THIS AGREEMENT (this "Agreement") for the distributorship of ULTIMATE ME2
is made and entered into as of October 12, 2006 by and between MACH 3
TECHNOLOGIES GROUP, LLC. a limited liability company duly registered in
the State of Nevada, hereinafter called MACH 3 and Essentially Yours
Industries Inc., hereinafter called DISTRIBUTOR.
R E C I T A L S:
WHEREAS, MACH 3 has acquired the authority and developed a certain
line of ecological product as a fuel enhancement catalyst for automotive
and other internal combustion engines, called "ULTIMATE XX0"
(XX EPA Registration #204320001), hereinafter called the PRODUCT.
The PROUDCT is a fuel additive completed with a set of fuel saving and
emission test reports in accordance with EPA 511 (including FTP-75),
SAE Type II J1321, 40 CFR 86 and California Title 13 Test Protocols by
Automotive Testing and Development Services, Inc. (ATDS), an independent
testing laboratory recognized by the US EPA and the California Air
Resources Board (CARB).
MACH 3 has the exclusive worldwide rights under license from Xxxxxx Xxxxx
to manufacture and to distribute the PRODUCT and its future generation of
improvement from time to time, and desires the assistance of DISTRIBUTOR
in its efforts to market and distribute the PRODUCT.
1. RELATIONSHIP.
1.1 Appointment.
(a) Upon the terms, and subject to the terms and conditions,
contained herein, MACH 3 hereby appoints DISTRIBUTOR as a distributor of
the PRODUCT in The United States of America (USA), Canada and Mexico. The
rights granted hereunder shall permit DISTRIBUTOR to market and to sell the
PRODUCT anywhere within the USA, Canada and Mexico. It is understood and
agreed that DISTRIBUTOR shall also have the exclusive for the individual
residential market in the USA, Canada and Mexico upon the execution of
this Agreement, provided that a first order of PRODUCT in excess of
$250,000 will be made within 60 days.
1.2 Acceptance of Appointment. DISTRIBUTOR hereby accepts the
appointment as provided in Section 1.1 above, and hereby agrees fully
and faithfully to perform and discharge all of its duties, obligations
and responsibilities as set forth in this Agreement. It is understood
and agreed that the Authorized Distributor status is maintained with
special privileges to order the PRODUCT at the Special Authorized
Distributor Prices as shown in Schedule A, which may be revised from
time to time with minimum 60 days written notice. If the increase is
more than 5%, then Mach 3 shall provide the DISTRIBUTOR with 90 days
written notice. DISTRIBUTOR hereby also acknowledges the proprietary
and intellectual property rights of MACH 3 in the PRODUCT as well as
the exclusive distribution rights of MACH 3 and Chinaoil (USA) Inc.
in the said PRODUCT.
1.3 Competing Products. During the term of this Agreement,
DISTRIBUTOR and all officers, directors, shareholders, employees,
agents or representatives of a company to be formed (collectively,
"Agents"), and any entity in which DISTRIBUTOR or any of its Agents
has a direct or indirect controlling ownership interest, shall not,
directly or indirectly, promote, sell or distribute any fuel additive
or similar product(s) which are directly competitive with the PRODUCT.
Any such violation by the DISTRIBUTOR shall have the DISTRIBUTOR
immediately deemed to be in default of this Agreement.
1.4 Independent Contractor. The relationship of MACH
3 and DISTRIBUTOR established by this Agreement is that of independent
contractors. Nothing contained in this Agreement shall be construed
to (a) give either party hereto the power to direct and control the
day-to-day activities of the other, or (b) constitute the parties as
partners, joint ventures, co-owners or otherwise as participants in
a joint or common undertaking. Neither party hereto nor any of its
Agents is the representative of the other party for any purpose
except as MACH 3 has set forth in this Agreement, and has no power
or authority as agent, employee or in any other capacity to represent,
act for, bind, or otherwise create or assume an obligation on behalf
of the other for any purpose whatsoever. All financial obligations
associated with Distributor's business are the sole responsibility
of DISTRIBUTOR. All sales and other agreements between DISTRIBUTOR
and its customers are DISTRIBUTOR'S sole responsibility and shall have
no effect on MACH 3's obligations under this Agreement. MACH 3 shall
substantiate and be responsible for any information and/or claims
provided to the DISTRIBUTOR.
1.5 Product Development. From time to time DISTRIBUTOR may
recommend certain packaging modifications to existing PRODUCT and MACH
3 shall work with DISTRIBUTOR to coordinate in developing same into
viable commercial products to the extent that MACH 3 believes such
recommendations are viable. The use of the PRODUCT labels must comply
with the provisions of 8.4 and 8.5, as applicable. No representations
regarding the PRODUCT shall be made in any private label or branded
marketing materials, packaging etc. without the prior written approval
of MACH 3, which approval shall not be unreasonably withheld.
1.6 Promotional Duties.
(a) DISTRIBUTOR shall (i) exert its best efforts consistent
with sound business planning and projected profitability and sales
potential to introduce and diligently advertise, promote, sell,
distribute, and service (collectively, "Marketing") the PRODUCT,
ii) make use of, and disseminate to its existing customers, and to
potential purchasers, all promotional materials, if any, supplied by
MACH 3, and (iii) cooperate with MACH 3 in activities directed toward
the Marketing of the PRODUCT. At MACH 3's request, DISTRIBUTOR shall
make immediately available to MACH 3 copies of all print and electronic
Marketing materials used by it for the PRODUCT.
(b) DISTRIBUTOR shall at all times demonstrate and otherwise
represent the PRODUCT fairly and accurately in comparison with
competitive products from other manufacturers, shall make no false
or misleading representations with regard to the PRODUCT, and shall
not make any representations with respect to the specifications,
features or capabilities of the PRODUCT which is not consistent
with those described in the product literature or other material
supplied by MACH 3.
