EXHIBIT 10.1
GUARANTEE AND AGREEMENT
GUARANTEE AND AGREEMENT, dated as of August 5, 1997, between VISUAL
EDGE SYSTEMS INC., a Delaware corporation ("VES"), and CADILLAC MOTOR CAR
DIVISION OF GENERAL MOTORS CORPORATION, a Delaware corporation ("Cadillac").
RECITALS
WHEREAS, Cadillac desires to implement a test drive program in which
Cadillac Dealers nationwide will have the opportunity to invite potential
customers to take a "personalized golf lesson with Xxxx Xxxxxx" if they test
drive a new Cadillac (the "Test Drive Program"); and
WHEREAS, Cadillac desires that VES provide, and VES is willing to
provide, certain services relating to the production of Xxxx Xxxxxx personalized
video golf lessons in connection with the Test Drive Program on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS. The following terms shall have the meanings
set forth below. Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
"CADILLAC" means Cadillac Motor Car Division, a Division of General Motors
Corporation.
"CADILLAC DEALERS" means an independent automotive dealer that sells
Cadillac automobiles that is in a state that is serviced by VES in accordance
with Schedule II.
"CDMA" means the Cadillac Dealers Marketing Association, a regional group
of independent Cadillac dealers.
"EVENT DAY" means any day on which VES vans have been scheduled to appear
at a Participating Dealership in connection with the Test Drive Program, and
that is no longer than the time it takes to complete up to 150 instruction
tapes, including videotaping and production time.
AGREEMENT
"FLORIDA/NEW YORK TEST" shall have the meaning set forth in Section
4(b)(i).
"FLORIDA STATE TEST" shall have the meaning set forth in Section 4(b)(ii).
"XXXX XXXXXX APPEARANCE" shall have the meaning set forth in Section 2(e).
"MARKETING MATERIAL" shall have the meaning set forth in Schedule III
hereto.
"MINIMUM GUARANTEES" shall have the meaning set forth in Section 3(c).
"PARTICIPATING DEALERSHIP" means any Cadillac Dealer participating in the
Test Drive Program.
"PRODUCT" shall mean a ONE-ON-ONE WITH XXXX XXXXXX personalized videotape
golf lesson of approximately 45 minutes.
"SERVICES" shall have the meaning set forth in Schedule I hereto.
"TERM" shall have the meaning set forth in Section 4.
"TERRITORY" means the continental United States.
"TEST DRIVE PROGRAM" shall have the meaning set forth in the recitals
hereto.
SECTION 2. EXCLUSIVITY; PRODUCT AND SERVICES
(a) EXCLUSIVE NATURE. During the Term of this Agreement and in the
Territory, subject to the terms of the Services set forth in Schedule I hereto,
VES shall not itself or through others directly or indirectly sell or provide
(or cause to be sold or provided) the Product in automotive dealership of any
other automobile manufacturer; PROVIDED that VES may provide the Product to any
automobile manufacturer in connection with non-dealership events, including, but
not limited to, events taking place on golf courses, as well as charity
tournaments, sales meetings, trade shows, conventions and corporate outings. At
its option, Cadillac may permit VES to provide the Product to the dealerships of
other General Motors divisions.
(b) PRODUCT AND SERVICES. During the Term (defined below), VES shall
provide to Cadillac the Product and the Services described in Schedule I hereof;
PROVIDED that VES shall not be obligated to provide any Services that would be
in contravention of law.
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AGREEMENT
(c) SCHEDULING. Cadillac, CDMA or a Cadillac Dealer must advise
VES of its intention to use the Services no less than sixty (60) days prior to
the requested Event Day(s). VES will use its best efforts to accommodate the
Scheduling Party (as defined below) within its schedule.
(d) QUALITY. The Services to be provided hereunder shall be
consistent in kind and quality with those customarily provided by VES.
(e) XXXX XXXXXX APPEARANCE. Upon the completion of the Florida/New
York Test and the Florida State Test and if Cadillac has not elected to
terminate this Agreement under Section 4(b)(iii) and is otherwise in compliance
with the terms and conditions of this Agreement (including, if applicable, the
payment of the Minimum Guarantee provided for in Section 3(c)), VES will create
an annual event at which VES will make Xxxx Xxxxxx available to play a round of
golf at The Medalist Golf Course in Hobe Sound, Florida with an individual
designated by Cadillac. Such individual will receive an all expenses paid trip,
including airfare, hotel accommodations, a Cadillac courtesy car (to be supplied
by Cadillac), photo session, souvenirs, lunch and an 18-hole round of golf with
Xxxx Xxxxxx in person to be paid by VES; the itinerary and logistics will be
determined by VES. Cadillac must notify VES by each of December 31, 1998, 1999
and 2000 of the name of the designated individual, and VES shall notify Cadillac
of the date scheduled for the Xxxx Xxxxxx Appearance by no later than January 31
of the next succeeding calendar year. The Xxxx Xxxxxx Appearance date shall be
no later than October 31 of each such year. Notwithstanding VES's confirmation
and approval of Xx. Xxxxxx'x availability on such a date as shall have been
earlier given, if Xx. Xxxxxx'x illness or injury prevents his performing
services on the actual designated Xxxx Xxxxxx Appearance, VES shall use its
reasonable efforts to reschedule the Xxxx Xxxxxx Appearance as soon as possible
thereafter. In such event, VES shall not be responsible for any costs or
expenses incurred by Cadillac in connection therewith.
