**Exhibit 4.2**

 

**TIENDAS MONTANA, C.A.**, company domiciled in Caracas and registeredbefore the Second Mercantile Registry of the Judicial Circuit of the FederalDistrict and Miranda State, on December nineteen (19) 1968, under number 42,Volume 80-A hereinafter THE FRANCHISER, represented in this act by **                     and                     **,Venezuelans, of legal age and bearers of identity cards numbers **                     **and **                     **,respectively, authorized for this act by the Board of Directors of theirprincipal on its session of may twenty two (22), 2002, on one side and on theother                                                  **, C.A.,**company domiciled in             and registered before the             Mercantile Registry of the Judicial Circuit of             ,on              ,under number     , Volume       ,hereinafter THE FRANCHISEE, represented in this act by its              ,Mr.                                   ,Venezuelan, of legal age and bearer of identity card number                  ;WHEREAS:

 

1)     WHEREAS the franchise is a commercialization of goods and servicessystem where an individual or legal entity named THE FRANCHISER, contractuallyor temporarily transfers to another named THE FRANCHISEE, the rights of use ofa trademark and the knowledge, commercial procedure, marketing techniques, etc;as a compensation for the payment of a price, generally fixed, plus aparticipation in the results of the commercial operation, that allow the latterto operate a determined business in an uniform and standard fashion.

 

2)     WHEREAS TIENDAS MONTANA, C.A., has acquired the rights to use the nameTIENDAS MONTANA from Corimon Pinturas, C.A., company domiciled in Caracas andregistered before the Mercantile Registry of the Judicial Circuit of theFederal District and Miranda State, under No 3, Volume 18-A, on May 16 1.962,who hereinafter shall be named The Supplier; “TIENDAS MONTANA” or any variationor simulation thereof collectively; TIENDAS MONTANA has created and developed aplan, design, method and system for the commercialization of paints and relatedproducts that satisfy the market needs.

 

3)     WHEREAS TIENDAS MONTANA, C.A., has reserved the exclusive rights tofranchise on behalf of TIENDAS MONTANA, or any of its variations; the partieshave agreed to enter into the franchise agreement contained in the followingclauses:

 

1.-THE FRANCHISE AND THE ESTABLISHMENT 

 

FirstClause: THE FRANCHISEEshall occupy a commercial office, distinguished with number          , located in                                                          ,-                    State; hereinafter THE ESTABLISHMENT, where it shall operate its business underthe commercial denomination of TIENDAS MONTANA, exploiting the franchise that isgranted through this agreement.

 

SecondClause:   Subject to the terms and conditions hereinset forth, THE FRANCHISER grants THE FRANCHISEE  the TIENDAS MONTANA franchise, and in consequence, thenon-transferable right to use the name TIENDAS MONTANA.

 

Therights herein transferred imply the operation of THE ESTABLISHMENT to promoteand advertise it under the name of TIENDAS MONTANA, provided it abides

 

----

 

tothe guidelines set or approved by THE FRANCHISER. The franchise is applied tothe specific location of the abovementioned ESTABLISHMENT. This agreement doesnot limit the right of THE FRANCHISER to use or franchise the TIENDAS MONTANAsystem or to commit to franchise any other kind of business in any otherlocation with that same name. The name of THE ESTABLISHMENT shall be TIENDASMONTANA and THE FRANCHISEE  may notchange it.

 

Itis understood that this agreement is entered into “intuito personae” regardingTHE FRANCHISEE, in virtue of which, THE FRANCHISEE may not execute withcompanies directly or indirectly related, or with any other legal entity orindividual, any kind of contract with respect thereto, nor assign it and it isexpressly forbidden the total or partial sublease of THE ESTABLISHMENT,considering it null if it has not previously obtained for each case, theauthorization given in writing by THE FRANCHISER.

 

Thefailure to comply with this clause shall give THE FRANCHISER the right to:

 

1)Immediately terminate this agreement, 2) Demand the immediate eviction of THEESTABLISHMENT, and 3) The payment by THE FRANCHISEE of an amount of threehundred thousand Dollars of the United States of America (US$ 300,000.oo) to bepaid in that same currency, excluding any other, for damages and losses,without having to be proved by THE FRANCHISER.

