BAT VEO



August 27th, 2018 

IMPERIAL TOBACCO COMPANY LIMITED  TRADING TERMS AND CONDITIONS FOR RETAIL CUSTOMERS 

1. Definitions  

Whenever used in these Trading Terms and Conditions for Retail Customers, the following words shall have the respective meanings ascribed to them as follows: 

(a) “Affiliate” means a subsidiary or other entity related to a Person through common ownership, as defined in the Canada Business Corporations Act, as such statute may be amended; 

(b) “Business Day” means any day, other than a Saturday or Sunday, on which the Royal Bank of Canada in the Province of Quebec is open for commercial banking business during normal banking hours; 

(c) “Carton” means a carton (200 cigarettes) of tobacco Products or a Carton Equivalent of tobacco Products;  

(d) “Carton Equivalent” means 1 tray of pouches of fine cut tobacco, or 1 tub of fine cut tobacco; 

(e) “Customer” is the Person who purchases Products from ITCO for resale in the Customer’s Retail Operations; 

(f) “Customer’s Retail Operations” means the Retail Locations of the Customer and/or its Affiliates and/or its Franchisees each of which meets the following criteria: 

(i) offers for sale and sells the Products only to adult end use consumers; 

(ii) does not carry on any other business operations in which the Products are offered for sale, such as a wholesale business, in the same physical location; 

(iii) orders Products exclusively for purpose of sale to adult retail end use consumers; and 

(iv) is readily identifiable to the public as a distinct retail business. 

(g) “DSS Service” has the meaning ascribed to it in Section 6(a) of these TTCs; 

(h) “DSS Territory” means those areas within Canada where ITCO offers DSS Service; 

(i) “Effective Date” has the meaning ascribed to it in Section 2(d) of these TTCs; 

(j) “Franchise” means a right to engage in a business granted by a Person (the “Franchisor”) pursuant to a contract in which: 

(i) the Person to whom such grant is made (the “Franchisee”) is required to make a payment or continuing payments to the Franchisor in the course of operating such business; 

(ii) the Franchisor grants to the Franchisee the right to sell and offer for sale goods or services that are substantially associated with the Franchisor’s trade-mark, trade name or logo;  

(iii) the Franchisee is required to primarily or solely use the Franchisor’s trade-mark, trade name or logo in association with the business, and otherwise identify the business, and present it to the public, as part of the Franchisor’s franchise system;  

(iv) the Franchisor exercises significant control over the Franchisee’s method of operation, such as product merchandising and display layout, building design and furnishings, locations, business organization, marketing techniques or training;  

(v) the Franchisor has the right to designate brands of products or product assortment to be sold by the Franchisee and has the right to designate authorized sources of such products to be purchased by the Franchisee; and 

(vi) the Franchisor may suggest or influence compliance with maximum prices for the products sold by the Franchisee. 

(k) “Franchisee” has the meaning set out in the definition of “Franchise”, above; 

(l) “Franchisor” has the meaning set out in the definition of “Franchise”, above; 

(m) “ITCO” means Imperial Tobacco Company Limited; 

(n) “ITCO Order Solution” means ITCO’s ordering solution for ordering Products through one of the methods recognised by ITCO, namely by web, EDI or by fax (if approved by ITCO upon request by the Customer by calling ITCO customer service). 

(o) “Item(s)” means the Products as packaged and includes Carton, Carton Equivalent and 1 pouch of fine cut tobacco;   

(p) “Law” means any federal, provincial or municipal law, by-law, regulation, order, code, guideline or other rule having the force of law; 

(q) “Money Laundering” means the process used to disguise the source of money or assets derived from criminal activity; 

(r) “NGP Products” means next generation products that are comprised of any Tobacco Heated Products and Vaping Products; 

(s) “Order” means an order for the Products placed by the Customer in respect of its Retail Locations, or by the Customer’s Affiliates or Franchisees on behalf of the Customer in respect of such Affiliate’s or Franchisee’s Retail Locations, in accordance with these TTCs;  

(t) “Pre-Existing Agreement” means any valid written agreement between ITCO and the Customer in force as of the Effective Date; 

(u) “Person” includes any individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, governmental authority and a natural person in such person’s capacity as a trustee, executor, administrator or other legal representative;  

(v) “Product(s)” means the products, including NGP Products distributed by ITCO or its Affiliates and identified on ITCO’s Products and price lists, that are in force from time to time; 

(w) “Qualifications” has the meaning ascribed to it in Section 2(a) of these TTCs; 

(x) “Retail Locations” means any and all of the retail store locations of the Customer, and of the Customer’s Franchisees and/or Affiliates, if any, as agreed to by the parties and as may be amended from time to time upon agreement by the parties, which retail store locations must be located in the DSS Territory, unless otherwise agreed by ITCO;  

(y) “Term” has the meaning ascribed to it in Section 8(a) of these TTCs; 

(z) “Tobacco Heated Products” means products that are manufactured in whole or in part from tobacco and that, instead of being burned, are designed to be heated to produce a vapour or aerosol, any device used to heat such products, and any accessories to be used with such a device; 

(aa) “Transfer” means any event pursuant to which the rights and obligations of the affected party under these TTCs are or are attempted to be sold, disposed of, assigned, pledged, hypothecated, charged, mortgaged, encumbered, sublicensed or transferred and includes any transfer by operation of Law;  

(bb) “TTCs” mean these Trading Terms and Conditions for Retail Customers including all attached schedules, all ITCO policies and documents incorporated herein by reference and all instruments supplementing, amending or confirming them, as amended from time to time by ITCO; and 

(cc)  “Vaping Products” means any device that produces emissions in the form of an aerosol and is intended to be brought to the mouth for inhalation of the aerosol, any accessories to be used with such a device, and any substance or mixture of substances, whether or not containing nicotine, that is intended to be used by such a device to produce emissions. 

