AGREEMENT made and entered into this 31st day of December, 2001, by and
between RSI, Inc. a New York Corporation with a principal place of business at
00 Xxxx 00xx Xxxxxx, Xxxxx 000, Xxx Xxxx, XX 00000 (the Company), and Paradigm
Solutions, Inc., at a Delaware corporation with an office at 0 Xxxx Xxxxx,
Xxxxxxxx Xxxxxxx, Xxx Xxxx 00000 (PSI). The Company and PSI are sometimes
collectively referred to as the "Parties".
WITNESSETH:
WHEREAS, the Company is the owner of a, trademark, service xxxx and logo
SpongeTech (hereinafter collectively referred to as the Trademark) and;
WHEREAS, the Company utilizes the Trademark in connection with a delivery
system of various ingredients on a sponge for automotive wash applications
(hereinafter the Product); and
WHEREAS, the Company desires to market the Product in all worldwide
marketing venues (hereinafter referred to as the Market), and;
WHEREAS, the Company is willing to provide PSI with the rights necessary to
market, distribute and sell the Product in the Market on the terms and subject
to the conditions hereinafter set forth in this agreement (the Agreement);
WHEREAS, PSI a marketing company with strong relationships in the direct
response industry, is willing to market and sell the Products in the Market on
the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the receipt and adequacy of which is
hereby acknowledged and accepted, the Parties hereby agree as follows:
1. Grant of rights and License. The Company grants to PSI and PSI hereby
accepts the following:
A. The sole and exclusive worldwide license and rights to sell, either
itself or through third parties or sub-licensees appointed by PSI and
reasonably approved by the Company, the Products are currently names
or in private brand form via all marketing channels.
B. PSI shall have the exclusive license and right to use the Trademark in
connections with the distribution, marketing and sale of the Products.
C. The Company covenants and agrees to make a reasonable number of
Product samples available to PSI for promotional purposes at no cost
to PSI.
2. Terms of License and Grant of Rights
A. Initial Term. The initial term of this Agreement shall be 150 days
commencing with the date of execution (the Trial Term). If prior to
the expiration of the Trial Term, PSI shall have secured a commitment
from the Television Shopping Network and/or with a DRTV company to
promote and sell the Product on television, then in that event the
Trial Term of this Agreement shall be automatically extended for five
(5) years commencing on the date of the first airing of the Product
(the initial Term).
B. Renewal Term. Subject to the Companies receipt of a minimum of
$500,000 in gross sales during each year of the initial Term this
Agreement shall be automatically renewed for successive five-year
terms. In the event the Company receives less than the required
minimum of gross sales during the initial Term the rights granted
herein will continue on a non-exclusive basis for the balance of the
initial Term and any term extension will be at the discretion of the
Company.
3. Territory. This Agreement grants the exclusive rights to PSI to sell or
arrange for the sale of the Product worldwide, it is PSI's responsibility
to obtain government approval. if necessary, to market and sell the Product
outside the United States.
4. Price of Product. The Parties hereby agree and consent that the wholesale
prices for the Products in various configurations and packaging shall
be as
set forth in Exhibit A annexed to this Agreement and hereby incorporated
into the Agreement by this reference. These prices may be changed by the
Company, upon sixty (60) days written notice to PSI.
5. Compensation. The Company hereby covenants and agrees to pay to PSI 10% of
all gross revenue the Company receives as a result of the sale or license
of the Product during the term of this Agreement. Also, the Company hereby
covenants and agrees to pay PSI 10% of all gross revenue the Company
receives as a result of the sale or license of products using the delivery
system concept on a sponge for applications other than automotive (Other
Products) if such transactions are made with a company listed on Exhibit B
amended to this Agreement and hereby incorporated into the Agreement by
this reference. Additional companies will be added to Exhibit B from time
to time. As used herein, the term gross revenue shall mean all revenue
received by the Company less shipping charges and returns only. All
payments to PSI shall be accompanied by copies of purchase orders received
by the Company, sales reports and documentation to support such sales and
the nature and extent of any and all deductions.
6. Representations and Warranties of the Company. The Company hereby
represents and warrants to PSI as follows.
A. The execution and delivery of this Agreement, the performance of its
obligations hereunder and the consummation of the transaction made the
subject hereof have been approved by the Board of Directors of the
Company and no action or proceeding on the part of the Company is
authorization, consent or approval of any public body or authority is
necessary for the consummation by the Company of the transaction
contemplated by the Agreement.