 

ThirdClause:   THE ESTABLISHMENT is constituted by theoffice where THE FRANCHISEE will commercially exploit the granted franchise.THE ESTABLISHMENT must remain inalterable during the existence of the agreementand any amendment, broadening, improvement or remodeling must be made with theprior authorization and consequent supervision of THE FRANCHISER.

 

Allthe furniture such as: shelves, counters, show windows, utilities officefurniture of, computer system, devices burglar alarm, special equipment of accessand exit, announcements and structures of promotion of the business, that havebeen acquired by it shall be property of THE FRANCHISEE.

 

FourthClause:   As consideration for the dispositions ofthe second clause of this agreement, THE FRANCHISEE shall pay THE FRANCHISER,within the first five (5) calendar days, an amount set by the aggregate of thefollowing amounts:

 

a)     The amount of                                                                                (Bs.                         ).This amount shall be adjusted each year according to the variations existing inthe Consumer Price Index that is set by the Banco Central de Venezuela for thecity of Caracas for the corresponding period. THE FRANCHISEE shall also beresponsible for the payment of the basic services that are rendered in THEESTABLISHMENT, such as: water, public cleaning service, condominium, electricenergy and telephone expenses.

 

b)    An amount in bolívares equivalent to a percentage of the monthlypurchases made by THE FRANCHISEE to The Supplier, during the month immediatelyprior (after deducting any applicable sales tax) to the month when such paymentis made. Said

 

2

----

 

percentage, which shall notexceed four percent (4%), shall be determined by THE FRANCHISER and shall benotified to THE FRANCHISEE in writing to the address of THE ESTABLISHMENT setforth on the First Clause of this agreement

 

FifthClause: THE FRANCHISERexpressly declares and THE FRANCHISEE so recognizes, that there is no expressor implied guaranty, nor any statement by THE FRANCHISER, its officers,advisers, employees, agents or affiliates regarding the income, profits,success or feasibility of the commercial adventure that THE FRANCHISEE isbeginning

 

SixthClause: THE FRANCHISERmust be previously informed with respect to any statutory change that THEFRANCHISEE suffers, if any amendment in its shares composition that compromisesthe making of decisions of any of the contracting parties, reserving THE FRANCHISERfor itself the right to continue or not the contractual relation.

 

SeventhClause: THE FRANCHISERdeclares that it shall make its best efforts to obtain the pacific, stable anddocumented occupation of the real property mentioned on the first clause ofthis contract. However, in case THE FRANCHISEE is obligated to the evict thereal estate within the first three (3) years of existence of this agreement, itshall have a preferential right to install a new TIENDA MONTANA store, in aterm not longer than ninety (90) days beginning the abovementioned eviction, inanother real estate located in the area where both parties agree, provided itcomplies with the quality specifications and standards and design determined byTIENDAS MONTANA, and its operations begin within the abovementioned term.

 

2.-STANDARDS:

 

EightClause: The franchisesystem grants the right of use of the service trademark TIENDAS MONTANA, aswell as similar trademarks that may be incorporated by THE FRANCHISER as partof the franchise system. THE FRANCHISER shall be entitled to make changes andimprovements to the franchise system and everything relating thereto in orderto make it more effective, efficient, economic and competitive, or to adapt itto the new conditions or technologies, or to increase the popularity of thename TIENDAS MONTANA. Upon the execution of this agreement, THE FRANCHISER,shall acquaint THE FRANCHISEE on the Operating Manual that regulates andcontains the specifications of the TIENDAS MONTANA franchise system; thisOperating Manual is of mandatory compliance for THE FRANCHISEE  since it is an integral part of thisagreement.

 

THEFRANCHISEE  declares that THE FRANCHISERshall have full use and disposition over the works or inventions that maybecome profits for the business which are a result of the intellect of THEFRANCHISEE, assuming that THE FRANCHISER may use without restriction, foritself or for any other business given in franchise, the trademarks of theproducts, service trademarks or any other kind of ideas that contribute to theprofitability thereof, without being obligated to pay an indemnification oramount of money to THE FRANCHISEE for intellectual property rights.

