May 8, 2007 Ms. Kathy Kordowski Vice President, Package Engineering & Marketing Services Avon Products, Inc. New York, N.Y. 10020 Re: Credit Memo Dear Kathy,
May
8,
2007
Xx.
Xxxxx
Xxxxxxxxx
Vice
President, Package Engineering & Marketing Services
Avon
Products, Inc.
0000
Xxxxxx xx xxx Xxxxxxxx
New
York,
N.Y. 10020
Re: Credit
Memo
Dear
Xxxxx,
Avon
Products, Inc. (“Avon”) and Versadial, Inc. (“Versadial”, collectively the
“Parties”) are parties to a certain Letter of Agreement dated September 18, 2006
and clarified by letter dated September 27, 2006 (“LOA”).
As
contemplated by the LOA, the Parties are entering into a master supply agreement
(the “Master Supply Agreement”) and purchase order (“PO”) whereby Versadial will
provide to Avon a 20mm dual chambered dispensing pump (referred to hereafter
as
the “Lipmix Package”), with custom blending technology for use in packaging
color cosmetics with various Avon designed formulas.
As
Avon
has given its approval based on the Functionality Test, it has delivered to
a
Versadial the $1,700,000 provided for in the LOA and has issued the PO
contemplated therein, Avon is entitled to recover the entire $1,700,000 (the
“Credit Amount”) as credits against products purchased from Versadial using the
Lipmix Package, including items purchased pursuant to the PO, as same may be
amended or extended, in accordance with the terms and conditions set forth
below.
Other
then as a credit against such purchases, Avon shall not be entitled to return
of
any portion of the Credit Amount unless there is an Event of Default, described
below. In such event, Avon shall have the right, in the exercise of its
discretion, to either recover the outstanding balance of the Credit Amount
as
credits, to be negotiated in good faith by the Parties, against other purchases
from Versadial or to reduce the outstanding balance of the Credit Amount to
a
Promissory Note, in the form attached hereto as Exhibit 1, as provided
below.
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Specific
Terms of this Credit Memo:
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Credit
Amount:
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US$1,700,000.
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Application
of Credit:
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(a)
Commencing with shipments of products, using the Lipmix Package,
to Avon
following the first six (6) months from date of the first shipment
of such
products for commercial purposes under the PO, Avon shall be entitled
to
credit against the purchase price of all products purchased by
Avon using
the LipMix Package, regardless of product sector, until the entire
Credit
Amount has been applied;
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(b)
The Credit Amount shall be applied at the rate of US$0.075 per
piece for
all such products purchased by Avon.
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(c)
such credit is available and shall be applied on an open ended
basis,
without expiration, until the entire Credit Amount has been
applied.
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Default
Provisions:
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The
occurrence of any of the following events shall be deemed an Event
of
Default empowering Avon to demand the execution of the Promissory
Note
described below or to enter into good-faith negotiations for the
application of the Credit Amount to other purchases by Avon from
Versadial. Failure of Avon to require Versadial’s performance of any of
the terms under this Agreement or waiver by Avon of any breach
by
Versadial of this Agreement shall not prevent subsequent enforcement
of
such term, nor shall it be deemed a waiver of any subsequent breach
hereof.
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(i)
If Versadial commits or suffers any act of bankruptcy, comes under
the
control of a receiver, is unable to pay its bills on time, makes
an
assignment for the benefit of creditors of all or part of its assets,
or
undergoes liquidation or dissolution, or
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(ii)
fails to cure any material breach in the provisions of this Credit
Memo
within ten (10) days after written notice of such breach,
or
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(iii)
fails to cure any material breach in the provisions of the Master
Supply
Agreement, as provided therein.
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Force
Majeure:
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The
failure of Versadial to perform its obligations under this Agreement
shall
be excused if such failure to perform or any delay (not to exceed
180
days)is caused by matters beyond its reasonable control, such as
acts of
God; strikes; and civil commotion.
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5
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Promissory
Note:
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In
the event that an Event of Default, as described above, remains
uncured,
Avon shall have the right to demand and Versadial hereby agrees
to execute
an unsecured promissory note in the form annexed hereto as Exhibit
1
(“Promissory Note”) for the balance of the Credit Amount still outstanding
at the time of such demand (the “Loan Amount”). Where Versadial does not
execute such Promissory Note within five (5) business days of request
therefore, Avon is hereby appointed attorney-in-fact for Versadial,
coupled with an interest, to execute such Promissory Note.