B. The Company is the sole and exclusive owner by assignment license or
otherwise of any and all trademarks, copyrights and other proprietary
rights associated with the Product that are necessary to market, sell,
distribute and license the Product (hereinafter collectively referred
to as the Ownership Rights) which are the subject of this Agreement
and which Ownership Rights are owned by the Company free and clear of
any and all liens, claims, pending or threatened litigation and
encumbrances of any kind, nature or description. The Company, which
has researched the Ownership Rights, and the same do not conflict with
or constitute a breech, violation or infringement of any patent,
trademark, or other similar or related ownership right, has not
assigned or transferred any interest, and PSI will receive the
exclusive right to sell the Product in the Market. The Company has
not, nor will it, during the Product in the Market; and
C. The Product complies in all material respects with all laws and
regulations relating to the advertisement, sale, use and effects of
the Product.
7. Representations and Warranties of PSI. PSI hereby represents and warrants
to the Company as follows.
A. The execution and delivery of this Agreement, the performance of its
obligations hereunder and the consummation of the transaction made the
subject hereof have been approved by the Board of Directors of PSI and
no action or proceeding on the part of PSI is necessary to authorize
this Agreement and the transactions contemplated hereby. No filing or
registration statement with or authorization, consent or approval of,
any public body or authority is necessary for the consummation by PSI
of the transaction completed by this Agreement.
8. Covenants of the Company. The Company hereby covenants with PSI as follows:
A. To make Xxxxxxx Xxxxxx available for live television appearances,
filmed commercials, infomercials, spots, or print advertising to
promote the Product wherever deemed necessary by the Parties and to
attend any meetings with third parties with respect to the promotion
and sale of the Product. If Xxxxxxx Xxxxxx is unavailable for any
reason the Parties will discuss other personalities.
B. At all times during the term of this Agreement to abide by the pricing
schedule attached as Exhibit A hereto and hereby incorporated herein
by reference, except as that may be changed by notice of the Company
and to abide by the company listing attached as Exhibit B hereto and
hereby incorporated herein by reference and to allow PSI or its
representative once per year, upon written notice, to conduct a
reasonable examination of the books and records of Company as may
relate to this Agreement.
C. To be solely responsible for paying all amounts due to individuals
offering their services for testimonials, on camera or live
appearances;
D. To indemnify PSI and hold it harmless from and against all claims,
suits, actions proceedings, damages, losses or liability, cost or
expenses (including reasonable attorneys fees) arising out of or based
upon, related to or in connection with (1) any alleged breach of
rights of a third party during the introduction of the Company to PSI,
and (II) any breach by the Company of its right to grant the rights
granted in this Agreement, and (III) any claim by a user of the
Product for damages, illness or death caused the user from the use of
the Product. This covenant and duty to indemnity and hold harmless
shall survive the termination of this Agreement (and any extension of
this Agreement) for two (2) years; and
E. RSI may discharge its obligations under paragraph B (d) with respect
to any personal injury or property damage arising out of the
manufacture of the Product by the Product Liability insurance, by
obtaining and maintaining for two (2) years thereafter at its expense,
a standard product liability insurance policy from a financial sound
and recognized insurance company in an amount of at least $2,000.000
for bodily injury and $500,000 for property damage each occurrence.
PSI is to be named as an additional insured on Company policy and a
certificate of insurance naming PSI an additional insured will be sent
to PSI. No policy shall be cancelled for default in payment of
premiums until the insured shall have given notice of default to PSI
and PSI shall have thirty (30) days after receipt of such notice to
cure said default and
F. In the event of the Company's termination of this Agreement, PSI shall
continue to be entitled to receive and the Company will continue to
pay to PSI the 10% compensation set forth in Section 5 with respect to
any and all Product and Other Product series that continue through
accounts introduced to the Company by PSI for as long as the third
party companies continue to do business with the Company. In the event
that termination is due to acts of negligence, misconduct or
malfeasance by Psi, Company shall have no obligation to pay PSI any
compensation subsequent to the termination of this Agreement.
