DISTRIBUTION
AGREEMENT
THIS AGREEMENT is made August 3, 2009
BETWEEN :
FERTILIZER
KING CORPORATION LIMITED
a corporation incorporated under the laws
of Hong Kong, PRC
WITH
CORPORATE OFFICES AT :
12121 Wilshire Boulevard
Suite 1400
Los Angeles, California
90025, USA
Phone: +1-866-575-6854
Fax: +1-877-420-7950
Email: info@fertilizerking.com
(“ FK
”)
- and -
TARA
MINERALS CORP.
a corporation incorporated under the laws
of the State of Nevada
(the “ Distributor
”)
WHEREAS
:
A.
FK manufactures and sells the Product
(hereinafter defined).
B.
FK desires to retain the services of the
Distributor as FK’s exclusive distributor of the Product in
the Territory (hereinafter defined).
NOW THEREFORE , in consideration of the sum of $10 and the recitals
and the mutual covenants contained hereinafter and for other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Parties agree as follows:
1.
INTERPRETATION
1.1
Definitions
In this Agreement, the following terms
have the following meanings:
“ Agreement ” means
this distribution, including the schedules thereto;
“ Confidential Information
” means any and all
(a)
information that is not available to the
public;
(b)
knowledge and information of a
confidential or proprietary nature related to a Party, its
equipment designs, manufacturing techniques and formulas, product
development know-how, sales and distribution confidential data or
its operations in general which the other Party may acquire from
first Party; and
(c)
communications between FK and the
Distributor,
other than information that (i) becomes
publicly available as a result of a disclosure in breach of this
agreement, (ii) becomes available on a non-confidential basis
from a source other than the other Party or its representatives, so
long as that source is not bound by a confidentiality agreement or
otherwise prohibited from transmitting the Confidential Information
by a contractual, legal or fiduciary obligation, or (iii) was
already known to the other Party on a non-confidential
basis;
“ Minimum Sales Requirement
” has the meaning ascribed thereto in Section
5.4.1;
“Party”
means a party to this
agreement;
“ Product ” means the
fertilizers and similar products produced by FK or any of
FK’s affiliates;
“ Sales Contract(s) ”
has the meaning ascribed thereto in Section 5.1(a);
“ Term ” has the
meaning ascribed thereto in Section 4.1; and
“ Territory ” means
the Federal Republic of Mexico.
1.2
Gender and Number
In this Agreement, words in the singular
include the plural and vice-versa and words in one gender include
all genders.
1.3
Currency
“Dollars” or “$”
refers to United States Dollars. All payments made pursuant to this
Agreement shall be made in United States Dollars unless mutually
agreed upon by both parties.
2.
APPOINTMENT
2.1
Appointment of
Distributor
FK hereby grants to the Distributor
exclusive promotional, sales and distribution rights regarding the
promotion, sale and distribution of the Product in the Territory
and the Distributor accepts such rights, all upon and subject to
the terms and conditions of this agreement.
2.2
Exclusivity of
Appointment
2.2.1
Provided that the Distributor has met the
Minimum Sales Requirement, the Distributor shall be the sole and
exclusive distributor of FK’s Product within the
Territory.
2.2.2
FK shall not, directly or
indirectly:
(a)
appoint or employ any other sales
representative, agent or distributor in the Territory;
(b)
distribute or sell the Product in the
Territory, except as provided in this Agreement; and
(c)
knowingly, offer or sell Product to any
purchaser or agent who intends to use or export the Product, or
resell the Product for delivery, in the Territory.
2.2.3
The Distributor shall be entitled to
liquidated damages equal to $100.00 per tonne upon any sales made
in contravention of Section 2.2.2 above.
2.3
Sub-distributors
2.3.1
The Distributor may appoint
sub-distributors covering all or part of the Territory, provided
that such sub-distributors shall be subsidiaries of the Distributor
or entities with which the Distributor shall have a contractual
relationship. The Distributor must notify FK of any newly appointed
or formed sub-distributor that are controlled by the Distributor.
All other sub-distributors must be approved in writing by FK, but
approval will not be duly withheld without cause.
2.4
Customer Enquiries
2.4.1
FK agrees that all enquiries with respect
to, and all orders for, the Product received by FK from the
Territory shall be promptly referred to the Distributor. FK further
agrees that is shall not sell or provide the Product to any other
party without first obtaining an agreement that such third party
shall not re-sell or distribute the Product within the
Territory.