(f) EXTENT OF SERVICES. VES shall use its reasonable efforts to
provide the Services to all Cadillac Dealers, subject to the availability and
location in the United States of VES personnel, vans and other equipment and in
accordance with the scheduling guidelines set forth herein. As VES expands its
fleet of vans to states other than those listed in Schedule II, it will notify
Cadillac quarterly by delivering an updated Schedule II, listing the states with
VES vans and information regarding availability and other factors limiting the
availability of Services. Each such expansion to additional states shall
increase the aggregate number of Event Days per Cadillac Dealer per calendar
year included in the Minimum Guarantee referred to in Section 3(c).
SECTION 3. FINANCIAL ARRANGEMENTS.
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AGREEMENT
(a) BILLED PARTIES. The party that schedules an Event Day (a
"Scheduling Party") shall be the party that is billed for such Event Day. A
Scheduling Party may include Cadillac, a Participating Dealer, CDMA, or other
General Motors divisions, their dealers or DMAs.
(b) FEES. The Scheduling Party will pay VES fees for each Event Day
conducted during the periods described below as follows:
Time Period Amount Per Event Day
----------- --------------------
Through December 31, 1998 $5,000
January 1, 1999 through December 31, 1999 $5,300
January 1, 2000 through December 31, 2000 $5,625
(c) CADILLAC GUARANTEE. For the time period from the execution of
this contract to December 31, 1998, Cadillac (together with the CDMAs and
Participating Dealerships) guarantees to purchase a total of 1,500 Event Days
from VES. Throughout the Term, VES shall notify Cadillac on a monthly basis of
the number of Event Days conducted and scheduled to date. No later than August
31, 1998, VES shall notify Cadillac as to whether the guaranteed number of Event
Days is scheduled to be conducted during the period. If 1,500 Event Days
(unless such number is reduced in accordance with Section 13) are not scheduled
and conducted by December 31, 1998, VES shall, on January 1, 1999, be entitled
to invoice Cadillac for the difference between the guaranteed 1,500 Event Days
and the actual number of Event Days conducted during the period at a rate of
$5,000.00 per Event Day. Payment of such invoice shall be due no later than
March 31, 1999.
For January 1, 1999 to December 31, 1999, Cadillac (together with the
CDMAs and Participating Dealerships) guarantees to purchase a total of 2,500
Event Days from VES. Throughout the Term, VES shall notify Cadillac on a
monthly basis of the number of Event Days conducted and scheduled to date for
calendar year 1999. No later than August 31, 1999, VES shall notify Cadillac as
to whether the guaranteed number of Event Days is scheduled to be conducted
during the calendar year 1999. If 2,500 Event Days (unless such number is
reduced in accordance with Section 13) are not scheduled and conducted in
calendar year 1999, VES shall, on January 1, 2000, be entitled to invoice
Cadillac for the difference between the guaranteed 2,500 Event Days and the
actual number of Event Days conducted during the period at a rate of $5,300.00
per Event Day. Payment of such invoice shall be due no later than March 31,
2000.
For January 1, 2000 to December 31, 2000, Cadillac (together with the
CDMAs and Participating Dealerships) guarantees to purchase a total of 2,500
Event Days from VES.
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AGREEMENT
Throughout the Term, VES shall notify Cadillac on a monthly basis of the number
of Event Days conducted and scheduled to date for calendar year 2000. No later
than August 31, 2000, VES shall notify Cadillac as to whether the guaranteed
number of Event Days is scheduled to be conducted during the calendar year 2000.
If 2,500 Event Days (unless such number is reduced in accordance with Section
13) are not scheduled and conducted in calendar year 2000, VES shall, on January
1, 2001, be entitled to invoice Cadillac for the difference between the
guaranteed 2,500 Event Days and the actual number of Event Days conducted during
the period at a rate of $5,625.00 per Event Day. Payment of such invoice shall
be due no later than March 31, 2001.
(d) EXPENSES. Travel, lodging and similar costs and expenses of VES
employees and third parties performing the Services shall be borne by VES.
