DISTRIBUTORSHIP AGREEMENT
This agreement (hereinafter the "Agreement") is made and executed in
New York this 1st day of October , 1996 between ASIA LEGEND TRADING LTD, Asia,
PRC, China Republic Corporation (hereinafter "Asia") and NEW ERA FOODS, INC.
(USA) Inc., a New York Corporation with offices at 120 East Industry Court, Deer
Park, New York (hereinafter "NEF").
WITNESSETH
WHEREAS Asia is an acquiror, developer, and Seller with complete
authority for the continued sale of frozen squid processed and sold under the
brand names "Tenda" and "Piccolo" (the "Product") as well as other frozen
seafood items.
WHEREAS Asia is willing to grant exclusive distributorship rights in
the United States and otherwise non-exclusive rights under terms and conditions
whereby Asia would receive a set price for the Product and have rights of
consultation and approval for marketing strategies; and
WHEREAS NEF is a consumer product sales distributor based in the United
States and represents that it possesses the technical facilities and ability to
promote the sale and use of the Product as developed by Asia and is desirous of
developing demand for and selling such Products and other items offered for sale
by Asia on an exclusive basis in the United States and on an exclusive and/or
non-exclusive basis elsewhere outside the United States; and
WHEREAS NEF has expressed a willingness to accept responsibilities for
the distribution of the Product on the terms and conditions set forth herein,
and Asia has agreed to negotiate a distributorship contract with NEF based upon
such understandings; and
WHEREAS Agent is a US domestic corporation acting in an indenpendent
contractor capacity, as consultant, business administrator, and US contact for
Asia through whom US business of Asia is conducted.
NOW THEREFORE, the parties hereto acknowledge the above stated
understandings and in furtherance of mutual compliance therewith and in
consideration of the mutual covenants hereinafter contained, the parties agree
as follows:
I. REPRESENTATIONS AND WARRANTIES
1.1 NEF represents and warrants that it is an authorized corporation
formed in the United States and it has full right, power and authority to
distribute consumer products in the United States and other jurisdictions
outside the United States where distribution of Asia's Product under the terms
of this Agreement is contemplated by NEF and NEF will maintain such authority in
all such jurisdictions during the full term of this Agreement.
1.2 NEF, and Asia each to the other represent and warrant that they
have full right, power and authority to enter this Agreement and to perform the
same in accordance with the terms, provisions and conditions hereof and in the
manner herein specified.
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1.3 NEF represents and warrants that it is versed in the general
customs and usages of the grocery supply industry in which the Product is
expected to be sold and that it has inspected representative samples of the
Product, is familiar with the literature describing Asia, and its Product, and
understands the uses and methods for which the Product was designed, and intends
to distribute the Product only for its intended use.
1.4 Asia represents that the Product is saleable in the United States,
and they individually and through Agent, and Agent also represents that and they
are familiar with and the Product conforms with all applicable government
regulation both in United States and elsewhere where NEF may be asked to
distribute the Product as may be necessary for sale of the Product or otherwise
as may restrict or prohibit sale of the Product.
II. DISTRIBUTORSHIP
2.1 Asia appoints NEF as the exclusive distributor for the sale of its
Product within the bounds of the United States, which area may be subsequently
increased or otherwise changed with the mutual consent of the parties hereto.
The area wherein NEF is allowed an exclusive distributorship for the sale of the
Product is hereinafter referred to as the "Exclusive Territory".
2.2 During the continuance of this Agreement and the exclusive
distributorship granted to NEF hereunder, Asia shall not appoint any other or
different person, firm, corporation or other entity to sell the same products in
the Exclusive Territory.
2.3 Asia appoints NEF as a distributor for the sale if its Product on a
non-exclusive basis in any other area or jurisdiction outside the United States
where NEF is qualified to do business and where Asia has not or does not
subsequently appoint an exclusive distributor, if requested by NEF, and when NEF
is qualified to distribute products. The area wherein NEF is allowed a
non-exclusive distributorship for the sale of the Product is hereinafter
referred to as the "Non-Exclusive Territory".
2.4 NEF agrees to discontinue any sales in any Non-Exclusive Territory
where, after notice in writing from Asia to NEF, Asia subsequently appoints an
exclusive distributor, and in such case NEF shall be allowed a reasonable time
to close its operations, if any, in such area.
