purchase the interest, within thirty
(30) days of the date upon which TFI is notified of such death or
incapacity, the interest may be transferred within a further sixty (60)
days by sale to a third party meeting TFI's then current criteria for
new distributors, provided that the requirements of paragraph D of this
Article are met. If a transfer to an approved transferee cannot be
effected within a further one hundred and twenty (120) days, this
Agreement shall terminate automatically.
3. No sale or transfer of the interest shall be approved by TFI
unless the incapacitated Distributor or personal representative has
agreed to reimburse TFI for the reasonable costs and expenses it has
incurred or may incur in providing (at TFI's option) one or more
interim Distributors to manage the business until a transfer of the
interest is effected, if TFI determines, in its discretion, that such
supervision is necessary or desirable.
E. TFI's consent to a transfer of any interest subject to the restrictions of
this Article shall not constitute a waiver by TFI of the right to distribute
Products granted herein, nor shall it be deemed a waiver of TFI's right to
demand exact compliance with any of the terms of this Agreement by the assignee.
The document effecting the transfer or assignment of any interest subject to the
restrictions of this Article shall specifically provide that Distributor's
obligations hereunder shall continue in full force and effect notwithstanding
any such disposition.
F. If Distributor has received and desires to accept any bona fide offer to
purchase his or its distribution rights hereunder, Distributor or such person
shall notifl TFI in writing ofthe purchase price and terms of such offer, and
TFI shall have the right and option (subject to any limitations of applicable
local laws exercisable within thirty (30) days after receipt of such written
notification), to send written notice to Distributor or such persons that TFI or
its assignee intend to purchase Distributor' s interest on the same terms and
conditions offered by the third party.
Any material change in the terms of any offer prior to closing shall
result in a new notification as in the case of the initial offer. TFI's failure
to exercise the option afforded by this paragraph F of this Article shall not
constitute a waiver of any other provision of this Agreement, including any of
the requirements of this Article with respect to the proposed transfer.
G. Provided always that TFT's consent shall be required, not to be
unreasonably withheld, and no fee shall be chargeable in respect of a transfer
to:
(a) a subsidiary or affiliate;
(b) a corporate successor resulting from merger, amalgamation,
consolidation or other corporate re-organization.
ARTICLE XII
DEFAULT
A. In addition to those events hereinbefore stated to be events of default,
it is agreed that the rights granted to Distributor to this Agreement may be
terminated forthwith with notice upon the happening of any one or more of the
following events, except that TFI must be in compliance with the terms and
conditions ofthis Distribution Agreement:
1. If the Distributor fails to comply with any of the terms and
conditions of this Distributorship Agreement and such failure to comply
continues for a period of thirty (30) days after written notice thereof
has been given to the Distributor.
2. If the Distributor fails to comply with any of the terms and
condition of any other agreements entered into pursuant to or
collateral to this agreement and such failure to comply continues for a
period of thirty (30) days after written notice thereof has been given
to the Distributor.
3. If the Distributor shall be adjudicated a bankrupt or become
insolvent, or if a receiver or other person with like powers shall be
appointed (whether temporary or permanent) to take charge of all or
substantially all of the Distributor's assets, or if the Distributor
shall make a general assignment for the benefit of creditors or a
proposal under the Bankruptcy Act (or any similar or successor Act), or
commence any proceedings to wind-up, liquidate, or dissolve the
Distributor's business.
4. If the Distributor knowingly falsifies any statement or report
furnished to TFI or otherwise deliberately provides false information
to TFI; or if the Distributor is convinced of a felony or other crime
or impairs the goodwill associated with the TFI Marks.
5. If the Distributor does not order and complete the purchase of
the french fry Vending machines it is required to purchase pursuant to
the terms of this Agreement in the manner and at the time therein
specified or pay the cash payment required in lieu thereof as set out
in Schedule B hereto.
6. Distributor will pay all attorney's fees as between an attorney
and his own client, accounting fees and court fees incurred by TFI in
the event of a violation by Distributor of this Agreement.
7. In case of a breach of the terms of this Agreement by
Distributor, TFI shall, in addition to any other remedy it may have,
and notwithstanding any other provision hereof, be entitled to an
injunction restraining Distributor from committing or continuing to
commit any breach of this Agreement, without showing or providing any
actual damaged sustained by TFI, which damage is hereby conclusively
acknowledged.
8. If the Distributor fails to continuously and actively operate
its distributorship throughout the Territory.
ARTICLE XIII
RIGHTS AND OBLIGATIONS OF PARTIES
ON TERMINATION OR EXPIRATION
A. Upon termination or expiration of this Agreement for any reason whatsoever,
Distributor will immediately discontinue use of all trade names, trade marks,
signs, forms of advertising, printed material and all other indicia of operation
as a TFI Distributor from it operations.
B. TFI may retain all fees paid pursuant hereto.
C. Any and all obligations of TFI to Distributor under this Agreement shall
immediately cease and terminate.
D. In no event shall termination or expiration of this Agreement for any
reason whatsoever affect Distributor's obligation to take or abstain from taking
action in accordance with this Agreement .
E. It is understood by Distributor that rights in and to the TFI Marks and
any part thereof or addition thereto and the use thereof shall be and remain the
property of TFI and Distributor shall further assign, transfer and convey to TFI
all additional rights which may be acquired, if any, by reason of the use of
said name of Distributor. As Distributor has registered the TFI Marks at
Distributor's own expense in the Territory, if requested to assign the rights to
the ▇▇▇▇ to TFI during the term and under the conditions set forth in this
Agreement, TFI will compensate Distributor for all its costs of registration,
protection, defense and maintenance of the TFI Marks in the Territory.
F. TFI shall have the option to purchase, at Distributor's cost less
twenty-five (25) percent. all or any portion of inventory of any kind bearing
the TFI Marks, including, but not limited to, french fry vending machines,
equipment, vehicles, and any other items Distributor may have in stock at the
time of such termination or expiration.
G. Distributor shall cause immediate discontinuance of all advertising or
other public display or publication of the words "Tasty Fries" and, in the event
that such action is not taken by Distributor and after a period of six (6)
months has elapsed, Distributor hereby constitutes irrevocably TFI as
Distributor's attorney to carry out such acts at Distributor' s sole expense.
H. Distributor will immediately pay any and all amounts owing to TFI and its
subsidiaries and affiliates.