(e) PAYMENTS. During the Term, VES will invoice the Scheduling
Party for fees payable hereunder prior to the Event Day scheduled. All invoices
are due and payable within thirty (30) days after each Event Day. Any
additional charges are due and payable upon presentation.
(f) PROGRAM MANAGEMENT. VES agrees that it will hire an event
management firm or individuals to be approved by Cadillac to coordinate the
services of VES and Cadillac's dealers.
(g) THIRD PARTIES. VES will have the right to retain third parties
to provide services on its behalf from time to time, in accordance with VES's
customary practice in the ordinary course of business. The use by VES of any
such third party will not be subject to approval by Cadillac; PROVIDED that if
requested by Cadillac, VES will keep Cadillac advised quarterly regarding any
significant use of such third parties. VES shall be responsible for the payment
of any fees and expenses of third parties retained by VES.
SECTION 4. TERM.
(a) TERM. This Agreement shall continue in effect until December 31,
2000, unless terminated in accordance with Section 4(b) or 4(c) below (the
"Term"); PROVIDED that if Cadillac desires to terminate this Agreement as of
December 31, 1998, Cadillac must notify VES of its intention to terminate this
Agreement on or before June 30, 1998 and Cadillac shall be responsible for the
payment of the Minimum Guarantee for the calendar years 1997 and 1998.
(b) SPECIAL TERMINATION. The parties agree that VES shall perform
test events as follows:
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AGREEMENT
(i) FLORIDA/NEW YORK TEST: Three Cadillac dealerships in
Florida and one in New York will test the Test Drive Program provided by
VES hereunder to identify the most effective method of properly servicing
Cadillac Dealers (the "Florida/New York Test"). Such test shall commence
as soon as practicable and be completed no later than October 15, 1997.
Cadillac will promptly pay to VES the cost of the Florida/New York Test,
which shall equal $20,000 (representing the aggregate cost of four Event
Days).
(ii) FLORIDA STATE TEST: Upon completion of the Florida/New
York Test, Cadillac shall launch the Test Drive Program with the Florida
CDMA for Cadillac dealerships in Florida (the "Florida State Test") by no
later than December 31, 1997. Cadillac will promptly pay to VES the cost
of the Florida State Test, which shall equal the number of Event Days
conducted by the Cadillac dealerships in Florida multiplied by the rate of
$5,000 per Event Day.
(iii) TERMINATION. In the event that Cadillac finds that (i)
the Florida/New York Test has demonstrated that the Services may not be
satisfactorily integrated into its dealers' business, it may elect to
terminate the Term by providing notice to VES no later than October 31,
1997, or (ii) the Florida State Test has not been satisfactory, it may
elect to terminate the Term by providing notice to VES no later than
January 31, 1998, each such notice to specify that it is a notice of
special termination hereunder. In such event Cadillac shall thereafter
have no further obligations to order Services under Section 2 and this
Agreement shall be deemed null and void.
(c) NON-PAYMENT. In the event that Cadillac has failed to make the
payment of any Minimum Guarantee, as required under Section 3, and Cadillac has
not cured such failure within fifteen (15) days after receipt of written notice
from VES, VES may terminate this Agreement by notice to Cadillac at least
fifteen (15) days prior to the effective date of termination.
SECTION 5. INDEPENDENT CONTRACTOR.
(a) SELECTION OF EMPLOYEES. VES shall select the VES employees and
third parties to provide Services hereunder on a basis consistent with its
normal practice, and such individuals shall not be deemed to be employees of
Cadillac or any of its subsidiaries. All work performed hereunder by VES shall
be performed by VES as an independent contractor.
(b) NO JOINT VENTURE. Notwithstanding anything herein to the
contrary, no partnership or joint venture has been created in or by this
Agreement or as a result of the provision of Services hereunder.
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AGREEMENT
SECTION 6. TRADEMARKS. It is expressly agreed by the parties that
Cadillac shall not acquire any rights to any of VES's proprietary information
(whether owned or licensed), including, but not limited to, its software,
technology, concepts, the "ONE-ON-ONE WITH XXXX XXXXXX" trade name or other
trade names, or other intellectual property, and that VES shall not acquire any
rights to any Cadillac trade names or trademarks or other intellectual property
pursuant to this Agreement. Each party agrees that it will obtain prior written
approval before using the other's trade names, trademarks or other intellectual
property.
SECTION 7. AMENDMENT. This Agreement may be amended only by an
instrument in writing executed by the parties hereto.
SECTION 8. NOTICES. All notices and other written communications
hereunder shall be in writing and shall be delivered personally against written
receipt, by a nationally recognized overnight courier service or by prepaid,
registered or certified mail, return receipt requested, to the following persons
and addresses (or to such other persons or addresses as any party may request by
notice to the other parties):
If to VES: Visual Edge Systems Inc.