9. Confidentiality Throughout the term of this Agreement the Parties agree not
to disclose to others or to use any confidential or proprietary information
or property of the other acquired hereunder or in connection hereunder,
except as authorized herein or in advance in writing to the disclosing
party and both shall keep and shall require their respective directions,
officers, employees and agents to keep confidential such information. The
foregoing restrictions shall not apply to confidential information which is
or was learned, acquired or developed independently or disclosed by either
receiving Party, with the knowledge of the other or which is know publicly.
The provisions of this paragraph and each Party's obligation hereunder
shall survive any termination of reaction of this Agreement.
10. Termination The Parties hereby agree and consent that this Agreement may be
terminated by either Party on 90 days prior written notice provided that
the other Party shall not have cured the noticed default within the 90 day
period, as follows:
A By the Company if PSI:
1. Fail to meet its Trial Term obligations as set forth in Section
2A above;
2. Fails to meet its initial Term obligations as set forth in
Section 2B above;
3. Materially breeches any of its obligations under the terms of
this Agreement.
B PSI if the Company:
1. Materially breaches any of its obligations under the terms of the
Agreement
11. Independent Contractor. Neither Party nor any of its officers, employees,
agents or representatives is an employee or agent of the other Party for
any purpose whatsoever. Rather, each party is and shall at all times remain
an independent contractor. Each Party shall have sole control of the manner
and means of performing its obligations under this Agreement. Except as
otherwise specifically provided herein, each Party shall be responsible for
all expenses and disbursements, which it incurs in connection with this
Agreement. Neither Party has, nor shall it hold itself out as having, any
right, power or authority to create any contract or obligation either
express or implied, on behalf of, in consent thereto in writing. Each Party
shall have the right to appoint and shall be solely responsible for its own
sales people, employees, agents and representatives, who shall be at such
Party's own risk, expense and supervision and shall not have any claim
against the other Party for compensation or reimbursement.
12. Intellectual Property Enforcement. Each party shall use it reasonable
efforts to reduce or, if possible eliminate any infringement or passing off
of any intellectual property rights herein, or for the purpose, is shall
advise the other Party of any infringements or violations of or challenges
to the right to use such intellectual property rights that shall come to
its attention. Each Party shall have the sole right and obligation, to
bring suite to stop any infringement, violation of or challenge to
identified intellectual property rights associated with the Product. Each
Party shall bring such an action through counsel of its own selection at
its own cost and expense. Neither Party shall have the authority to enter
into a settlement on behalf of the other Party.
13. Indemnity. Each Party hereby agrees to hold each other, each other's
parent, subsidiary and/or affiliate companies and their respective
officers, directors, employees and agents and each other's permitted
successors and assigns harmless from and against any and all claims,
demands, suits, losses, coats, expenses (including, without limitation,
reasonable council fees), damages or recoveries (including, without
limitation, any amounts paid in settlement, provided the indemnitor's prior
consent thereto has been obtained, such consent not to be unreasonably
withheld) suffered, made, incurred or assured by reason of the breach of
any representation, warranty, agreement, and/or certification made or
entered into herein or hereunder by the indemnitor. In the event any claim
to which these indemnities may apply shall arise against the Party claiming
the indemnity, such claim with the Party claiming the indemnity having the
right, but not the obligation, to jo8in in and be represented by its own
council at its own cost and expense. In the event the indemnitor does not
defend any such claim the indemnities shall have the right to do so and the
reasonable costs of such defense shall be reimbursed to the indemnities by
the indemnitor.
14. Expenses. Regardless of whether or not the transaction contemplated herein
is consummated, each Party shall be responsible for its own share of all
costs and expenses incurred in connection with this Agreement and
transactions contemplated hereby.
15. Amendment. This Agreement may be amended by the Parties hereto only by
action taken by their mutual consent at any time. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
Parties hereto.
16. Finder's Fee. The Company hereby represents and warrants that no
individual, firm or entity including a stockholder of the Company is
entitled to any brokerage commission or finders fee in connection with the
transaction contemplated herein.
17. Binding Effect and Assignments. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by and against the heirs, executors, administrators and
representatives of the Seller and the successors and assigns of the
Purchaser. This Agreement may not be assigned by any Party without the
written consent of the other Party.
17. Notwithstanding the foregoing, PSI hereby agrees and consents that the
Company shall have the exclusive right to assign this Agreement to an
entity controlled by the stockholders of the Company. In the event of any
such assignment, the Company shall give prompt written notice to PSI.
