CONSULTING AGREEMENT
CONSULTING
AGREEMENT dated as of March 31 2008 (the “Agreement”) by and between Straw
Marketing, a Delaware corporation and Xxxxxx Xxxxxxxxxx (collectively, the
“Consultant”) and Spongetech Delivery Systems, Inc.. a Delaware corporation (the
“Company”).
WHEREAS,
the Company is in the business of designing, producing, and distributing
cleaning products for vehicular and household uses;
WHEREAS,
the Company desires to engage the Consultant as a consultant and in connection
therewith the Consultant shall provide certain consulting services related
to
the development of the Company’s business and promotion of the Company’s
products and Consultant is willing to be engaged by the Company as a consultant
and to provide such services, on the terms and conditions set forth
below;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
Company and Consultant agree as follows:
1. Consulting. The
Company hereby retains Consultant, and Consultant hereby agrees to make himself
available as a consultant to the Company, upon the terms and subject to the
conditions contained herein. During the Consultant Term (as hereinafter
defined), Consultant shall provide certain consulting services to the Company
as
requested by management, including but not limited to:
A.
Make
promotional appearances on behalf of the Company;
B.
Coordinate promotional appearances and campaigns with the New York Yankees
and
the New York Mets;
C.
Introduce the Company to promotional opportunities with Major League Baseball;
D.
Arrange meetings with the Company and other parties to coordinate licensing
agreements or arrangements; and
E.
Attend
trade shows with the Company to promote its products.
2. Term.
Subject
to the provisions for termination hereinafter provided, the term of this
Agreement shall commence on the date hereof (the “Effective Date”) and shall
continue until February 28, 2009 (the “Consultant Term”).
3. Compensation.
A. In
consideration of the services to be rendered by Consultant hereunder, during
the
Consultant Term the Company agrees to pay to Consultant, and Consultant agrees
to accept, as a consulting fee of an aggregate of $40,000 (the “Consulting
Fee”).
payable quarterly as follows:
(a).
$10,000, upon execution hereof;
(b).
$10,000 on June 1, 2008;
(c).
$10,000 on September 1, 2008; and
(d).
$10,000 on December 1, 2008.
B. In
addition, the Company agrees to issue to the Consultant 500,000 shares of common
stock of the Company (the “Shares”). The Company shall use its best efforts to
register the Shares using a registration statement on Form S-8. The Company
shall file such Form S-8 with the Securities and Exchange Commission within
one
(1) year of the execution of this Agreement.
C.
The
Company agrees to pay to Consultant $10,000 upon the execution of a Licensing
Agreement entered into by the Company with a party introduced to the Company
by
the Consultant. In addition, in connection with any such licensing agreement,
at
such time after the Company shall have received $750,000 in gross receipts
from
the sale of such licensed product, the Company shall pay the Consultant as
a
bonus, 1.5% for every $1,000,000 in gross receipts from the sale of such
licensed product.
4. Termination.
The
Company may, in its discretion and at its option terminate this Agreement at
any
time.
5. Reimbursement.
The
Company will reimburse Consultant for all reasonable out-of-pocket expenses
incurred in connection with this Agreement.
6. Investment
Representations.
A. Consultant
Bears Economic Risk.
The
Consultant must bear the economic risk of this investment indefinitely unless
the Shares are registered pursuant to the Securities Act of 1933, as amended
(the “Securities Act”), or an exemption from registration is available. The
Consultant also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow the Consultant to transfer all or any
portion of the shares of the common stock of the Company to be received by
the
Consultant pursuant to this Agreement under the circumstances, in the amounts
or
at the times the Consultant might propose.
B. Acquisition
for Own Account.
The
Consultant is acquiring the Shares to be received by the Consultant pursuant
to
this Agreement for its/his own account for investment only, and not with a
view
towards distribution.
C. The
Consultant Can Protect His Interest.
The
Consultant represents that by reason of its/his business or financial
experience, the Consultant has the capacity to protect its/his own interests
in
connection with the transactions contemplated by this Agreement. Further, the
Consultant is aware of no publication of any advertisement in connection with
the transactions contemplated by this Agreement.
D. Company
Information.
The
Consultant has had an opportunity to discuss the Company’s business, management
and financial affairs with directors, officers and management of the Company
and
has had the opportunity to review the Company’s operations and facilities. The
Consultant has also had the opportunity to ask questions of and receive answers
from the Company and its management regarding the terms and conditions of this
investment.
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E. Transfer
Restrictions. The
Consultant will not sell or otherwise transfer the Shares, without registration
under the Securities Act or unless an exemption from registration is available.
F. Rule
144.
The
Consultant acknowledges and agrees that the common stock of the Company to
be
received by the Consultant pursuant to this Agreement must be held indefinitely
unless it is subsequently registered under the Securities Act or an exemption
from such registration is available. The Consultant is aware that the Shares
are
“restricted securities,” as such term is defined in Rule 144 promulgated under
the Securities Act. The Consultant has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act as in effect from
time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about
the
Company and the resale occurring following the required holding period under
Rule 144.
G. No
Representations or Warranties.
No
representations or warranties have been made to the Consultant by the Company
or
any officer, director, employee, agent, affiliate or subsidiary of the Company
other than those contained herein, and in accepting shares of common stock
of
the Company, the Consultant is not relying on any representations other than
those contained herein.