00-00 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xx. Xxxx Xxxxxxxx
With a copy to: Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Cadillac: Cadillac Motor Car Division
00000 Xxx Xxxx
Xxxxxx, XX
Attention: Mr. Xxxxxx Xxxx
With a copy to: DMB&B
0000 X. Xxx Xxxxxx
X.X. Xxx 0000
Xxxx, XX 00000-0000
Attention: Xx. Xxxx Xxxxxxxx
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AGREEMENT
SECTION 9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan without giving
effect (to the fullest extent permitted by law) to any choice of law rule that
would cause the application of the laws of any other jurisdiction.
SECTION 10. SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
SECTION 11. ARBITRATION. Any dispute or controversy arising under
this Agreement and relating to an amount in dispute of less than $100,000, which
cannot be settled amicably by the parties, shall be referred to a single
arbitrator to be chosen by the rules of the American Arbitration Association and
the arbitration shall be conducted in New York, New York in accordance with the
applicable rules and procedures of the American Arbitration Association. The
arbitrator's decision shall be in writing, shall be final and shall be binding
upon the parties.
SECTION 12. SCHEDULES. The Schedules to this Agreement are deemed a
part of this Agreement and are subject to all of the provisions herein.
SECTION 13. FORCE MAJEURE. Any delay or failure of either party to
perform its obligations hereunder shall be excused to the extent that it is
caused by an event or occurrence beyond its reasonable control, such as, by way
of example and not by way of limitation, acts of God, actions by governmental
authority (whether valid or invalid), fires, floods, windstorms, explosions,
riots, natural disasters, wars, sabotage or labor problems; PROVIDED the party
claiming force majeure promptly notifies the other party of the event of force
majeure, the anticipated duration of the event of force majeure, and the steps
being taken to remedy the failure.
SECTION 14. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument, and all signatories need
not appear on any one counterpart.
[Remainder of page intentionally left blank]
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AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
VISUAL EDGE SYSTEMS INC.
By: /s/ Xxxx Xxxxxxxx
---------------------------
Xxxx Xxxxxxxx
Chief Executive Officer
Date: 8/5/97
CADILLAC MOTOR CAR DIVISION OF
GENERAL MOTORS CORPORATION
By: /s/ Xxxxx Xxxx
---------------------------
Xxxxx Xxxx
Date: 8/5/97
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AGREEMENT
SCHEDULE I
DESCRIPTION OF SERVICES TO BE PROVIDED
On the agreed upon Event Day, VES will arrive 2 hours prior to the
scheduled time for set up purposes. VES shall provide the following services to
the Participating Dealer:
1. The Marketing Material as listed in Schedule III.
2. The ONE-ON-ONE WITH XXXX XXXXXX van, trailer and all hardware and
software needed to execute the Product.
3. Two VES employees to videotape Cadillac participants and execute the
Product.
4. An indoor hitting cage (if indoors) which requires a floor area of 20'
x 20' and 12' high.
An Event Day shall consist of the time it takes (excluding set-up time) to
complete up to 150 instruction tapes, including video taping and production
time, for the fee detailed in Section 3(b).
Each Participating Dealer shall receive up to a maximum of 150 videotapes
of the Product per Event Day. Additional videotapes may be purchased for $25.00
per tape.
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AGREEMENT
SCHEDULE II
STATES COVERED BY VES VANS
AND NUMBER OF VANS PER STATE
AS OF JULY 31, 1997
STATES NUMBER OF VANS
------ --------------
Arizona 1
California 2
Connecticut 1
Delaware 1
Florida 3
Georgia 1
Illinois 1
Maryland 1
Massachusetts 1
Michigan 1
Nevada 1
New Jersey 1
New York 1
Pennsylvania 1
Rhode Island 1
South Carolina 1
Texas 1
Virginia 1
West Virginia 1
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AGREEMENT
SCHEDULE III
DESCRIPTION OF MARKETING MATERIALS TO BE PROVIDED
MARKETING MATERIALS: VES will provide marketing materials to each
Participating Dealership to be used in the Test Drive Program. Such marketing
materials shall include for each Event Day::
(i) 1,000 direct mail invitations plus envelopes,
(ii) creative approved by Cadillac for print, radio and television
advertisements for use by the Participating Dealerships at their
option.
(iii) on-site promotional materials, such as banners and posters in an
amount to be mutually agreed upon..
(iv) a sales video to be given to each Participating Dealership to
educate their staff on preparation for an Event Day.
(v) customized Cadillac videotape sleeves and labels for each video
tape provided to a Participating Dealership customer.
All such marketing materials shall be pre-approved by Cadillac. Before
finalizing the form of any and all marketing material, VES shall forward to
Cadillac a written proposal setting forth: (i) the proposed final form of the
material and (ii) the proposed manner in which the material is designed to be
used. Cadillac's approval of any such material submitted by VES must be given
to VES by Cadillac in writing.
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