(c) MACH 3 shall assist DISTRIBUTOR in its efforts by making
available reasonable quantities of such marketing materials as MACH
3 has developed and/or jointly developing such marketing materials
with DISTRIBUTOR as DISTRIBUTOR may recommend.
1.7 Technical Support. MACH 3 shall provide DISTRIBUTOR with
such technical support regarding the PRODUCTS as is reasonably
necessary for DISTRIBUTOR to assist MACH 3 under this Agreement,
including but not limited to copies of all applicable test results
of PRODUCT.
1.8 Reporting Obligations of DISTRIBUTOR. DISTRIBUTOR
shall provide to MACH 3, no later than the fifteenth (15th) day of
each calendar month, as to the following month, DISTRIBUTOR'S sales
projection reports setting forth the non binding projected sales of
each size of the PRODUCT for the next 2 months for Mach 3 to make
reasonable preparations, as well as such other information that MACH
3 may reasonably request from time to time.
2. PURCHASE OF PRODUCT
2.1 Ordering Procedure. Purchase of PRODUCT shall be made
by DISTRIBUTOR by means of Purchase Orders submitted to MACH 3. Each
such Purchase Order shall specify the number of units of the PRODUCT
ordered by DISTRIBUTOR, the desired date and location of delivery,
which shall have a minimum time spans of 60 days from the date of
order. MACH 3 shall use its best efforts to comply with the
requirements of DISTRIBUTOR on the terms and conditions of this
Agreement. However, MACH 3 shall not be responsible for any delay of
delivery due to acts of God and/or any situations beyond its
reasonable control as more particularly described in Item 16 herein.
2.2 Purchase Order The DISTRIBUTOR shall submit each Purchase
Order for the PRODUCT. No additional or conflicting terms or conditions
may be proposed by DISTRIBUTOR in or in connection with any Purchase
Order, and no such additional or conflicting terms or conditions shall
be binding upon MACH 3 without its prior written consent.
2.3 Productions, Supply and Delivery of PRODUCT. During the
term of this Agreement or thereafter, MACH 3 reserves the right,
without obligation or liability to MACH 3, to manufacture, produce,
warehouse or source the PRODUCT initially in California and later at
any worldwide location, including locations outside of the United
States of America. The PRODUCT ordered by DISTRIBUTOR shall be
delivered F.O.B. place of manufacturing. However, the freight for any
products produced outside the United States shall not exceed the freight
from California. MACH 3 further reserves the right, in its sole
discretion with thirty (30) days prior written notice to modify
and/or improve the PRODUCT and one hundred and twenty (120) days
prior written notice to DISTRIBUTOR, to discontinue the production
of any superceded version of the PRODUCT.
2.4 Titles and Risk of Loss. Title to the PRODUCT thus
ordered and all risk of loss shall pass from MACH 3 to DISTRIBUTOR
at the time and place of MACH 3's delivery of the PRODUCT to a common
carrier for delivery to DISTRIBUTOR in accordance with the delivery
terms prescribed in each purchase order, notwithstanding that MACH 3
may retain rights of possession or repossession to ensure collection
of the purchase price thereof. DISTRIBUTOR shall be solely
responsible for insuring the PRODUCT after delivery to a common
carrier for delivery to DISTRIBUTOR. DISTRIBUTOR shall designate
the common carrier used for transportation of the PRODUCT. MACH 3
shall not be responsible for any delay caused by the carrier.
2.5 Inspections and Rejection. Upon written notice from
MACH 3 that the PRODUCT on order is ready for delivery at the
factory gate, DISTRIBUTOR or its representative shall have 3 business
days to carry out inspections (for approval or rejection) of the
PRODUCT for compliance with the specifications of the packaging for
quality control as indicated in the PURCHASE ORDER, which has been
accepted by MACH 3.
3. PRICING STRUCTURE OF PROUCT.
3.1 It is understood and agreed that confidentiality of
the Special Authorized Distributor Price structure of the PRODUCT is
for the mutual protection of DISTRIBUTOR as the Exclusive MLM
distributor and MACH 3. Violation of such confidential information
by any authorized sub-distributors, DISTRIBUTOR itself, or any of
its personnel shall be deemed to be in default. DISTRIBUTOR shall
be responsible to regulate such violation(s). Failure by DISTRIBUTOR
to regulate any such parties shall have DISTRIBUTOR deemed to be in
default of this Agreement. DISTRIBUTOR will therefore be fully and
solely responsible to all consequences and remedies. The Special
Authorized Distributor Price list of PRODUCT is subject to change
upon sixty (60) calendar days notice.
3.2 UNIFORM RETAIL PRICE STRUCTURE. It is understood and
agreed that all parties hereto will maintain a Uniform Retail Price
structure set jointly by MACH 3 and DISTRIBUTOR in order to maintain
a stable market condition of the PRODUCTS for the protection of all
parties. Violation to sell the PRODUCTS by DISTRIBUTOR and/or any
other sub-distributors at discounts unauthorized by MACH 3 is
prohibited. Any repeated violation after written warning would
constitute the violating party in default of this Agreement.
DISTRIBUTOR and/or any other authorized sub-distributors shall,
however, be allowed to market and sell product at prices that are
more expensive than the Uniform Retail Price structure.
3.3 SCHEDULE A herewith attached and known as
"The Special Distributor Price List of Ultimate ME2" and its
subsequent revisions, if any, shall be an integral part of this
Agreement.
4. PAYMENT FOR PRODUCTS.
4.1 Payment Terms.
i) DISTRIBUTOR shall pay by cash or cashier's check or wire
transfer directly into MACH 3 appointed bank account for the full
amount of the purchase up to the amount of $100,000 upon submitting
the Purchase Order, exclusive of shipping costs.
ii) For orders exceeding $100,000, exclusive of shipping costs,
DISTRIBUTOR shall elect to pay in full of the Purchase Order by wire
transfer or to pay a deposit equal to FIFTY FIVE PERCENT (55%) of
the Purchase Order together with an irrevocable letter of credit
("ILOC") for the balance FORTY FIVE PERCENT (45%) acceptable to the
bank or banking agent of Mach 3 plus shipping costs, if any. MACH
3 may assign such ILOC to any party and upon commencement of
manufacturing of the PRODUCT so ordered by DISTRIBUTOR and to
collect the balance 60% of the total purchase order guaranteeing
payment by such ILOC upon delivery of the PRODUCT to the common
carrier F.O.B. of MACH 3's premises of manufacturing or warehousing.
