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MASTER
DISTRIBUTOR AGREEMENT
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This Agreement, made this 6th day of April 1995, between TF Purifiner, Inc.
("TF"), as exclusive worldwide distributor for TF Systems, Inc. (the
"Manufacturer"), both Delaware Corporations, having their principal offices at
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and KLC
Corporation, having its principal office at ▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇.
I. WHEREAS:
A. The Manufacturer and TF are in the business of designing, develop-
ing, manufacturing and marketing bypass oil refiners and filters
under the trademark "PURIFINER(TM)" hereinafter referred to as the
"Product";
B. TF is the exclusive licensee of Patents No. 4,189,351, 4,227,969,
4,289,583, 4,943,352 and pending patent applications;
C. TF has the right to grant to the Distributor the right to purchase
and sell the Product in the Territory (as defined herein);
D. The Distributor warrants that it is now solvent and capable of
acting as a distributor within the Territory; and
E. The Distributor is desirous of purchasing and selling the Product
in the Territory, and TF is desirous of granting the Distributor,
the right to do so upon the following terms and conditions; in
consideration of the mutual promises and understandings set forth
below, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
II. APPOINTMENT
A. TF appoints the Distributor as the master exclusive distributor of
the Product within the Territory and will sell the Product to the
Distributor, and the Distributor agrees to purchase such Product
from TF and distribute the Product within the Territory under the
terms of this Agreement.
B. TF shall not appoint another distributor of the Product in the
Territory. However, TF is not accountable for sales of the Product
or similar items by unauthorized accounts within or outside of the
Territory, or as a part of a vehicle, boat, engine or other
installation equipped with the Product as OEM and imported into
the Territory.
C. The Territory shall be defined as Brazil.
The Distributor shall not solicit sales or sell the Product
outside the Territory without first getting written permission
from TF.
D. Original Equipment Manufacturer Accounts:
TF reserves the right to sell the product directly to any
manufacturer of engines, vehicles, and other machinery as original
equipment (hereinafter referred to as "OEM"), outside of Brazil.
All sales made to OEM's in Brazil must be negotiated in
conjunction and under the guidelines of TF.
III. TERM OF AGREEMENT
This Agreement is for three years and seven months, commencing May 1,
1995, providing that the Distributor abides by all provisions of this
Agreement, including meeting minimum monthly purchases specified in
Article IV. The Agreement shall be automatically renewed, provided
minimum quantities between the two parties are established, for an
additional four year period with minimum monthly purchase quantities to
be in no event less than quantities established for last year of 300
units per month or more than a 20% increase per year. The Distributor
has the right to appoint sub-distributors or franchisees within the
Territory. The Distributor agrees and accepts that any contract made or
entered into with sub-distributors or franchisees shall not exceed the
term of this Agreement and will be subject to the terms of this
Agreement. In the event that each month's minimum purchases is not met,
the Distributor will be granted a non-exclusive option to sell the
Product and will purchase the Product from TF at the current
International Price Schedule until another exclusive distributor is
appointed, at which time the prior distributor would purchase Product
from the new distributor at the new distributors selling price.
IV. MINIMUM ANNUAL PURCHASES
The parties agree that the Distributor shall purchase from TF not less
than the following:
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Number of
Purchase Order Date Units & Cases of Filters
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February 24, 1995 [ ] Purifiner Units
June 1, 1995 and the first of 200 Purifiner Units and 200
each month thereafter through cases of Purifiner Filters
December 1, 1995
January l, 1996 and the first [ ] Purifiner Units and 233
of each month thereafter cases of Purifiner Filters
through December l, 1996
January 1, 1997 and the first [ ] Purifiner Units and 267
of each month thereafter through cases of Purifiner Filters
December 1, 1997
January 1, 1998 and the first [ ] Purifiner Units and [ ] of each month
thereafter through cases of Purifiner Filters December 1, 1998
The Distributor will notify TF at least 30 days prior to the monthly
purchase order date of its actual purchase requirements for the upcoming
month, specifying the actual sizes and voltage requirements. The
Distributor also agrees to provide TF with purchase forecasts by month
for the upcoming calendar year at least 90 days prior to year end. Any
additional orders in excess of the minimum purchase quantities will be
shipped within eight (8) weeks.
V. REPURCHASE OPTION
Upon termination or cancellation of this Agreement, TF shall have the
option to repurchase from the Distributor any or all of the Product then
remaining in Distributor's inventory from TF at TF's original sales
price less freight, duties and other charges plus a restocking charge
not to exceed 15%.
VI. DISCONTINUANCE OF USE OF TRADEMARK AND PATENTS
Upon termination or cancellation of this Agreement, the Distributor
shall (a) discontinue any and all use of the trademarks, trade names and
Patents of TF, including such use in advertising, (b) remove and return
to TF, or in the alternative, remove and destroy, any and all signs
designating Distributor as a distributor for the Product or which
include the trademark or trade name of TF and (c) assign to TF all
rights, title and interest to the use of the local Distributor's name
and local Product names used by Distributor.