H. Legend. The
Consultant understands and acknowledges that any shares of common stock of
the
Company to be received by the Consultant pursuant to this Agreement shall bear
a
legend substantially as follows until such time as (a) such securities shall
have been registered under the Securities Act, or (b) in the opinion of counsel
for the Company such securities may be sold without registration under the
Securities Act as well as any applicable state securities laws:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, HYPOTHECATED,
SOLD OR TRANSFERRED UNLESS REGISTERED AND QUALIFIED UNDER THE SECURITIES ACT
AND, IF APPLICABLE, STATE SECURITIES LAWS, OR IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY SUCH REGISTRATION AND QUALIFICATION
ARE
NOT REQUIRED.”
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6. Confidential
Information.
Consultant recognizes and acknowledges that by reason of Consultant’s retention
by and service to the Company before, during and, if applicable, after the
Consulting Term, Consultant will have access to certain confidential and
proprietary information relating to the Company’s business, which may include,
but is not limited to, trade secrets, trade “know-how,” product development
techniques and plans, formulas, customer lists and addresses, financing
services, funding programs, cost and pricing information, marketing and sales
techniques, strategy and programs, computer programs and software and financial
information (collectively referred to as “Confidential Information”). Consultant
acknowledges that such Confidential Information is a valuable and unique asset
of the Company and Consultant covenants that she will not, unless expressly
authorized in writing by the Company, at any time during the Consulting Term
use
any Confidential Information or divulge or disclose any Confidential Information
to any person, firm or corporation except in connection with the performance
of
Consultant’s duties for the Company and in a manner consistent with the
Company’s policies regarding Confidential Information. Consultant also covenants
that at any time after the termination of this Agreement, directly or
indirectly, she will not use any Confidential Information or divulge or disclose
any Confidential Information to any person, firm or corporation, unless such
information is in the public domain through no fault of Consultant or except
when required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) with apparent jurisdiction
to order Consultant to divulge, disclose or make accessible such information.
All written Confidential Information (including, without limitation, in any
computer or other electronic format) which comes into Consultant’s possession
during the Consulting Term shall remain the property of the Company. Except
as
required in the performance of Consultant’s duties for the Company, or unless
expressly authorized in writing by the Company, Consultant shall not remove
any
written Confidential Information from the Company’s premises, except in
connection with the performance of Consultant’s duties for the Company and in a
manner consistent with the Company’s policies regarding Confidential
Information. Upon termination of this Agreement, the Consultant agrees to return
immediately to the Company all written Confidential Information (including,
without limitation, in any computer or other electronic format) in Consultant’s
possession.
7. Independent
Contractor.
It is
understood and agreed that this Agreement does not create any relationship
of
association, partnership or joint venture between the parties, nor constitute
either party as the agent or legal representative of the other for any purpose
whatsoever; and the relationship of Consultant to the Company for all purposes
shall be one of independent contractor. Neither party shall have any right
or
authority to create any obligation or responsibility, express or implied, on
behalf or in the name of the other, or to bind the other in any manner
whatsoever.
8. Conflict
of Interest.
The
Consultant and the Company hereby agree that there is no conflict of interest
in
connection with the retention by the Company of the Consultant pursuant to
this
Agreement.
9. Waiver
of Breach.
The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate nor be construed as a waiver of any subsequent breach.
10. Binding
Effect; Benefits.
None of
the parties hereto may assign his or its rights hereunder without the prior
written consent of the other parties hereto, and any such attempted assignment
without such consent shall be null and void and without effect. This Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto
and
their respective successors, permitted assigns, heirs and legal representatives.
11. Notices.
All
notices and other communications which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been duly given (a)
when delivered in person, (b) one (1) business day after being mailed with
a
nationally recognized overnight courier service, or (c) three (3) business
days
after being mailed by registered or certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at:
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If
to the Company, to :
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Spongetech
Delivery Systems, Inc.
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00
Xxxx 00xx Xxxxxx, Xxxxx 000
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Xxx
Xxxx, XX 00000
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If
to the Consultant, to:
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Straw
Marketing
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12. Entire
Agreement; Amendments.
This
Agreement contains the entire agreement and supersedes all prior agreements
and
understandings, oral or written, between the parties hereto with respect to
the
subject matter hereof. This Agreement may not be changed orally, but only by
an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge is sought.
13. Severability.
The
invalidity of all or any part of any provision of this Agreement shall not
render invalid the remainder of this Agreement or the remainder of such
provision. If any provision of this Agreement is so broad as to be
unenforceable, such provision shall be interpreted to be only so broad as is
enforceable.
14. Governing
Law; Consent to Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the law of
the
State of New York without giving effect to the principles of conflicts of law
thereof. The parties hereto each hereby submits herself or itself for the sole
purpose of this Agreement and any controversy arising hereunder to the exclusive
jurisdiction of the state courts in the State of New York.
15. Headings.
The
headings herein are inserted only as a matter of convenience and reference,
and
in no way define, limit or describe the scope of this Agreement or the intent
of
the provisions thereof.
16. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original and all of which together shall constitute one and the same
instrument. Signatures evidenced by facsimile transmission will be accepted
as
original signatures.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as
of the date first above written.
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Spongetech
Delivery Systems, Inc.
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By:
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/s/
Xxxxxx Xxxxxxxxx
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Straw
Marketing
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By:
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/s/
Xxxxx Strawberry
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/s/
Xxxxxx Xxxxxxxxxx
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Xxxxxx
Xxxxxxxxxx
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