The ILOC shall be directly cashable. The irrevocable letter of
credit provisions as described above may be substituted by cash
and/or cashier's checks or other means acceptable to MACH 3.
iii) In lieu of providing an ILOC to MACH 3 to guarantee payment
for the balance of any Purchase Order of PRODUCT as stipulated
above in 4.1(ii), DISTRIBUTOR may choose to provide an irrevocable
assignment of its own receivables in a form acceptable to MACH 3
and equal to a minimum of 125% of the outstanding balance of the
Purchase Order(s) to guarantee such payment. DISTRIBUTOR shall
be responsible to pay any and all reasonable expenses incurring
from such arrangement. In the event of any late payment or
settlement, DITRIBUTOR shall pay 2.5% interest per month on
any outstanding balance owed to MACH 3. It is also understood
and agreed that such privilege extended to DISTRIBUTOR will
automatically terminate and DISTRIBUTOR shall be deemed in
default of this Agreement should DISTRIBUTOR fail to make the
outstanding balance of payment of the Purchase Order within 60
calendar days from the date that the outstanding balance is
due and payable.
5. REPRESENTATIONS AND WARRANTIES. DISTRIBUTOR represents
and warrants to MACH 3 that it: (a) has full and unrestricted
authority to enter into this Agreement and, by executing,
delivering or performing under this Agreement, it will not
breach any agreement to which it is currently a party; (b) has
the legal right, free of any right or interest of any third
party, to perform its obligations hereunder; and (c) currently
is in material compliance with all applicable Laws and has
received all applicable product safety certifications and
registrations from appropriate governmental entities necessary
to perform its obligations under this Agreement. MACH 3
represents and warrants to DISTRIBUTOR that it: (a) has
full and unrestricted authority to enter into this Agreement
and, by executing, delivering or performing under this
Agreement, it will not breach any agreement to which it is
currently a party; (b) has the legal right, free of any right
or interest of any third party, to perform its obligations
hereunder; (c) currently is in material compliance with all
applicable Laws and has received all applicable product safety
certifications and registrations from appropriate governmental
entities necessary to perform its obligations under this
Agreement, and, (d) has legal ownership of the Products,
free and clear of any right or interest of any third party
whatsoever.
5.1 AUTHORITY TO EXECUTE CONTRACT:
It is represented herein that Xxxxxx Xxxxx has the full and
complete authority to bind MACH 3 in executing the
Distributorship Agreement and any other related agreements
with DISTRIBUTOR.
It is also represented herein that Xxx Xxxxxxxx has the full
and complete authority to bind DISTRIBUTOR in executing this
Distributorship Agreement and any other related agreements
with MACH 3.
6. CONFIDENTIAL INFORMATION.
6.1 Definition. The Parties recognize that the
relationship created by this Agreement may involve access
by the parties to information of substantial value to each
other, including, but not limited to, designs, drawings,
plans, software, programs, material and manufacturing
specifications, devices, trade secrets, applications,
formulae, know-how, methods, techniques, and processes
(whether related to product Patents (as such term is
hereinafter defined), or otherwise), as well as financial,
business, marketing and product development information,
and customer lists including contact lists provided to
MACH 3 relating to the Products (collectively,
"Confidential Information"), provided that Confidential
Information shall not include information:
(a) In the public domain or which subsequently
falls into the public domain;
(b) Specifically intended by MACH 3 for
disclosure to customers of DISTRIBUTOR;
(c) Which the recipient can prove was known through
a source independent of the disclosing party prior to any
communication by the disclosing party; or
(d) Disclosed to the recipient in good faith by a
third party having a legal right to do so.
6.2 Non-Disclosure. The Parties acknowledge and
agree that they own all rights, title and interest in and to
their Confidential Information. The Parties further agree
that they shall (i) maintain the secrecy and confidentiality
of all Confidential Information which comes to its attention,
(ii) take all necessary precautions to prevent any disclosure
of Confidential Information by any of its Agents, and (iii)
during the term of this Agreement and for so long as
Confidential Information does not enter into the public
domain through no act or omission of DISTRIBUTOR, neither
publish, disclose nor disseminate any part of such
Confidential Information, which shall include but not
limited to the Supply Price List of PRODUCT supplied by
MACH 3 to DISTRIBUTOR , in any manner, or use the same,
without the prior written consent of MACH 3. Failure in
strictly observing the obligation of non-disclosure of any
secret and confidential information without the written
consent of the other party shall result the disclosing
party deemed in default of this Agreement. The disclosing
party shall then be fully responsible for all consequences.
6.3 Injunctive Relief. The Parties understand and
agree that the Confidential Information has special value,
the loss of which cannot be reasonably or adequately
compensated in damages or in an action at law, and
therefore, in the event of any breach or violation of the
provisions of this Section 6 by any party to this Agreement,
the other party shall be entitled to equitable relief by way
of injunction without bond and without the necessity of proving
actual damages, in addition to, and not in limitation of,
any other relief or rights to which they may be entitled.
The terms and provisions of this Section 6 shall survive any
termination or expiration of this Agreement.
7. PRODUCT WARRANTY. MACH 3 warrants and guarantees
that all products supplied to DISTRIBUTOR to be free of any
design and/or manufacturing defects. Products that have been
paid for and delivered to DISTRIBUTOR, in the sole opinion
of MACH 3, found to be defective shall be replaced to
DISTRIBUTOR by MACH 3 at no extra charge to DISTRIBUTOR.