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VII. TERMINATION
A. If either party breaches materially any of the fundamental terms
of this Agreement, the other party has the right to terminate this
Agreement by written notice unless the party committing such
breach shall have corrected such breach within thirty (30) days
(or such longer time as may be agreed in writing between the
parties) after receipt of the above written notification. The
written notice must specify the breach and be delivered by
certified mail or facsimile.
B. This Agreement shall be terminated immediately by its own force
without notice from either party in the following events: (a) An
assignment of all or a major part of the assets of Distributor for
the benefit of creditors; (b) Insolvency of the Distributor or the
placing in liquidation (voluntarily or compulsorily) or being
subject to the appointment of an official manager or receiver; (c)
The discontinuance of Distributor's purchase of Products in
accordance with the minimum purchase requirement specified in IV;
and (d) Failure in performing any of Distributor's obligations
under this Agreement for a period of more than six (6) months by
reason of directives of any government.
Distributor shall immediately advise TF in writing of the
occurrence of any events specified in this article.
VIII. RELATIONSHIP OF THE PARTIES
A. The relationship of the Distributor to TF shall be that of an in-
dependent contractor. This Agreement does not in any way create
the relationship of joint venture partnership, franchiser and
franchisee or principal and agent between TF and the Distributor,
and it is not contemplated that TF will render significant
assistance or guidance to the Distributor in the management,
promotion or operation of the Distributor's business.
B. Distributor will use its best reasonable efforts to market the
Products in the Territory. The Distributor's activities in
marketing the Products to its customers will include, but not be
limited to: identify and develop new accounts and subdistributors,
diligently promote other new products and/or services offered by
TF, provide all services necessary for the support of customers in
their channel of distribution, effectively communicate all
relevant information on the market, the competition, prices,
customers, etc., that may have an impact on TF's business,
including, but not limited to, normal monthly reporting of
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statistical information of sales, units, type of customer,
applications and system ideas.
C. At the expiration of this Agreement, unless renewed~ no further
relationship between Distributor and TF will exist.
D. Distributor agrees that it will:
1. Not act in any way that would give the impression that it
has the power or authority to bind TF in any respect
whatsoever.
2. Not make any representation (oral or written) which varies
from the specifications, operating instructions or
representations given to Distributor or made by TF with
respect to the Products, including warranties.
3. Maintain a place of business in the Territory and employ
sufficient personnel to carry out Distributor's obligations
under this Agreement.
4. Comply with Brazilian and U.S. and other applicable inter-
national, federal, province, state and local laws, rules,
regulations, ordinances and orders, in the solicitation of
orders for the Products, and in its other activities.
5. Ensure that that each installer chosen by the Distributor
will have received adequate and proper training and carry a
"errors and omissions" policy in accordance with the laws of
the Territory which insurance will cover any liability due
to improper installation.
6. Use TF's trademarks (including "Purifiner"), trade names,
logo-type and service marks only in accordance with TF's
guidelines established for the use of such proprietary
materials. Acknowledges TF's exclusive right, title and
interest in any and all trademarks and trade names, which TF
may have now and in the future.
7. Maintain the confidentiality of any of TF's and Manufact-
urer's trade secrets and proprietary information of whatever
nature disclosed to Distributor.
8. Forward to TF a copy of any complaint received by Distribu-
tor about Distributor, TF, Manufacturer, or the Products.
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9. Distributor acknowledges that TF has the right at any time
to change the design of discontinue, or limit the
manufacture or provision of any of the Products to change
the price thereof, or to withdraw from the market entirely
upon giving written notice to Distributor within 90 days of
such actions.
10. If the Distributor sells controlling interest of the
distributorship (defined as greater than 50% of the voting
shares), it must first be approved by TF.
11. Assign to TF any improvements to all TF Products as they are
developed by the Distributor or any affiliated entity or
person.
12. The Distributor recognizes the importance of TF's
technologies and will take all necessary steps to protect
TF's proprietary rights in the Territory.
13. Will purchase all necessary sales and training aids, includ-
ing demonstration unit, at TF's cost.
14. Distributor will furnish monthly reports to TF as to the
companies (names) Purifiner units are installed on, and any
oil analysis.
15. Distributor shall indemnify and hold TF harmless from all
liability for damages and/or costs (including attorney fees)
caused by the Distributor's violation of this Agreement or
local, state, federal or international laws or regulations.
16. Distributor will promptly notify TF, in writing, of any and
all infringements, imitations, illegal user or misuse of the
Trademark or Trade Names which come to the attention of the
Distributor. Distributor agrees that he will take no action,
whether legal or otherwise, to attempt to prevent the
infringements, imitations, illegal use or misuse of the
Trademarks, Trade Names or Patents and that such actions
fall within the authority of TF. Distributor will render all
assistance requested of it by TF in connection with the
protection of its Trademarks or Trade Names.
E. TF agrees that it will:
1. Use its best efforts to deliver each order to the freight
forwarder in the least possible time, making partial
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deliveries if necessary. TF will not be liable due to any
"force majeure" as stipulated in section XIII.
2. Provide the Distributor with all of TF's existing and to be
developed sales and promotional materials, training manuals,
installation guidelines, etc. at TF's cost.
