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EXHIBIT 10.5
CONSULTING AND MARKETING AGREEMENT
THIS AGREEMENT is made this 25th day of February, 2000, by and
between Clarkstone International Corporation ("CIC") and Exhaust
Technologies, Incorporated ("Company").
WHEREAS, the Company owns all rights, patents and trademarks
related to products known as "AirCat(TM)" pneumatic air wrenches and
"Turbolator(R)" exhaust mufflers ("Products").
WHEREAS, the Company and CIC desire that CIC render certain
services to the Company for the development, marketing and sales of
the Products.
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, marketing and sales services to the Company:
1.1 Marketing. CIC will provide consulting services to the
Company in a marketing and sales 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 products
- 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
- Assist in the design of collateral materials including
brochures and point-of-purchase displays
- Develop synergistic marketing relationships with individual
companies and vertical markets
2. SALES. CIC will provide national and international marketing
and sales management of the "Products" and will use reasonable
efforts to develop appropriate markets for the "Products." This will
include efforts to sell, demonstrate and otherwise promote the sale
of the "Products" through, but not limited to catalog sales (i.e.:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, etc.), OEM (private label opportunities),
primary and secondary market sales, trade shows if applicable, and
the development of a network of sales representatives.
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2.1 Sales Compensation. CIC will be compensated for all
sales of the Products (except licensing), on a commission basis,
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. The
commission will be calculated as follows:
Sales under $10,000 15% of the sale
Sales $10,000 - $20,000 $1,500 plus12% of the amount of
the sale over $10,000
Sales $20,000 - $30,000 $2,700 plus 11% of the amount of
the sale over $20,000
Sales over $30,000 $3,800 plus 10% of the amount of
the sale over $30,000
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 products. The cost of the products 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 (20th) 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 Products by a license of the Products 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 15% of the royalties or other fees paid to the Company
under the terms of the license ("CIC License Fee") for the life
of the products. 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 Products, and trade show expenses
as detailed in Exhibit A. 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
Products 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
Products, 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 organization for the Products as described
above, with the exception of Company held "Corporate Accounts".
"Corporate Accounts" are those identified in Exhibit B. All
other sales activity and invoices will be deemed the result of
CIC efforts and eligible for compensation to CIC in accordance
with Paragraph 2.1 and 2.2.
"Corporate Accounts" which have not resulted in a purchase order
within six (6) months of the employment of ▇▇▇▇▇▇ ▇▇▇▇ by the
Company, will be deemed "CIC Accounts" upon notification to the
Company in writing by CIC prior to CIC or their representatives
scheduling initial sales call activity for the purpose of
soliciting purchase orders from the customer. "Corporate
Accounts" which have not resulted in a purchase order before
December 31, 2000 will be deemed
"CIC Accounts". "CIC Accounts" which have not resulted in a
purchase order within six (6) months may become "Corporate
Accounts" upon notification to CIC in writing by the Company
prior to Company employed personnel scheduling initial sales
call activity for the purpose of soliciting purchase orders from
the customer. Each party agrees to promptly furnish the other
with copies of invoices upon request.
In the event that both CIC and Company employed personnel have
participated in the sales procurement process which results in
the securing of a purchase order(s) for a "Corporate Account",
50% commission compensation will be payable to CIC for such
account(s) and subject to the terms and conditions set forth
herein.
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3.2 The Company agrees to refer all customer inquires to
CIC and to promptly furnish CIC with copies of all
correspondence and documentation between the Company and the
customer, with the exception of "Corporate Accounts".
3.3 Sales Policies. The Company shall establish the prices,
charges and terms of sales of the Products ("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.
3.4 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, with the
exception of "Corporate Accounts". 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.
3.5 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.
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4. TERM. This Agreement shall continue in full force and
effect for a period of three (3) years (or more) and shall
automatically renew from year to year on the annual anniversary
("Renewal Date") of the Agreement, unless terminated at that time by
either party. The effective date of termination ("Termination Date")
shall be set forth in a notice given by one party to the other within
ten (10) days of the annual Renewal Date 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.
5.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 Products (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 Products, or
their sale, which may result from the sale or distribution of the
Products by CIC hereunder.
5.1 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.
5.2 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
full 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.
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5.3 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.