 

3

----

 

NinthClause: During theexistence of this agreement THE FRANCHISEE shall operate THE ESTABLISHMENTkeeping it in a clean and proper condition, and shall abide to the securitystandards under which TIENDAS MONTANA operates; it shall render an efficient,respectful and high quality service in strict compliance with the TIENDASMONTANA franchise system. THE FRANCHISEE shall open the stores to the public for eight (8) hours per day andaccording to the extensions of time and/or changes that the company decides: Itshall comply with all the aspects of the manual or instructions of thefranchise system of TIENDAS MONTANA, and shall comply with all the requirementsof THE FRANCHISER regarding:

 

1)     Listings of price and discount referential margins of the products orservices established by THE FRANCHISER that are offered in THE ESTABLISHMENT,in order to maintain the concept of the chain stores of TIENDAS MONTANA.

 

2)     The type or kinds of services and/or service products that may be sold,advertised and offered in the store.

 

3)     The showing of the symbols and logos approved for the store.

 

4)     The capacitating of the persons that shall be involved in the operationof the store.

 

5)     The procedure necessary for the service of the clients.

 

6)     Governmental requirements regarding the payment of all the national andmunicipal taxes such as the business tax (*patente de industria y comercio*) and taxover the commercial advertising (this latter one specified in the nineteenthclause of this agreement), as well as to maintain in force all theauthorizations and governmental permits that are necessary for the operation ofthe store according to the TIENDAS MONTANA franchise system.

 

7)     The hiring of a civil liability against third parties insurance policy,with an ample and sufficient coverage, enough to cover any event occurring overthe merchandise and commercial activity, including rental risks for materialdamages that THE ESTABLISHMENT may suffer (caused for incidents such as: fire,explosion, short circuits; etc.)

 

Tenth Clause: Toverify the good conditions of THE ESTABLISHMENT, THE FRANCHISER shall beentitled, at least once a month, through any of its representatives, orauditors firms, to inspect the well functioning of the store, as well as toaudit the invoicing system to corroborate the proper compliance of theobligations contained in this agreement.

 

3.- MAINTENANCE, RENOVATIONS AND RESTORATIONS:

 

EleventhClause: During theexistence of this agreement, THE FRANCHISEE shall keep at all times THE ESTABLISHMENT in good conditions, restoringit if it were necessary, including the replacement of the furniture, additions,supplies and equipment; these restorations shall be made in rational period orupon THE FRANCHISER’s request. THE FRANCHISEE shall restore or replace all the symbols

 

4

----

 

andlogos that contain the commercial denomination of TIENDAS MONTANA. Everyrenovation or restoration shall comply with the standards and specifications ofquality and design of TIENDAS MONTANA imposed by THE FRANCHISER.

 

4.- PURPOSE OF THE TIENDAS MONTANA FRANCHISE: 

 

Twelfth Clause:Purpose of the TIENDAS MONTANA franchise:

 

a)     Reach the expansion and placing of the commercial denomination TIENDASMONTANA, nationwide, with the least investment.

 

b)    Increase the sales of the products that are commercialized under theTIENDAS MONTANA commercial denomination in a short period, through a highervolume of sales with the consequent benefits for the franchisees.

 

c)     Allow the franchisees a stable development with a minimum investment inevidenced commercial success products and good quality.

 

5.- OBLIGATIONS OF THE FRANCHISER:

 

Thirteenth Clause:The following shall be the obligations of THE FRANCHISER

 

a)     Grant THE FRANCHISEE  the rightof use of the commercial denomination   TIENDASMONTANA.

 

b)    Ease the acquisition of the advertisement items for the display of themerchandise at the cost value, as well as the tools necessary for the wellfunctioning of THE ESTABLISHMENT to THE FRANCHISEE.

 

c)     Give technical assistance and advise in all and each of the technicalaspects that allow a proper and good functioning of the franchises.

 

d)    Carry on the necessary formalities to procure the greatest efficiencyand time in the dispatches of the merchandise requested by THE FRANCHISEE, andshall make its best efforts to have a fluid communication between THEFRANCHISEE and The Supplier.