8. TRADEMARKS.
8.1 MACH 3's Marks and the Trademarks of ULTIMATE ME2.
It is understood and agreed that MACH 3 owns or has the right
to use certain trademarks, service marks and/or trade names in
connection with the distribution, sale and promotion of the
PRODUCT.
8.2 Use of MACH 3's Marks and/or the ULTIMATE ME2
Trademarks of the PRODUCT by DISTRIBUTOR. MACH 3 hereby assigns
to DISTRIBUTOR a non-exclusive right and license to use the
MACH 3'S Marks AND Trademarks of the PRODUCTS during the term
of this Agreement only in connection with the Marketing of the
PRODUCT including in the name of MACH 3. This right and license
shall not be assignable or transferable by, or subject to any
encumbrance of, DISTRIBUTOR in any manner whatsoever, nor
shall DISTRIBUTOR have the right to grant any sublicenses
without MACH 3's prior written consent. All rights with
respect to the MACH 3's Marks and the Trademarks of the
PRODUCT and all other trademarks, service marks and trade
names used by MACH 3 not specifically granted to DISTRIBUTOR
in this Agreement shall be and hereby are reserved (ii) within
thirty (30) days of the expiration or other termination of
this Agreement DISTRIBUTOR shall change its name so as to no
longer include MACH 3's Marks and/or ULTIMATE ME2 Trademarks
after the DISTRIBUTOR has complete the sale of all remaining
inventory or 6 months from the date of expiration or early
termination of this Agreement, whichever may come sooner.
8.3 Acknowledgment of Ownership. DISTRIBUTOR
acknowledges that (i) MACH 3 owns the MACH 3's Marks and the
ULTIMATE ME2 Trademarks of the PRODUCT and all goodwill
associated with or symbolized by the MACH 3's Marks and the
Trademarks of the PRODUCTS, (ii) MACH 3 owns the MACH 3 Marks
and Trademarks of the PRODUCT and all goodwill associated with
or symbolized by the MACH 3 Marks, (iii) DISTRIBUTOR has no
ownership right in or to any of the MACH 3 Trade Marks and/or
MACH 3 Marks, (iv) DISTRIBUTOR shall acquire no ownership
interest in or to any of the MACH 3 Marks and/or the ULTIMATE
ME2 Trademarks of the PRODUCT by virtue of this Agreement, and
(v) DISTRIBUTOR acknowledges that the MACH 3's Marks and the
ULTIMATE ME2 Trademarks of the PRODUCT have acquired secondary
meaning. DISTRIBUTOR shall do nothing inconsistent with MACH 3's
ownership of the MACH 3 Marks and the ULTIMATE ME2 Trademarks
of the PRODUCT related goodwill and agrees that all use of the
MACH 3 Marks and the Trademarks of the PRODUCT by DISTRIBUTOR
shall inure to the benefit of MACH 3. Nothing in this Agreement
shall be deemed to constitute or result in an assignment of
any of the MACH 3 Marks and Trademarks of the PRODUCT to
DISTRIBUTOR or the creation of any equitable or other
interests therein. DISTRIBUTOR shall not use any of the
MACH 3's Marks and/or the ULTIMATE ME2 Trademarks of the
PRODUCT in any manner as a part of its business, corporate or
trade name or otherwise in violation of this Section 8.
8.4 Form of Use. DISTRIBUTOR shall use MACH 3's
Marks and the ULTIMATE ME2 Trademarks of the PRODUCT only in
the form and manner prescribed from time to time by MACH 3.
DISTRIBUTOR shall xxxx each Product and all Marketing or other
materials bearing any of the MACH 3's Marks and/or the
ULTIMATE ME2 Trademarks of the PRODUCT with such notices
as MACH 3 may reasonably require, including, but not limited
to, notices that the MACH 3 Marks and the ULTIMATE ME2
Trademarks of the PRODUCTD are trademarks of MACH 3 are
being used with the permission of MACH 3. It will be deemed
reasonable for references to the MACH 3 name, satisfactory
in form and substance to ATG and/or MACH 3, to appear on
all packaging and in all of MACH 3's advertising of MACH
3 branded products.
8.5 Submissions. DISTRIBUTOR shall submit to MACH
3 for its written approval, before any use is made thereof,
representative samples of all stationery, invoices, catalogs,
brochures, packages, and marketing materials bearing any of
the MACH 3's Marks and/or the ULTIMATE ME2 Trademarks of the
PRODUCT which DISTRIBUTOR or its Agents prepare. DISTRIBUTOR
shall not make any use of MACH 3 Marks and/or ULTIMATE ME2
Trademark of the PRODUCT unless and until it receives MACH
3's prior written approval. MACH 3 shall have the absolute
respective right to approve or reject any proposed use of
any of the MACH 3 Marks and the ULTIMATE ME2 Trademark of
the PRODUCT, in its sole discretion. MACH 3 shall approve
or reject each proposal within 3 business days after
submission, and Failure to respond within such time period
shall result in the automatic approval of such proposal.
8.6 Registration. It is understood and agreed by
DISTRIBUTOR that MACH 3, as the originator and licensed
manufacturer of the PRODUCT shall have the sole right to
take such action, as it deems appropriate to obtain trademark
registration for any of the MACH 3's Marks and/or the
ULTIMATE ME2 Trademarks of the PRODUCT in the Distribution
Territory. If it shall be necessary for DISTRIBUTOR to be
the applicant to effect any such registrations, DISTRIBUTOR
shall cooperate with MACH 3 to effect any such registrations,
and hereby does assign all of its right, title and interest
in and to each such application, and any resulting
registration, to MACH 3, and shall execute all papers and
documents necessary to effectuate or confirm any such
assignment. DISTRIBUTOR shall perform all reasonable and
necessary acts and execute all necessary documents to effect
the registration of the MACH 3's Marks and The ULTIMATE
ME2 Trademarks of the PRODUCT as MACH 3 may request, all
at the sole expense of MACH 3. DISTRIBUTOR shall not
obtain or attempt to obtain in the Distribution Territory,
or elsewhere, any right, title or interest, registration,
or otherwise, in or to the MACH 3's Marks and/or the
ULTIMATE ME2 Trademarks of the PRODUCT, any applications
or registrations therefore, or any of them. In the event
that any such right, title or interest should be obtained
by DISTRIBUTOR in contravention hereof, DISTRIBUTOR shall
hold the same on behalf of, and in trust for, MACH 3 and
shall transfer the same to MACH 3 upon request without
any expense to MACH 3.
