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EXHIBIT 10.3
CONSULTING AND MARKETING AGREEMENT
THIS AGREEMENT is made the _____ day of _______________, 1999, by
and between Clarkstone International Corporation ("CIC") and Exhaust
Technologies, Incorporated ("Company").
WHEREAS, the Company owns all rights, patents and trademarks
related to a product(s) known as "Pneumatic Hand Tool Exhaust
Muffler(s)" ("Product"),
WHEREAS, the Company and CIC desire that CIC render certain
services to the Company for the development and marketing of the
Product.
NOW, THEREFORE, in consideration of the foregoing and the
covenants and conditions contained herein, the parties hereto agree as
follows:
1. CONSULTING SERVICES. CIC shall provide the following consulting
services to the Company:
1.1 Product Development. CIC will provide consulting services to
the Company related to the product development of the
Product. These services will include but are not limited to,
recommendations to identify appropriate service providers, as
well as advisory assistance that incorporates market trends
and perspectives into early decisions that are made in the
development of the Product.
1.2 Marketing. CIC will provide consulting services to the
Company in a marketing capacity which may include, but not
limited to the following:
* Identify and analyze potential markets
* Create market strategies for the most effective
introduction of the product
* Evaluate individual distribution organizations
* Study market share potential
* Recommend pricing structure
* Pursue publicity opportunities, i.e.; news releases and
publication editorials
* Produce a marketing video if appropriate
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* Assist in the design of collateral materials including
brochures and point-of-purchase displays
* Develop synergistic marketing relationships with
individual companies and vertical markets
1.3 Compensation. CIC will be compensated for consulting services
provided under Paragraphs 1. 1 and 1.2 at an hourly rate of
One Hundred Fifty Dollars ($150.00). CIC has estimated eighty
(80) hours for this project. Without the prior approval of
the Company, CIC will not be paid for more than eighty (80)
hours of services. On or before the 5th day of each month,
CIC shall provide the Company with an invoice of the services
rendered in the previous month. Such invoice shall be paid by
the Company within twenty (20) days of receipt. CIC shall be
paid its compensation for services rendered under Paragraphs
1. 1 and 1.2 in the form of common stock of the Company
valued at the price of $.20 per share. CIC acknowledges that
it has carefully reviewed the representations, warranties and
agreements contained in Exhibit "A" attached hereto with
respect to the shares to be issued. Unless CIC notifies the
Company in writing at the time an invoice is submitted that
such representations, warranties or agreements are not true
and correct, the Company may rely on such representations,
warranties and agreements each time a payment is made in
stock hereunder.
2. SALES. CIC will provide national and international sales
management of the "Product" and will use reasonable efforts to
develop appropriate markets for the "Product." This will include
efforts to sell, demonstrate and otherwise promote the sale of the
"Product" through, but not limited to catalog sales (i.e.:
Xxxxxxx, XxXxxxxx Xxxx, etc.), OEM (private label opportunities),
primary and secondary market sales, trade shows if applicable, and
the development of a network of sales representatives.
2.1 Sales Compensation. CIC will be compensated for all sales of
the Product (except licensing), on a commission basis as
follows:
Sales under $10,000 15% of the sales price
Sales $10,000 - $20,000 $1,500 plus l2% of the
amount of the sales
price over $10,000
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Sales $20,000 - $30,000 $2,700 plus 11 % of the
amount of the sales
price over $20,000
Sales over $30,000 $3,800 plus 10% of the
amount of the sales
price over $30,000
For the purposes of this Agreement sales price shall be
exclusive of actual freight and transportation costs
(including insurance), normal and recurring bona fide trade
discounts approved by CIC and any applicable sales or similar
taxes. Sales are based on cumulative sales of a one year
period (the fiscal year of the Company), per individual
customer. In no event will the commission be more than 25% of
gross profit from the sale of the product. The cost of the
product will be shown at the beginning of each month to CIC
by the Company and the Company will make available all
information used in connection with determining costs.
All commission owed by the Company to CIC shall be due and
payable on or before the twentieth (20") date of the month
immediately following the month during which the payment of
invoice applicable to an order in whole or in part is
received by the Company.