5.4 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. If the parties cannot agree upon an
arbitrator within ten (10) days after demand by either of them,
either or both parties may request the American Arbitration
Association to name a panel of three (3) arbitrators. Each party
shall strike one name on this list, and the remaining name shall
be the arbitrator. The expenses of the arbitrator shall be
shared equally by the parties, unless the arbitrator determines
that the expenses shall be otherwise assessed.
5.5 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.
5.6 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.
5.7 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.
5.8 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.
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CIC: CLARKSTONE INTERNATIONAL CORPORATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
By: ▇▇▇▇▇ ▇. ▇▇▇▇ Date: February 25, 2000
Vice President
Title
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
THE COMPANY: EXHAUST TECHNOLOGIES, INCORPORATED
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
By: ▇▇▇ ▇▇▇▇▇▇▇▇ Date: February 25, 2000
President
Title
▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
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EXHIBIT A
Trade Shows
The Company and CIC mutually agree to the following terms and
conditions with respect to trade shows.
The Company shall be responsible for costs associated with trade
show promotion of the Company's Product upon mutual agreement by both
parties to participate at a specific event. Event space will be
contracted by Clarkstone and the Company will pay costs associated
with the event to Clarkstone. The Company's responsibility for booth
and equipment expenses will be based on the square footage of the
Clarkstone trade show booth space to be used exclusively for the
representation of the Company's Product.
1. The Company pays the costs of the following expenses based on
the percentage of Clarkstone booth space allocated for the
representation of the Company's Product:
- Event booth space
- Furnishings (i.e.: table, table skirt, chairs, carpet,
etc.)
- Utilities (i.e.: electrical hook-up for lights and
equipment and etc.)
- Equipment (i.e.: lead machine and etc.)
- Event labor (should this be required)
2. The Company pays 100% of the following costs:
- Booth display, graphics and props (and associated costs)
used to represent the Company's Product
- Freight and related expenses (i.e.: insurance) for the
shipment of the Company's display and materials to and from
the event
- Promotional "hand-out" materials and sample product
- Personal expenses of Company personnel for airfare and etc.
(should Company personnel elect to attend the event)
- Event related advertising or product promotions authorized
by the Company
3. CIC shall be responsible for the following event expenses based
on the percentage of Clarkstone booth space used to represent
products other than the Company's Product:
- Event booth space
- Furnishings (i.e.: table, table skirt, chairs, carpet)
- Utilities (i.e.: electrical hook-up for lights and
equipment)
- Equipment (i.e.: lead machine)
_ Event labor (should this be required)
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4. Clarkstone pays 100% of the following costs:
- All costs related to other Clarkstone client products
represented at the event
- Airfare, lodging, meals, transportation, and related
personal expenses of personnel authorized by Clarkstone to
staff the event booth
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EXHIBIT B
"Corporate Accounts"
The Company and CIC mutually agree the following thirty-five (35)
companies comprise the "Corporate Accounts" as defined in Paragraph
3.1 for the purpose of Product sales, the establishment of reps (if
any) and ongoing account service and management.
1. Ingersol Rand
2. Chicago Pneumatic
3. Florida Pneumatic
4. APD (Pep Boys)
5. Monroe Muffler
6. Meineki Muffler
7. ▇▇▇▇▇▇ Tire
8. Discount Tire
9. CPW, Inc. (Winston Tire)
10. Firestone Store, Inc.
11. Goodyear Tire, Inc.
12. Oreilly Auto Parts
13. ▇▇▇▇▇▇ Tire
14. Merchants Tire
15. ▇▇▇▇▇▇▇▇.▇▇▇
16. Lucor, Inc.
17. Altons Tire
18. TBC (Big O)
19. AM-PAC Tire Dist Inc.
20. Fountain Tire
21. Sommerset Tire and Service, Inc.
22. Team Tire
23. OK Tire Stores
24. Dal Tire
25. ▇▇▇▇▇▇▇ Tire
26. ▇▇▇ ▇▇▇▇▇▇ Tire
27. Merlin Muffler
28. Econo Lube and Tune
29. Kar Kwik
30. ▇▇▇ ▇▇▇▇▇▇
31. Mac Tools
32. Advanced Auto Parts, Inc.
33. CSK Auto, Inc.
34. Parts ▇▇▇▇▇▇▇.▇▇▇
35 ▇▇▇▇▇▇ Tires
The Company has agreed to establish communications with Midas and
Meineke for the purpose of developing a coupon redemption program.
Midas is not a "Corporate Account" for the purpose of soliciting
Product sales.