2. Application and Interpretation 

(a) Qualifications: These TTCs are applicable to the Customer only if it meets the following qualifications (the “Qualifications”), as determined by ITCO in its sole discretion:  

(i) it has obtained and is complying with all licences and permits required under any applicable Law authorizing the purchase, possession, storage or sale of Products in the manner it does so; 

(ii) it has a valid GST/HST and QST/PST number, where applicable; and 

(iii) it purchases, possesses, stores and sells the Products in accordance with these TTCs and with applicable Law. 

(b) Representations and Warranties: The Customer represents and warrants that it meets the Qualifications, and covenants to ensure that it shall meet the Qualifications at all times during the Term. The Customer shall, upon request by ITCO, provide evidence in a form satisfactory to ITCO of such Qualifications.   

(c) The Customer acknowledges that by providing its email address to ITCO, it consents to be added to the ITCO Order Solution and to receive electronic communications in relation to the ITCO Order Solution, Order related official invoices and Products. The Customer may choose to unsubscribe from receiving electronic messages at any time. 

(d) Effective Date: These TTCs apply to the Customer starting on August 27th, 2018 (the “Effective Date”). The Customer is deemed to have accepted and agreed to be bound by and comply with these TTCs once an Order has been placed on or at any time after the Effective Date. 

(e) Schedules: The following Schedules form part of these TTCs: 

(i) Schedule A – Credit Policy  

(f) Number and Gender: In these TTCs, words importing the singular include the plural and vice versa and words importing gender include all genders. 

(g) Currency: All references to money amounts in these TTCs shall be in Canadian currency. 

(h) Headings: The insertion of headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. 

(i) Entire Agreement: These TTCs constitute the entire agreement between the parties pertaining to the subject matter hereof and, with the exception of any Pre-Existing Agreements, supersede all prior agreements, understandings, negotiations and discussions with respect to the subject matter hereof whether oral or written.  Except as provided in such Pre-Existing Agreements, there are no conditions, representations, warranties, undertakings, obligations, covenants, promises, inducements or agreements whether direct, indirect, collateral, express, implied or legal made by ITCO to the Customer. Subject to Section 7, no supplement, modification or waiver of these TTCs shall be binding unless executed in writing by ITCO and the Customer. In the event of any inconsistency between these TTCs and any Pre-Existing Agreement, the latter shall govern to the extent of such inconsistency. 

(j) Time Periods: Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next Business Day following if the last day of the period is not a Business Day. 

3. Products and Pricing 

(a) Sale of Products to Customer: ITCO will sell the Products to the Customer, the Customer will purchase the Products from ITCO, and the Customer shall be responsible for payment to ITCO for such Products, all in accordance with these TTCs and subject to the following conditions: 

(i) Customer agrees to respect the maximum retail prices set by ITCO from time to time on each of the affected Products to be communicated to Customer by its ITCO representative. Subject to compliance with the maximum retail prices, Customer remains free to set their retail prices as they see fit. Customer is free to sell for less than the maximum retail prices and will not suffer in its business relationship with ITCO if Customer chooses to do so; and 

(ii) Customer agrees to price the Product(s) that is (are) designated by ITCO from time to time at the Customer’s chosen lowest price point. This condition applies to single Item vs. single Item or multiple Item formats vs. multiple Item formats (including 2-pack formats and Cartons). At all times Customer remains free to set its lowest price point and may sell multiple tobacco products at the same lowest price point. 

(b) Nothing in these TTCs shall be construed as (i) requiring the Customer to purchase the Products exclusively from ITCO, (ii) requiring ITCO to sell the Products exclusively to the Customer, or (iii) requiring the Customer to make any Product purchases from ITCO. 

(c) Products and Price Lists: ITCO’s Products and price lists are available and will be provided to the Customer upon request. ITCO reserves the right to change any and all Products and price lists at any time, without notice. 

(d) Prices and Price Changes: The prices payable by the Customer for all Products shall be ITCO’s prices in effect on the day the proof of delivery is received by ITCO (subject to Section 6(g)). ITCO reserves the right to change any and all prices for any of the Products at any time without notice. Such changes will be effective for all Orders received by ITCO on the day such change is implemented. In addition, Orders not placed for immediate delivery shall be subject to the revised prices. Notwithstanding any of the foregoing, if ITCO changes the prices due to any new or changed tax, duty or other government charge or fee, the price change shall be in effect as of the effective date of the change implemented by the government. 

(e) Amendment to Rebate/Discount/Programs: ITCO reserves the right to set and amend its rebate and/or discount and/or trade programs as it sees fit without notice to the Customer, which amendments shall be effective upon the date specified by ITCO. 

