EXHIBIT 10.8
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[PURADYN(R) LOGO]
Puradyn Filter Technologies Incorporated
MASTER DISTRIBUTORSHIP AGREEMENT
International
This Master Distributor Agreement ("Agreement"), is made and
effective this 18th
of February, 2008, by
and between Puradyn
Filter Technologies, Incorporated
("PFTI") or ("The Company"), whose principal address is at 2017
High Ridge Road,
Boynton Beach, FL 33426 and Filter Solutions Ltd (FSL) (hereinafter
referred to
as "Master
Distributor") having
Principal offices at 33A Kingfisher Court,
Hambridge Road, Newbury RG14 5SJ United Kingdom.
WHEREAS:
A.
The
Manufacturer
is in the business of designing, developing,
manufacturing and
marketing bypass oil refiners and filters
under
the trademark "puraDYN(R)" hereinafter referred to as the
"PRODUCT".
B.
The
Manufacturer is the exclusive licensee of Patents No.
5,591,330
5,639,965
5,630,912
5,718,258
6,139,725 and
pending patent
applications.
C.
The
Manufacturer
has the right to grant
to the Master
Distributor
the right to purchase and sell the product in the Service
Territory
(as defined herein);
D.
The Master
Distributor
warrants that it is
now solvent and capable
of acting as a Master Distributor within the Service territory;
and
E.
The Master
Distributor
is desirous of
purchasing
and selling the
Product in The Service
Territory, and the
Manufacturer is desirous
of granting
the Master 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:
PFTI desires to appoint Master Distributor, and Master Distributor
desires to
accept appointment as,
a exclusive Master
Distributor of PFTI's product as set
forth herein.
The parties agree as follows:
1. Rights
Granted and Appointment
A.
PFTI
hereby grants to Master Distributor an Exclusive
RIGHT on the
terms and conditions contained below to purchase inventory,
promote
and resell "PFTI
Products" (as defined
below) in United
Kingdom,
Mainland Europe
and Ireland plus additional international
territories on a case-by-case basis to (i) end-users with fleets
of
vehicles; (ii) users
of hydraulic
applications for
manufacturing
processes; and (iii)
Distributors
who market to end-users with
fleets of vehicles and/or users of hydraulic applications for
manufacturing
processes (those persons identified in paragraph 1,B
(i), (ii) and (iii) shall be collectively referred to as
"Customers"
and individually
as a "Customer), subject to the terms and
conditions set forth
and stated in this
Agreement and its attached
exhibits. The
Master Distributor hereby accepts such appointment and
agrees to use its best
efforts in the
performance of such
duties
hereunder.
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INITIALS [ILLEGIBLE] PURADYN
INITIALS [ILLEGIBLE] MASTER DISTRIBUTOR
1 of 18
2017 High Ridge Road,
Boynton Beach, FL 33426 (TF) 1 866 PURADYN (787 2396)
* (T) 561 547 9499 * (F) 561 547 8629 www.puradyn.com
<PAGE>
B.
Manufacturer agrees to forward all inquiries for sales and/or
Master
Distributors to the
Master Distributor
no matter what
industry or
market segment inquiry
originate. Master
Distributor will have ten
(10) working
days to respond to Manufacturer in regards to how
inquiry will be
handled. In the event that inquiry has not been
adequately satisfied
and Manufacturer
receives third contact
from
said inquirer,
Manufacturer
will notify in writing the Master
Distributor that the Manufacturer will handle the inquiry.
C.
The
Manufacturer reserves
the right to sell the Product directly to
any U.S. Manufacturer of engines, vehicles, and other machinery as
original equipment
(hereinafter referred
to as "OEM"). The OEM has
the right to sell the Product through its dealer network.
D.
Master
Distributors activities shall include, but not be limited to,
building sales
volume to existing accounts, identifying and
developing new accounts, diligently promoting new products
and/or
services to Customers,
identified by Master Distributor, providing
any and all services necessary for the support of Customers in
their
channels of
distribution,
effectively
communicate to Manufacturer
all relevant
information on the market, competition and Customers
that could in any way impact Manufacturer's business, and monitor
the creditworthiness of Customers in the Territory.
