MASTER DISTRIBUTOR AGREEMENT
----------------------------
This Agreement, made this 11th day of January 1995, between TF Purifiner, Inc.
("TF"), as exclusive worldwide distributor for TF Systems, Inc. (the
"Manufacturer"), both Delaware Corporations, having their principal offices at
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Trimex Korea, a
South Korean Corporation, located a ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇-▇ ▇▇▇▇▇-▇▇▇▇,
▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇ and Trimex Trading Corporation (the "Distributor"),
located at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
I. WHEREAS:
A. The Manufacturer and TF are in the business of designing, dev-
eloping 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 applica-
tions;
C. TF has the right to grant to the Distributor the right to pur-
chase 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. Distributor shall not sell
the Product in any country other than its Territory.
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 O.E.M. and imported into the Territory.
C. The Territory shall be defined as South Korea.
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 "O.E.M"),
outside of South Korea.
E. South Korean OEM Accounts:
It is agreed that Halla, KIA and Hando accounts ("Existing
Accounts"), which have been previously contacted by TF, and all
other South Korean OEM accounts will be jointly handled and
negotiated by TF and Distributor. Sales commissions for all OEM
accounts where ( l ) the OEM decides to manufacture the Product
and pay TF a per unit fee and/or (2) purchase the unit directly
from TF, will result in a sales commission to the Distributor
of between 5% to 10%, depending on effort put forth by the
Distributor, with the exact percentage to be negotiated prior
to the signing of any OEM agreements. For example. if TF
receives an average price of $ 100 per unit from the OEM then
the Distributor will receive $5.00 to $10.00 per unit and TF
will be responsible for any applicable royalty payments to Mr.
Malt.
In the event that the Manufacturer, TF and Distributor decide
to sell the exclusive manufacturing rights for the Product to
the Existing Accounts, TF agrees to pay 25% of the total
payment received from the Existing Accounts to the Distributor
as a commission upon collection of such amount by TF. If the
exclusive manufacturing rights are sold to other OEM accounts
the commission earned by the Distributor will be negotiated
prior to the signing of any such OEM agreements. For example,
if TF sells the exclusive manufacturing rights to KIA for five
years for $5,000,000, then the Distributor will receive 25% or
$1,250,000 from TF as a sales commission.
Any sales commissions to be paid to the Distributor will be
paid within 10 working days after TF receives such sales or
license proceeds from the OEM accounts. Payments of sales
commission should be by wire transfer to Trimex Trading
Corporation's bank account at [ ].
2
III. TERM OF AGREEMENT
This Agreement is for six years providing that the Distributor abides
by all provisions of this Agreement, including meeting minimum
quarterly purchases specified in Article IV. Either party may terminate
this Agreement at the end of its six year term by advising the other
party three (3) months in advance. If the Agreement is not so
terminated, it shall be automatically renewed for another six year
period with minimum purchase quantities to be not less than 7,200 TF
Purifiner units each year plus sufficient original TF replacement
filters each year. The Distributor has the right to appoint
sub-distributors within the Territory. The Distributor agrees and
accepts that any contract made or entered into with sub- distributors
shall not exceed the term of this Agreement. In the event that each
year's minimum annual 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 without
any discount 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
All minimum annual purchase requirements set forth in this Agreement
shall exclude all TF Purifiner units purchased or manufactured by all
original equipment manufacturers in the Territory.
The parties agree that the Distributor shall purchase from TF not less
than [ ] TF Purifiner units in the first year, [ ] TF Purifiner
units in the second year, and [ ] TF Purifiner units in the third
year, plus sufficient original TF replacement filters to meet market
demands on a quarterly basis. The Distributor will notify TF at least
45 days prior to the quarterly purchase deadline of its actual purchase
requirements for the upcoming quarter, specifying the actual sizes and
voltage requirements. The minimum quarterly purchase requirements will
be between 15% to 50% of the annual minimum requirements and in no
event will the sum of the four quarterly purchase requirements, to be
purchased on February l, May l, August l and November l of each year,
be less than the annual minimum purchase requirement of this Agreement.
The Distributor also agrees to provide TF with purchase forecasts by
quarter for the upcoming calendar year at least 90 days prior to year
end.
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 of 10%.
3
VI. DISCONTINUANCE OF USE OF TRADEMARK
Upon termination or cancellation of this Agreement, the Distributor
shall (a) discontinue any and all use of the trademarks and trade names
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.
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.
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 for sale in the Territory
for a period of at least three (3) months, of 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
independent 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.
4
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: build sales volume to Existing Accounts,
identify and develop new accounts and sub-distributors,
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, customers, etc., that may have an impact on TF's
business, including, but not limited to, normal quarterly
reporting of 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, and no
further commissions whatsoever are due to Distributor for any
sales made by TF to any other entity, whether Distributor dealt
with the entity or not, after expiration or termination of this
Agreement, except such amounts as have accrued and are due and
owing to the Distributor at the date of termination.
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 and will commit to
expend a minimum of $1,000,000 (U.S.) to launch the
distribution of the Products in the Territory.
4. Comply with South Korean and other applicable
international, 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.
5
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.
7. Maintain the confidentiality of any of TF's and Manu-
facturer's trade secrets and proprietary information
disclosed to Distributor.
8. Forward to TF a copy of any complaint received by Dis-
tributor about Distributor, TF, Manufacturer, or the
Products.