CIC shall be responsible for all costs associated with the
development of a network of sales representatives and factory
representatives. CIC shall also be solely responsible for the
payment of all commissions and benefits (if any) to such
persons. CIC shall indemnify and hold the Company harmless
against any claims made by sales or factory representatives
for payments due to them or any other claim arising out of
their relationship with CIC.
2.2 License Fees. The parties acknowledge that CIC may also
market the Product by a license of the Product technology to
a third party. CIC shall have the right to negotiate the
terms of any such license, but in any event, the license
shall not be effective until the terms thereof are approved
by the Company. As compensation for these activities, CIC
shall be entitled to receive 25% of the royalties or other
fees paid to the Company under the terms of the license ("CIC
License Fee") for the life of the Product. Such fees shall be
paid by the Company to CIC within ten (10) days following
receipt of funds thereof by the Company from the third party.
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2.3 Advertising. The only marketing costs for which the Company
shall be responsible are costs associated with creation and
publication of advertisements, brochures, video and other
promotional materials for the Product. The Company shall
supply CIC with sufficient materials, as requested by CIC, to
meet the full demand of marketing and sales. CIC will submit
examples of all proposed advertisements and other promotional
materials for the Product to the Company for inspection and
approval. CIC shall not create any obligation or contract
which would become binding on the Company unless the Company
shall consent thereto in writing.
2.4 Samples. The Company shall supply CIC with sufficient
Product, as requested by CIC, for sample or demonstration
purposes to enable CIC to meet the full demand of marketing
and sales.
3. ADDITIONAL TERMS.
3.1 Exclusive Representation. The Company grants to CIC the
exclusive right to act as the Company's national and
international sales manager of the Product as described above
and subject to the terms and conditions set forth herein. The
Company agrees to refer all inquires to CIC and to promptly
furnish CIC with copies of all correspondence and
documentation between the Company and the customer.
3.2 Sales Policies. The Company shall establish the prices,
charges and terms of sales of the Product ("Sales Policies").
The Sales Policies shall be those currently in effect and/or
established from time to time by the Company in its price
books, bulletins and other authorized releases. Written
notice of each Sales Policy change shall be given by Company
to CIC at least thirty (30) days in advance of such change.
3.3 Orders and Collections. Orders for products shall be
forwarded to and subject to acceptance by the Company. The
Company agrees to refer all inquiries to CIC and to promptly
furnish CIC with copies of all orders, correspondence and
documentation between the Company and the Customer. All
invoices in connection with orders shall be rendered by the
Company, direct to the Customer, and full responsibility for
all products, services, collections, and bad debts rests with
the Company.
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3.4 Relationship Created. CIC is not an employee of Company for
any purpose whatsoever, but is an independent contractor. The
Company is interested only in the results obtained by CIC,
who shall have sole control of the manner and means of
performing under this Agreement. The Company shall not have
the right to require CIC to do anything which would
jeopardize the relationship of independent contractor between
Company and CIC. All expenses and disbursements incurred by
CIC in connection with this Agreement shall be borne wholly
and completely by CIC. CIC does not have, nor shall CIC hold
out as having any right, power, or authority to create any
contract or obligation, either express or implied, on behalf
of, in the name of, or binding upon the Company, unless the
Company shall consent thereto in writing. Designation by CIC
as "Sales Agent" or "Sales Agency" shall not expand the
limited authority to conduct "Sales" activities granted under
this Agreement. CIC shall have the right to appoint and shall
be solely responsible for representatives at their own risk,
expense, and supervision and shall not have any claim against
the Company for compensation or reimbursement. Unless
expressly permitted in writing, CIC shall not represent
products which directly compete with Products of the Company
during the existence of this contract relationship, or for a
period of one year following notice of termination should CIC
elect to terminate this Agreement.
3.5 Term. This Agreement shall continue in fall force and effect
until the date ("Termination Date") set forth in a notice
given by one party to the other indicating such party's
election to terminate this Agreement, which Termination Date
shall be at least ninety (90) days after the date notice of
such election is given. Alternatively, this agreement may be
terminated at any time by mutual written agreement between
both parties. If this Agreement shall terminate for any
reason whatsoever, CIC shall be entitled to receive CIC's
full commission for a period of twelve (12) months, as
determined in accordance with provisions of Paragraph 2.1
with respect to orders solicited prior to the effective date
of such termination, regardless of when such orders are
accepted by Company (provided CIC can demonstrate such orders
were solicited prior to the effective date of such
termination) and regardless of when such shipments are made
or invoices rendered. In addition, CIC shall continue to
receive the CIC License Fee (in accordance with Paragraph
2.2) under any license signed by the Company or solicited by
CIC prior to the Termination Date.