E.
Master
Distributor
shall not sell or
deliver the Products
outside
the territory or to individuals it knows will transport the
Products
outside the Territory
without first receiving written consent from
one of Manufacturer's
Officers. In addition, Master Distributor
shall not, directly or
indirectly
engage in any of the
following
activities outside the Territory without, the prior written consent
of Manufacturer
in each case:
advertise the Products; maintain
warehouses for the
Products; or seek
Orders or engage in any other
kind of sales promotion for the Products.
F.
The Master
Distributor
shall not sell,
offer for sale,
or act as
sales agent for the
solicitation of Orders
for any products
which
are competitive
with any of the
Products without first
receiving
written authorization from Manufacturer.
G.
Installation must be
performed and completed by a properly trained
and authorized representative of the Company or Master
Distributor.
2.
Products
As used in
this Agreement,
the term "PFTI's Products" shall mean the
products,
related service parts
and accessories
manufactured and/or sold
by PFTI as
outlined in the PFTI
price list, a copy of
the most recent of
which is
attached.
3. Term of
Agreement
This
Master Distributor contract will have duration of five (5) years
from
the
signing date provided Master Distributor has fulfilled his
obligations
hereunder.
The contact will renew
automatically,
negotiated with minimum
quantities, for an additional twelve (12) months on each
anniversary date.
This
contract may be cancelled by either party with 30 days' written
notice.
4. Minimum
Annual Purchases
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INITIALS [ILLEGIBLE] PURADYN
INITIALS [ILLEGIBLE] MASTER DISTRIBUTOR
2 of 18
2017 High Ridge Road,
Boynton Beach, FL 33426 (TF) 1 866 PURADYN (787 2396)
* (T) 561 547 9499 * (F) 561 547 8629 www.puradyn.com
<PAGE>
The
parties agree that the
Master Distributor
shall purchase from the
Manufacturer not less
than US $600,000 through December 2008 from date of
this
contract and to be allocated approximately US$200,000 per quarter,
beginning
March 1, 2008. (As an
example, if Master
Distributor
were to
purchase
US$ 250,000 in 2nd Quarter and US$ 250,000 during the 3rd
Quarter,
4th Quarter purchases would have to be only US$ 100,000 to
comply
with
Agreement.)
(Reference
Exhibit
1 for quarterly purchase
requirements.)
A.
Master
Distributor agrees to
sell US $600,000 of Product during the
first 9 months beginning March 1, 2008.
B.
After
the first 9 months,
Master Distributor agrees to a minimum
fifteen percent
(15%) increase over the previous 12
months annual
rata (of $800,000).
This fifteen percent
(15%) increase will apply
to each successive 12 month calendar period:
2nd year $
920,000 U.S. Dollars
3rd year
$1,058,000
U.S. Dollars
5. Price
and Terms of Sale
A.
Price of
Products. Master
Distributor shall purchase the Product at
the prices set forth
on the Price Schedule
attached as Exhibit 2
(the "Price
Schedule"). The Price
Schedule does not include Master
Distributor taxes,
duties, licenses, excises and tariffs, which
shall be paid by the Master Distributor.
B.
Change in
price of Products.
Manufacturer may,
from time to time,
change the
Price Schedule in its
sole discretion
after providing
Master Distributor
with sixty (60) days written notice of such
change.
C.
Payments
Free of Taxes,
Withholding, etc.
Master Distributor shall
pay any and all taxes and any other surcharges, fees, licenses and
other amounts charged
or payable in connection with the importation
of the Products into, and the sale of Products within, the
Territory.
D.
Payment
Terms. The Master
Distributor shall pay
for the Product by
wire transfer the purchase price prior to Manufacturer making the
shipment available to Master Distributor EXW Manufacturer's
shipping
dock, Boynton Beach, Florida, or by Letter of Credit initially at
30
days after shipment and at some later period, 7 days after
shipment.
E.
Carrier.
The Carrier
will be selected
and shipment scheduled by
PFTI, unless Master
Distributor requests a
reasonable
alternative
which does not negatively affect or delay shipment.
6. Order
Processing, Returns and Repurchase Option
A.