8.7. Infringement Information. DISTRIBUTOR shall
notify MACH 3 promptly of any unauthorized use of the MACH
3 Marks and/or of any xxxx confusingly similar, thereto which
comes to its attention. Within twenty (20) days after MACH 3's
receipt of such notice, MACH 3 and DISTRIBUTOR shall decide
jointly whether to proceed with any claim or litigation, and
each shall have the right to do so independently if the
other elects not to participate. If any action taken by
MACH 3 and DISTRIBUTOR is joint, then all parties shall
share equally in the costs and proceeds. If one party
elects to proceed with a claim or litigation independently,
the party, which proceeds with the claim or litigation, shall
retain all the proceeds thereof and shall bear all of the
costs thereof. If MACH 3 elects to make a claim or litigate,
DISTRIBUTOR may not proceed with its own separate claim or
litigation without first obtaining the written consents of
MACH 3 to do so. DISTRIBUTOR shall provide MACH 3 with all
reasonable assistance, at the expense of MACH 3, in any
prosecution of any such infringement, which MACH 3 may
decide to institute. If such infringement reduces the
sales of the Products by DISTRIBUTOR, then MACH 3 and
DISTRIBUTOR shall mutually agree upon a reduction of the
Sales Requirement during the period of such infringement.
With respect to any joint action, MACH 3 shall have the sole
right to employ counsel and to direct the handling of the
action and litigation and any settlement thereof. As to
claims or litigation with which DISTRIBUTOR decides to
proceed but in which MACH 3 elects not to participate,
MACH 3 shall provide DISTRIBUTOR with all reasonable
assistance, at DISTRIBUTOR's expense.
8.8 Termination of Use. Upon expiration or
earlier termination of this Agreement, DISTRIBUTOR shall
cease using MACH 3's Marks and/or ULTIMATE ME2 Trademarks
of the PRODUCT in any manner, either similar or dissimilar
to the uses enumerated above upon the completion of the
sale of all remaining inventory or 6 months from the date
of expiration or early termination of this Agreement,
whichever may come sooner.
9. PATENT OWNERSHIP AND RIGHTS TO INVENTIONS.
DISTRIBUTOR shall not be deemed by anything contained in
this Agreement or done pursuant to it to acquire any right,
title or interest in or to Product Patents (as such term
is hereinafter defined) or any patent now or hereafter
covering or applicable to any PRODUCTS, nor in or to any
invention or improvement now or hereafter embodied in any
Product, whether or not such invention or improvement is
patentable under the laws of any country.
10. If DISTRIBUTOR becomes aware that a third party is or
may be making unauthorized use of (a) any patent owned by
MACH 3, or for which MACH 3 has the exclusive right of use,
which relates to the Product Patents, or (b) any other
intellectual property rights relating to the PRODUCT owned or
controlled by MACH 3, DISTRIBUTOR shall promptly give MACH 3
a written notice thereof, which notice shall fully describe the
potentially infringing actions of such third party. Within twenty
(20) days after receipt of such notice by MACH 3, MACH 3 and
DISTRIBUTOR shall decide jointly whether to proceed with any
claim or litigation, and each shall have the right to do so
independently if the other elects not to participate. If any
action taken by MACH 3 and DISTRIBUTOR is joint, then each party
shall share equally in the costs and proceeds. If one party elects
to proceed with a claim or litigation independently, the party,
which proceeds with the claim or litigation, shall retain all
the proceeds thereof, subject to the rights of licensors of
MACH 3 regarding such proceeds, and shall bear all of the
costs thereof. If MACH 3 elects to make a claim or litigate,
DISTRIBUTOR may not proceed with its own separate claim or
litigation without first obtaining the written consent of MACH
3 to do so. DISTRIBUTOR shall provide MACH 3 with all
reasonable assistance, at the expense of MACH 3, in any
prosecution of any such infringement, which MACH 3 may decide
to institute. With respect to any joint action, MACH 3 shall
have the sole right to employ counsel and to direct the
handling of the action and litigation and any settlement
thereof.
11. CLAIMS.
11.1 Product Liability Claims. DISTRIBUTOR shall
notify, as the case may be, MACH 3 in writing immediately of
any products liability claim or action brought with respect
to the PRODUCT based on alleged defects in the design or
manufacture of the PRODUCT. Upon receiving such written
notice, MACH 3 shall assume and have sole control of the
defense of any such claim or action, including the power
to conduct and conclude any and all negotiations, compromises
or settlements. DISTRIBUTOR shall comply with all reasonable
requests from MACH 3 for information, materials or assistance,
with respect to the conduct of such defense at DISTRIBUTOR's
expense, provided MACH 3 shall reimburse reasonable out of pocket
expenditures of DISTRIBUTOR which MACH 3 approved in advance in
writing through MACH 3, provided further that the retaining
of any outside consultant, attorneys and others requires
the prior written consent of MACH 3. MACH 3 shall be responsible
for payment of all claims based on the design or manufacture of
the Products, and all legal expenses and costs incurred in
that regard. Nothing in this Section 11.1 shall be construed
as requiring MACH 3 to conduct and/or assume DISTRIBUTOR's
independent defense against any claim or action, to the extent
that such claim or action involves only the independent conduct,
acts or omissions of DISTRIBUTOR. The foregoing represents the
entire liability of MACH 3 as the case may be to DISTRIBUTOR
through MACH 3 for products liability claims or actions brought
with respect to product design or manufacturing defects.
