MINNESOTA COMMERCE - Unhappy Franchisee

ate of interest that will be charged for inidal inventory financing will be 8.25% (Prime Rate plus 5%)
up to 10.25% (Prime Rate plus 7%). The term of the Note will be determined by Mateo and will be up
to 120 months.
You will be in default under the Note if (a) any installment of principal or interest on the Note is not
paid when due or upon demand as provided for in the Note; (b) you fail to pay your debts as they
mature; (c) you default under the Distributorship Agreement or any other agreement, note, lease, or
contract between you and Mateo, or if any such agreement is canceled; (d) you cease operating the
Distributorship or the Distributorship is dissolved, terminated, insolvent, or ceases operadons; or (e)
you fail to have the Note fully collateralized with inventory (as reflected in the Security Agreement,
described below) at all times.
If you default under the Note, the principal balance and all accrued interest will become due and
payable without demand. You and any endorsers or guarantors of the Note must waive demand,
protest, presentment, notice of protest and non-payment or dishonor, and must also waive any and all
defenses on the grounds of any extensions or partial payments which may be granted or accepted by
Mateo.
The Note must be guaranteed by you or another person acceptable to Mateo. You must also sign a
Security Agreement (Exhibit D to the Distributorship Agreement) granting Mateo a secmity interest in
your inventory of Products and Accounts Receivable. At Mateo's request, you must sign all necessary
financing statements and other firanchisedocuments and pay the costs of document processing and
filing fees for such statements or other documents. The processing/filing fee is included as part of the
document processing fee that you pay at the time you execute the Distributorship Agreement.
Mateo financing will not be offered to all prospecdve distributors, but only to those that meet Mateo's
qualifications. Also, even in situations in which Mateo offers financing,Mateo is not required to offer
financing for the maximum amount of up to $72,000, but may offer financingfor a lesser amount.
Factors such as your qualifications and credh-worthiness will affect the level of financingthat might
be offered.
(2) In some states, the maximum interest rate may be less than the amount stated in the chart due to state
lending laws.
(3) Your purchases of the Products are charged to aftvour Open Purchase Account on which payment is
due upon your receipt of an invoice from Mateo. Other charges to the Open Purchase Account, in
addidon to Product purchases and related charges, may include MDBS charges, web maintenance
fees, Tool Expo charges, and training costs. If you do not make payment within 21 days of the
invoice, the account is deemed delinquent by Mateo. Mateo will assess a 5% per week late fee for
each week that you fail to pay the balance owed up to $100. If you pay within 14 days of the invoice,
you may be eligible for purchase discounts, which may vary from3% to 5.25% depending upon the
volume of purchasesT and performance rewards protrram level. In certain limited circumstances, some
distributors might oualifv for addidonal VPTT bonuses or rebates, and the VPTT bonus mav be UP to
6.%-pf the_qualiiying^Buichaseg.^ In addidon, if you are not in compliance with the NationalJDistributor
Purchase Average/District Distributor Purchase Average requirement, or the purchase average to total
sales rado discussed in Item 6 above, your Volume Payment to Terms Bonus will en^y-be available
only if you pay for purchases within 7 days of the invoice (see Item 6 above). As noted in the chart,
Mateo will have a security interest in the inventory and receivables and you must sign the Security
Agreement noted above (even if you did not sign a Note described in Note (I) above).
(4) Upon termination or expiration of this Agreement, you will pay Mateo interest on the balance owed
under your Open Purchase Account as of the date of termination or expiradon, at a rate of 22.5%
annually, or the maximum rate permitted by law, whichever is lower. In addition, Mateo may assess
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Mateo 2ai2.FDD/PK -^5#?§45^4-y42QlL£ 03/09/4412