I. Distributor shall not, in any capacity whatsoever, either directly or
indirectly. individually or as a member of any business organization, engage in
the preparation or sale of any TFI or other approved TFI Product, or have any
employment or interest in a firm engaged in the preparation or sale of such
products within the Territory or within thirty (30) miles of any other
Distributor's exclusive or nonexclusive territory for a period of three (3)
years following such termination. Distributor acknowledges and agrees that this
restriction upon subsequent activities is necessary in view of the Confidential
Information and expertise Distributor will
acquire pursuant to the terms of the Agreement and will cause TFI irreparable
and substantial damage in the event of breach of these provisions.
ARTICLE XIV
INSURANCE
A. Distributor agrees to place and keep in effect during the life of this
Agreement with an insurance company approved by TFI, public liability in amounts
no less than One Million Dollars ($1.000.000.00) U. S., in case of damage or
injury to one person, no less than One Million Dollars ($1.000,000.00) U.S., in
case if damaged or injury to more than one person, property damage insurance of
One Million Dollars ($1,000.000.00) U.S. in case of damage or injury to one
person (proof of insurance coverage shall be furnished to TFI prior to the
delivery of the first machine).
B. It is specifically agreed that insurance coverage required to be kept in
effect by the terms of this paragraph shall be subject to review by TFI in order
to ensure adequate insurance protection throughout the term of this Agreement.
TFI may, from time to time, and in its sole discretion, require Distributor upon
thirty (30) days notice to obtain reasonable amounts of additional insurance
beyond the aforementioned requirements of this paragraph.
ARTICLE XV
INDEMNIFICATION OF COMPANY
A. Distributor agrees to protect, indemnify, and save TFI, its affiliates,
subsidiaries, partners, stockholders, directors, officers and employees of its
partners harmless from any and all loss, damages, liability, expenses,
attorney's fees and costs incurred by any of them because of any action, matter,
thing, or conduct relating to Distributor and Distributor's business or its
agents, servants, employees, customers and guests in, on, or connected with the
preparation, cooking and sale ofProducts.
B. TFI agrees to protect, indemnify and save Distributor its stockholders,
directors, officers and employees harmless from any and all loss, damage,
liability expenses, attorney's fees and costs incurred by any of them as a
result of any defect in the design, construction or operation of any of the
french fry vending machines supplied by TFI or as a result of any defect in and
of the other Products supplied by TFI.
ARTICLE XVI
APPEARANCE OF MACHINES
Distributor shall see to it that all machines in the Distributor's
Territory are in good repair, and shall refurbish, tidy, and maintain each TFI
french fry vending machine as necessary or as required by TFI in order to ensure
that at all times a first class, safe and reputable Product is provided to the
public.
ARTICLE XVII
RENEWAL OF AGREEMENT
Unless terminated as herein otherwise provided, Distributor shall have
the option, pursuant to such procedures as may be required by TFI at the
expiration of the initial term of this Agreement, to renew the license granted
hereunder at each ten (10) year expiration date as long as all contractual
conditions are met hereof by executing TFI's then-current form of
Distributorship Agreement provided that:
1. Distributor gives TFI written notice of its election to renew no
less than three (3) months nor more than nine (9) months prior to the
expiration of the then current term and, Distributor executes a general
release under seal, in a form prescribed by TFI, of any and all claims
against TFI, its affiliates, stockholders, directors, officers and
employees; and
2. Distributor at the time of notice of election to renew and at the
end of the then current term is not in default of any of the terms or
conditions of this Agreement or any other Agreement between Distributor
and TFI or its affiliates, and has substantially complied with the
terms and conditions of all such agreements during the term of this
Agreement; and
3. All of the Distributor's accrued monetary obligations to TFI and its
subsidiaries and affiliates have been satisfied prior to renewal, and
timely met throughout the terms of this Agreement.
Upon renewal of this Agreement, no additional distributorship
fee will be due. However, it is specifically agreed that Distributor
will, upon renewal, be charged by TFI a sum which shall be equal to
TFI's estimated costs incurred in connection with such renewal plus an
administrative fee equal to fifteen (15%) percent of such costs.
Furthermore, Distributor acknowledges the terms of the TFI's then
current form of Distributorship Agreement .
ARTICLE XVIII
RELATIONSHIP OF PARTIES
A. TFI and Distributor are not and shall not be considered as joint
venturers, partners, or agents of each other, or anything other than
Manufacturer and Distributor and neither shall have the power to bind or
obligate the other than as set forth in this Agreement.
B. The parties further agree that their relationship created by this
Agreement is not a fiduciary relationship .
ARTICLE XIX
DISTRIBUTOR' SRESPONSIBILITY
A. Distributor acknowledges that his success in the distribution of products
contemplated to be undertaken by Distributor pursuant to this Agreement is
speculative and depends primarily upon the ability of Distributor as an
independent business organization. Distributor acknowledges that neither TFI nor
any other person has guaranteed or warranted that Distributor will succeed in
the operation of this business venture.
B. Distributor further acknowledges that there have been no representations,
promises, or guarantees or warranties of any kind made by TFI or its agents or
representatives to induce Distributor to execute this Agreement, except as
specifically set forth in this Agreement and further that Distributor has
received all information which he has requested concerning the business
operation of TFI which, in the opinion of Distributor, is necessary to decide
whether to enter into this Agreement.
ARTICLE XX
NOTICES
A. All notices to TFI required by the terms of this Agreement shall be sent
to TFI at its office at:
TASTY FRIES, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇, ▇.▇.▇. ▇▇▇▇▇
(or such other address as TFI shall designate in writing) or by telefax,
telecopy, or other electronic means of communication to such address.
B. All notices to Distributor required by the terms of this Agreement shall
be sent to Distributor at its office at:
CANADIAN TASTY FRIES, INC.
#▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇, ▇.▇.▇. ▇▇▇▇▇
(or such other address as Distributor shall designate in writing) or by telefax,
telecopy, or other electronic means of communication to such address.
C. All notices to either party required by the terms of the Agreement
shall be deemed to have been received:
(i) in the case of hand delivery or telefax, telecopy or other
electronic communication, upon actual receipt thereof(and not the date
of receipt of confirming mail); and
(ii) in the case of notice sent by registered mail, ten (10)
business days after the date of mailing.
ARTICLE XXI
INTERPRETATION AND EXECUTION
OF AGREEMENT
A. This Agreement shall be construed and interpreted in accordance with the
laws of the State of Florida.
B. This instrument contains the entire Agreement of the parties and no
representation, inducements, promises, or agreement, oral or otherwise, not
embodied herein, were made by TFI and none shall be of any force or effect.,
C. Nothing in this Agreement shall bar or restrict TFI's right to obtain
injunctive relief under applicable law.