PFTI will
employ its best efforts to fill Master Distributor's
orders promptly
on acceptance, but reserves the right to allot
available inventories among Master Distributors at its
discretion.
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INITIALS [ILLEGIBLE] PURADYN
INITIALS [ILLEGIBLE] MASTER DISTRIBUTOR
3 of 18
2017 High Ridge Road,
Boynton Beach, FL 33426 (TF) 1 866 PURADYN (787 2396)
* (T) 561 547 9499 * (F) 561 547 8629 www.puradyn.com
<PAGE>
B.
PFTI will
accept returns of
products that are defective at the time
of sale to Master Distributor or prove defective during the
warranty
period. PFTI will also
allow Master
Distributor to return
salable
goods to The Company,
but only within the
policy established
for
returned goods, shown below.
7.
Financial Policies
Master
Distributor
acknowledges
the importance to PFTI of Master
Distributor's sound financial operation and Master Distributor
expressly
agrees
that it will:
A.
Maintain
and employ in connection with Master Distributor's business
and operations under
this Agreement
such working
capital and net
worth as may be required to enable Master Distributor properly and
fully to carry out and perform all of Master Distributor's duties,
obligations and responsibilities under this Agreement;
B.
Pay
promptly all amounts due PFTI in accordance with terms of sale
extended by PFTI; and
Furnish PFTI with financial information and references in such
form
as PFTI may reasonably
require from
time-to-time for determination
of credit worthiness.
Shipments
and contract may be suspended at PFTI's discretion in the event
that
Master Distributor
fails to promptly and
faithfully
discharge any
obligation
in this Section.
8. Use of
PFTI's Name
Master
Distributor will not
use, authorize or permit the use of, the name
"Puradyn
Filter Technologies
Incorporated" or
derivatives, or any
other
trademark
or trade name owned by
PFTI as part of its firm, corporate or
business
name in any way. Master Distributor shall not contest the right
of PFTI to
exclusive use of any trademark or trade name used or claimed by
PFTI.
Master Distributor
may, subject to PFTI's written approval of same,
utilize
PFTI's name,
trademarks or logos in
advertising
on stationery,
business
cards and signage.
9.
Termination
A.
Termination after Notice. This agreement may be terminated by
either
party in the event of
a breach by the
other party (or any of its
Officers or
Principals
joining this agreement) of any of its
obligations under this
Agreement (other than those obligations set
forth in paragraphs 9.C and 9.D, below, which may result in earlier
termination) which has
not been corrected by
the breaching
party
within a period of thirty (30) days from the date on which
written
notice of termination is given. In such event, termination shall be
effected
by written notice of
termination to the
breaching party.
Termination on such grounds shall not preclude the terminating
party
from taking recourse to any legal action or remedy to which it
might
be entitled.
B.
Immediate
Termination without Notice. This agreement shall be deemed
terminated immediately
without notice upon the occurrence of any of
the following events:
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INITIALS [ILLEGIBLE] PURADYN
INITIALS [ILLEGIBLE] MASTER DISTRIBUTOR
4 of 18
2017 High Ridge Road,
Boynton Beach, FL 33426 (TF) 1 866 PURADYN (787 2396)
* (T) 561 547 9499 * (F) 561 547 8629 www.puradyn.com
<PAGE>
1. An
assignment
of all or a
substantial
portion of the
assets of the Master
Distributor
for the benefit of
creditors;
2. The
insolvency of Master
Distributor (as defined in the
Uniform Commercial Code);
3. The
filing of a voluntary
petition in bankruptcy
by or
against the other party;
4. The
filing
of any attachment, distraint, levy,
execution, or judgment
against Master Distributor, the
filing of an
involuntary petition
under the provisions
of the U.S. Bankruptcy
Act, or similar act under the
Master Distributor's
local laws as amended, or any
applications for
the appointment of a receiver for
Master
Distributor's
property, the filing of which
remains unsatisfied
and undischarged
after the end of
thirty (30) days after the occurrence of such event;
5. The
filing of a petition for bankruptcy, receivership,
suspension or payments or dissolution by or against the
other party or any equivalent thereof under the national
law of that party,
which petition is not discharged
within thirty (30) days thereafter.
