EXHIBIT 10.31
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AGREEMENT BY AND BETWEEN XXXXXXXXXX.XXX, INC., CDKNET, LLC,
JMC INVESTMENTS, LLC AND ARCADIA MARKETING, INC.
WHEREAS, XxxxxXxxxx.xxx, Inc., (V-Flash"), CDKnet, LLC. ("CDK"), JMC
Investments, LLC. ("JMC") and Arcadia Marketing, Inc., ("AMI") (collectively
"the Parties") hereby wish to enter into the following Agreement; AND
WHEREAS, the Parties acknowledge that JMC is an exclusive client of AMI and JMC
has been introduce to V-Flash and CDK by AMI; AND
WHEREAS, JMC desires to market V-Flash and CDK technologies to individuals,
companies or other entities, collectively designated as "JMC Clients" as set
forth on Exhibit A attached hereto; AND
WHEREAS, V-Flash and CDK acknowledges that JMC is an AMI client and V-Flash and
CDK desire JMC to market V-Flash and CDK technologies to JMC Clients,
NOW THEREFORE, the parties hereby agree to the following:
TERMS AND CONDITIONS:
I. PURPOSE OF AGREEMENT
The Parties desire to enter into this Agreement. The purpose of this Agreement
is to define the parameters by which JMC will market, and/or sell, V-Flash and
CDK technologies and/or services to specified clients as defined within this
Agreement. This Agreement also defines how all transactions with said clients
will be managed and how compensation will be paid from V-Flash and CDK to JMC
and/or AMI.
II. EXCLUSIVITY
II(a.) CLIENT LIST - JMC will communicate with a specified list of
individuals, corporations, and other entities as listed in Exhibit A. of this
Agreement entitled "JMC Client List". In addition to said JMC Client List, JMC
shall submit additional names of individuals, corporations and other entities to
V-Flash, CDK, and AMI as an addendum(s) to this Agreement on an ongoing basis.
Said addendum(s) shall become a binding part of this Agreement upon the mutual
written agreement of the Parties.
It is understood by the Parties that said JMC Client List is exclusive to JMC.
Furthermore, should any dispute arise regarding the exclusive right of JMC to
represent V-Flash or CDK technologies or services to said JMC Client List, by
any third party, or by any individual or corporate officer of V-Flash or CDK,
this Agreement will take precedence and will control in any such dispute and the
Parties shall adhere to all terms and conditions of this Agreement.
Additionally, should any individual or corporate officer from any entity
included on JMC Client List contact V-Flash or CDK directly, V-Flash or CDK
agree to promptly notify JMC and AMI of said contact. V-Flash and/or CDK upon
notification to JMC and AMI, may choose to pay additional compensation to a
third party who claims to represent a Client included on JMC Client List, but in
no way shall JMC and AMI forfeit their right to any
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compensation as a result of any Client usage of V-Flash or CDK technology, as
defined within the Agreement. Any payment by V-Flash or CDK to such third party
shall not reduce the amount of JMC and AMI compensation, or, the definition of
the term "gross" or "net", as defined herein.
II(b.) INITIAL CLIENT CONTACT - JMC shall request, in writing, initial
approval of a proposed client from CDK and/or V-Flash which shall be given in
writing by CDK and/or V-Flash within five business days or said written request.
Within ten business days of receipt of written approval. JMC agrees to provide
V-Flash, CDK and AMI with evidence of scheduled meeting date with any JMC
Client, to take place within sixty days of such approval, concurrent with JMC
Client being added to JMC Client List.
II(c.) TERMS OF EXCLUSIVITY - JMC agrees to provide V-Flash, CDK and
AMI with notification of a confirmed meeting date and time with each Client that
JMC submits for addition to JMC Client List. Said Clients shall remain exclusive
to JMC under the terms of the Agreement for an initial 45-day period. Should
Client maintain a substantive dialogue with JMC and V-Flash or CDK concerning
the use of V-Flash or CDK technologies and/or services, said 45-day exclusive
period shall be extended for a 3-month period. Said 3-month extended period
shall be repeated for additional 3-month periods upon the approval of V-Flash,
CDK and AMI, and while substantive dialogue is ongoing with said JMC Client.
Should Client utilize V-Flash or CDK technology and/or Services within said
exclusive period, said Client shall remain exclusive to JMC concurrent with the
duration of said Clients usage of any V-Flash or CDK technology or service and
for a period of 12 months after the date said Client (a) concludes all usage of
all V-Flash and CDK technology or service or (b) makes final payment for V-Flash
or CDK technology.