ARTICLE XXII
SEVERABILITY AND CONSTRUCTION
A. Each section, part, term and provision of this Agreement, and any portion
thereof shall be considered severable, and if for any reason, any portion of
this Agreement is determined to be invalid to or in conflict with any applicable
present or future law, rule, or regulation in a final unappealable ruling issued
by any court, agency, or tribunal with valid jurisdiction in a proceeding to
which TFI is a party, that ruling shall not impair the operation of, or have any
other affect upon, such other portions of this Agreement as may remain otherwise
intelligible (all of which shall remain binding on the parties and continue to
be given full force and agreement as of the date upon which the ruling becomes
final).
ARTICLE XXIII
WRITTEN APPROVALS AND WAIVERS
A. TFI shall not be deemed to have waived or impaired any right, power or
option reserved by this Agreement (including, without limitation, its rights to
demand Distributor's exact compliance with every term, condition, and convenant
herein, or to declare any breach thereof a default and to terminate this license
prior to the expiration of its term), by virtue of any custom or practice of the
parties at variance with the terms hereof, any failure by TFI to demand
strict compliance with this Agreement, any forbearance, delay, failure or
omission by TFI to exercise any right, power or option, whether of the same,
similar or different nature, against Distributor or other Distributorships, or
the acceptance by TFI of any payments due from Distributor after any breach of
this Agreement.
AS WITNESS the hands and seals of the duly authorized representatives
of the parties hereto as of the day and year first above written.
TASTY FRIES, INC.
/S/ /S/
---------------------------- ----------------------
Authorized Signatory Witness
CANADIAN TASTY FRIES, INC.
/S/ /S/
---------------------------- ----------------------
Authorized Signatory Witness
SCHEDULE"A"
TO THE DISTRIBUTORSHIP AGREEMENT
BETWEEN: TASTY FRIES, INC.
AND: CANADIAN TASTY FRIES, INC.
DESCRIPTION OF TERRITORY
ARTICLE 1.
For the purposes of this Distributorship Agreement (the "Agreement") the
territorial boundaries to which this Agreement applied are the internationally
recognized boundaries of the countries listed herein (referred to in this
Agreement as the "Territory").
Denmark
Finland
France
Greece
Hungary
Italy
Nonvay
Portugal
Spain
Sweden
SCHEDULE "B"
TO THE DISTRIBUTORSHIP AGREEMENT
BETWEEN: TASTY FRIES, INC.
AND: CANADIAN TASTY FRIES, TNC.
FEE PAYMENT SCHEDULE
ARTICLE IX
The purchase price for the grant of distributorship made in this Agreement is
$4,000,00000 U.S. to be paid as follows:
A. On the acceptance and signing of this Agreement by TFI $ 1 75,000.00;
B. (a) The balance of the purchase price shall be tied to the order and
delivery of french fry vending machines (the "Machines") which Machines
the Distributor shall be obliged to order in the quantity set out in
Column TT below for each year specified in Column I below following the
Start Date and shall make the associated payment against the purchase
price set out in Column III below which payment is based on and paid at
a rate of $500.00 per Machine delivered:
COLUMN I COLUMN II COLUMN III
-------- --------- ----------
YEAR MINIMUM NO OF MACHINES MINIMUM PAYMENT
---- ---------------------- ---------------
1 400 $ 200,000
2-9 800 $ 400,000
10 850 $ 425,000
(b) The Start Date shall be the first day of the month immediately
following the first six month (180 day) period in which TFI delivers a
minimum of ten (10) Machines suitable for distribution in Europe to
Distributor.
(c) In any year that Distributor does not order the minimum number of
Machines set out in Column II above, Distributor shall make a cash
payment to TFI on the last day of that year equal to the shortfall from
the required payment set out in Column III above for that year.
(d) If in any year Distributor orders the required minimum number of
Machines but TFJ is unable or fails to deliver the minimum number of
Machines to Distributor, then Distributor for that year shall only be
obliged to make a payment equal to $500.00 times the number of Machines
delivered to it. The balance of the payment for that year shall be made
on the basis of $500.00 per Machine when TFI finally delivers the
remainder of the minimum of Machines to Distributor.
AMENDMENT TO DISTRIBUTION AGREEMENT
BETWEEN TASTY FRIES, INC. AND
CANADIAN TASTY FRIES, INC.
DATED APRIL 5, 1995
WHEREAS, Tasty Fries, Inc. and Canadian Tasty Fries, Inc. desire to
amend the Distributorship Agreement dated April 5, 1995 (the "Distributorship
Agreement) to include additional European countries in the defined Territory;
NOW, THEREFORE, the parties hereto for good and valuable consideration,
receipt whereof is hereby acknowledged, do hereby agree to amend the
Distributorship Agreement as follows:
1. Schedule "A to the Distributorship Agreement, attached
thereto and made a part thereof, is amended as follows:
SCHEDULE "A"
TO THE DISTRIBUTORSHIP AGREEMENT
BETWEEN: TASTY FRIES, INC.
AND: CANADIAN TASTY FRIES, INC.
DESCRIPTION OF TERRITORY
ARTICLE 1.
For the purposes of this Distributorship Agreement (the "Agreement")
the territorial boundaries to which this Agreement applies are the
internationally recognized boundaries of the countries listed herein (referred
to in this Agreement as the "Territory").
Bulgaria
Czechoslovakia
Denmark
Finland
France
Greece
Hungary
Italy
Norway
Poland
Portugal
Romania
Spain
Sweden
Turkey
2. Schedule "B" to the Distributorship Agreement, attached
thereto and made a part thereof, is amended to include a new paragraph B.(e)
to read as follows:
(e) TFI agrees to use its best efforts to maintain a 12%
▇▇▇▇-up on all machines it delivers for distribution
in Europe to Distributor.
IN WITNESS WHEREOF, the undersigned have executed this Amendment on the
date written above.
TASTY FRIES, INC.
By:/S/
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
CANADIAN TASTY FRIES, INC.
By:/S/
------------------------------
▇▇▇ ▇▇▇▇▇▇▇, President
DISTRIBUTORSHIP AGREEMENT (U.S.A.)
This Agreement made this ____ day of ___________, 1995.
BETWEEN :
TASTY FRIES, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇, ▇.▇.▇. ▇▇▇▇▇
(hereinafter referred to as "TFI")
AND :
CANADIAN TASTY FRIES, INC.
#▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇, ▇.▇.▇. ▇▇▇▇▇
(hereinafter referred to as "Distributor")
WITNESSETH:
WHEREAS, TFI owns rights to manufacture, distribute and sell a fully
automated french fry vending machine;
WHEREAS, TFI is the owner of a distinctive type of marketing, preparation
and vending machine sale of TFI french fry food products; and;
WHEREAS, TFI has developed and adopted for its own use and for the use of
its Distributors a unique system of TFI product preparation and vending machine
sale, consisting in part of the unique french fry vending machines, distinctive
advertising, signs, food presentation and formula secret recipes (collectively
the "Products"); and
WHEREAS, in addition to valuable goodwill, TFI owns the valuable trade name
and design of TFI in addition to various patents, trademarks, service marks,
copyrights, trade names, slogans, designs, insignia, emblems, symbols, package
designs, logos and other proprietary characteristics (collectively, the "TFI
Marks") used in relation to and in connection with the Products; and
WHEREAS, Distributor wishes, upon the terms and conditions hereinafter set
forth, to enter into the business of distributing TFI Products on an exclusive
basis in the Territory herein defined and more particularly described in
Schedule "A" attached hereto and forming part of this Agreement (the
"Territory") and to bene~t from the expertise of TFI in its field; and
WHEREAS, TFI is willing to permit Distributor to use TFI Marks as aforesaid
together with the retail sale of TFI French Fry Vending Machine and it products
upon the terms and conditions hereinafter set forth; and
WHEREAS, TFI is willing to permit Distributor to register the TFI Marks to
secure their exclusive use in that Territory.
NOW, THEREFORE, the parties hereto, in consideration of the mutual covenants
herein contained and promises herein expressed for other good and valuable
consideration, receipt whereof is hereby acknowledged, do hereby agree as
follows:
ARTICLE 1
DISTRIBUTORSHIP AGREEMENT
A. Subject to the provisions of this Agreement and the performance of its
covenants and obligations, TFI hereby grants Distributor an exclusive right and
license to distribute all present and future TFI Products and to use the TFI
Marks in the retail sale thereof within the territorial boundaries set forth as
described in Schedule "A" attached hereto (the "Territory") for a term of ten
(10) years.
The parties specifically acknowledge and agree that the restriction of
operation to the Territory identified herein is an essential and indispensable
term of this Agreement.
DISTRIBUTOR'S SPECIFIC TERRITORIAL RIGHTS
1. The Distributor shall have the exclusive right in its Territory to sell
the TFI French Fry Vending Machine and TFI attendant Products to all users in
the Territory.
2. The Distributor shall have the right to subdivide its Territory as
Distributor in its sole discretion sees fit and to grant additional
distributorships for these subdivided areas on similar terms as contained in
this Agreement and all compensation for said additional distributorships shall
be for the benefit of Distributor without any fee, royalty or deduction to be
paid to TFI.
3. In the event that TFI machines are sold by the parent company for use in
the Distributor's Territory, the Distributor shall earn its full Distributor's
profit. This provision is contingent upon his consent to supply and service the
machines.
4. The Distributor shall receive its full profit if machinery is sold to
clients in his Territory in areas outside of his Territory. Except that in the
event the machinery is sold into another Distributor's Territory, the
Distributor profit shall be seventy (70%) percent of the originating Distributor
and thirty (30%) percent of the Territorial Distributor.
5. The Distributor in his exclusive Territory will receive thirty (30%)
percent of the full distributors profit in such event that there are installed
in his Territory TFI machines resulting from international accounts having
locations in various areas throughout North America.
An international account is defined for the purposes of clarity as an
international theater chain, an international retail chain or any entity that
has locations in more than four states and the Territory. The Distributor in
order to earn the national account Distributor's profit is obligated to supply
and service these locations.
ARTICLE II
OBLIGATIONS OF TFI
TFI agrees to assist Distributor in distributing Products by way of
retail sale in the following manner:
A. TFI will conduct, at no charge, certain sales and maintenance training
programs in its headquarters training school which Distributor and one key
employee may attend and up to two individuals from each additional
distributorship granted by Distributor in its Territory may attend.
B. TFI agrees to provide to Distributor, as it is available from time to
time, exchange of information relating to the Products and additional types of
products as may be authorized by TFI from time to time for sale pursuant to this
Agreement, and which, when authorized, will also constitute "Products" for all
purposes herein, at such times and in such detail as TFI shall deem appropriate.
C. TFI will take all steps necessary to ensure the Products meet the
standards of the Territory for import and resale therein and if necessary will
license the Products in the Territory for that purpose.
ARTICLE III
CONFIDENTIAL INFORMATION
A. The parties hereto covenant and agree that any Confidential Information
disclosed to the Distributor relating directly or indirectly to the vending
machines and their component parts of the ingredients, preparation or sale of
any of the Products will remain the property of TFI at all times and will, if
disclosed in any tangible format, be returned to TFI upon demand and, in any
event, upon termination of this Agreement.
B. It is expressly understood and agreed by Distributor that the Confidential
Information described above constitutes highly confidential trade secrets and
Distributor agrees that neither he nor any of his employees will reveal or
reproduce any of such Confidential Information except as is necessary to
describe the operations to employees and staff and additional distributors
within the Territory so they can safely use the vending machines and Products.
Such employees, staff and additional Distributors shall be required to execute
appropriate confidentiality agreements.
ARTICLE IV
STANDARDS OF OPERATION
AND SUPERVISION BY TFI
A. Distributor agrees to conduct its business in a manner consistent with the
standards set forth in this Agreement. It is understood that these standards may
change from time to time, and are in addition to and not in substitution fora ny
standard as set forth in this Agreement.
B. In order to preserve the value and goodwill of TFI and related goodwill of
other TFI Distributors and to promote the purpose of this Agreement, the parties
hereto agree as follows:
1. Distributor will use and distribute the Products as herein
contemplated strictly in accordance with the terms of this Agreement.
2. Unless approved in writing by TFI, Distributor will not develop,
produce, sell, advertise for sale or give away any products under the
TFI Marks which might reasonably compete with the Products and all food
Products will be prepared in accordance with the specific formulas or
utilizing the ingredients purchased from or specified by TFI.
3. TFI may from time to time offer guidance to Distributor relative
to retail prices for Products offered for retail sale that in TFI's
judgement constitute good business practice.
4. Distributor will use its best efforts to see it that its
customers maintain suitable signs (which signs shall be approved by
TFI), at, on or near the front of any premises within which its french
fry vending machines are located, describing the premises having
Products available for retail sale.