18. Entire Agreement. Each of the Parties hereby covenants that this Agreement
is intended to and does contain and embody herein all of the understandings
and agreements, both written and oral, of the parties hereby with respect
to the subject matter of this Agreement, and that there exists no oral
agreement or understanding, express or implied, whereby the absolute, final
and unconditional character and nature of this Agreement shall be in any
way invalidated, empowered or affected. There are no representations,
warranties or covenants other than those set forth herein.
19. Laws of the State of New York This Agreement shall be deemed to have been
made and delivered in and governed by and interpreted under and construed
in all respects in accordance with the laws of the State of New York,
irrespective of the place of domicile or resident of either party.
20. Arbitration. The Parties agree that in the event of a controversy arising
out of the interpretation, construction, performance or breach of the
Agreement, any and all claims arising out of or relating to this Agreement
shall be settled by arbitration according to the Commercial Arbitration
Rules of the American Arbitration Association located in New York City
before a single arbitrator, except as provide below. The decision of the
arbitrator(s) will be enforceable in any court of competent jurisdiction.
The Parties hereby agree and consent that service of process in any such
arbitration proceeding outside the City of New York shall be tantamount to
service in person within New York, New York and shall confer personal
jurisdiction on the American Arbitration Association. In any dispute where
a Party seeks Fifty Thousand Dollars ($50,000.00) or more in damages, three
(3) arbitrators will be employed. In resolving all disputes between the
Parties, the arbitrators will apply the law of the State of New York,
except as may be modified by the Agreement. The arbitrators are, by this
Agreement, directed to conduct the arbitration hearing no later than three
(3) months from the service of the statement of claim and demand for
arbitration unless good cause is shown establishing that the hearing cannot
fairly and practically be so convened. The arbitrators will resolve any
discovery disputes by such prehearing conferences as may be needed. Both
Parties agree that the arbitrators and any counsel of record to the
proceeding will have the power of subpoena process as provided by law.
Notwithstanding the foregoing, if a dispute arises out of or related to
this Agreement, or the breach thereof, before resorting to arbitration the
Parties agree first to try in good faith to settle the dispute by mediation
under the Commercial Mediation Rules of the American Arbitration
Association.
21 Originals. This Agreement may be executed in counterparts, each of which is
executed shall be deemed an original and constitute one of the same
Agreement.
22. Address of Parties. Each Party shall at all times keep the other informed
of its principal place of business if different from that stated herein,
and shall promptly notify the other of any change, giving the address of
the new residence or principal place of business.
23. Notices. All notices that are required to be or may be sent pursuant to the
provisions of this Agreement shall be sent by certified mail, return
receipt requested, or by overnight package delivery service to each of the
parties at the address appearing herein, and shall count from the date of
mailing or the validated air xxxx.
24. Modification and Waiver. A modification or waiver of any of the provisions
of this Agreement shall be effective only if made in writing and executed
with the same formality of this Agreement. The failure of any Party to
insist upon strict performance of any of the provisions of this Agreement
shall not be construed as a waiver of any subsequent default of the same or
similar nature or of any other nature or kind.
25. Attorneys' Fees. In the event any arbitration proceeding is commenced by a
Party secured or indemnified under this Agreement, the prevailing Party
shall be entitled to recover a reasonable attorney's fee and costs, in such
amounts as the court may adjudge reasonable, including, but not limited to,
those fees and costs incident to (a) any action or participation in (or in
connection with) a case or a proceeding involving a Party under any
applicable chapter of the Bankruptcy Code (11 U.S.C.& 101 et seq), or any
successor statute thereto, and (b) the pursuit or any post-judgment
remedies or appeals.
26. Captions, Gender. The captions herein are included for convenience of
reference and shall be ignored in the construction or interpretation of
this Agreement, Gender, name singular (ity) and plural (ity) shall be read
and construed in the content required by grammar, syntax, common sense and
the intent of the parties as expressed herein.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and
year first above written.
RSI, Inc.
By: /S/ Xxxxxxx Xxxxxx
-----------------------------
Xxxxxxx Xxxxxx, President
Paradigm Solutions, Inc.
By: /S/ Xxxxxxxx XxXxxxxx
------------------------------
Xxxxxxxx XxXxxxxx, President