2.5 NEF accepts the appointment to develop demand for and to sell the
Product within both the Exclusive Territory and the Non-Exclusive Territory and
will make all sales hereunder in accordance with the terms and conditions of
this Agreement.
2.6 For purposes of this Agreement, Agent shall act as the
representative for Asia in the United States and all business conducted under
this Agreement between Asia and NEF shall be processed through Age nt as though
Agent were the product supplier, to which exclusive agency arrangement Asia
hereby agrees, and any communications wuth, payments to, acceptance of
instructions from, or other contact with Agent by NEF regarding any aspect of
the business between Asia and NEF as described and/or provided herein, shall be
considered as having been handled with and through Asia the same as authorized
by this Agreement whether or not such acts and information shall be otherwise
considered confidential.
2.7 As a distributor as appointed under the terms of this Agreement NEF
shall act as an independent contractor and shall market the Product for
distribution and sale directly from Asia to the purchaser thereof arranged by
NEF.
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2.8 In connection with sales and other distribution of the Product by
NEF in both the Exclusive Territory and Non-Exclusive Territory NEF shall obtain
all necessary licenses and regulatory approvals and will otherwise comply with
all governmental regulations applicable to sale and other distribution of the
Product by NEF except that Asia shall be solely responsible for compliance with
and shall cover the cost for, independent of NEF, all government regulation,
regardless of origin, necessary to have the Product available for the sale in
the United States and other jurisdictions within both the Exclusive Territory
and the Non-Exclusive Territory, which costs shall in no event be included in
the calculation of or allowed as deductions from, the price set forth for the
sale of the Product through NEF.
2.9 In addition to distribution of the Product, NEF shall use its best
efforts to establish a trade business in the United States in and interest in
the purchase of other grocery products available, to become available, or
potentially available from or through Asia and the reasonable costs of such
development shall be the responsibility of Asia, the costs thereof being borne
by NEF but advanced or otherwise financed by Asia provided such costs are
reasonable and any costs of significant amounts are where possible disclosed in
advance to Asia and approved (which approval shall not be unreasonably
withheld).
2.10 Asia reserves the right to, on notification to NEF, require Asia
approval of any significant expenditures in connection with this Agreement for
which Asia is made responsible prior to NEF incurring such expense.
2.11 "Significant Expenditures" as such term is utilized in this
Agreement shall mean expenditures relating to any marketing activity of NEF
which exceeds or is expected to exceed $50,000.
2.12 Product liability risks and risks of non-compliance with
applicable government regulation, as well as risk of loss not caused by willful
misconduct or gross negligence of NEF as such risks pertain to the Product or
other products sold or distributed by NEF for or on behalf of Asia shall be the
sole responsibility of Asia for which Asia shall and does hereby indemnify NEF.
2.13 NEF will be responsible to provide all services required to
transact in the frozen squid and grocery businesses in the United States
including but not limited to billing, collections, payables, inventory
maintenance and receivables support. Asia will provide all the financing
required after reviewing each transaction as it is submitted for payment. NEF
will be responsible to pay all operating expenses relating to the administration
of this Agreement out of NEF compensation. Asia will only be responsible to pay
for direct product costs including shipping and insurance and insure collections
are properly received and accounted for prior to remitting NEF compensation due
on each transaction to NEF.
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III. TERM
The term of this Agreement shall be ten (10) years from the date
hereof, with two successive five year extensions without change in terms (unless
agreed to by the parties hereto in writing, and conditioned upon NEF not being
in material default under the terms of this Agreement when the request for
extension is made) as may be requested in writing in advance by NEF, and as may
be further extended by mutual consent between the parties, unless earlier
terminated in accordance with and as specified in Article VI.
IV. CONSIDERATION
4.1 NEF shall pay to Asia (through Agent) as and for the consideration
for the granting by Asia to NEF of the rights to sell the Product in the
Exclusive Territory and Non-Exclusive Territory, royalties, administrative fees
and financing charges (apportioned between all as is agreeable to Asia)
(hereinafter the "Consideration") to be paid to Asia on the Product sales of NEF
in an amount equal to 2.25% of the net pre-tax profit on Sales proceeds for the
Product or products sold which net profit shall be based upon a wholesale (the
"Wholesale Price") price list for such products provided to and agreeable to
NEF, .25% of such Consideration shall be payable to Asia (in Asia's name through
Agent, unless otherwise instructed in writing by Asia)in restricted common stock
issued pursuant to Regulation S as long as and to the extent that Asia is and
continues to be qualified to acquire such stock in Krantor Corporation
(hereinafter "Krantor") (public parent corporation to NEF) the amount of shares
per dollar of Consideration to be based upon the then current market value of
publicly traded common stock in Krantor.