Any translation from the English language or deviation from
TFI approved designs contained in such sign shall required the prior
written approval of TFI.
5. It is the Distributor's responsibility to ensure that all food
products sold by Distributor hereunder will be of the highest and
safest quality, and the service relating to any such sale hereunder
will comply with the instructions and standards provided by TFI in
preparing the food Products, or with any other further written
requirements of TFI as they are communicated to Distributor from time
to time.
6. It is the Distributor's responsibility to ensure that it will
maintain all french fry vending machines by which its business is
conducted in conformity with the high quality, style and cleanliness
required of similar french fry vending machines now operated in
connection with the TFI Marks, component parts, equipment and signs.
Distributor shall see that its customers comply with all applicable
ordinances, health and safety regulations, laws and statutes governing
the operation of such premises and the sale of products, including all
criminal and quasi-criminal laws and regulations.
C. TFI or TFI's supervisory personnel shall have the right to enter upon any
premises in which Distributor conducts its business at any reasonable time for
the purposes of examining, conferring with Distributor's employees, inspecting
and checking perishable and non-perishable food supplies, vending machines, and
other equipment and in determining whether the distribution of Product is being
conducted in accordance with the aforesaid standards and within the terms of
this Agreement.
ARTICLE V
COMMENCEMENT OF BUSINESS
A. Distributor agrees to obtain, prior to commencement of its distribution
business, pursuant to this Agreement, all licenses, approvals, inspections,
permits or any other certification which may be required by any competent public
authority for the lawful operation of its business and to keep the same in good
standing during the term hereof.
ARTICLE VI
USE OF TFI NAME, MARKS AND ADVERTISING
A. During the term of this Agreement, and any renewals hereof, Distributor
shall advertise sale of the Products under the trade name "Tasty Fries" and will
diligently promote and make every reasonable effort to steadily increase sale of
the Products by proper use of all advertising media.
B. No design, advertisement, sign or form of publicity, including form,
color, number, location and size, shall be used by Distributor in connection
with sale of the Products unless the same shall have been first submitted to TFI
and approved in writing.
C. All printed materials, including, but not limited to, product carrying
bags, product wrapping, cups, napkins, posters or other printed material used in
connection with the distribution by retail sale of the Products shall bear TFI
Marks as suggested by TFI, and such use will indicate that TFI Marks are
registered Marks.
D. Distributor shall act prudently and in conformity with all laws,
regulations, ordinances, or other requirements which may affect the utilization
of the TFI Marks to ensure that the Marks are not jeopardized, diminished or
damaged in any manner and Distributor agrees to indemnify and save harmless TFI
for any damage or expense occasioned directly or indirectly by Distributor's
improper use of said Marks.
E. Any contractual arrangement of any kind for advertising under the trade
name "Tasty Fries" or utilizing the TFI Marks, entered into by Distributor shall
expressly provide for termination with no greater than ten (10) days written
notice.
ARTICLE VII
TFI MARKS
A. TFI hereby grants to Distributor for the term of this Agreement the
exclusive right to register the TFI Marks for use by the Distributor in the
Territory but only in connection with the distribution of TFI Products which
Distributor is permitted to sell hereunder, and the extent and manner of use of
the TFI Marks shall be subject to TFI approval. The cost of such registration to
be born by the Distributor.
B. TFI hereby agrees to provide all necessary consents and original art work
for the TFI Marks to assist the Distributor in the registration thereof in the
Territory.
C. Upon registration of the TFI Marks by Distributor, Distributor shall be
responsible for pursuing any counterfeiting or infringement of the TFI Marks
which may come to Distributor's attention.
ARTICLE VIII
UNIFORMITY OF PRODUCTS
A. Distributor agrees that all food Products offered for sale in the vending
machines and paper goods, supplies and other materials utilized in connection
with the food products shall be purchased directly from TFI or suppliers
specified by TFI.
B. In order to establish uniformity of taste and quality of the Products, TFI
has developed and will continue to develop recipes and formulas of ingredients,
which ingredients will be made available to Distributor. Such Products will be
purchased by Distributor at the prevailing prices from time to time, and will be
utilized by Distributor exclusively as specified by TFI. TFI may from time to
time agree with Distributor on an alternate supplier of Products, in which case,
TFI shall be entitled to a reasonable royalty on any Products so produced to
compensate TFI for loss of profit.
C. Distributor agrees that he will not offer any food product or utilize any
paper goods, supplier or other materials, or any equipment, signage, display
cases or other items under the TFI Marks which may compete with the Products and
which are not purchased from TFI or any supplier that is not currently approved
by TFI.
D. Should at any time TFI be unable to supply the Products to Distributor as
contemplated in this Agreement and as required by Distributor to conduct its
business, Distributor shall be entitled with the consent of TFI such consent not
to be unreasonably withheld, to arrange for its own alternate supply of the
Products, in which case, TFI shall be entitled to a reasonably royalty on any
Products so produced to compensate it for loss of profit.
ARTICLE IX
FEES AND FINANCIAL OBLIGATIONS
A. In consideration of the right to distribute Products granted herein, and
subject to TFI satisfying the requirements of Article II C. herein concerning
acceptability of the Products for import and resale in the Territory and further
subject to the Distributor being able to register the TFI Marks for exclusive
use in the territory, Distributor shall purchase from TFI, and TFI supply to
Distributor, a minimum number of french fry vending machines upon the terms and
conditions set forth on Schedule "B" attached hereto and forming a part of this
Agreement.
B. Unless otherwise specified herein, all amounts stated herein or payments
to be made to TFI under this Agreement shall be in U. S. Dollars.
ARTICLE X
DISTRIBUTOR
A. Distributor acknowledges that the TFI Products are unique and distinctive
and have been developed by TFI at great effort, time and expense; that
Distributor has regular and continuing access to valuable and confidential
information, training and trade secrets regarding the Products; and that
Distributor recognizes his obligation to fully develop its Territory for sales
of the Products and accordingly agrees as follows:
1. During the term of this Agreement and any renewal thereof, Distributor
shall not, in any capacity whatsoever, either directly or indirectly,
individually or as a member of any business organization, except with the prior
written consent of TFI, engage in the sale of any french fries vending machine
or supplies therefore, other than TFI's.
2. During the terms of this Agreement, or upon expiration or termination of
this Agreement, divulge any aspect of the Products whether expressly stated to
be confidential or otherwise to any person.