III. V-FLASH COMPENSATION
III(a.) PERCENTAGE OF REVENUE FROM ONGOING V-FLASH OPERATIONS OF
JMC/V-FLASH CLIENTS ("V-FLASH RESIDUALS") - JMC shall receive a percentage,
herein identified as V-Flash Residuals, of all collected V-Flash gross revenues
generated by each JMC Client. When calculating JMC's V-Flash residuals as
defined below, the "Year 1" period shall commence upon the initial receipt of
revenues by V-Flash from the respective JMC Client's V-Flash operations:
JMC V-FLASH RESIDUALS SCHEDULE
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Year 1: 5%
Year 2: 4%
Year 3: 3%
Year 4 and thereafter: 2.5%
III(b.) V-FLASH REVENUE - At present, V-Flash revenue is anticipated to
be comprised of: (1.) Monthly Client "Per User" Fees, and/or (2.) Percentages of
Advertising Revenue, and/or (3.) Percentage of Client and/or Other Commerce
Revenues. This list shall not be deemed exhaustive, and JMC's V-Flash residuals
will apply to all V-Flash revenue generated by JMC/V-Flash Clients without
regard to the composition of such revenue.
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III(c.) REPORTING V-FLASH RESIDUALS TO JMC AND AMI - JMC and AMI shall
receive a complete accounting from V-Flash or all gross revenues generated by
each JMC Client. IN addition, JMC and AMI shall receive a complete accounting
from V-Flash of all JMC Client activity with regard to Client's V-Flash usage
and operations. This shall include, but not be limited to, copies of all reports
provided by V-Flash to Client. Any report or accounting identified within this
paragraph shall be sent by V-Flash to JMC and AMI on a monthly basis.
Additionally, V-Flash agrees to provide to JMC and AMI copies of all contracts
and agreements, purchase orders, and/or all invoices and any modification
thereto and amendments thereof with regard to Client's V-Flash usage and
operation promptly upon receipt of same. JMC and AMI shall provide copies of all
relevant correspondence and documentation to V-Flash. JMC and AMI shall also
have the right to audit the records of V-Flash with regard to JMC's Client's
usage and revenue generated via Client's V-Flash Operations. Any audit shall be
performed once per quarter, upon notice, and during regular business hours.
III(d.) V-FLASH RESIDUALS PAYMENT TERMS - V-Flash shall pay to JMC the
V-Flash Residuals due to JMC from each JMC Client's V-Flash operations on a
month basis within 10 business days following the end of each calendar month.
For example, all V-Flash Residuals earned by JMC during the month of January
would be paid to JMC within the first 10 business days of February.
III(e.) V-FLASH STOCK OPTIONS FOR CLIENT AGREEMENTS: JMC shall receive
2,500 Stock Options from V-Flash for any JMC Client that becomes a V-Flash
Client by signing the standard V-Flash "Client Letter of Agreement" (sample
attached) or other agreement which shall be provided by V-Flash.
A total of 40,000 V-Flash Stock Options shall be available for issuance
to JMC based on Client Agreements.
III(f.) V-FLASH STOCK OPTIONS BASED ON V-FLASH REVENUES: JMC shall
receive Stock Options when V-Flash Revenues are generated by JMC Clients. Said
Stock Options base on V-Flash Revenues shall be issued on a pro-rate basis using
the ratio of 1 Stock Option for every $40 of V-Flash Revenues. Stock Options
shall be issued and delivered on a quarterly basis.
For example: JMC Clients generate $1,000,000 of V-Flash Gross Revenues,
therefore, JMC would receive 25,000 Stock Options.
A total of 62,500 V-Flash Stock Options shall be available for issuance
to JMC based on V-Flash Revenues.
III(g.) V-FLASH STOCK OPTION PRICING: JMC's V-Flash Stock Options shall
be exercisable for 5 years and shall have an exercise price of $2.00 per share.
Any Options issued to JMC pursuant to this Agreement will contain standard
representations and warranties by V-Flash and customary shareholder protections
and anti-dilution protections.
III(h.) 5% CASH BONUS: JMC shall receive an additional 5% of all earned
V-Flash Revenues, generated by JMC Clients which in the aggregate are in excess
of $5,000,000 in the first two years of this Agreement. V-Flash shall pay to JMC
said 5% Cash Bonus
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within 10 business days following the end of each calendar month in which said
Cash Bonus has been achieved and collected or from which a credit has been
received.
IV. CDK COMPENSATION
IV(a.) PAYMENT FOR CDK PRODUCT/PERCENTAGE AND DISTRIBUTION OF CLIENT
REVENUES
IV (a1.) CDK PAYMENT TERMS
The following represents the percentage of Net Revenue to be allocated
to the Parties from any JMC Client sale: Net Revenue is hereinafter defined as
total gross revenues paid for CDK CD Units and/or CDK technology, less the
actual cost of manufacturing the CD's at a third party CD replication facility.