Asia, Agent, their successors and assigns shall not, as stockholder,
partner, principal agent, employee or otherwise, directly or indirectly engage
in any business of any nature or type conducted by NEF and subject to this
Agreement which shall in any manner compete with the business of NEF subject to
this Agreement or limit or preclude to NEF the opportunity of increasing or
expanding its business, without the prior written consent of NEF.
4.2 In consideration for Asia or their duly authorized designee
providing the Product and/or other products to NEF for further sale and
distribution by NEF in accord with this Agreement, on credit and consignment to
NEF, and as security for doing so, NEF shall at the initiation of the joint
venture provided for by this Agreement loan and transfer to Asia $2,000,000 in
cash and inventory as collateral security for performance by NEF as provided in
and in accord with this Agreement. Interest at an annual rate of 5% shall accrue
on such monies while held by or for the benefit of Asia and shall be payable by
Asia to NEF along with return of the funds if and when returned to NEF. If there
shall occur any material default by NEF under the terms of this Agreement and if
such default be notified and evidenced to NEF, be undisputed, and remain uncured
for 30 days or more continuous, Asia may enforce recovery of monetary damages
resulting from such default against said funds, and such recovery shall be the
exclusive manner of Asia receiving any monetary damages. If the claimed default
is disputed in writing by the party claimed to have defaulted, such disputes
shall be solved using the same procedure as with terminating of this Agreement
(See Section VI infra) although access to the said funds shall be available to
the aggrieved party if default is confirmed in such litigation. Asia shall also
maintain a lien interest in such funds as security for sale or return of the
Product or other products transferred to NEF for further sale in accord with
this Agreement. Possession of said funds shall be sufficient to perfect the said
lien interest, but financing statements may be filed if such is deemed advisable
by legal counsel to Asia. This agreement and arrangements as provided herein re:
the $900.00 funds shall take effect upon receipt by Asia of said funds and need
not be memorialized or otherwise provided for in any separate instrument unless
and until so required at the written request of Asia. From time to time, if
business experience warrants, within the sole discretion of NEF, they may elect
to provide Asia with additional collateral funds to help assist in increased
business between NEF and Asia.
4.3 As further security for the covenants within and participation in
the arrangements made per this Agreement by Asia, and as further assurance by
NEF of their performance hereunder, Asia recognizes and relies upon the value
and good-will of Krantor Corporation, ("Krantor) the corporate parent of NEF and
requires a stock pledge of all securities in NEF held by Krantor, which stock
pledge is agreed to by both NEF and Krantor, evidenced by their signatures
provided on this Agreement. Such stock pledge shall also be evidenced by
separate instrument significantly in the form as attached as an exhibit to this
Agreement.
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V. PAYMENT AND DELIVERY
5.1 All orders Asia receives for its product from NEF or customers
referred to Asia by NEF and manner of payment therefor are subject to acceptance
by Asia and Asia reserves a right of consultation and approval on marketing
strategies, which approval shall not be unreasonably withheld and such approval
shall be given if marketing methods and strategies by NEF are in conformity with
the usual business practices prevalent in the marketing area. In all events,
shipment of the Product pursuant to the order given by or through NEF shall be
construed as approval.
5.2 Asia shall pay or arrange for payment to NEF all proceeds from sale
of the Product and other sales of products marketed by Asia through NEF as
authorized within the provisions of this Agreement from which NEF shall subtract
the Wholesale Price for such payment and the Consideration (as such terms have
been defined herein) and remit same to Asia, through Agent, the net amounts to
be paid to NEF hereinafter to be referred to as the "Net Proceeds". All Net
Proceeds payable to NEF which are received by Asia shall be forwarded to NEF
within 7 days of receipt by Asia, and/or Agent, and Asia shall provide weekly
summaries of such receipts in writing to NEF. All payments shall be made in US
currency. Compensation to NEF under this Agreement shall hereinafter be referred
to as "NEF Compensation".