(f) Invoices: ITCO will provide the Customer with invoice pro forma invoice at the time the Products are delivered (to be used for reference purposes only). An official invoice will be sent by e-mail (or by fax if approved by ITCO upon request by the Customer by calling ITCO customer service) to the Customer once ITCO has received the proof of delivery for such Products. ITCO may provide a copy of such official invoice (or certain information contained in or relating to such official invoice) to the Customer’s designee for payment purposes, if approved by ITCO. The official invoice will include details regarding the quantities of Product delivered, prices, all applicable discounts and rebates and any applicable federal, provincial or local taxes and charges. Due to possible delays between the time the pro forma invoice and the official invoice are received, the prices reflected on both documents may vary (for example if a tax increase were to come into effect within that delay). In all cases, the amounts payable by the Customer will be the ones shown on the official invoice. The amount owing must be paid in full by the Customer or its designee by the deadline noted on the official invoice, which deadline shall be determined by ITCO in accordance with its Credit Policy, a current copy of which is attached as Schedule A. For further clarity, the Customer shall be responsible for payment of all Orders placed for delivery of the Products. 

(g) Suggested Prices: Any suggested retail price, other than a maximum retail price set by ITCO (if any), in any of ITCO’s documents, communications or representations constitutes a suggestion only and the Customer is under no obligation to accept such suggestion and in no way will the Customer suffer in its business relationship with ITCO if it fails to accept such suggestion or offers for sale or sells any Products below such suggested price. 

(h) Suggested Order Quantities:  Any suggested Order quantities that are provided by an ITCO representative, through the ITCO Order Solution or through any other means in the context of the DSS Service constitute a suggestion only. The Customer is under no obligation to accept such suggestion. Subject to any listing, distribution or assortment obligations that may be specifically agreed to by the Customer from time to time, by contract or otherwise or as specified at Section 5(vii), the Customer remains free to Order the Products of its choice in the quantities of its choice and is not bound to accept any suggested Order quantities. ITCO recommends a suggested Order quantity based on a Customer sales trends and inventory information provided. An ITCO representative will follow up to discuss any risk of out of stock or any other issues flagged at the submission of Order. 

4. Rights and Obligations of the Customer 

(a) Sale of Product by the Customer: The Customer shall offer for sale and sell the Products purchased pursuant to these TTCs exclusively through the Customer’s Retail Operations and exclusively to:  

(i) adult retail end use consumers by the Item, and specifically not, with the exception of sales to its Franchisees and Affiliates in (ii) and/or (iii) immediately below, to any Person for the purpose of resale;  

(ii) its Franchisees which form part of a same applicable ITCO trade program category and benefit from the same Products rebates and/or discounts, provided that (A) such Franchisees offer for sale and sell the Products exclusively to adult retail end use consumers and specifically not to any Person for the purpose of resale, (B) such Franchisees offer for sale the Products by the Item and meet subsections (ii) and (iii) of the Qualifications, and (C) the Products are sold to such Franchisees at a cost that does not exceed the net price at which the Products were purchased from ITCO as shown on the invoice for such Products (for greater certainty, the Customer may sell for less), and the Customer does not seek from its Franchisees, directly or indirectly, a fee or payment in any manner whatsoever in respect of any actions by the Customer relating to the Products, including (without limitation) purchase, resale, payment, distribution, storage, handling, or administration, unless such fee or payment is part of the Customer’s ordinary distribution practices applicable to products generally; and/or 

(iii) its Affiliates which form part of a same applicable ITCO trade program category and benefit from the same Products rebates and/or discounts, provided that such Affiliates offer for sale and sell the Products exclusively to,  

a) adult retail end use consumers and specifically not, with the exception of (B) below, to any Person for the purpose of resale, and also provided that such Affiliates offer for sale the Products by the Item and meet subsections (ii) and (iii) of the Qualifications, or 

b) their Franchisees which form part of a same applicable ITCO trade program category and benefit from the same Products rebates and/or discounts, provided that such sales are made in accordance with the requirements of Section 4(a)(ii) above and that such Affiliates meet subsections (ii) and (iii) of the Qualifications; and the Products are sold to such Affiliates at a cost that does not exceed the net price at which the Products were purchased from ITCO as shown on the invoice for such product (for greater certainty, the Customer may sell for less). 

For greater certainty, the references to Franchisees and Affiliates in this Section 4(a) only refer to Franchisees and Affiliates of the Retail Locations which are part of the Customer’s Retail Operations. Customer shall immediately advise ITCO if any of the Retail Locations of its Franchisees and/or Affiliates cease to be qualifying Retail Locations under the TTCs. 

