DISTRIBUTORSHIP AND SALES AGENCY AND ROYALTY AGREEMENT
DISTRIBUTORSHIP
AND SALES AGENCY AND ROYALTY AGREEMENT
THIS
DISTRIBUTORSHIP AND SALES AGENCY AGREEMENT (the “Agreement”) is made this 19 day
of January, 2009, by and between Megola, Inc., with its principal place of
business located at 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxx, Xxxxxx
X0X0X0 ( “Megola” and sometimes the "Company") and Vulcan Technologies, LLC, a
New Jersey limited liability company, having its principal offices located at
C/O Law Offices of Xxxxxx X. Xxxxxxx, 00 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx
Xxxxxx 00000 ( “Vulcan” and sometimes the "Distributor").
BACKGROUND:
WHEREAS,
Megola has obtained the North American rights to a line of fire prevention
products known as the “Hartindo” line of products and may, in the future, obtain
or develop additional fire resistant products alone or with third parties or
obtain additional products by virtue of agreements and contracts with third
parties (collectively, the “Products”) and desires to appoint Vulcan, and to
take certain actions that shall cause Vulcan to be a distributor/sales
representative for the Products in North America;
WHEREAS,
Vulcan shall make certain payments to Megola for its appointments under this
Agreement and shall introduce parties to Megola and to certain of its contract
parties to purchase the Product, in exchange for which Megola and its contract
parties shall acknowledge the role of Vulcan as the exclusive distributor/sales
representative for each of Vulcan’s customers (the “Customer(s)”) during the
term of this Agreement.
NOW,
THEREFORE, in consideration of the promises hereinafter made by the parties
hereto, it is agreed as follows:
ARTICLE I
APPOINTMENT
1. Co-Exclusive Distribution
Rights to Woodsmart and Janus
Contracts.
In partial consideration of the Vulcan payment set forth in Section 3 below, the
Company hereby appoints Vulcan as the co-exclusive distributor
under:
A. a
certain Marketing and Distributorship Agreement (the “Janus Contract”), dated
November 21, 2007, by and between Megola, Inc., MSE Enviro-Tech Corp. and Janus
Products Corp. (“Janus”), rendering Vulcan by such appointment and assignment,
the co-exclusive distributor/sales representative with Janus of the “Fire
Blanket” under the terms of said contract; Megola hereby agrees that Vulcan
shall earn royalty payments for each “Fire Blanket” sold by or through Janus
during the term of this Agreement (see Appendix ‘A’).
B. a
certain Hartindo AF21 Products, Purchase, Sales, Distribution, Marketing and
Service Agreement (the “Woodsmart Contract”), dated October 5, 2008, by and
between Megola, Inc., MSE Enviro-Tech Corp. and Woodsmart Solutions, Inc.
(“Woodsmart”), rendering Vulcan the co-exclusive distributor of the Products and
“Enhanced Product” under the terms of said contract; Megola hereby agrees that
Vulcan shall earn royalty payments for each concentrate gallon of Product sold
to or through Woodsmart during the term of this Agreement. Vulcan hereby agrees
that the first $311,000 of revenue derived from sales received by Megola under
the Woodsmart Contract will belong exclusively to Megola to repay its costs to
produce and deliver the first 100,000 gallons of Product (see Appendix
‘A’).
2. Exclusive Distribution and
Sales Representative Rights. In further consideration of the
Vulcan payment set forth in Section 3 below, the Company hereby appoints Vulcan
as the exclusive distributor and sales representative for the following
industries or parties, as the case may be:
A. Megola
hereby grants to Vulcan (i) the exclusive distribution/sales representative
rights for the Product in the countries of Canada and Mexico and (ii)
co-exclusive distribution/sales representative rights in the United States of
America (the “U.S.”), to the railroad industry (the “Railroad Industry”) for a
ten (10) term, provided, however, that Vulcan’s co-exclusive distribution/sales
representative rights for the U.S. shall be negotiated further by Megola with
MSE Enviro-Tech to enable Vulcan the complete U.S. exclusive rights. This
negotiation process should be finalized within 90 days following the execution
and delivery of this Agreement. Vulcan shall pay to Megola a commission payment
equal to twenty-five (25%) percent of Vulcan’s profit, less Megola’s ”Cost”,
defined below, on Products purchased (the “Vulcan Commission”) by any party in
the Railroad Industry. Megola’s “Cost” shall be defined for all
purposes of this Agreement as Megola’s actual costs to acquire the raw materials
for the Product, the costs for its preparation, including the toting, mixing and
skimming processes, as well as Megola’s freight expenses through shipment (see
Appendix ‘A’). Vulcan shall have the right, upon reasonable notice,
to audit the costs of Megola with respect to the calculation of its profits for
any purchase/sale of the Product in the Railroad Industry. Vulcan hereby commits
to generate aggregate gross sales of the Hartindo Products in the Railroad
Industry of no less than $3 Million on or before the second anniversary of this
Agreement, and, thereafter, agrees to increase such aggregate gross sales by
fifteen (15%) percent for each year thereafter, commencing with the third year
of the term. In the event Vulcan fails to achieve the aggregate gross sales
thresholds at the second anniversary date or for any year of the remaining term
of this Agreement, Vulcan shall automatically lose its exclusive rights in the
Railroad Industry and shall be a co-exclusive distributor/sales representative
for the balance of the term of this Agreement. For example, if Vulcan and/or
parties have purchased Hartindo Products and the aggregate cash receipts for the
Rail Industry which are equal to or exceed $3,450,000 upon the third anniversary
date of this Agreement, the term shall be automatically extended for an
additional fourth year since $3,450,000 represents a 15% increase over the
$3,000,000 sales requirement for the prior second anniversary date.