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5.3 Asia will use its best efforts to fill the accepted orders as
promptly as practicable, subject, however, to delays caused by transportation
conditions, labor or material shortages, strikes or other labor difficulties,
fire or other natural disaster, or other cause of whatever nature beyond the
immediate control of Asia. In all cases Asia will use its best efforts to advise
NEF in advance of any inability to make full and timely delivery of any of the
Product which NEF has previously arranged an order for.
5.4 NEF or its duly designated agent shall be allowed the right to
inspect the Product prior to being packaged and placed for shipment and NEF need
not offer for sale any product thought unsatisfactory in their sole discretion.
5.5 There shall be no minimum amount requirements which NEF shall be
required to have purchased or have arranged for purchase.
5.6 The costs of shipping and of insuring the Product during shipment
shall be borne by Asia and arrangements therefor made by Asia and NEF shall have
no responsibility to customers arranged by them for Product orders to Asia and
NEF shall be indemnified by Asia for claims of damages to such customers for
non-shipment of goods or shipment of defective goods. NEF shall be named as an
additional insured on shipment of all Products by Asia to customers arranged by
NEF.
5.7 In order to enable Asia to have a complete record of all products
sold, NEF shall furnish Asia at such intervals as Asia and NEF shall agree, but
not less than semi-annually, a report of all sales of Asia's Product in the
Exclusive Territory and/or in the Non-Exclusive Territory by NEF.
5.8 Unless Asia shall have authorized or permitted the return of any
Product, Asia shall not be obligated to accept any Product returned, nor to make
any exchange thereof, nor to credit NEF therefor, except in the case of damage
or defect attributable to Asia.
VI. TERMINATION
6.1 This Agreement and the term thereof may be terminated by either
Asia or NEF in the event of the material and substantial breach, violation or
default by the other party of any covenant, condition, warranty or
representation hereunder. Such termination shall become effective ten (10) days
after receipt by the breaching or defaulting party of written notice of such
termination from the other party with the nature of such default and the facts
underlying the default therein specified, unless the party claimed to have
defaulted disputes such claim in writing, upon which occurrence the parties
shall be allowed to litigate the issues and unless otherwise agreed further
performance under this Agreement shall be stayed until the parties are notified
of the results of such litigation without liability to either party being caused
by such delay. Notwithstanding, if the litigation can not be scheduled, heard,
and a decision rendered within one hundred twenty (120) days not caused by
neglect or willful act of the party seeking continuation of the Agreement, this
Agreement shall be terminated and continuance shall require execution of a new
or renewal contract. 6.2 Asia shall not be liable to NEF or customers of Asia
arranged by NEF for any delays in delivery or any failure to deliver due to
causes beyond Asia's control, including but not limited to acts of God, war,
mobilization, civil commotion, riots, embargoes, domestic or foreign
governmental regulations or orders enacted after inception of the joint venture
provided for under the terms of this Agreement, fires, floods, strikes, lockouts
or other difficulties, machinery breakdowns, or shortages of or inability to
obtain shipping space or transportation, not caused by the gross neglect or
willful misconduct Asia.
6.2 Asia shall not be liable to NEF or customers of Asia arranged by
NEF for any delays in delivery or any failure to deliver due to causes beyond
Asia's control, including but not limited to acts of God, War moblization, civil
commotion, riots, embargoes, domestic or foreign governmental regualtions or
orders enacted after inception of the joint venture provided for under the terms
of this Agreement, fires, floods, strikes, lockouts or other difficulties,
machinery breakdowns, or shortages of or inability to obtain shipping space or
transportation, not caused by the gross neglect or willful misconduct Asia.
6.3 The termination of this Agreement, irrespective of the ground
thereof and the party effecting same, shall not relieve any party of its
obligations hereunder prior to the effective date of such termination, nor
thereafter of any of the obligations set forth in Sections 2.7, 2.8, 5.7, 5.8,
and Article VII.
6.4 The parties mutually acknowledge and agree that in the event of any
default by another party under this Agreement, the injury to the aggrieved party
will be irreparable and damages will be inadequate and that, in addition to any
other remedy allowed, the aggrieved party shall, at is option, be entitled to
specific performance of this Agreement.