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If
the
foregoing meets with your understanding, please sign a copy of this credit
memo
were provided below and it shall serve as a binding understanding between
us in
conjunction with the Master Supply Agreement and PO.
Sincerely,
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By /s/
Xxxxxxxx
Xxxxxxxxx
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Xxxxxxxx
Xxxxxxxxx, CEO
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Agreed
to and Accepted this
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8th
of May, 2007
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Avon
Products, Inc.
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By
/s/
Xxxxx
Xxxxxxxxx
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Xxxxx
Xxxxxxxxx
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Vice
President, Package Engineering & Marketing
Services
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EXHIBIT
1
FORM
OF
PROMISSORY
NOTE
| Date: | Amount: $______________ |
Versadial,
Inc. (hereinafter “Maker”) promises to pay to the order of Avon Products, Inc.
(hereinafter “Holder”), FOR VALUE RECEIVED, the principal sum of______________
($________) DOLLARS, together with default interest as provided below if
applicable (computed on the basis of the actual number of days elapsed and
a
year of 365 or 366 days, as the case may be) on the unpaid principal balance
thereof outstanding from time to time, from and including the date hereof
until
such principal balance is repaid in full.
The
principal and accrued interest (if any) shall be due and payable in lawful
money
of the United States of America at such address as the Holder from time to
time
may specify by written notice to the Maker 90 days after due Demand has been
made for payment by Xxxxxx.
Where
Maker has defaulted in its obligation to make payment hereunder, the interest
rate shall immediately (whether or not Holder has declared a default or
commenced an action to collect on this note) be fixed at 8% per annum and
the
obligation of Maker shall be increased as same applies.
The
Maker, may, at its option pre-pay this note in whole or in part without premium
or penalty but with accrued interest, if any.
The
Holder hereof, at its option, may make extensions of the time for the payment
of
the indebtedness or accept a renewal note or notes therefor, all without
notice
and the Maker hereby consents to any such extensions or renewals, all without
notice, and agrees that any such action shall not release it from any liability
hereunder.
The
Maker
waives presentment for payment, demand, protest, notice of dishonor, notice
of
non-payment of this note and diligence in the collection thereof, as conditions
of liability under this note and also hereby waives trial of jury, counterclaim
or set-off in the event of litigation by Xxxxxx to enforce payment of this
note.
Upon
default, Holder may take all actions in law and in equity to collect on this
note and Maker hereby agrees to pay to the Holder hereof such further amount
as
shall be sufficient to cover all costs and expenses of collection (not merely
recoverable costs) including without limitation, reasonable attorney's fees
for
all services rendered in that connection.
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Any
action whatsoever brought upon or relating to this Note shall be instituted
and
prosecuted in the state courts of New York, county of New York, or the federal
district court in and for the Southern District of New York, and each party
waives the right to change the venue and any objection or defense to any
such
jurisdiction as an inconvenient forum, or otherwise. The parties hereto further
consent to accept service of process in any such action or proceeding by
certified mail, return receipt requested, directed to the addresses for Maker
and Holder set forth below.
Any
notice hereunder shall be in writing, shall be signed by the giver, and shall
be
sent to the Maker or Holder, as applicable, at the address specified in this
Note or most recently specified in any written notice to the other party,
which
notices shall be sent by certified or registered mail, return receipt requested,
facsimile to a number provided by such notice, with written confirmation,
or by
overnight courier, messenger or other means of personal delivery, and shall
be
effec-tive upon delivery.
This
note
has been made and delivered in the City, County and State of New York, and
shall
be governed by and construed in accordance with the applicable law pertaining
in
the State of New York (other than those conflict of law rules that would
defer
to the substantive laws of another jurisdiction). Whenever reference is made
to
any party, such reference shall be deemed to include the successors, assigns,
heirs and legal representatives of such party; provided, however, that nothing
herein shall be deemed to authorize or permit the Maker to assign or delegate
any of such person's rights or obligations under this note to any other person
(whether or not an affiliate of such person). Each and every modification
and
amendment of this Note shall be in writing and signed by the Maker and the
Holder. The terms and provisions of this note are intended to be severable.
This
note contains the entire agreement of the parties and supersede all other
representations, warranties, agreements and understandings (oral or otherwise)
with respect to the matter contained herein and therein.
Versadial,
Inc. (Maker)
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By________________________
Authorized
Signator
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Address
of Maker
000
Xxxxxxx Xxxxxx
Xxxxx
0000
Xxx
Xxxx XX 00000
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