 

6.-BASIC CONDITIONS FOR THE INSTALLATION OF THE FRANCHISE:

 

FourteenthClause: THE FRANCHISEEdeclares that it has efficient resources for the performance of the franchiseTIENDAS MONTANA, for which it states that it has the following for thebeginning of the commercial activity:

 

a)     The necessary computer equipment for the control of the sales thatallows the verification of the development of the same, as well as itsrespective control for the purposes of tax administration, besides of thecommunication equipment for the transmission of information required by thecompany, such as: Fax, modem or others. It is understood that in the case thatTHE FRANCHISER decides to include technological updates and improvements to thesystem, such as

 

5

----

 

computer,communication, sales or other systems, in order to facilitate the management ofthe business as well as its operation and control, THE FRANCHISEE will beadjusted to the standards adopted by THE FRANCHISER, understanding that theseimprovements shall be set by this latter within reasonable parameters regardingcost which do not affect the profitability of the business and shall be paid byTHE FRANCHISEE as part of the operation expenses of THE ESTABLISHMENT.

 

b)    External decoration of the premises, locale, respecting the colorsspecified by THE FRANCHISER.

 

c)     Internal decoration of the premises according to the design of thestore.

 

d)    Security systems required by the authorities for the operation of thestore.

 

FifteenthClause: THE FRANCHISERshall be able to include at any of the stores given as franchise, new productlines, which regarding its opinion, are accordant with the operation of thebusiness TIENDAS MONTANA, and, by mutual consent with each franchisee, shallevaluate their selling feasibility at each store. It is understood that theproducts that THE FRANCHISEE wants to include to THE ESTABLISHMENT, shall besubjected, in written, to the consideration of THE FRANCHISER, and this latter,within a period no longer than seven (7) business days following to thepetition of THE FRANCHISEE, shall approve or not the incorporation of the samewithin the concept of Tiendas Montana.

 

7.-DISTRIBUTION AND SALES OPERATION SYSTEMS:

 

SixteenthClause: THE FRANCHISERshall be able to audit the inventory at any moment, with or without previousnotification, in order to verify the compliance of the exclusivity of the commercializationof products supplied or approved by THE FRANCHISER, care of the merchandise,rotation of the same and the rest of the guidelines set forth in thisagreement.

 

SeventeenthClause: THE FRANCHISEEis absolutely responsible for the store administration, for which it isunderstood that everything corresponding to working personnel, services,municipal duties, taxes and any other performance expenses, are of its absoluteresponsibility and shall be paid by it. THE FRANCHISER, in any case and under anyconcept, shall be jointly responsible for the obligations that should becomplied by THE FRANCHISEE for the performance of its stores.

 

EighteenthClause: It isunderstood that the reliable employees, supervisors and workers of THEFRANCHISEE shall not be subordinate workers of THE FRANCHISER, neither of itsmanagers, supervisors or employees; for which both parties acknowledge thatthere no working relation shall exist between THE FRANCHISER and the personsrendering services to THE FRANCHISEE, being this latter the sole employer ofthis personnel and therefore responsible for all the legal and/or contractualobligations provided in the labor legislation. Notwithstanding the above, ifany of the persons rendering services to THE FRANCHISEE, initiates an administrativeor judicial proceeding against THE FRANCHISER, THE FRANCHISEE shall immediately

 

6

----

 

indemnifyTHE FRANCHISER for all the expenses and/or contributions of any type in whichit have to incur, for the purposes of its defense.

 

8.-PUBLICITY:

 

NineteenthClause: THE FRANCHISEEshall operate continuously the business granted as a franchise, making its besteffort to increase the profitability of the same, and shall be able, at itsoption, to publicize it with the name TIENDAS MONTANA, just as indicated orapproved by the Marketing Department of THE FRANCHISER, through any way ofpublicity; however, no design, billboard or any way of publicity, shall be usedto represent the store, unless the way, message, colors, number, place or sizeof the same, have been previously approved in written by THE FRANCHISER(through its Marketing Department). THE FRANCHISER or its authorized agents,may, at any moment, through a previous notification to THE FRANCHISEE andwithin a period no less than five (5) days, withdraw advertising billboards ormedia, from any place, which have not been approved by it, without beingobliged to pay any penalty or amount of money for damages. Any merchandiseitem, equipment, stationary, supplies, furniture or utensils having thecommercial denomination TIENDAS MONTANA, or any imitation of the same, shall beused, unless these have been previously approved in written by THE FRANCHISER,following the quality and design standards.

 

Pursuantto the provisions of the ninth clause, numeral 6 of this agreement, THEFRANCHISEE is obliged to pay the municipal tax regarding commercial publicity,as well as to carry out the corresponding proceedings to get the necessarypermits for the installation of advertising billboards or walls metallic orluminous signs or any way of publicity requiring THE ESTABLISHMENT, thatgenerates any tax.