11.2 Notice from DISTRIBUTOR. DISTRIBUTOR shall
promptly notify MACH 3 of any potential or actual litigation
or governmental legal activity within the boundary of the
Distribution Territory relating to the Products or the business
operations of MACH 3. DISTRIBUTOR shall provide such notice
within seven (7) days from the time that DISTRIBUTOR learns
of such litigation or activity. MACH 3 shall have no liability
for any judgment without such notice, or any settlement,
compromise, expenses or costs made or incurred by DISTRIBUTOR
without the consent of MACH 3.
11.3 Indemnification. Each party assumes sole
responsibility for all acts performed by it pursuant to this
Agreement and shall be solely responsible for all Claims
(as defined herein) in connection therewith. Each party shall
indemnify, defend and hold the other harmless from any and all
claims, actions, lawsuits, demands, costs, liabilities, losses,
damages and/or expenses (including reasonable attorneys' fees
and costs of litigation) by any other party resulting from or
relating to any acts, omissions or misrepresentations of such
party, its Agents or any of them (collectively, "Claims"). As
defined herein, "Claims" shall not include claims or actions
against DISTRIBUTOR resulting solely from the Products'
infringement of Third Party Rights through no fault of
DISTRIBUTOR or from product liability claims or actions through
no fault of DISTRIBUTOR.
11.4 Product Quality Complaints. DISTRIBUTOR shall
notify MACH 3 immediately in writing of any product quality
complaints and any product packaging quality complaints from any
party, including, without limitation, wholesalers, retailers,
consumers, or governmental entities. DISTRIBUTOR agrees to
coordinate any response to such complaints with MACH 3 and to
follow instructions of MACH 3 and that of MACH 3 in dealing with
any such complaints.
12. PRODUCT LIABILITY INSURANCE. MACH 3 shall maintain in
full force and effect product liability insurance and property
damage insurance on its operations for a minimum coverage of FIVE
MILLION DOLLARS ($5,000,000) at a maximum of ONE MILLION DOLLARS
($1,000,000) per incident. Mach 3 shall have up to 60 days to
make such arrangement. However, as the annual sales volumes of
the PRODUCT increases beyond TEN MILLION DOLLARS ($10,000,000)
the coverage amount shall also be increased proportionately to
allow for the eventuality of any class action with DISTRIBUTOR
as co-insured.
13. TERM AND MINIMUM ANNUAL ORDER.
Subject to the termination provisions of Section 14 hereof, the
term of this Agreement shall commence on the date of this
Agreement for a term of THREE (3) years (the "Initial Term")
commencing from the date first written in this Agreement with
minimum annual orders. The minimum annual orders are as listed
below. Notwithstanding the aforesaid, unless terminated on
six months advance notice or DISTRIBUTOR is in incurable default
of any terms of this Agreement, this Agreement shall automatically
be extended for a second term of THREE (3) YEARS ("Renewal Term")
with new minimum annual orders of PRODUCT as mutually agreed upon.
Year Minimum Orders of PRODUCT
1 US $1,000,000
2 US $ 6,000,000
3 US $12,000,000
__________________
Total US $19,000,000
14. TERMINATION. This Agreement shall remain in full force
and affect as specifically set forth in Section 13 hereof, unless
earlier terminated as follows:
(a) By mutual consent of the parties in writing at any time.
(b) By either party upon giving written notice to the other
party if such other party is in default of any term or provision
herein contained, and such default is not cured within thirty (30)
days of written notice of such default. Any such notice shall
identify the nature of the claimed default and the action or
actions required to cure each claimed default.
(c) By MACH 3's giving written notice to DISTRIBUTOR: (i)
if all or substantially all of DISTRIBUTOR's assets are transferred
to another person or entity other than the persons or entities
exercising ownership of DISTRIBUTOR at the date of this Agreement;
or (ii) if a court having jurisdiction in the premises shall enter
a decree or order means for relief in respect of DISTRIBUTOR in an
involuntary case under any applicable Bankruptcy, insolvency or other
similar law now or hereinafter in effect, or appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrate (or similar
official) of DISTRIBUTOR or for any substantial part of its
property, or order the winding up or liquidation of its affairs,
and such decree or order shall remain unseated and in effect for
a period of sixty (60) consecutive days; or (iii) if DISTRIBUTOR
shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in any involuntary case
under any such law, or consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrate (or similar official) of such party or for any
substantial part of its property, or make any general assignment for
the benefit of creditors, or fail generally to pay its debts as they
become due or shall take any action in furtherance of any of the
foregoing. (iv) Subsequent to DISTRIBUTOR repeatedly violating the
Non-disclosure and/or Non-circumvention covenants against MACH 3
for three (3) or more times in accordance with the provision(s)
as contained in Item 6.2.
15. EFFECT OF TERMINATION. Termination of this Agreement
shall not extinguish debts and other obligations created or arising
between the parties by virtue of this Agreement or by virtue of
contracts or arrangements entered into hereunder before the effective
date of termination of this Agreement (the "Termination Date"). Without
limiting the generality of the foregoing, upon the Termination Date:
(a) DISTRIBUTOR shall not be relieved of its obligation to
(i) pay for the PRODUCT ordered by DISTRIBUTOR prior to the Termination
Date or (ii) receive and pay for all quantity of the PRODUCT covered
by orders which have been accepted by MACH 3 prior to the Termination
Date; MACH 3 shall be obligated to complete all Product orders which
were accepted by MACH 3 prior to the Termination Date, provided that
MACH 3 receives assurance satisfactory to MACH 3 in its sole
discretion that it will be paid in accordance with the terms of this
Agreement; and in each such case, DISTRIBUTOR shall be permitted to
distribute such PRODUCT as well as any quantity of the PRODUCT in
DISTRIBUTOR's inventory. After the Termination Date, MACH 3 shall
have no obligation of any kind to accept any orders, for the Products
or otherwise, from DISTRIBUTOR.