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, in-
cluding demonstration unit at TF's cost.
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 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 train-
ing in sales and installation of its Product at TF's
Florida facility. Any out-of-pocket expenses, except for
one round trip airfare to South
6
Korea, 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. TF understands the importance of fast patent approval
from the South Korean Department of Patent Registry and
TF will do its best to support such prompt approval.
5. TF will authorize Distributor to take specific actions
against known patent infringers in order to give
Distributor the ability to stop any illegal activities
as required.
6. TF will apply for TF existing or new trademark to appro-
priate South Korean Government Agency at Distributor
expense.
IX. PRICE AND CREDIT TERMS
A. The Distributor shall purchase the initial purchase of $100,000
of Product from TF at the Price Schedule attached hereto as
Exhibit A. A 5% discount to the attached Price Schedule will
apply to the next $150,000 of Product purchased and a 10%
discount will be applied for all purchases thereafter. The
Price Schedule may be changed from time to time by TF upon
giving written notice to Distributor within 90 days of such
action.
B. Within ten days of the signing of this Agreement, the Distribu-
tor shall pay for 50% of the initial $100,000 (U.S.) order of
the Product by means of wire transfer for $50,000.00 (U.S.) to
TF at [ ]. The remaining balance for the initial order
($50,000.00 U.S.) is payable by an irrevocable confirmed sight
letter of credit with a corresponding bank of ▇▇▇▇▇▇▇ Bank,
opened at the time of the placement of the initial order;
issued in the name of TF and payable on sight upon the delivery
of the Products to the freight carrier for shipment, and TF may
draw upon Distributor's Letter of Credit for this 50% upon
presentation of: (a) a signed ▇▇▇▇ of lading, and ~b) a net
invoice of shipment. (Letter of Credit to be made payable to [
]). The initial order will be placed within 30 days of this
Agreement and will include sufficient demonstration units,
Batch Refiner units and a mix of other units and filters, as
reasonably determined by Distributor. All fees related to
Letter of Credit will be paid by Distributor.
For all subsequent orders, and depending on the performance of
this Agreement, every order will be payable with an irrevocable
and confirmed on sight Letter of Credit with a corresponding
bank of ▇▇▇▇▇▇▇ Bank for the total amount of each order to be
7
obtained at the time of the order. TF will be able to draw upon
such Letter of Credit upon presentation to its bank of the
signed billing of lading evidencing shipment of such order and
a net invoice of shipment. All expenses related to the Letters
of Credit will be borne by the Distributor.
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.
Insurance coverage on all shipments is the responsibility of
the Distributor.
X. ADVERTISING AND PROMOTION
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 one (1) year 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 Dis-
tributor 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.
8
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
quarterly purchase shipment to Distributor.
XIII. 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
Trimex Trading Corporation at the addresses noted herein.
9
XV. ABITRATION
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.
--------------------------------- ----------------------------------
TF PURIFINER, INC. DATE
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, PRESIDENT
--------------------------------- ----------------------------------
TRIMEX TRADING CORPORATION DATE
IN ▇▇▇, PRESIDENT
--------------------------------- ----------------------------------
TRIMEX KOREA DATE
▇▇▇▇▇ SOO PARK, PRESIDENT
10
First Amendment to
Master Distributor Agreement
This first amendment to TF Purifiner, Inc., Trimex Korea and Trimex Trading
Corporation Master Distributor Agreement is as follows:
1. All references to minimum purchase requirements shall be amended as
follows:
a) 1996 minimum purchase requirements shall be [ ] units plus a suffic-
ient number of original replacement Purifiner filters, which shall be
ordered by November 1996.
b) Subsequent quarterly minimum purchase amounts (yearly amounts in brac-
kets) shall be as follows:
1. 1997 ([ ] units/1997) - [ ] units plus sufficient
replacement Filters ("Filters")
2. 1998 ([ ] units/1998) - [ ] units plus Filters
3. 1999 ([ ] units/1999) - [ ] units plus Filters
4. 2000 ([ ] units/2000) - [ ] units plus Filters
5. 2001 ([ ] units/2001) - [ ] units plus Filters
c) All references to purchase price and payment terms will be amended as
follows:
1) Purchase price will be due TF Purifiner upon placement of order by
wire transfer.
2) Purchase price will be as shown in the attached Appendix A for all
orders placed prior to the resolution of the patent issue
discussed below. Adjustments may be made to such prices based upon
increases in the international price sheet based upon same
percentage off international prices as Appendix A. The purchase
price subsequent to patent resolution shall be negotiated by
parties within 30 days subsequent to such resolution.
1
First Amendment to
Master Distributor Agreement
d) TF Purifiner will continue to use its best efforts to have ▇▇▇▇▇▇
Malt assigned his rights to the Korean patent number 88-7256 from PDC
and CNP. TF Purifiner represents to Trimex that to the best of its
knowledge Malt is the rightful owner of such patent and any rights
obtained by CNP from PDC were fraudulently obtained. If such patent
rights are not obtained by Malt by December 31, 1996 then Distributor
may cancel agreement.
-------------------------------- ----------------------------------
TF Purifiner, Inc. Date
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President
-------------------------------- ----------------------------------
Trimex Trading Corporation Date
In ▇▇▇, President
-------------------------------- ----------------------------------
Trimex Korea Date
▇▇▇▇▇ Soo Park, President