 

Itis agreed, that THE FRANCHISEE shall accept and carry out all the publicity andadvertising guidelines and strategies developed by THE FRANCHISER, for thechain and the benefit of the same, and also accepts the obligation to submit tothe prior authorization of THE FRANCHISER, any publicity segments and the itemsthat involve the trademark TIENDAS MONTANA or the products commercialized inTHE ESTABLISHMENT.

 

9.-PROPERTY RIGHT ON THE FRANCHISE TIENDAS MONTANA:

 

TwentiethClause: THE FRANCHISEEagrees that the rights on the name TIENDAS MONTANA and the use of the same,shall be and remain as property of THE FRANCHISER, and THE FRANCHISEE, shalltransfer to TIENDAS MONTANA any additional right that may be acquired, if it isthe case, as consequence of the use of said name.

 

Anyregistration request to be carried out by THE FRANCHISEE in order to use thename TIENDAS MONTANA, required by the laws of any governmental entity, shallspecify that the use of said name is limited to the specifications of thisagreement. THE FRANCHISEE, also accepts to not interfere in any way whatsoeverand under any circumstance, in the use or registration of the name TIENDASMONTANA or any of the commercial names or registered trademarks TIENDAS MONTANAby THE FRANCHISER.

 

7

----

 

THEFRANCHISER has the exclusivity on the use of the commercial denominationTIENDAS MONTANA, for which it has the full right to grant it as a franchise toany other individual or legal entity it considers convenient, without THEFRANCHISEE being able to oppose in any way whatsoever. All the improvements,additions or inventions regarding the system, will result in the benefit of thesame, and may be used by THE FRANCHISER.

 

THEFRANCHISER shall have absolute right and the responsibility be aware of thedisputes with third parties in everything related to Industrial Property Rightand Copyright of the franchise system TIENDAS MONTANA, and THE FRANCHISEE, atits own expense, shall grant its full collaboration to THE FRANCHISER ifnecessary.

 

THEFRANCHISER is the only person obliged to defend the right of use of thecommercial denomination TIENDAS MONTANA, for which only it shall be able todetermine the way to conciliate or solve any conflict arising from the cases ofimitation or infringements in the use of its name. THE FRANCHISEE shall notinitiate, in any case, proceedings against the imitators or infringers or anyother trial or proceeding to demand and protect the TIENDAS MONTANA franchisesystem. Both parties shall make their best effort regarding the above, in orderto keep, protect and promote the name TIENDAS MONTANA, its distinctivecharacteristics and the rest of the service trademarks, registered trademarks,logos and slogans, related to the franchise system TIENDAS MONTANA.

 

10.-CONFIDENTIALITY OF THE INFORMATION SUPPLIED:

 

Twentieth-firstClause: All theinformation supplied by THE FRANCHISER pursuant to this agreement shall betreated as confidential, and THE FRANCHISEE acknowledges that this is and shallalways remain property of THE FRANCHISER. THE FRANCHISEE shall make its bestefforts to ensure that the supplied information only be disclosed to thoseemployees that due to their duties must have access to it. This information,including annotations or other documents containing it, shall be submitted toTHE FRANCHISER at the place it specifies, once the agreement has terminated.While this information is not of public knowledge, the same shall not bedisclosed to any person, business, company or association.

 

11.-RECORDS AND AUDITS:

 

Twentieth-secondClause: All the store’sincomes, including the net incomes, shall be permanently recorded in any wayreasonably required by THE FRANCHISER. The report shall be in the fashion anddetail as required by THE FRANCHISER, specifying prices, types of products,quantities, cash, credit or discount sales, among others.

 

12.-DURATION OF THE AGREEMENT:

 

Twentieth-thirdClause: For all thepurposes of this agreement, the starting date of this contracting shall beunderstood as the              dayof the month of                        of                       ,even when the authentication of the same be done in a previous or further 

 

8

----

 

dateto that date. The duration of this agreement is three (3) years starting fromthe abovementioned date.

 

13.-CAUSES FOR EARLY TERMINATION:

 

Twentieth-fourthClause: The followingshall be causes granting the right to THE FRANCHISER to terminate thisagreement:

 

1.               The breach in the payment of any of theconcepts stated in the fourth clause of this agreement.

 

2.               The breach by THE FRANCHISEE on the obligationto condition, maintain, restore or improve the store according to thespecifications and rules required by THE FRANCHISER.