ARTICLE XI
DISTRIBUTORS MARKUP
A. TFI contracts for manufacturing of the machines based on competitive bids.
TFI agrees use its best efforts to maintain no greater than a 12 % markup on all
machines delivered for distribution in the Territory of the Distributor. Should
TFI be required to charge more than 12% markup in order to maintain satisfactory
operating margins, TFI agrees to notify Distributor no less than ninety (90)
days prior to the increase in markup.
ARTICLE XII
TRANSFER OF WHOLE INTEREST
A. This Agreement shall enure to the benefit of the successors of TFI and may
be so assigned at any time.
B. For purposes of clarity, the provisions of this Article XII apply solely
to the transfer by Distributor or its personal representatives of the whole of
the Distributor's interest in this Agreement and shall have no application to
the granting of additional distributorships by Distributor for subdivided areas
within its Territory, as previously described in Article II paragraph 2.
C. TFI shall not unreasonably withhold its consent to any transfer or
assignment which is subject to the restrictions of this Article, provided,
however, that TFI shall not be required to give its consent unless, in addition
to the requirements of Article IV hereof, the following conditions are met prior
to the effective date of the assignment:
1. For all proposed transfers or assignments:
(a) Distributor shall not be in default under any provision of
the terms of this Agreement or any other agreement ancillary to this
Agreement, and shall have continuously distributed products for a
period of not less than three (3) months;
(b) Distributor has executed a general release in a form
prescribed by TFI of any and all claims against TFI;
(c) The proposed assignee executes such other documents as TFI
may require in order to assume all of the obligations of this
Agreement, to the same extent, and with the same effect, as previously
assumed by Distributor;
(d) A transfer fee has bee paid to TFI in an amount equal to
five percent (5%) of the aggregate cash or cash valued consideration
paid by the assignee to assignor for the distribution rights, to defray
its reasonable costs and expenses in connection with the transfer,
including without limitation, the cost of legal and accounting fees,
credit and investigation charges, evaluations, retraining and
additional supervision. It is agreed that the original cost of the
Territory will be deducted.
D. Upon the death or permanent incapacity of a Distributor the following
shall apply:
1. TFI shall have the right, within thirty (30) days of the date
upon which TFI is notified of such death or incapacity (if consistent
with applicable local laws) to purchase the interest or any part
thereof for cash at the appraised value, such purchase to be completed
within sixty (60) days.
2. If TFI declines to elect to purchase the interest, within thirty
(30) days of the date upon which TFI is notified of such death or
incapacity, the interest may be transferred within a further sixty (60)
days by sale to a third party meeting TFI's then current criteria for
new distributors, provided that the requirements of paragraph D of this
Article are met. If a transfer to an approved transferee cannot be
effected within a further one hundred and twenty (l20) days, this
Agreement shall terminate automatically.
3. No sale or transfer of the interest shall be approved by TFI
unless the incapacitated Distributor or personal representative has
agreed to reimburse TFI for the reasonable costs and expenses it has
incurred or may incur in providing (at TFI's option) one or more
interim Distributors to manage the business until a transfer of the
interest is effected, if TFI determines, in its discretion, that such
supervision is necessary or desirable.
E. TFI's consent to a transfer of any interest subject to the restrictions of
this Article shall not constitute a waiver by TFI of the right to distribute
Products granted herein, nor shall it be deemed a waiver of TFI's right to
demand exact compliance with any of the terms of this Agreement by the assignee.
The document effecting the transfer or assignment of any interest subject to the
restrictions of this Article shall specifically provide that Distributor's
obligations hereunder shall continue in full force and effect notwithstanding
any such disposition.
F. If Distributor has received and desires to accept any bona fide offer to
purchase his or its distribution rights hereunder, Distributor or such person
shall notify TFI in writing of the purchase price and terms of such offer, and
TFI shall have the right and option (subject to any limitations of applicable
local laws exercisable within thirty (30) days after receipt of such written
notification), to send written notice to Distributor or such persons that TFI or
its assignee intend to purchase Distributor' s interest on the same terms and
conditions offered by the third party.
Any material change in the terms of any offer prior to closing shall
result in a new notification as in the case of the initial offer. TFI's failure
to exercise the option afforded by this paragraph F of this Article shall not
constitute a waiver of any other provision of this Agreement, including any of
the requirements of this Article with respect to the proposed transfer.
G. Provided always that TFI's consent shall be required, not to be
unreasonably withheld, and no fee shall be chargeable in respect of a transfer
to:
(a) a subsidiary or affiliate;
(b) a corporate successor resulting from merger, amalgamation,
consolidation or other corporate re-organization.
ARTICLE XIII
DEFAULT
A. In addition to those events hereinbefore stated to be events of default,
it is agreed that the rights granted to Distributor to this Agreement may be
terminated forthwith with notice upon the happening of any one or more of the
following events, except that TFI must be in compliance with the terms and
conditions of this Distribution Agreement:
1. If the Distributor fails to comply with any of the terms and
conditions of this Distributorship Agreement and such failure to comply
continues for a period of thirty (30) days after written notice thereof
has been given to the Distributor.
2. If the Distributor fails to comply with any of the terms and
condition of any other agreements entered into pursuant to or
collateral to this agreement and such failure to comply continues for a
period of thirty (30) days after written notice thereof has been given
to the Distributor.
3. If the Distributor shall be adjudicated a bankrupt or become
insolvent, or if a receiver or other person with like powers shall be
appointed (whether temporary or permanent) to take charge of all or
substantially all of the Distributor's assets, or if the Distributor
shall make a general assignment for the benefit of creditors or a
proposal under the Bankruptcy Act (or any similar or successor Act), or
commence any proceedings to wind-up, liquidate, or dissolve the
Distributor's business.
4. If the Distributor knowingly falsifies any statement or report
furnished to TFI or otherwise deliberately provides false information
to TFI; or if the Distributor is convinced of a felony or other crime
or impairs the goodwill associated with the TFI Marks.
5. If the Distributor does not order and complete the purchase of
the french fry vending machines it is required to purchase pursuant to
the terms of this Agreement in the manner and at the time therein
specified or pay the cash payment required in lieu thereof as set out
in Schedule B hereto.
6. Distributor will pay all attorney's fees as between an attorney
and his own client, accounting fees and court fees incurred by TFI in
the event of a violation by Distributor of this Agreement.
7. In case of a breach of the terms of this Agreement by Distributor,
TFI shall, in addition to any other remedy it may have, and
notwithstanding any other provision hereof, be entitled to an
injunction restraining Distributor from committing or continuing to
commit any breach of this Agreement, without showing or providing any
actual damaged sustained by TFI, which damage is hereby conclusively
acknowledged.