(b) Restrictions: The Customer will not, and shall ensure that all of its Affiliates and Franchisees to whom it resells the Products do not: 

(i) display, promote, offer for sale, sell, ship, transfer or transship: (A) the Products to any Person other than an adult retail end use consumer or as permitted by Law; (B) the Products at or in any location other than a Retail Location; or (C) the Products, directly or indirectly, outside of Canada. The Customer shall ensure that, if its Affiliates and/or Franchisees Order any Products directly from ITCO on the Customer’s behalf, such Affiliates and/or Franchisees shall place such Orders, and receive the deliveries, in accordance with these TTCs; 

(ii) take any action, directly or indirectly, to interfere with the transportation of the Products to the Retail Location specified in the Order (or the alternate delivery point if agreed in accordance with Section 6(f)) or to redirect the delivery of the Products to any other location, without the specific prior written approval of ITCO;  and  

(iii) directly or indirectly, alter, remove or deface any aspects of the packaging of the Products, it being understood that nothing contained herein is intended to prevent the Customer, or its Affiliates and/or Franchisees, from removing the Products from cases or Cartons for purposes of resale in accordance with these TTCs. 

(c) Product Receipt/Inspection/Shortages/Overages: The Customer or its designee must carefully inspect the Products after delivery and report any Product damage or shortage to ITCO, by contacting ITCO’s Customer service line or by performing any other action that may be required by ITCO from time to time, within 2 Business Days following the delivery of the Products. If the Customer fails to report a Product damage or shortage in the manner prescribed previously, the shipment will be deemed to be accurate and to be accepted by the Customer and the Customer will not be entitled to receive a refund or credit for any damaged or missing Products. In the event of overages, the Customer shall be invoiced for the additional Products unless such Products are returned to ITCO with ITCO’s prior authorization.  

(d) Products Returns: The Customer or its designee may return all Products that do not meet ITCO’s standards and specifications for quality and freshness, provided that the Customer or its designee has first sought and obtained ITCO’s consent. Except as set out above, the Products are sold without return privileges. All Product returns that were authorized by ITCO will be credited at the price in effect on the day when the return of the Product is authorized by ITCO, less any rebates, allowances, discounts, price adjustments or other price deductions to which the Customer is entitled at that time.  

All Product returns that were authorized by ITCO (for which a return confirmation number is issued by ITCO) must be packed in a sealed container and accompanied by all documents that may be prescribed by ITCO. The sealed container must be set aside by the Customer for pick-up from the Retail Location by ITCO’s designated carrier. The Customer must keep proof of the container’s pick-up.in the form of the waybill number or return receipt of the carrier, if available. The Customer must keep that waybill number or return receipt so long as a credit has not been either issued or denied to the Customer for the returned Products. Product returns are to be placed by Customers using the web based ITCO Order Solution unless otherwise agreed to by ITCO. Customers must follow the approved Product return process as communicated by ITCO for submitting their Product returns. 

The approved Product return process, as it may be updated from time to time, will be made available to Customers by ITCO through the web based ITCO Order Solution and/or by ITCO’s Customer Service. 

ITCO reserves the right to adjust the value of a credit to a Customer or even deny the credit to a Customer if the value or the quantity of the Products received by ITCO for return is different from the value or the quantity of Products that was declared at the time when ITCO authorized the return of the Products.   

ITCO also reserves the right to deny the credit to a Customer if the Products for return are not received by ITCO within 15 days following the date on which the return was authorized by ITCO, assuming that the returned Products were not picked-up from the Retail Location by ITCO’s designated carrier. If the returned Products are not picked-up from the Retail Location by ITCO’s designated carrier within 10 days following the date on which the return was authorized, the Customer must alert ITCO’s Customer Service Line promptly. 

(e) Discontinued Products Returns: The Customer is authorized to return discontinued Products, including discontinued Products that do not meet ITCO’s standards and specifications for quality and freshness, for 1 year after the date of discontinuance. ITCO may authorise the return of any discontinued Products more than 1 year after the date of their discontinuance, provided that the Customer or its designee has first sought and obtained ITCO’s consent. All discontinued Product returns that were authorized by ITCO will be credited at the last price available in ITCO’s system for the Product, less any rebates, allowances, discounts, price adjustments or other price deductions to which the Customer is entitled on the day when the return of the Product is authorized.  All returns of Products that were migrated will be credited at the price in effect for the replacement product on the day when the return of the migrated Product is authorized by ITCO, less any rebates, allowances, discounts, price adjustments or other price deductions to which the Customer is entitled on the day when the return of the Product is authorized. 

(f) Order Modification: The Customer may cancel or modify an Order, until such time when ITCO starts to process it. Notwithstanding the foregoing, no modifications of an Order are possible after the noon to noon cut-off time of the DSS Service schedule as described in Section 6 (c). An extra Order may be granted, subject to applicable fees. 

5. Category Management Conditions 

 Customer will, and it will ensure that any Franchisees or Affiliates to whom it sells the Products will abide by the following category management conditions: 

(i) Availability: stock and offer for sale in a continuous and uninterrupted manner up to four (4) weeks’ supply of the Products, to be determined together with its ITCO representative, taking into account market conditions, and in order to meet adult consumer demand; 

(ii) Freshness: ensure all Products available for sale are of a level of freshness acceptable to ITCO by ensuring proper Product rotation. 