3. Make available the necessary personnel to provide training
in sales and installation of its Product at TF's Florida
facility. Any out-of-pocket expenses, incurred by TF for
training performed at other locations requested by the
Distributor will be paid for by the Distributor, including
hotel, meals, local transportation, etc.
4. If TF becomes desirous of manufacturing the Product in
Brazil then the Distributor will have the first right for 90
days to negotiate a joint venture with TF.
IX. PRICE AND CREDIT TERMS
A. The Distributor shall purchase the Product from TF at TF's then
current International Distributor Price List attached hereto as
Exhibit A. The Price Schedule may be changed from time to time by
TF upon giving written notice to Distributor within 90 days of
such action. The price contains a commission to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
which shall be paid by TF.
B. The Distributor shall pay for seventy (70%) percent of the monthly
Purchase Price on the monthly Purchase Order Date, commencing June
1, 1995 and the first day of each month thereafter, of the Product
by means of wire transfer to TF at [ ], or cashier's check on a
U.S. bank. The remaining monthly balance of thirty (30%) percent
is payable by wire transfer or cashiers check at the at the end of
each month or time of shipment, if earlier.
C. The Price Schedule does not include applicable taxes, duties,
licenses, excises and tariffs and any other applicable charges all
of which are the responsibility of the Distributor.
D. All shipments will be made F.O.B. TF's Florida shipping dock. In-
surance coverage on all shipments is the responsibility of the
Distributor.
X. ADVERTISING AND PROMOTION
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A. Distributor agrees to spend at least 5% of gross revenue, per
annum on advertising and sales assistance.
B. The Distributor shall not manufacture and/or cause to be
manufactured and/or purchase and/or sell during the term of this
Agreement, and for a period of ninety (90) days following
termination or cancellation of this Agreement products which in
the judgment of TF are similar in performance to or competitive
with TF's Products from any source other than TF.
C. TF agrees during the term of the Agreement to permit the Distribu-
tor to use the TF's trademarks and trade names in the
Distributor's sales program for the sole purpose of advertising
and promoting the sale of the Product. Distributor agrees not to
use or cause the use of TF's trademarks or trade names in any
manner which shall directly or indirectly tend to lessen their
value. Further, Distributor shall not use TF's trademark or trade
names in the name of the Distributor's business or in any manner
likely to convey to the public the idea that it is acting or
selling goods on behalf of TF unless approved by TF.
D. Any printed advertising and promotional material created by the
Distributor referring to the Product shall be sent to TF prior to
any use, including the English translation, and TF may disapprove
within ten (10) days by fax, the use of any material which, in
TF's opinion, misrepresents the Product or which might mislead
customers.
E. Distributor agrees to conduct its promotion, advertising, sales,
pricing and business generally at all time in strict compliance
with all applicable international, federal, state and local laws
and regulations.
XI. WARRANTIES AND DISCLAIMERS
Attached to this Agreement is Exhibit B which is a copy of the limited
warranty on the Product provided by the Manufacturer and TF. Distributor
is not authorized on behalf of the Manufacturer or TF to expand or
attempt to expand such warranty or the liabilities for any breach of
that warranty. If defective units are returned to Distributor, the
Distributor will report such to TF and will hold such units until TF
notifies Distributor as to where to ship or dispose of such units at
TF's expense. TF will replace all defective units as part of next
monthly purchase shipment to Distributor.
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XII. FORCE MAJEURE
Neither party shall be liable for failure to fulfill any obligation
under this Agreement due to fire, tempest, flood, act of God, war, civil
revolution or disturbance, riot, blockade, governmental restraint,
industrial strike or lock-out, or any other similar causes whatsoever
beyond the party's control.
XIII. MANUFACTURER AND TF HELD HARMLESS
Distributor shall indemnify and hold the Manufacturer and TF harmless
from all liability for damages and/or costs (including attorney fees)
caused by the Distributor's violation of this Agreement or any
international, federal, state or local laws or regulations.
XIV. ENTIRE AGREEMENT AND NOTICE
A. This Agreement is made in English and is the entire Agreement
between the parties and supersedes all prior agreements if any.
Any waiver, amendment, modification or renewal of this Agreement,
to be effective must be in writing and signed by the parties.
There are no oral or implied agreements and no oral or implied
warranties between the parties.
If any provision of this Agreement shall be held invalid, the
remaining provisions shall continue to be binding upon the
parties.
B. The waiver of any one default of this Agreement shall not waive
subsequent defaults.
C. Any notices required by this Agreement shall be sent to TF and KLC
Trading Corporation at the addresses noted herein.
XV. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement or
the breach thereof, shall be settled according to the Florida Law in the
form of legal arbitration. The arbitration shall take place in Palm Beach
County and the number of arbitrators shall be three. Judgment upon the
arbitration award may be entered in any court having jurisdiction thereof
The prevailing party shall be entitled to recover all attorney fees and
related costs incurred in the arbitration proceeding in addition to any
other relief to which they are entitled.
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TF Purifiner, Inc. Date
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KLC Trading Corporation Date
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