8. If the Distributor fails to continuously and actively operate its
distributorship throughout the Territory.
ARTICLE XIV
RIGHTS AND OBLIGATIONS OF PARTIES
ON TERMINATION OR EXPIRATION
A. Upon termination or expiration of this Agreement for any reason whatsoever,
Distributor will immediately discontinue use of all trade names, trade marks,
signs, forms of advertising, printed material and all other indicia of operation
as a TFI Distributor from it operations.
B. TFI may retain all fees paid pursuant hereto.
C. Any and all obligations of TFI to Distributor under this Agreement shall
immediately cease and terminate.
D. In no event shall termination or expiration of this Agreement for any
reason whatsoever affect Distributor's obligation to take or abstain from taking
action in accordance with this Agreement .
E. It is understood by Distributor that rights in and to the TFI Marks and
any part thereof or addition thereto and the use thereof shall be and remain the
property of TFI and Distributor shall further assign, transfer and convey to TFI
all additional rights which may be acquired, if any, by reason of the use of
said name of Distributor. As Distributor has registered the TFI Marks at
Distributor's own expense in the Territory, if requested to assign the rights to
the ▇▇▇▇ to TFI during the term and under the conditions set forth in this
Agreement, TFI will compensate Distributor for all its costs of registration,
protection, defense and maintenance of the TFI Marks in the Territory.
F. TFI shall have the option to purchase, at Distributor's cost less
twenty-five (25) percent, all or any portion of inventory of any kind bearing
the TFI Marks, including, but not limited to, french fry vending machines,
equipment, vehicles, and any other items Distributor may have in stock at the
time of such termination or expiration.
G. Distributor shall cause immediate discontinuance of all advertising or
other public display or publication of the words "Tasty Fries" and, in the event
that such action is not taken by Distributor and after a period of six (6)
months has elapsed, Distributor hereby constitutes irrevocably TFI as
Distributor's attorney to carry out such acts at Distributor's sole expense.
H. Distributor will immediately pay any and all amounts owing to TFI and its
subsidiaries and affiliates.
I. Distributor shall not, in any capacity whatsoever, either directly or
indirectly, individually or as a member of any business organization, engage in
the preparation or sale of any TFI or other approved TFI Product, or have any
employment or interest in a firm engaged in the preparation or sale of such
products within the Territory or within thirty (30) miles of any other
Distributor's exclusive or nonexclusive territory for a period of three (3)
years following such termination. Distributor acknowledges and agrees that this
restriction upon subsequent activities is necessary in view of the Confidential
Information and expertise Distributor will
acquire pursuant to the terms of the Agreement and will cause TFI irreparable
and substantial damage in the event of breach of these provisions.
ARTICLE XV
INSURANCE
A. Distributor agrees to place and keep in effect during the life of this
Agreement with an insurance company approved by TFI, public liability in amounts
no less than One Million Dollars ($1.000.000.00) U. S., in case of damage or
injury to one person, no less than One Million Dollars ($1.000.000.00) U.S., in
case if damaged or injury to more than one person, property damage insurance of
One Million Dollars ($1.000,000.00) U.S. in case of damage or injury to one
person (proof of insurance coverage shall be furnished to TFI prior to the
delivery of the first machine).
B. It is specifically agreed that insurance coverage required to be kept in
effect by the terms of this paragraph shall be subject to review by TFI in order
to ensure adequate insurance protection throughout the term of this Agreement.
TFI may, from time to time, and in its sole discretion, require Distributor upon
thirty (30) days notice to obtain reasonable amounts of additional insurance
beyond the aforementioned requirements of this paragraph.
ARTICLE XVI
INDEMNIFICATION OF COMPANY
A. Distributor agrees to protect, indemnify, and save TFI, its affiliates,
subsidiaries, partners, stockholders, directors, officers and employees of its
partners harmless from any and all loss, damages, liability, expenses,
attorney's fees and costs incurred by any of them because of any action, matter,
thing, or conduct relating to Distributor and Distributor's business or its
agents, servants, employees, customers and guests in, on, or connected with the
preparation, cooking and sale of Products.
B. TFI agrees to protect, indemnify and save Distributor its stockholders,
directors, officers and employees harmless from any and all loss, damage,
liability expenses, attorney's fees and costs incurred by any of them as a
result of any defect in the design, construction or operation of any of the
french fry vending machines supplied by TFI or as a result of any defect in and
of the other Products supplied by TFI.
ARTICLE XVII
APPEARANCE OF MACHINES
Distributor shall see to it that all machines in the Distributor's
Territory are in good repair and shall refurbish, tidy, and maintain each TFI
french fry vending machine as necessary or as required by TFI in order to ensure
that at all times a first class, safe and reputable Product is provided to the
public.
ARTICLE XVIII
RENEWAL OF AGREEMENT
Unless terminated as herein otherwise provided, Distributor shall have
the option, pursuant to such procedures as may be required by TFI at the
expiration of the initial term of this Agreement, to renew the license granted
hereunder at each ten (10) year expiration date as long as all contractual
conditions are met hereof by executing TFI's then-current form c Distributorship
Agreement provided that:
1. Distributor gives TFI written notice of its election to renew no
less than three (3) months nor more than nine (9) months prior to the
expiration of the then current term and Distributor executes a general
release under seal, in a form prescribed by TFI, of any and all claims
against TFI, its affiliates, stockholders, directors, officers and
employees; and
2. Distributor at the time of notice of election to renew and at
the end of the then current term is not in default of any of the terms
or conditions of this Agreement or any other Agreement between
Distributor and TFI or its affiliates, and has substantially complied
with the terms and conditions of all such agreements during the term of
this Agreement; and
3. All of the Distributor's accrued monetary obligations to TFI and
its subsidiaries and affiliates have been satisfied prior to renewal,
and timely met throughout the terms of this Agreement.
Upon renewal of this Agreement, no additional distributorship
fee will be due. However, it is specifically agreed that Distributor
will, upon renewal, be charged by TFI sum which shall be equal to TFI's
estimated costs incurred in connection with such renewal plus an
administrative fee equal to fifteen (15%) percent of such costs.
Furthermore, Distributor acknowledges the terms of the TFI's then
current form of Distributorship Agreement.
XVIX
RELATIONSHIP OF PARTIES
A. TFI and Distributor are not and shall not be considered as joint venturers,
partners, or agents of each other, or anything other than Manufacturer and
Distributor and neither shall have the power to bind or obligate the other than
as set forth in this Agreement.