(iii) Tobacco Products Shelf Space: provide ITCO for tobacco Products with ITCO’s provincial market share plus 5% equivalence in available ITCO preferred point of sale tobacco products inventory or storage space in proportions and positioning set out in a planogram to be provided by its ITCO representative, as the planogram may be updated by ITCO from time to time; 

(iv) NGP Products Shelf Space: provide ITCO for ITCO NGP Products with 50% in available ITCO preferred point of sale NGP inventory or storage space and positioning set out in a planogram to be provided by its ITCO representative, as the planogram may be updated by ITCO from time to time; 

(v) Price Sign: in accordance with applicable Law, post any price signs provided by ITCO and provide ITCO with ITCO’s provincial market share plus 5% equivalence in available ITCO share on the price signs. Where only one price sign may be posted, Customer shall provide ITCO with ITCO’s provincial market share plus 5% equivalence in available ITCO share of such sign for the posting of Product prices. 

(vi) Ongoing Cooperation: be available to discuss with its ITCO representative (in person or by telephone, as elected by ITCO) and, where the ITCO representative attends the Retail Location, provide the representative access to Customer’s inventory of the Products and generally allow the representative to discuss issues of inventory management, product assortment as outlined at Section 5(vii) and other business issues that may be of mutual benefit, such as Product characteristics, and launches;  

(vii) Products Assortment: use reasonable efforts to distribute, in a continuous and uninterrupted manner, all Products stock keeping units (“SKU(s)”), including all new Product SKUs, subject to the following: 

a) Product SKUs which do not maintain a minimum average sales volume of that may be communicated by ITCO from time to time may be delisted by Customer provided that Customer is not otherwise required to continue listing such Product SKUs; and 

b) List all new Product SKUs within 4 weeks of receiving ITCO’s new Products SKUs listing kit. New Product SKUs are to be distributed for a minimum 6 months unless otherwise agreed to with ITCO. 

(viii) Inventory and Price Capture: using the web based ITCO Order Solution; provide Products inventory and Customer’s chosen Products retail prices information which reflects the highest standards of quality, accuracy, completeness, and consistency. Without limiting the generality of the foregoing, Customer shall ensure that the Products inventory information provided to ITCO includes inventory of Items; 

(ix) Orders: place Products orders in accordance with the DSS Service schedule as described in Section 6(c). Subject to Section 6(f), Products Orders are to be placed using the web based ITCO Order Solution unless otherwise agreed to by ITCO.  

(x) Compliance with Laws: comply with all applicable Laws, including those relating to the purchase, possession, storage, display and sale of the Products and those designed to combat Money Laundering; 

(xi) Merchandising and Trade Programs: ensure Customer’s Retail Operations and their clerk staff have uninterrupted access to the web based ITCO Order Solution or are otherwise available to learn about any relevant merchandising activities, trade programs or new Products that ITCO may offer to the Customer from time to time; and 

(xii) Listing Fees: not charge ITCO any listing fees in respect of any Products. 

6. Rights and Obligations of ITCO 

(a) Product Changes: ITCO may, at any time, without prior notice to the Customer or the Customer’s Franchisees, Affiliates or customers, delete, discontinue or limit the supply of any of the Products; alter the design or specifications (in whole or in part) of any Products; change, add or delete a model(s) or feature(s) of any Products; or add new products to its line.  ITCO has no obligation to make any new or modified Products available to the Customer in accordance with these TTCs or otherwise.  

(b) DSS Service: ITCO shall provide DSS Service to all Retail Locations. “DSS Service” means that: 

(i) a representative of ITCO will visit or call by telephone each Retail Location, in accordance with ITCO’s service schedule, to dialogue with the Customer and provide information and recommendations with respect to the management of Product availability, freshness, assortment and positioning, and to present to the Customer ITCO’s ongoing merchandising and trade programs; and  

(ii) ITCO will make available to each Retail Location, in accordance with ITCO’s service schedule, an ordering method capable of providing Order recommendations, taking Orders for the Products and arranging for invoicing and delivery of such Products. Such ordering methods include a) telephone ordering through an ITCO representative; b) the ITCO Order Solution; or c) any other method that may be supported by ITCO from time to time. 

Unless otherwise expressly agreed by ITCO and subject to Section 6(g) below, ITCO will only accept Orders hereunder that are placed in accordance with these TTCs and that are for Products to be sold from the Retail Location that is identified on the Order. ITCO will not accept consolidated or centralized Orders, or any other Orders that are placed with respect to multiple Retail Locations. 

(c) DSS Service Schedule: ITCO will provide to each Retail Location its own DSS Service schedule. The DSS Service schedule sets out the schedule according to which ITCO and the Customer, or its designee, must perform the tasks related to the DSS Service, namely the ordering and delivery of the Products before noon, and before 10:00am for 3PL locations. The DSS Service Schedule may be changed at any time by ITCO at its entire discretion. ITCO may charge an out of route service fee should the DSS Service schedule not be respected. ITCO reserves the right to postpone the Product delivery when an Order is placed outside of the Retail Location’s assigned DSS Service schedule. 

(d) DSS Tote Service: Customer may receive their Order in an ITCO Products shipping container (“Tote Parcel”). Customer may be charged a fee should Customer not return the Tote Parcel to ITCO or its designee.  

(e) DSS Service Fees:  As at the Effective Date, ITCO does not charge service fees in relation with the DSS Service. The DSS Service may become subject to service fees as may be communicated following a reasonable notice to the Customer.  