B. Except
as set provided for under the Janus Contract and the Woodsmart Contract, Megola
hereby grants to Vulcan the exclusive distribution/sales representative rights
for any Customer introduced by Vulcan and any customers
Vulcan has under agreements as sales agents. Vulcan shall pay to Megola the
Vulcan Commission, or twenty-five (25%) percent of Vulcan’s profit (sales price
less Megola’s cost) on Products purchased by any Customer of Vulcan during the
term of this Agreement. Vulcan shall have the right, upon reasonable notice, to
audit the costs of Megola with respect to the calculation of its profits for any
purchase/sale of the Product to a Customer of Vulcan. Megola shall take whatever
measures necessary to protect Vulcan’s rights under this Agreement, including
but not limited to preventing any other party from selling the Product to a
Vulcan Customer. Vulcan also understands that Megola may also require the same
provision to potential other distributors Megola may acquire throughout other
industries.
C.
Megola hereby acknowledges, and shall take all necessary measures to obtain the
acknowledgement of all interested parties, that “ICI” and its successors are the
exclusive customers of Vulcan and any purchases of the Product by or through
“ICI” shall be subject to the terms of this Agreement.
3. Vulcan Payments for
Appointments. In consideration of its appointments set forth in this
Agreement, Vulcan agrees to pay Megola the sum of Seven Hundred Fifty Thousand
($750,000.00) USD dollars, as follows: (i) a partial payment of $400,000 to
Megola due five (5) business days after the execution and delivery of
this Agreement by all parties, and; (ii) a payment of $350,000 ninety
(90) days following the date of this Agreement, provided, however, that such
payment shall only be due and owing at that time if Woodsmart, under the
Woodsmart Contract, and Janus, under the Janus Contract and any other
distribution means by Megola has purchased no less than 100,000 finished gallons
of AF21. . It is agreed and acknowledged by Vulcan that the $350,000 payment
shall only be paid to Megola upon the attainment by this performance
criteria.
4. Competitive Products.
Vulcan agrees not to represent or sell other products which are deemed to be
competitive with the Products unless agreed to by Megola by prior written
consent.
5. Sales. Vulcan shall
use its best efforts to promote the sale and distribution of the Products in
North America.
ARTICLE II
PRICE,
SALES, ACCEPTANCE, DELIVERY
1. Prices for the
Product. Except in the cases of the Woodsmart Contract and the Janus
Contract, Vulcan with assistance from Megola shall determine the selling price
for the Product throughout the term of this Agreement and any extensions
thereof
2. Payment Terms. Vulcan
shall, or, alternatively negotiated with Megola direct its Customers, to submit
to Megola purchase orders (“Order and/or Orders”) for the Product to Megola
during the term of this Agreement. Upon Megola’s receipt of any such Order,
Megola shall promptly advise the Customer and Vulcan of its acceptance or
rejection of the Order. In the event of any conflict between the terms of such
Order and this Agreement, the terms of this Agreement shall prevail. Except for
Orders from the military establishment or the U.S. General Services
Administration, Vulcan and/or its Customers shall pay Megola with acceptance of
the Purchase Order 50% upon purchase order with the balance payable to Megola
upon shipment of the Product. Within
fifteen (15) days of its receipt of any full payment for the Product under the
terms of this Agreement, Megola shall pay to Vulcan its royalty payments due
under the Janus and Woodsmart Contracts and when/if applicable any Commission
for sales in the Railroad Industry or to any Vulcan Customer during the term of
this Agreement.
3. Shipment. All
Products sold to pursuant Megola’s acceptance of Purchase Orders pursuant to
Section 2 above shall be delivered FOB Megola’s manufacturer’s point of shipment
to the Customer with all risk of loss and damage thereafter to be borne by the
Customer.