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VII. TRADE SECRETS
NEF agrees that any trade secrets or any other like information of
value relating to the business and/or field of interest of Asia or any of its
affiliates, or of any corporation or other legal entity in which Asia or any of
its affiliates has an ownership interest of more than twenty-five per cent
(25%), including but not limited to, information relating to inventions,
disclosures, processes, systems, methods, formulae, patents, patent
applications, machinery, materials, research activities and plans, costs of
production, contract forms, prices, volume of sales, promotional methods, list
of names or classes of customers, which NEF has heretofore acquired during the
engagement of NEF by Asia or any of its affiliates or which NEF hereafter
acquire during the term of this Agreement as the result of any disclosures to
NEF, or in any other way, shall be regarded as held by Asia and its personnel in
a fiduciary capacity solely for the benefit of Asia, its successors and assigns,
and shall not at any time, either during the term of this Agreement or
thereafter, be disclosed, divulged, furnished, or made accessible by NEF or its
personnel to anyone, or be otherwise used by them, except in the regular course
of business of Asia or its affiliates. Information shall for the purposes of
this Agreement be considered to be secret if not known by the trade generally,
even though such information may have been disclosed to one or more third
parties pursuant to distribution agreements, joint venture agreements and other
agreements entered into by Asia or any of its affiliates.
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VIII. MISCELLANEOUS
9.1 Distributor Not Made an Agent. It is agreed that this Agreement
does not constitute NEF the agent or legal representative of Asia for any
purpose whatsoever. NEF is not granted any right or authority to assume or to
create any obligation or responsibility, express or implied, on behalf of or in
the name of Asia or to bind Asia in any manner or thing whatsoever.
9.2 Governing Law. This contract shall be governed by and construed
according to the laws of the State of New York, but all questions and
controversies, if any, shall be settled in United States Federal Court having
jurisdiction and location within the State of New York.
9.3 Further Assurances. At any time, and from time to time, after the
date of this Agreement, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred or to be transferred in accordance
with the terms hereof or otherwise to carry out the intent and purposes of this
Agreement.
9.4 Assignment. This Agreement is personal to the parties and shall
incur only to their benefit or the benefit of any further entity into which said
parties may merge under law. This Agreement cannot be assigned by any party
except by or with the written consent of the other party. Nothing herein
expressed or implied is intended or shall under any circumstances be construed
to confer upon or give any person, firm or corporation other than the parties
hereto and their respective legal representatives, any rights or benefits under
or by reason of this Agreement.
9.5 Notices. All notices, demands and other communications hereunder
shall be deemed to have been duly given if delivered or mailed, certified or
registered mail, with postage prepaid, or served personally on a party at his
respective address as hereinabove recited or at such other address as such party
may, from time to time, provide in writing to the other party for such purpose.
9.6 Complete Agreement. This Agreement constitutes a complete statement
of all of the arrangements, understandings and agreements between the parties
with respect to the subject matter hereof. All prior memoranda and oral
understandings with respect thereto are merged into this Agreement. Except as
aforesaid, neither of the parties hereto shall rely on any statement by or in
behalf of any other party which is not contained in this Agreement.
9.7 Interpretation. Whenever possible, each Article of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any Article is unenforceable or invalid under such law,
such Article shall be ineffective only to the extent of such unenforceability or
invalidity, and the remainder of such Article and the balance of this Agreement
shall in such event continue to be binding and in full force and effect.
9.8 Non-Waiver. The terms, provisions and covenants hereinbefore
contained shall be specifically enforceable. The failure by either party hereto
to enforce any provision of this Agreement shall not operate or be construed as
a waiver of any right, power or privilege contained in that provision or any
other provision of this Agreement.
9.9 Headings. The headings of all Articles or within any Articles
herein specified are for the convenience of locating information only and shall
have no substantive effect on or be construed as assisting in the interpretation
of any of the terms, covenants or conditions of this Agreement.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed the day and year first above written.
WITNESS: NEW ERA FOODS, INC.
by /S/ Mair Faibish, Vice President
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Mair Faibish, Vice President
WITNESS: ASIA LEGEND TRADING LTD
by /s/ Wei Wei, Resident Director
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Wei Wei, Resident Director
WITNESS KRANTOR CORPORATION
by
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