(f) ITCO Order Solution: Customer must use the ITCO Order Solution for all Orders. As at the Effective Date, ITCO charges a $10.00 fee per Order to Customers who use the fax based ITCO Order Solution but does not charge service fees in relation with ITCO’s web based and EDI based ITCO Order Solution. As at the Effective Date,  subject to Section 6 (i), ITCO also charges a $20.00 fee per Order of less than 20 Items. The ITCO Order Solution may however become subject to further service fees, charges and their modifications upon a reasonable notice to the Customer. Furthermore, ITCO will offer to Customers through the ITCO Order Solution the following: 

(i) Contingency Ordering System:  ITCO maintains a contingency ordering system. In the event that any of its systems required for the placing or processing of Orders suffers an interruption of service (planned or unplanned), preventing a participating Customer’s Orders from being placed or processed on their scheduled day, the contingency ordering system allows ITCO to place an appropriate order on behalf of each Customer, on its regularly scheduled order day. The contingency Order is based on such Customer’s historical order quantities.   All contingency Orders are confirmed in advance with Customer by a representative of ITCO or by telephone before delivery.    

(g) Acceptance of Orders: No Order shall be binding on ITCO until such Order has been delivered by ITCO and proof of delivery has been received by ITCO. ITCO has complete discretion in accepting and rejecting any Orders (in whole or in part) without notice, objection or liability.  Without limiting the foregoing, ITCO may reject any Order if the Customer, or its designee for payment purposes, has outstanding amounts which are due and payable, or if ITCO is unable to supply all Products ordered because ITCO’s aggregate orders exceed its available supply capacity.  

(h) Partial Delivery: ITCO may deliver any Order in part, and such delivery shall be invoiced separately and paid for by the applicable due date. Upon such partial delivery of an Order, the balance of the Order shall be deemed to be rejected by ITCO, unless ITCO advises the Customer otherwise. For greater certainty, ITCO reserves the right to fulfill balance of Orders upon notice to the Customer. Any balance of Orders of minimum 5 Items may be delivered to Customer. No DSS Service or out of DSS Service schedule fees will apply to such minimal balance of Orders. Customer will be offered the option of placing an Order for minimum 5 Items when missing Product quantity does not trigger an automatic recovery Order at no additional DSS fees. Customer may also be offered by an ITCO representative an alternative Product when the ordered Product cannot be fulfilled within the same week.  

(i) Minimum Order: ITCO has the right to reject all Orders that do not meet the minimum requirement of 10 Items. ITCO charges a service fee for:  

(i) Orders for less than 20 Items per Retail Location, or 

(ii) Orders for any non-tobacco Products unless such Order includes the applicable minimum quantity of Items as set out in (i) above. 

Notwithstanding Section 1 (o), for the purposes of this Section 6 (i) the term Item(s) shall not include the following:  tubes and NGP Products accessories. ITCO reserves the right to update the Minimum Order requirements from time to time at its entire discretion. 

(j) Delivery - Title and Risk of Loss: ITCO will deliver the Products, at a predetermined time, to the Retail Location specified in the Order, unless ITCO has agreed expressly and in writing to an alternate delivery point. All of ITCO’s prices are F.O.B. (Freight on Board) the Retail Location (or other delivery point as agreed) and are shipped freight pre-paid. Title and risk of loss or damage for the Products ordered shall pass to the Customer upon delivery to such location or other point of delivery. 

7. Amendment  

(a) Amendment to TTCs: Except as otherwise specifically provided in these TTCs, these TTCs may be amended by ITCO in its sole discretion without notice to the Customer. The Customer is deemed to have accepted and agreed to be bound by and comply with TTCs as amended once an Order has been placed following such amendment. If the Customer provides to ITCO a notice of objection, the parties shall attempt in good faith to agree on the amendment until 30 days following ITCO’s receipt of such Customer notification. If the parties are unable to resolve the Customer’s objection within such period, either party may terminate these TTCs. 

 (b) Amendments due to Change in Law: Notwithstanding Section 7(a) above, in the event that any Law is enacted prohibiting or restricting, in whole or in part, ITCO’s or the Customer’s ability to display or sell the Products in accordance with these TTCs, then the Customer and ITCO shall comply with such Law and these TTCs shall be deemed to have been automatically amended so as to: 

(i) exclude any activities prohibited by such Law and the ITCO payments otherwise payable, in respect of such excluded activities, shall cease automatically without indemnity or recourse in favour of the Customer; and 

(ii) restrict the scope of the activities to a level permitted by such Law and the ITCO payments otherwise payable, in respect of such restricted activities, shall automatically be diminished accordingly, upon agreement of the parties, without indemnity or recourse in favour of the Customer. 

8. Term and Termination 

(a) Term: These TTCs shall be effective for a term beginning on the Effective Date and ending upon termination pursuant to the terms herein (the “Term”). 

(b) Termination Without Cause: Each of ITCO and Customer may terminate these TTCs without cause at any time upon 30 days notice to the other party. 