C.
Immediate
Termination
By Either Party With
Notice. This
Agreement
may be terminated with
immediate effect by
either party by written
notice in the event of:
1. The
occurrence
of a "Force Majeure" as defined in
paragraph 17.A hereof; and
2. Any
representation made or
furnished by the other party
or any of its Officers or Principals who have joined in
the execution
of this Agreement being false or
misleading in any
material respect at the time it was
made.
D.
Immediate
Termination by Manufacturer. Moreover, this Agreement may
be terminated
by Manufacturer with immediate effect by written
notice to Master Distributor in the event that:
1. Master Distributor is acquired by or
becomes affiliated
with a company
which is or may potentially become a
competitor of
the Manufacturer or any of the
Manufacturer's affiliates;
2. A
change occurs of more than fifty percent (50%) or more
in the direct
or indirect voting control of Master
Distributor;
3. Master
Distributor's
failure to meet any Budget set
forth for any period listed in Exhibit 1, hereof;
4. Master
Distributor's assignment, transfer, or attempted
assignment or
transfer, of the rights and privileges
granted hereunder
without the prior
written consent of
the Manufacturer;
5. Master
Distributor
fails to make timely payment to
Manufacturer for
amounts owed hereunder
in accordance
with the terms herein.
10. Relationship
of the Parties
A.
The
relationship of the Master Distributor to the Manufacturer
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 the Manufacturer and
the Master
Distributor,
and it is not contemplated that the
Manufacturer will render significant assistance or guidance to the
Master Distributor in the management, promotion or operation of the
Master Distributor's business.
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INITIALS [ILLEGIBLE] PURADYN
INITIALS [ILLEGIBLE] MASTER DISTRIBUTOR
5 of 18
2017 High Ridge Road,
Boynton Beach, FL 33426 (TF) 1 866 PURADYN (787 2396)
* (T) 561 547 9499 * (F) 561 547 8629 www.puradyn.com
<PAGE>
B.
At
the expiration of the Term, this Agreement automatically
terminates and no further relationship between Master Distributor
and
the Manufacturer will exist, and no further commission
whatsoever are due to Master Distributor for any sales made by the
Manufacturer to any other entity, whether Master Distributor dealt
with the entity or not, after expiration or termination of this
Agreement, except such
amounts as have accrued and or due and owing
to the Master Distributor for sales made in the Master
Distributor's
Service territory as of the date of termination.
C.
Master
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 the Manufacturer
in any respect whatsoever.
2. Not
make any representation (oral or written) that
varies from the specifications, operating instructions
or representations
given to Master
Distributor or made
by the manufacturer with respect to the Products,
including warranties.
3.
Maintain a place of business in the Service Territory
and
employ sufficient personnel to carry out Master
Distributor's obligations under this Agreement.
4. Comply
with all applicable United Kingdom and applicable
international
territory, 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. Master
Distributor
shall ensure that each installer
chosen by Master Distributor (and/or Master Distributor,
if applicable)
to install the Products carries a
commercial
general liability
insurance policy,
with a
reputable insurance
company, subject to
Manufacturer's
reasonable
approval, that
is compliant with and
effective under the laws of the Territory (including any
laws of any province,
state or locality within the
Territory), which
policy shall insure
against any and
all liability due to improper installation. Such policy
shall have a face amount of not less than $1,000,000.00.
Master Distributor
shall ensure that
Manufacturer
is
named as an "additional insured" under the policy.
6. Send a
progress report to the Manufacturer on each
six-month anniversary
of the contract
indicating
the
condition and the progress of the Service Territory.
7.
Acknowledge that the
manufacturer has the
right at any
time to change the design of, discontinue, or limit the
manufacture or
provision of any of
the Products,
or,
upon not less than thirty (30) days prior written notice
to Master Distributor
to change the price thereof or to
withdraw from the market entirely.
8.
Acknowledge that
if the Master Distributor sells
controlling interest of Master Distributorship (defined
as 50.1% of the voting share capital or more), it must
first be approved by the Manufacturer, and may be
subject to immediate
termination
by Manufacturer in
accordance with
section 9.D.2 (above).