ARTICLE III
PROPRIETARY
RIGHTS
1. Use of Megola Company
Name. Megola expressly prohibits any direct or indirect use, reference
to, or other employment of its name or Hartindo, trademarks, or trade name,
except as specified in this Agreement or as expressly authorized by Megola in
writing. All advertising and other promotional material will be submitted to
Megola at least two weeks in advance and will only be used if Megola consents
thereto, which consent shall not be unreasonably withheld. Company hereby
authorizes and requires Vulcan's use of the Megola’s insignia or lettering which
will be on the products at the time of the delivery. Megola hereby authorizes
Vulcan's use of the legend set forth below. Vulcan shall submit
to Megola in writing full particulars prior to any use of the
authorized legends, on stationery, invoices, promotion material or otherwise,
and shall not proceed with such use unless and until Megola's written approval
has been received.
Authorized
legend shall be the following:
If the
authorized legend is used on any stationery, invoices, promotion material or
otherwise by Vulcan, it shall, on termination of this Agreement, or upon request
of Megola, discontinue the use of such legend on any stationery, invoices,
promotion material or otherwise and thereafter will not use, either directly or
indirectly in connection with its business, such legend or any other names,
titles of expressions so nearly resembling the same as would likely lead to
confusion or uncertainty, or to deceive the public.
2. Patent Indemnity.
Megola agrees, at its own expense, to indemnify, defend and hold harmless each
of Vulcan and its Customers from and against every expense, damage, cost and
loss (including attorneys' fees incurred) and to satisfy all judgments and
decrees resulting from a claim, suit or proceeding insofar as it is based upon
an allegation that the Products or any part thereof furnished by Megola or any
process which is practiced in the customary use of the Products is or has been
infringing upon any patent, copyright or proprietary right, if Megola is
notified promptly of such claim in writing and given authority, and full and
proper information and assistance (at Megola's expense) for the defense of same.
In case the Products, or any part thereof, in such suit is held to constitute an
infringement and the use of said Products or part is enjoined, Megola shall, in
its sole discretion and at its own expense, procure for the indemnitee the right
to continue using said Products.
3. Title to Products and
Product Materials. Vulcan acknowledges that the Products and any and all
materials, whether for sales, advertising, specifications or the like
are the property of Megola, and that the Products are being made available to
Vulcan and its Customers in confidence and solely on the basis of its
confidential relationship to Megola.
ARTICLE IV
CO-MANUFACTURE
RIGHT
1.
Co-Manufacture
Right. In the event that Megola, for whatever reason, is not able to
manufacture and/or deliver the Product to Vulcan and/or its Customers in
accordance with Megola’s normal and customary manufacturing and delivery
practices in the chemical industry, or if the Product fails to conform to its
specifications due to a lapse or series of lapses in quality control, then and
in that event Vulcan shall have the license and right to manufacture the Product
in accordance with its specifications in order to meet its and/or its Customers
Product orders, and the payment terms of this Agreement shall be adjusted
accordingly.
ARTICLE
V
WARRANTY
1. Products Warranty.
Megola warrants that its Products at the time of delivery thereof shall conform
to the specifications established in writing by Megola for such
Products.
THIS
CONSTITUTES THE SOLE WARRANTY MADE BY MEGOLA EITHER EXPRESSED OR IMPLIED. THERE
ARE NO OTHER WARRANTIES EXPRESSED OR IMPLIED WHICH EXTEND BEYOND THE FACE
HEREOF, HEREIN, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL MEGOLA BE LIABLE FOR ANY INCIDENTAL
OR CONSEQUENTIAL DAMAGES AND PURCHASER’S REMEDIES SHALL BE LIMITED TO CREDIT TO
VULCAN OR ITS CUSTOMER EQUAL TO THE AMOUNT PAID FOR THE NON-CONFORMING
PRODUCT.
2. Misuse of Products.
Any tampering, misuse or negligence in handling or use of Products renders the
warranty void. Further, the warranty is void if, at any time, Vulcan or its
Customer attempts to make any internal changes to any of the components of the
Products. TAMPERING WITH THE PRODUCTS OR THEIR COMPONENTS THAT RENDERS THIS
WARRANTY VOID WILL BE DEFINED TO INCLUDE ALL OF THE POSSIBILITIES DESCRIBED IN
THIS PARAGRAPH, TOGETHER WITH ANY PRACTICE WHICH RESULTS IN CONDITIONS EXCEEDING
THE DESIGN TOLERANCE OF THE PRODUCTS. Any Tampering with any Hartindo products
will result in Immediate Termination of Agreements.