(b) DISTRIBUTOR shall submit to MACH 3 within thirty (30) days
after the Termination Date a list of all the PRODUCT owned by DISTRIBUTOR
which were purchased from MACH 3 as of the Termination Date; MACH 3 may,
at its sole option, purchase none or any of all such PRODUCT from
DISTRIBUTOR upon written notice of its intention to do so, at prices to be
agreed upon between the parties but in no event greater than MACH 3's
cost for such PRODUCT; after receipt of such PRODUCT from DISTRIBUTOR,
MACH 3 will pay DISTRIBUTOR for such quantity of PRODUCT on thirty (30)
day terms. DISTRIBUTOR shall permit MACH 3 and its representatives to
have access to its inventory of the PRODUCT during Distributor's usual
business hours for purposes of inspection and verification of MACH 3's
inventory of PRODUCT after the Termination Date. If MACH 3 does not
purchase the remaining inventory, then DISTRIBUTOR will be permitted to
sell off the PRODUCT.
(c) DISTRIBUTOR shall cease to use any Confidential Information
relating to or in connection with its continued business operations and
shall promptly return to MACH 3 any and all registrations of the
MACH 3's Marks ULTIMATE ME2 Trademarks of the PRODUCT and all physical,
written and descriptive matter (including all reproductions and copies
thereof) containing Confidential Information as MACH 3 shall specify.
(d) Distributor's license to use the MACH 3's Marks and the
ULTIMATE ME2 Trademarks of the PRODUCT shall terminate.
(e) NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY FOR
DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, ON ACCOUNT OF TERMINATION OF THIS AGREEMENT IN
ACCORDANCE WITH ITS TERMS.
16. EXCUSABLE DELAYS. MACH 3 shall not be liable for any delay in
the manufacture or delivery of the PRODUCTS pursuant to the terms and
provisions of this Agreement, or for any damages suffered by DISTRIBUTOR
by reason of such delay, when such delay is, directly or indirectly,
caused by, or in any manner arises from, earthquakes, fires, floods,
accidents, riots, acts of God, war, governmental interference or
restrictions, strikes, labor difficulties, or any other cause beyond
the reasonable control of MACH 3, whether similar or dissimilar to
the foregoing. If any such delay occurs, MACH 3 shall make its best
efforts to find alternative sources for the ingredients to manufacture
the PRODUCT and shall permit DISTRIBUTOR to cancel its order and obtain
the quantities of PRODUCT in the canceled order from alternative sources,
subject to the approval of MACH 3 of the quality of such alternative
product(s).
17. GENERAL PROVISIONS.
17.1 Successors and Assigns. This Agreement shall inure to
the benefit of, and be binding upon, the respective successors and
assigns of the respective parties hereto; provided, however, that
neither party hereto shall have the right to assign any of its
rights under this Agreement without the prior written consent of
the other party which consent shall not be unreasonably withheld
or delayed, except that MACH 3 may assign its rights and interests
in this Agreement in connection with the merger or consolidation
of MACH 3 with a majority owned subsidiary of its parent company;
and provided, further, that neither party hereto shall be relieved
of its respective obligations hereunder upon any assignment,
whether voluntary, involuntary or by operation of law, of its
rights under this Agreement.
17.2 Notices. All notices, requests, demands and other
communications, which may be given or are required to be given under
this Agreement, shall be in writing and in English. All notices
shall be sent by facsimile transmission and confirmed by overnight
courier, and shall be deemed given on the date of such facsimile
transmission. All notices shall be addressed as set forth below:
If to MACH 3: MACH 3 Technologies Group, LLC.
00000 Xxxxxxxxx Xxxxx, Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx, President & General Manager
Telephone: 0-000-000-0000
Cellular: 0-000-000-0000
Fax: 0-000-000-0000
Email: xxxxxxxx@xxx.xxx
If to DISTRIBUTOR: Xxx Xxxxxxxx / Essentially Yours Industries, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, X. X. Xxxxxx X0X 0X0
Telephone: 0-000-000-0000
Fax: 0-000-000-0000
Cellular: 0-000-000-0000
Email: xxx@xxx.xx
Or to such other address as each party hereto may from time to time
designate by written notice to the other party as provided herein.
17.3 Governing Law. This Agreement has been executed and
delivered in, and shall be governed by and construed in accordance
with the laws of the State of Nevada without regard to its conflict
of laws provisions.
17.4 Resolution of Disputes. Any controversy or claim relating
to this Agreement (whether contract, tort, or both) or to the breach of
this Agreement shall be arbitrated by and in accordance with the then
existing commercial arbitration rules of the American Arbitration
Association, in Las Vegas, Nevada. The arbitrator may render a judgment
awarding actual compensatory damages only, and the arbitrator may
award no consequential, incidental, or punitive damages. Judgment on
the award rendered by such arbitrator may be entered in any court
having jurisdiction. Nothing in this Section 17.4 shall affect
MACH 3's or Distributor's right to bring an action or proceeding
against the other in the courts of any jurisdiction where the purpose
of such action or proceeding is to (i) seek injunctive relief or (ii)
collect moneys due and owing on account of failure to pay for Products
or services provided by the other. Service of process in any such
action or proceeding brought hereunder may be made by mailing copies
of such process to the address of the parties provided for in Section
17.2 hereto, provided that nothing in this Section 17.2 shall affect
the right to serve legal process in any other manner permitted by law.
In the event of any action or proceeding to enforce this Agreement,
the successful or prevailing party will be entitled to recover its
attorneys' fees actually incurred and other costs incurred in any such
action or proceeding, in addition to any other relief to which it may
be entitled.