B. The parties further agree that their relationship created by this
Agreement is not a fiduciary relationship.
ARTICLE XX
DISTRIBUTOR'S RESPONSIBILITY
A. Distributor acknowledges that his success in the distribution of products
contemplated to be undertaken by Distributor pursuant to this Agreement is
speculative and depends primarily upon the ability of Distributor as an
independent business organization. Distributor acknowledges that neither TFI nor
any other person has guaranteed or warranted that Distributor will succeed in
the operation of this business venture.
B. Distributor further acknowledges that there have been no representations,
promises, or guarantees or warranties of any kind made by TFI or its agents or
representatives to induce Distributor to execute this Agreement, except as
specifically set forth in this Agreement and further that Distributor has
received all information which he has requested concerning the business
operation of TFI which, in the opinion of Distributor, is necessary to decide
whether to enter into this Agreement.
ARTICLE XXI
NOTICES
A. All notices to TFI required by the terms of this Agreement shall be sent
to TFI at its office at:
TASTY FRIES, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇, ▇.▇.▇. ▇▇▇▇▇
(or such other address as TFI shall designate in writing) or by telefax,
telecopy, or other electronic means of communication to such address.
B. All notices to Distributor required by the terms of this Agreement shall
be sent to Distributor at its office at:
CANADIAN TASTY FRIES, lNC.
#▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇, ▇.▇.▇. ▇▇▇▇▇
(or such other address as Distributor shall designate in writing) or by telefax,
telecopy, or other electronic means of communication to such address.
C. All notices to either party required by the terms of the Agreement shall
be deemed to have been received:
(i) in the case of hand delivery or telefax, telecopy or other
electronic communication, upon actual receipt thereof (and not the date
of receipt of confirming mail); and
(ii) in the case of notice sent by registered mail, ten (10) business
days after the date of mailing.
ARTICLE XXII
INTERPRETATION AND EXECUTION
OF AGREEMENT
A. This Agreement shall be construed and interpreted in accordance with the
laws of the State of Florida.
B. This instrument contains the entire Agreement of the parties and no
representation, inducements, promises, or agreement, oral or otherwise, not
embodied herein, were made by TFI and none shall be of any force or effect.,
C. Nothing in this Agreement shall bar or restrict TFI's right to obtain
injunctive relief under applicable law.
ARTICLE XXIII
SEVERABILITY AND CONSTRUCTION
A. Each section, part, term and provision of this Agreement, and any portion
thereof shall be considered severable, and if for any reason, any portion of
this Agreement is determined to be invalid to or in conflict with any applicable
present or future law, rule, or regulation in a final unappealable ruling issued
by any court, agency, or tribunal with valid jurisdiction in a proceeding to
which TFI is a party, that ruling shall not impair the operation of, or have any
other affect upon, such other portions of this Agreement as may remain otherwise
intelligible (all of which shall remain binding on the parties and continue to
be given full force and agreement as of the date upon which the ruling becomes
final).
ARTICLE XXIV
WRITTEN APPROVALS AND WAIVERS
A. TFI shall not be deemed to have waived or impaired any right, power or
option
reserved by this Agreement (including, without limitation, its rights to demand
Distributor's exact compliance with every term, condition, and covenant herein,
or to declare any breach thereof a default and to terminate this license prior
to the expiration of its term), by virtue of any custom or practice of the
parties at variance with the terms hereof, any failure by TFI to demand strict
compliance with this Agreement, any forbearance, delay, failure or omission by
TFI to exercise any right, power or option, whether of the same, similar or
different nature, against Distributor or other Distributorships, or the
acceptance by TFI of any payments due from Distributor after any breach of this
Agreement.
AS WITNESS the hands and seals of the duly authorized representatives
of the parties hereto as of the day and year first above written.
TASTY FRIES, INC. CANADIAN TASTY FRIES, INC.
----------------------------- --------------------------
Authorized Signatory Witness
SCHEDULE"A"
TO THE DISTRIBUTORSHIP AGREEMENT
BETWEEN: TASTY FRIES, INC.
AND: CANADIAN TASTY FRIES, INC.
DESCRIPTION OF TERRITORY
ARTICLE 1.
For the purposes of this Distributorship Agreement (the "Agreement") the
territorial boundaries to which this Agreement applies are the internationally
recognized boundaries of the states of the United States of America listed
herein (referred to in this Agreement as the "Territory").
Alabama
Alaska
Georgia
Illinois
Indiana
Kentucky
Mississippi
North Carolina
Ohio
South Carolina
Tennessee
West Virginia
SCHEDULE "B"
TO THE DISTRIBUTORSHIP AGREEMENT
BETWEEN: TASTY FRIES, INC.
AND: CANADIAN TASTY FRIES, INC.
FEE PAYMENT SCHEDULE
ARTICLE IX
The purchase price for the grant of distributorship made in this Agreement is
$1,000,000.00 U.S. to be paid as follows:
A. On the acceptance and signing of this Agreement by TFI: $ Nil;
B. (a) The balance of the purchase price shall be tied to the order and delivery
of french fry vending machines (the "Machines") which Machines the Distributor
shall be obliged to order in the quantity set out in Column II below for each
year specified in Column I below following the Start Date and shall make the
associated payment against the purchase price set out in Column III below which
payment is based on and paid at a rate of $500.00 per annual minimum number of
machines delivered:
COLUMN I COLUMN II COLUMN III
-------- --------- ----------
YEAR MINIMUM NO OF MACHINES MINIMUM PAYMENT
---- ---------------------- ---------------
1 100 $ 50,000
2-8 200 $ 100,000
9-10 250 $ 125,000
(b) The Start Date shall be the first day of the month immediately
following the first six month (180 day) period in which TFI delivers a
minimum of ten (10) Machines suitable for distribution in the United
States to Distributor.
(c) In any year that Distributor does not order the minimum number
of Machines set out in Column II above, Distributor shall make a cash
payment to TFI on the last day of that year equal to the shortfall from
the required payment set out in Column III above for that year.
(d) If in any year Distributor orders the required minimum number of
Machines but TFI is unable or fails to deliver the minimum number of
Machines to Distributor, then Distributor for that year shall only be
obliged to make a payment equal to $500.00 times the number of Machines
delivered to it. The balance of the payment for that year shall be made
on the basis of $500.00 per Machine when TFI finally delivers the
remainder of the minimum of Machines to Distributor.