ARTICLE VI
TERM OF
AGREEMENT
1. Term. Except as set
forth in Article I, 2(A) for the Railroad Industry, the term of this Agreement
is 10 years.
2. Termination. This
Agreement may be terminated only:
(a) By
either party for substantial breach of any material provision of this Agreement
by the other, provided due notice has been given to the other of the alleged
breach and such other party has not cured the breach within thirty (30) days
thereof; or
(b) By
Megola, if Vulcan ceases to function as a going concern or makes an assignment
for the benefit of creditors; if a petition in bankruptcy is filed by or against
the Vulcan, resulting in an adjudication of bankruptcy;
(c) Upon
termination of this Agreement all further rights and obligations of the parties
shall cease, except that Megola shall not be relieved of (i) its obligation to
pay any monies due, or to become due, as of or after the date of termination,
and (ii) any other obligation set forth in this Agreement which is to take
effect after the date of termination.
ARTICLE VII
NOTICES
1. Notice or
Communication. Any notice or communication required or permitted
hereunder (other than Administrative Notice) shall be in writing and shall be
sent by registered mail, return receipt requested, postage prepaid and addressed
to the addresses set forth below or to such changed address as any party
entitled to notice shall have communicated in writing to the other party.
Notices and communications to Company shall be sent to:
|
If to Megola:
|
Megola,
Inc.
|
|
|
000
Xxxx Xxxxxx, Xxxxx 000
|
|
|
Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
|
|
|
Tel:
000-000-0000
|
|
|
Fax:
000-000-0000
|
|
If to Vulcan:
|
Silver Fox, LLC |
|
|
00
Xxxx 00xx
Xxxxxx
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Tel:
000-000-0000
|
|
|
Fax:
000-000-0000
|
Notices
and communications to the parties shall be sent to their above address. Any
notices or communications to either party hereunder shall be deemed to have been
given when deposited in the mail, or sent by telecopy, addressed to the then
current address of such party.
ARTICLE VIII
GENERAL
PROVISIONS
1. Relationship of
Parties. The relationship between the parties established by this
Agreement shall be solely that of vendor and distributor/sales representative
and all rights and powers not expressly granted to the Vulcan are expressly
reserved to Megola. Vulcan shall have no right, power or authority in any way to
bind the Company to the fulfillment of any condition not herein contained, or to
any contract or obligation, expressed or implied.
2. Independence of
Parties. Except as expressly set forth in this Agreement, neither party
hereto shall have any right whatsoever to incur any liabilities or obligations
on behalf or binding upon the other party. The Vulcan specifically agrees that
it will not at any time represent orally or in writing to any person or
corporation or other business entity that it has any right, power or authority
not expressly granted by this Agreement.
3. Indemnity. Megola and
Vulcan agree to hold each other free and harmless from any and all claims,
damages, and expenses of every kind or nature whatsoever (a) arising from acts
of a party; (b) as a direct or indirect consequence of termination of this
Agreement in accordance with its terms; or (c) arising from acts of third
parties in relation to Products sold under this Agreement, including, but not
limited to execution of liens and security interests by third parties with
respect to any such Products.
4. Assignment. This
Agreement constitutes a personal contract and Vulcan shall not transfer or
assign same or any part thereof without the advance written consent of Megola,
provided, however, that Vulcan shall be permitted, without the consent of
Megola, to assign all of its rights, title and interest in this Agreement to a
“public” company in which Vulcan management owns no less than twenty-five (25%)
percent of the equity.
5. Entire Agreement. The
entire Agreement between Megola and Vulcan covering the Products is set forth
herein and any amendment or modification shall be in writing and shall be
executed by duly authorized representatives in the same manner as this
Agreement. The provisions of this Agreement are severable, and if any one or
more such provisions are determined to be illegal or otherwise unenforceable, in
whole or in part, under the laws of any jurisdiction, the remaining provisions
or portions hereof shall, nevertheless, be binding on and enforceable by and
between the parties hereto.
6. Applicable Law. This
Agreement shall be construed and interpreted under the laws of the State of
Nevada. All disputes, claims or actions arising out of or in connection with
this Agreement shall be exclusively brought and venued in the state or federal
courts of the State of New York and each party hereby expressly consents to the
personal jurisdiction of such state and federal courts of the State of New York
and hereby waives any objections to such jurisdiction on the grounds of
inconvenient forum.
7. Separate Provisions.
If any provision of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
duly authorized officers as of the date and year indicated above.
MEGOLA,
INC.
By:____________________________________
Xxxx
Xxxxxxx,
Chief
Executive Officer
Vulcan
Technologies, LLC
By:____________________________________
Silverfox,
LLC, Managing Member
By:_______________________________
Xxxxxxx
Xxxxxxxx, Managing Member