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3.6 Further Provisions. Company shall save CIC harmless from and
against and indemnify CIC for all liability, loss, costs,
expenses or damages however caused by reason of any Product
(whether, or not defective), or any act or omission of
Company, including, but not limited to, any injury (whether
to body, property, or personal or business character or
reputation) sustained by any person or to any person or to
property, and for infringement of any patent rights or other
rights of third parties, and for any violation of municipal,
state, or federal laws or regulations governing the Product,
or their sale, which may result from the sale or distribution
of Me Product by CIC hereunder.
CIC shall hold the Company harmless from and against and
indemnify Company for all liability, loss, costs, expenses or
damages arising out of, or related to, CIC's breach of any
term of this Agreement.
3.7 Legal Jurisdiction. This Agreement shall be subject to and
shall be enforced and construed pursuant to the laws of the
State of Washington. If any provision of this Agreement is
held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the provisions shall
remain in fall force and effect, and shall in no way be
affected, impaired, or invalidated. In the event of
litigation, the prevailing party may recover interest, court
costs, and reasonable attorney's fees.
3.8 Notices. Any notice, demand, or request required or permitted
to be given hereunder shall be in writing and shall be deemed
effective on personal delivery or seventy-two (72) hours
after having been deposited in the United States mail,
postage prepaid, registered or certified, and addressed to
the addressee at his or its main office as set forth below.
Any party may change his or her address for purposes of this
Agreement by written notice given in accordance herewith.
3.9 Dispute Resolution. In the event of any dispute or default
arising as a result of this Agreement, the parties agree to
submit such dispute or default to binding arbitration,
according to the then existing rules of the American
Arbitration Association to an arbitrator or arbitration panel
in Spokane County, Washington.
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3.10 Entire Agreement. This Agreement, together with the Exhibits
attached hereto, constitutes the entire agreement among the
parties hereto, and no party hereto shall be bound by an
communications between them on the subject matter hereof
unless such communications are in writing and bear a date
contemporaneous with or subsequent to the date hereof Any
prior written agreements or letters of intent among the
parties shall, upon the execution of this Agreement, be null
and void.
3.11 Assignment, Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. No party shall
assign any of its rights or obligations hereunder without the
prior written consent of the other parties.
3.12 Waiver, Discharge. This Agreement may not be released,
discharged or modified except by an instrument in writing
signed on behalf of each of the parties hereto. The failure
of a party to enforce any provision of this Agreement shall
not be deemed a waiver by such party of any other provision
or subsequent breach of the same or any other obligation
hereunder.
3.13 Good Faith. Each party has a requirement to act in good faith
and in a fiduciary responsibility to the other. All terms and
conditions of this agreement shall be subject to normal and
reasonable business practices in good faith for the type of
services to be performed.
CIC: CLARKSTONE INTERNATIONAL CORPORATION
By: /s/ Xxxxx Xxxxx Date 5-11-99
Title: President
000 Xxxx Xxxx Xxx., Xxxxxxx, Xxxxxxxxxx 00000
000-000-0000
THE COMPANY: EXHAUST TECHNOLOGIES, INCORPORATED
By: /s/ Xxx Xxxxxxxx Date 5-11-99
Title: President
X.X. Xxx 0000, Xxxxxxx, XX 00000
000-000-0000
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Exhibit "A"
Representations, Warranties, and Agreements
CIC represents, warrants, and agrees:
1. Right Not Transferable. The right to receive the shares of
common stock in the Company as provided in Paragraph 1.3 shall not be
assignable or transferable, voluntarily or involuntarily, by operation
or law, or otherwise, and any such assignment or transfer which may be
attempted shall be null and void.