17.5 Headings. The headings herein are for convenience only,
do not constitute a part of this Agreement, and shall not be deemed to
limit or affect any of the terms or provisions hereof.
17.6 Construction. Whenever in this Agreement the context so
requires, references to the masculine shall be deemed to include
feminine and the neuter, references to the neuter shall be deemed to
include the masculine and feminine, and references to the plural shall
be deemed to include the singular and the singular to include the plural.
Any reference in this Agreement to either party hereto shall include
such party's Agents.
17.7 Waiver and Amendment. No waiver, amendment, modification
or change of any provision of this Agreement shall be effective unless
and until made in writing and signed by all of the parties hereto. No
waiver, forbearance or failure by any party hereto of its right to
enforce any provision of this Agreement shall constitute a waiver or
estoppels of such party's right to enforce any other provision of this
Agreement or a continuing waiver by such party of compliance with any
provision.
17.8 Severability. The provisions of this Agreement are
intended to be interpreted and construed in a manner so as to make such
provisions valid, binding and enforceable. In the event that any
provision of this Agreement is determined to be partially or wholly
invalid, illegal or unenforceable, then such provision shall be deemed
to be modified or restricted to the extent necessary to make such
provision valid, binding and enforceable, or, if such provision cannot
be modified or restricted in a manner so as to make such provision
valid, binding and enforceable, then such provision shall be deemed
to be excised from this Agreement and the validity, binding effect
and enforceability of the remaining provisions of this Agreement
shall not be affected or impaired in any manner.
17.9 Cooperation. Each party hereto shall cooperate with
the other party hereto and shall take such further action and shall
execute and deliver such further documents as may be necessary or
desirable in order to carry out the provisions and purposes of this
Agreement.
17.10 Counterparts and Facsimiles. This Agreement may be
executed in one or more counterparts by original or facsimile copies,
each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
17.11 Entire Agreement. This Agreement (including the
exhibits and schedules hereto, each of which is incorporated herein
and made a part of this Agreement) constitutes the entire agreement
and understanding of the parties hereto and terminates and supersedes
any and all prior agreements, arrangements and understandings,
both oral and written, or implied, between the parties hereto
concerning the subject matter of this Agreement. It is also agreed
and understood that if any part of this Agreement is deemed
unenforceable, all other parts of this agreement shall remain valid
and in full force.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
ESSENTIALLY YOURS INDUSTRIES, INC.
/s/ Xxx Xxxxxxxx
______________________________________
Xxx Xxxxxxxx, President
MACH 3 TECHNOLOGIES GROUP, LLC
/s/ Xxxxxx Xxxxx
_______________________________________
Xxxxxx Xxxxx, President and General Manager
Acknowledged by: CHINAOIL (USA) INC.
_______________________________________
Xxxxxxx Xx, President
SCHEDULE A:
Special Authorized Distributor Price List of ULTIMATE ME2
(Private and Confidential)
Unit Cash Price Required Minimum Order Remark
$7.66* / 12 oz. bottle 36,288 bottles (under ONE 40 ft. container) See below
$7.65* / 12 oz. bottle 103,680 bottles (TWO 40 ft. containers, approx.) See below
$7.65* / 12 oz. bottle 207,360 bottles (FOUR 40 ft. containers, approx.) See below
$7.55* / 12 oz. bottle 414,720 bottles (EIGHT 40 ft. containers, approx.) See below
Notes:
1. Product orders require 40% prepaid due and payable at time of order with
the balance 60% with irrevocable LC guarantee acceptable to MACH 3's bank,
due and payable within 5 days of written notice of product ready for delivery
FOB at southern CA factory gate. DISTRIBUTOR shall be responsible for any
shipping, storage or warehousing charges and any other related expenses
should delivery of product be delayed only or be required at DISTRIBUTOR's
request.
2. DISTRIBUTOR may arrange for independent third party inspection of PROFUCT
at the factory at his own cost with prior arrangement and procedure being
mutually acceptable.
3. Mach 3 shall provide (i) cardboard packaging (200B #3 Kraft white one side)
for color printing on the outside cardboard face to the size of the bottle
label for a 6-bottle pack and (ii) cardboard boxes in 275 lb/C Kraft plain
for master packaging for each and every 12 x 6-bottle packs shrink-wrapped
into each pallet of 2,592 (i.e. 6 x 48 x9) bottles ready for shipping.
4. Minimum 4 to 5 weeks lead time from the execution of this Agreement and
the product order in accordance with the Payment Terms of Article 4.1 herein
shall be allowed for MACH 3 to deliver the first order of product. 3 to 4 weeks
lead time shall be required for subsequent orders.
5. Prior to DISTRIBUTOR making the first order of product, MACH 3 shall be
responsible to provide for a minimum of one series containing one of each
(of gasoline and diesel engines) of the basic mileage and exhaust emission
reduction test report by an independent laboratory recognizable by the EPA a
nd/or the California Air Resources Board (CARB). The DISTRIBUTOR shall pay for
any other additional product test report(s) if so desired by the DISTRIBUTOR.
6. * Denotes $1.60 applicable supplement to the Unit Cash Price of the
Ultimate ME2 product in 12 oz. bottles, as specified herein above, on the
Purchase Orders to be made by DISTRIBUTIR for the duration of this Agreement
as an irrevocable bonus to compensate MACH 3 for the exclusivity of Ultimate
ME2 granted to DISTRIBUTOR for the individual residential market in the US,
Canada and Mexico. This $1.60 supplement to the Unit Cash Price shall be
paid forthwith to MACH 3 by means of ESSENTIALLY YOURS INDUSTRIES INC.
(EYII) common stock warrants at the equivalent fixed price of 6 cents per
share. The volume of EYII common stock warrants due to MACH 3 at each time
of the purchase order made by DISTRIBUTOR shall be calculated thus: ($1.60
x number of 12 oz. bottles ordered / 6 cents), to the limit of 15,000,000
EYII common stock warrants at the fixed price of 6 cents each share.