 

3.               The suspension of the line of business of THEFRANCHISEE due to the delay, bankruptcy, preventive or executive measure thatimpede the continuance of the franchise.

 

Allthese breach causes shall grant THE FRANCHISER the right to terminate theagreement and demand the indemnification payment for damages generated, evenfor damages generated to the property on their commercial trademark.

 

4.               The commercialization by THE FRANCHISEE ofproducts that compete with those manufactured by THE SUPPLIER. If there was atermination of this contract due to a cause set herein, THE FRANCHISEE shallpay THE FRANCHISER, the amount of three hundred thousand dollars of the UnitedStates of America (US$ 300,000.00), for indemnification of damages, withoutbeing necessary to prove said damages.

 

14.-EXTENSION OF THE FRANCHISE:

 

Twentieth-fifthClause: If THEFRANCHISEE is willing to continue with the TIENDAS MONTANA franchise after thetermination of this agreement, it shall submit a written request to THEFRANCHISER for the renewal of the same, with at least one (1) year prior to theexpiration date of the agreement. THE FRANCHISER shall carry through therequest, reviewing the performance background of THE FRANCHISEE, pursuant tothe procedures and criteria (including the requirements corresponding torenewals, restorations and improvements of THE ESTABLISHMENT, credit and marketfeasibility), being applied by THE FRANCHISER at that moment, for the grantingof new TIENDAS MONTANA franchises, and shall answer to THE FRANCHISEE withinthirty (30) business days starting from the request.

 

15.-TERRITORIALITY:

 

Twentieth-sixthClause: THE FRANCHISERshall review the requests submitted by potential franchisees regarding theinstallation of new franchises. If the new franchise should be placed withinthe locality of THE ESTABLISHMENT where THE FRANCHISEE operates, THE FRANCHISERshall grant THE FRANCHISEE the

 

9

----

 

preferentialright of installing a new store, at that locality. If interested in operatingthe new franchise, THE FRANCHISEE shall inform in written and within a periodno longer than seven (7) days starting from the notification made to THEFRANCHISER, its will to operate it, and shall have a maximum period of sixty(60) days to begin its operation. If THE FRANCHISEE is not interested inoperating this new store or does not begin its operation during the periodindicated above, THE FRANCHISER shall be able to grant the franchise to whom itdeems convenient.

 

16.-GUARANTEE:

 

Twentieth-seventhClause: I,                    ,Venezuelan, of legal age and bearer of the identity card number                    ,hereby certify: that I am guarantor and principal payer of                    ,C.A., mentioned above, for the compliance of all and each of the obligationsthat the latter assumes towards Tiendas Montana, C.A. and/or Corimon Pinturas,C.A., by virtue of the foregoing agreement.

 

17.-FINAL DISPOSITIONS:

 

Twentieth-eighthClause: For thepurposes of any notification, these shall be made in written and delivered tothe following addresses: FRANCHISER: TIENDAS MONTANA, Calle Hans Neumann,Edificio Corimon, Los Cortijos de Lourdes, Caracas – Venezuela. FRANCHISEE: Atthe address of THE ESTABLISHMENT, mentioned in the first clause of thisagreement.

 

Twentieth-ninthClause: For thepurposes of complying to the provisions of the Law of the Central Bank ofVenezuela, it is expressly certified that the referential exchange rate used inthis agreement for the amounts expressed in US dollars, is one thousand sixhundred bolivares (Bs. 1,600.00) per each US dollar (US$ 1.00).

 

Theparties choose as special domicile the city of Caracas, to the jurisdiction ofwhich courts they declare to be subjected. Both parties also agree toalternately submit any arising controversy to arbitration procedure, whetherthrough the regular procedure or through any procedure established in anyspecial legislation in force or in any other that grants the legal stabilityand speediness in the solving of the conflict that is promoted or governed bythe Public Administration Entities or Private Entities or Institutions ofrenown solvency and experience in this matter. Two copies of the same tenor aremade for a sole purpose, in Caracas at the date of its authentication with theNotary Public.

 
| THE  FRANCHISER |   | THE  FRANCHISEE |
|-----------------|--------|-----------------|

 

10

----