(c) Termination With Cause: ITCO may terminate these TTCs effective immediately and without prior notice to the Customer if: 

(i) at any time the Customer is in breach or default of any provision of these TTCs and fails to cure such breach or default within 5 days of the date of notice from ITCO of such default or breach;  

(ii) the Customer breaches Sections 2(b), 4(a), 4(b), 5 or 9(d) of these TTCs;  

(iii) the Customer ceases to meet the Qualifications; 

(iv) the Retail Locations cease to meet minimal standards of cleanliness and security as determined by ITCO from time to time; 

(v) the Customer breaches the Credit Policy; 

(vi) the Customer physically or verbally assaults any employee of ITCO, its designees or Affiliates; or 

(vii) the Customer becomes insolvent, or if proceedings are commenced in connection with the Customer’s winding up, dissolution or liquidation, or a proceeding is instituted by or against the Customer under the Winding-Up and Restructuring Act (Canada), the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) or any other present or future law relative to bankruptcy, insolvency or other relief for debtors or for or against the benefit of creditors, otherwise acknowledges its insolvency or is unable, for any reason, to meet its liabilities generally as they become due, or if any trustee in bankruptcy, receiver, receiver and manager, interim receiver, monitor or liquidator or any other officer or person with similar powers shall be appointed in respect of the Customer or over the property or assets of the Customer, or if the holder of any lien or charge or any other creditor takes possession of the property of the Customer, or any part thereof, or any interest of such party in such property, or any part thereof, or if a distress, execution, garnishment or any similar process be levied or enforced upon or against the same. 

(d) Consequences of Termination: Upon termination of these TTCs for any reason whatsoever and without limiting any other rights or remedies of ITCO: 

(i) the rights granted to the Customer in these TTCs immediately cease and terminate; 

(ii) the Customer shall immediately pay to ITCO all fees, amounts and other charges that may be owing under these TTCs or any other agreement between the parties, whether or not they have become payable; 

(iii) the Customer shall immediately cease to and thereafter not, directly or indirectly, hold itself out as an ITCO customer and shall immediately cease to use and will deliver to ITCO all documentation, price lists, signs and point of sale materials provided by or made available by ITCO in the Customer’s possession, custody or control, including these TTCs and material upon which any Intellectual Property appear; 

(iv) ITCO may reject or fulfil (on a prepaid or a cash-on-delivery basis) any outstanding Order; 

(v) ITCO will have the right, subject to applicable Law, to enter the Customer’s premises without notice and repossess and/or dispose of any Products for which full payment has not yet been received by ITCO; and 

(vi) provided ITCO has not exercised its right in (v) above, the Customer may sell the Products then in the Customer’s inventory at the time of termination, provided that such sale is in accordance with Section 3. 

Any termination by ITCO under this Section shall be without prejudice to any other rights  (including any right of indemnity), remedy or relief vested in or to which ITCO may otherwise be entitled against the Customer. The Customer expressly waives any right to indemnity or compensation if ITCO terminates these TTCs in accordance with the above provisions.  The foregoing remedies shall not exclude any other remedies which either party may have at Law or in equity by reason of default, breach or nonobservance by the other party of any provision of these TTCs. 

9. General 

(a) Independent Contractor: The Customer is and will at all times remain an independent contractor and is not and shall not represent itself to be the agent, mandatary, joint venturer, franchisee or partner of ITCO or to be related to ITCO.  

(b) No Liability: ITCO shall not be obligated or liable for any injury or death of any person or damage to any property caused by or relating to the Customer’s actions, failure to act, negligence or wilful conduct, nor for any liability of the Customer and the Customer undertakes to hold appropriate and adequate insurance to cover its liability. In no event shall ITCO be liable for any of the Customer’s, or Customer’s Franchisees’ or Affiliates’: (i) special, incidental, indirect, or consequential damages or (ii) damages for loss of business profits, loss of expected gains or revenues, business interruption, or any other pecuniary or economic loss, arising out of these TTCs, howsoever caused, including without limitation any liability for late or missed deliveries, even if advised of the possibility of such damages. 

(c) Indemnity: The Customer indemnifies and undertakes to defend ITCO, its Affiliates and their shareholders, directors, officers, employees, mandataries and agents and hold them harmless from all fines, suits, proceedings, losses, claims, demands or actions of any nature or kind whatsoever, directly or indirectly, arising out of or in any manner whatsoever associated or connected with the Customer’s performance, purported performance or nonperformance of its rights and obligations under these TTCs (including without limitation any failure to cause a Franchisee or Affiliate to comply with any obligation where required to do so) and against any and all damages, costs, expenses and fees (including without limitation reasonable legal expenses) incurred by or on behalf of any of the foregoing in the investigation or defence of any and all such suits, proceedings, claims, demands or actions, unless solely caused by the wilful misconduct or gross negligence of ITCO. 

(d) Confidential Information: The Customer acknowledges and agrees that in connection with the supply of the Products, it may obtain information which is of a proprietary and confidential nature and a trade secret of ITCO (including, without limitation, catalogues, advertising documents, price lists, order forms and marketing information). The Customer shall maintain the confidentiality of all such information during and after the Term and shall not disclose any such information for any reason whatsoever, except for disclosures to its employees, Franchisees and Affiliates, but only to the extent necessary for the operation of their respective businesses.  The Customer further agrees not to use any such information, directly or indirectly, in any other business or in any other manner or obtain and benefit therefrom except as specifically approved in writing by the other party.  The foregoing restriction does not apply to any information which is or becomes generally available to the general public (other than through breach of this Section 9(d)), or information which was known to the Customer prior to its receipt of information from ITCO or information which the Customer obtained from an independent third party who obtained the information lawfully.  