2.5
Relationship Between the
Parties
2.5.1
The Parties agree that the Distributor is
an independent contractor in accordance with the terms and
conditions of this Agreement, and not an employee, legal
representative, agent or partner of FK for any purpose
whatsoever.
2.5.2
Nothing contained in this Agreement shall
be deemed to constitute FK or the Distributor, representatives, or
employees of each other for any purpose. FK and the Distributor are
not granted, and shall not represent in any way that they possess,
any right or authority to assume any obligation to make any
agreement or commitment express or implied, on behalf of or in the
name of each other, or to bind each other in any manner. The
Distributor is solely
responsible for complying with all legal
and regulatory requirements and for all efforts of the Distributor
in promoting, selling and distributing the Product in the
Territory.
2.5.3
The Distributor agrees not to pledge or
bind the credit of FK in any way and not to act as to compromise
FK's credit and to undertake no guarantee or warranty in respect of
the Product of FK except as provided in writing by FK, and in all
matters of trade or technical description, shall follow such
description as established or ratified by FK in relation to
suitability for use of the Product in the Territory.
2.5.4
Upon the attainment of annual sales of
Product in the Territory exceeding 150,000 tonnes, FK and the
Distributor shall in good faith negotiate a joint venture
relationship regarding production of the Product in the Territory.
3.
REMUNERATION OF THE
DISTRIBUTOR
3.1
Distributor’s Fee
The Distributor shall sell the Product in
the Territory at prices set by the Distributor, such prices to be
determined solely by the Distributor at its discretion. The
difference between what the Distributor sells the Product and the
price for such Product payable to FK, as further detailed in
Subsection 5.3.2, shall comprise the Distributor’s gross margin
(the “Distributor’s Fee”).
The Distributor shall pay FK for Product
supplied by FK in the manner specified in Section 5.3.6.
All of the Distributor’s expenses
for traveling, maintenance, entertainment, office, clerical,
employee wages, income and other tax, insurance, telephone, and all
other selling and operating expenses incurred by the Distributor
shall be borne solely by the Distributor and FK shall not in any
way be responsible or liable for such expenses. The Distributor
shall provide, manage and control at its own expense, adequate
personnel, and equipment, office and communication facilities, to
perform its obligations under this Agreement. Subject to the
prior written approval by FK, certain expenses made in support of
the Distributor’s activities in the Territory, may qualify
for reimbursement by FK.
4.
TERM AND TERMINATION
4.1
Term
This agreement shall commence on the
later of: (i) the date of this agreement; (ii) the date when an
import licence has been granted to the Distributor by Mexico for
the Product; or (iii) the date when FK gives notice to the
Distributor that it is in a position to deliver, on 60 days notice,
Product at levels of no less than 20,000 t onnes per month,
and shall continue for an initial period of 10 years (the “
Initial Term ”) and shall automatically be
extended for an additional 10-year period unless terminated in
accordance with Section 4.2 (cumulatively, the “ Term
”).
4.2
Termination
The Agreement may be
terminated:
(a)
by the Distributor following the end of
the Initial Term (upon delivery of written notice no less that 120
days prior to the termination date);
(b)
by either party, without prejudice to the
rights of either party to money due or to become due under this
Agreement, effective immediately and without any requirement of
notice, in the event that the other party becomes insolvent, files
a petition in bankruptcy, files a petition seeking any
reorganization, arrangement, composition, or similar relief under
any federal, state or provincial law regarding insolvency or relief
for debtors, or makes an assignment for the benefit of creditors or
similar undertaking, or if a receiver, trustee or similar officer
is appointed for the business or property of the other party or if
a petition in bankruptcy is filed against the other party and not
dismissed within 60 days of being filed;
(c)
by written agreement signed by FK and the
Distributor;
(d)
by either party, at any time without
liability of one Party as against the other, if the situation among
nations renders the performance of this Agreement
illegal;
(e)
by the Distributor, upon 90 days written
notice if FK is unable to fulfill the requirements of this contract
to supply the Product to the Distributor for reasons of production
capacity on the part of FK;
(f)
FK will be entitled to liquidate damages
equal to $100 per tonne and have the option to terminate the
Agreement upon any sale of product outside of the Territory or any
sale of altered FK pr