Every year the
Master Distributor
shall inform the Manufacturer of any
stockholder changes.
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INITIALS [ILLEGIBLE] PURADYN
INITIALS [ILLEGIBLE] MASTER DISTRIBUTOR
6 of 18
2017 High Ridge Road,
Boynton Beach, FL 33426 (TF) 1 866 PURADYN (787 2396)
* (T) 561 547 9499 * (F) 561 547 8629 www.puradyn.com
<PAGE>
9. Not
file any (other) trademark applications, or
otherwise seek
intellectual property
rights in or for,
any other trademark
or trade name of PFTI,
and agrees
that PFTI has the right to an injunction (as well as any
other relief
available) if this provision is violated.
10. Use
Manufacturer's
or its subsidiaries'
or affiliates'
trademarks
"PURADYN"; "KEEP
IT CLEAN") only in
accordance with established guidelines and not use such
trademarks in
any manner that would convey the
impression that Master
Distributor is selling
Products
or acting on behalf of the Manufacturer.
11. Not
use or disclose any Trade Secrets (information
concerning
Manufacturer's marketing and business plans,
sales strategies,
advertising programs, pricing, costs,
customers, technology or manufacturing methods) and will
make every
effort to take
reasonable
precautions
to
prevent any such disclosure by its employees.
12. Appoint
sub-representatives (agents, sub-Master
Distributors or dealers) which meet all criteria of this
agreement, but will receive Manufacturer's prior written
approval for all
sub-representatives
which do not meet
all criteria.
13. Not make any
representations
about the Product other
than those contained
in written
information
and data
supplied by the Manufacturer and wilt be responsible for
all representations.
14. Provide
at its cost any
language translations of all
commercial
communications, such as quotations,
proposals, conditions,
catalogues and other promotional
materials, and
will indemnify and hold harmless
Manufacturer as a
result of incorrect or incomplete
translations.
15. Pay all
expenses incurred by Master Distributor and its
employees in the
performance of its
obligations under
this agreement.
16. Promptly
inform Manufacturer if it knows or suspects
that customers
or prospective customers intend to
re-export Products
outside the territory,
and will not
assist same
without prior written permission from
Manufacturer.
17. Be
responsible
for Product installation, customer
training and customer service, including but not limited
to post-warranty service and/or repair.
18. Comply with
all governmental requirements, statutes and
laws, and will notify Manufacturer of any conflict
between its
national laws and any provision of this
agreement.
19. Not directly
or indirectly make any
offer or promise to
improperly influence
an agent, government official,
political party or
candidate for office in order to
obtain or retain business or gain inappropriate
advantage.
20. Forward to
manufacturer any
complaint or grievance with
respect to
products immediately upon receiving the
complaint.
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INITIALS [ILLEGIBLE] PURADYN
INITIALS [ILLEGIBLE] MASTER DISTRIBUTOR
7 of 18
2017 High Ridge Road,
Boynton Beach, FL 33426 (TF) 1 866 PURADYN (787 2396)
* (T) 561 547 9499 * (F) 561 547 8629 www.puradyn.com
<PAGE>
21. Distribute
and sell Products in
the Territory
through
its own sales organization.
22. Use its best
efforts to promote and
increase sales of
the Products in its Territory and protect Manufacturer's
interests in the Territory.
23. Maintain an
inventory of all
Products adequate to
meet
the needs of the market in the Territory for a period of
ninety (90) days.
24. Maintain
a spare parts inventory sufficient to meet
demand on a timely basis.
25. Not deface,
alter, improve or otherwise make any changes
to the product.
26. Properly
train installers of the Product and participate
in one or more training sessions given by the
Manufacturer at its
facilities
(or off-site
with all
expenses incurred
by Manufacturer repaid by Master
Distributor) and will
pay for all expenses
incurred by
the Master Distributor for this training.
27. The
Master Distributor shall not manufacture and/or
cause to be manufactured and/or purchase and/or
distribute and/or sell and/or commercialize during the
term of this Agreement, and for a period of ninety
(90)
days following
termination
or cancellation of this
Agree