(e) NO WARRANTIES: EXCEPT IF, AND TO THE MINIMUM EXTENT, REQUIRED BY APPLICABLE LAW, ALL WARRANTIES, CONDITIONS, REPRESENTATIONS, INDEMNITIES, AND GUARANTEES WITH RESPECT TO THE PRODUCTS FURNISHED BY ITCO HEREUNDER, WHETHER EXPRESS, LEGAL OR IMPLIED, ARISING BY LAW, CONTRACT, CUSTOM, PRIOR, SIMULTANEOUS OR SUBSEQUENT ORAL OR WRITTEN STATEMENTS BY ITCO OR ITS REPRESENTATIVES, USAGE OF TRADE, CUSTOM, COURSE OF DEALING OR PERFORMANCE OR OTHERWISE (INCLUDING, BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY, SATISFACTION OR FITNESS FOR A PARTICULAR OR GENERAL PURPOSE, TITLE, OWNERSHIP (INCLUDING BUT NOT LIMITED TO THE WARRANTY THAT THE RELEVANT PROPERTY IS FREE OF ANY OTHER RIGHTS OR CHARGES), NON-INFRINGEMENT, SATISFACTORY QUALITY, CONFORMITY, AND WORKMANSHIP) ARE HEREBY OVERRIDDEN, EXCLUDED AND DISCLAIMED.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ITCO SPECIFICALLY DISCLAIMS ALL WARRANTIES REGARDING THE QUALITY, TOLERANCES OR SPECIFICATIONS OF ANY PRODUCT PROVIDED HEREUNDER. 

(f) Intellectual Property: All Intellectual Property of ITCO shall remain the exclusive property of ITCO. “Intellectual Property” means any and all intellectual property rights of ITCO or its Affiliates whether registered or not, including any copyrights, know-how, industrial designs, trade-marks, trade-names, trade secrets, trade dress, patents, logos or other commercial symbols, including the right to apply for any such right. 

(g) Severability: If in any jurisdiction any provision of these TTCs or their application to any party or circumstance is restricted, prohibited or unenforceable, such provision shall, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of these TTCs and without affecting the validity or enforceability of such provision in any other jurisdiction or its application to other parties or circumstances. 

(h) No Waiver: The failure by either party, at any time or for any period of time, to exercise or avail itself strictly of any right, remedy, or provision pursuant to these TTCs or available at Law shall not be construed as a waiver of such right, remedy, or provision, or of any other right, remedy, or provision of these TTCs or available at Law or of the right to enforce or take advantage of same.  

(i) Force Majeure: Neither party shall be responsible to the other for non-performance or delay in performance (other than any payment of money) occasioned by any causes beyond its control including without limitation acts or omissions of the other party, acts of civil or military authority, terrorism, strikes, lock-outs, embargoes, insurrections or Acts of God. If any such delay occurs, any applicable time period shall be automatically extended for a period equal to the time lost provided that the party affected makes reasonable efforts to promptly correct the reason for such delay and gives to the other party prompt notice of any such delay.  Such notice shall include an estimate of the time that will be taken to correct the reason for such delay. 

(j) Assignment: Neither these TTCs nor any rights nor benefits or obligations under them shall be Transferred, in whole or in part, in any manner, by the Customer, without the prior written consent of ITCO, not to be unreasonably withheld.  These TTCs shall enure to the benefit of and be binding upon the Customer and ITCO and their respective successors and permitted assigns. ITCO may Transfer any and/or all of its rights and/or obligations hereunder to any person or entity in its discretion and without the consent of Customer on written notice to Customer.  Such Transfer shall operate novation to ITCO’s benefit except as otherwise directed by ITCO in its discretion. 

(k) Survival: All obligations of the Customer, including obligations of indemnity, payment and confidentiality, which expressly or by their nature survive termination or permitted Transfer of these TTCs shall continue in full force and effect subsequent to and notwithstanding such termination or Transfer and until they are satisfied or by their nature expire.  

(l) Cumulative Rights: The rights of the Customer and ITCO hereunder are cumulative and no exercise or enforcement by the Customer or ITCO of any right or remedy hereunder shall preclude the exercise or enforcement by the Customer or ITCO of any other right or remedy hereunder of which the Customer or ITCO is otherwise entitled by law to enforce. 

(m) Set-off: The Customer shall not withhold or set off payment of any amounts due to ITCO under these TTCs for any reason, including on the grounds of alleged non-performance by ITCO of its obligations or claims of amounts owing from ITCO to the Customer.  For greater certainty, Customer waives any right it may have to refuse to perform under Article 1591 of the Civil Code of Quebec. 

(n) Governing Law: These TTCs are governed by, and shall be interpreted in accordance with, the laws of the Province of Quebec.  

(o) French Language: The parties confirm that it is their wish that these TTCs and all documents and notices relating thereto have been and shall be drawn up in English only. Les parties aux présentes confirment que c'est leur volonté que les CMC ainsi que tous les documents et avis s’y rapportant soient rédigés en anglais seulement.