2. Review of Documents. CIC has been granted access to and has
reviewed carefully copies of the Company's books and records. CIC is
entering into this Agreement and the transactions contemplated hereby
solely in reliance on CIC's own investigation and review, and warrants
that it has not relied upon any representations, oral or in writing not
contained in this Agreement. CIC has had an opportunity to meet with
the officers of the Company subsequent to review of such information to
discuss with them CIC's questions concerning the Company and the terms
and conditions of the acquisitions hereunder.
3. Acquisition of Shares for Own Account. The shares will be
acquired for CIC's own account, not as a nominee or agent and not for
the account of any other person or firm. No one else has or will have
any interest, beneficial or otherwise, in any of the shares. CIC is not
obligated to transfer any of the shares or any interest therein to
anyone else nor has it any agreement or understanding to do so. CIC
will acquire the shares, if at all, for investment for an indefinite
period and not with a view to the sale or distribution of any part or
all thereof, by public or private sale or other disposition, and has no
intention of selling, granting any participation in, or otherwise
distributing or disposing of any or of the shares or any interest
therein.
4. Restricted Nature of Shares. CIC is able to bear the economic
risk of any investment in the shares and is aware that CIC must be
prepared to hold the shares received for an indefinite period and that
the shares have not been registered under the Securities Act of 1933,
as amended (the "Act").
5. Sophistication of CIC. CIC has such knowledge and experience
in financial and business matters that CIC is capable of evaluating the
merits and risks of the prospective investment by CIC contemplated by
this Agreement and CIC has carefully reviewed and will carefully review
all the information regarding the Company, access to which has been or
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will be accorded to CIC hereunder, is thoroughly familiar with the
business, operations, and properties Of the Company by virtue of such
review.
6. Agreement to Refrain from Resales. Without in any way
limiting CIC's representations as set forth herein, CIC further agrees
that CIC shall in no event make any disposition of all or any part of
or interest in the shares and that the shares shall not be encumbered,
pledged, hypothecated, sold, or transferred by CIC nor shall CIC
receive any consideration for the shares or for any interest therein
from any person, unless and until prior to any proposed transfer,
encumbrance, disposition, pledge, hypothecation, or sale of any of the
shares, CIC either (a) sells the shares pursuant to a registration
statement under the securities laws or (b)(i) CIC notifies the Company
of the proposed disposition, (11) CIC furnishes the Company with an
opinion of counsel in form and substance satisfactory to the Company to
the effect that such disposition will not require registration of any
of the shares under the Act or qualification of the shares under any
other securities law and (iii) such opinion of counsel shall have been
concurred in by counsel for the Company and the Company shall have
advised CIC of such. concurrence.
7. Indemnification. CIC hereby agrees to indemnify the Company
and hold it harmless from and against any and all liability, damage,
cost, or expense incurred on account of or arising out of (a) any
inaccuracy in any of the representations, warranties, or agreement --
set forth in this Article 5, (b) the disposition of any shares which
CIC may receive, contrary to CIC's representations, warranties, and
agreements set forth herein or any action, suit, or proceeding based
on a claim that said representations, warranties, or agreements were
inaccurate or misleading or otherwise cause for obtaining damages or
redress from the Company under the federal or state Securities laws.
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ADDENDUM TO CONTRACT
THIS AGREEMENT HEREBY MODIFIES AND SUPERSEDES the contract entered
into between Exhaust Technologies, Inc. (Company) and Clarkstone
International Corporation (CIC). A copy of the contract is attached as
an exhibit. The modifications are as follows:
Amendment 1.
Page I paragraph 2: WHEREAS, the Company owns all
rights, patents and trademarks related to a product(s) known
as "Pneumatic Hand Tool Exhaust Muffler(s)" ("Product")
Amended to read: WHEREAS, the Company owns all rights,
patents and trademarks related to the products known as
"Pneumatic Hand Tool Exhaust Muffler(s)" and "Turbulator"
("Products")
Amendment 2.
Throughout the contract "Product" is amended to read
"Products"
These modifications are mutually agreed to by the contracting
parties, and are supported by legal consideration. The remaining terms
of the contact are unchanged by this agreement.
Date: May 11, 1
signed: /s/ Xxxxx Xxxxx
Clarkstone International Corporation
signed: /s/ Xxx Xxxxxxxx
Exhaust Technologies, Inc.