CD Manufacturing costs shall consist of out of pocket replicating, packaging,
and shipping and handling costs. CDK shall provide JMC and AMI, in a timely
fashion, with copies of all documentation related to the purchase of services
from said third party CD replication facility which will verify total
manufacturing costs. Any discounts or commissions received by and/or paid to CDK
by said third party CD replication facility shall be considered part of Net
Revenue and shall be included in calculating final Net Revenue. Should CDK not
utilize a third party replication facility, and CD's are replicated by CDK,
manufacturing costs shall consist of any direct cost, including but not limited
to cost of physical CDs, packaging, and shipping and handling costs. CDK shall
provide JMC and AMI, in a timely fashion, with copies of all documentation which
will verify CDK's total manufacturing costs as defined. The following identifies
the corresponding allocations of said Net Revenue to the Parties:
PERCENTAGE OF CDK NET REVENUE ALLOCATED TO CDK, JMC AND AMI:
JMC: 1/3 of Net Revenue
AMI: 1/3 of Net Revenue
CDKnet: 1/3 of Net Revenue
Should any JMC Client that purchases CDK technology, also use V-Flash
Technology, the above allocation of CDK Net Revenue shall remain the same.
IV(a2.) CLIENT PAYMENT TERMS
The Parties agree that Clients will be presented with the following
standard payment terms for purchase of any CDK technology and/or services. Said
payment terms may be adjusted for specific Clients, per the mutual consent of
the Parties.
One-third of Total Product Cost, identified as Initial Client Payment,
will be due from Client to CDK upon delivery of Client Purchase Order.
One-third of Total Product Cost identified as Second Client Payment,
will be due from Client to CDK upon deliver to Client of Final CDK Product
Proof.
One-third of the Total Product Cost, plus any applicable shipping
charges, identified as Final Client payment, will be due from Client to CDK upon
delivery of CDK technology and/or product to Client.
IV(a3.) CDK PAYMENT TERMS TO JMC AND AMI
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CDK shall pay to JMC and AMI their Percentage of Net Revenue from each of the
above referenced Client Payments within 10 business days of collection of each
said Client Payments by CDK. Additionally, CDK agrees to provide to JMC and AMI
copies of all contracts and agreements, purchase orders, and/or all invoice and
any modification thereto and amendments thereof with regard to Client's V-Flash
usage and operation promptly upon receipt of same. JMC and AMI shall provide
copies of all relevant correspondence and documentation to CDK. JMC and AMI
shall also have the right to audit the records of CDK with regard to JMC's
Client's usage and revenue generated via Client's CDK purchases. Any audit shall
be performed once per quarter, upon notice, and during regular business hours.
IV(b.) CDK STOCK OPTIONS: (for purposes of this paragraph in connection
with issuance of Stock or Options. "CDK" shall mean XXXxxx.xxx, Inc.) CDK shall
allocate 125,000 Stock options of CDK common stock, or its equivalent, to JMC
that will be issued as follows:
IV(b1.) STOCK OPTIONS BASED ON CDK REVENUES - JMC shall receive CDK
Stock Options when CDK Gross Revenues are generat6ed by JMC Clients. Said CDK
Stock Options based on CDK Gross Revenues shall be issued on a pro-rate basis
using the ratio of 1 CDK Stock Option for every $200 of CDK Gross Revenues.
Stock Options shall be issued and delivered on a quarterly basis.
FOR EXAMPLE: JMC shall receive 5,000 CDK Stock Options for every
$1,000,000 of CDK Gross Revenues generated by JMC Clients.
IV(b2.) STOCK OPTIONS BASED ON CDK UNITS - JMC shall receive CDK Stock
Options when CDK units are produced, and a per-unit fee has been charged to a
JMC Client. Said CDK Stock Options based on CDK per-unit sales shall be issued
on a pro-rate basis using the ratio of 1 CDK Stock Option for every 200 CDK
units produced.
FOR EXAMPLE: JMC shall receive 5,000 CDK Stock Options for every
1,000,000 CDK units produced in which a per-unit fee was charged to JMC Client.
IV(b3.) ITEMS (B1.) AND (B2.) may occur concurrently, in which CDK will
issue CDK Stock Options to JMC based on both Gross Revenues and total number of
CDK units produced, as in the following example:
FOR EXAMPLE: JMC's client orders 1,250,000 CDK units, which generate
$1,100,000 of Gross Revenues to CDK. As a result, CDK issues 11,750 CDK Stock
Options to JMC.
IV(b4.) CDK agrees to issue 500 CDK Stock Options to JMC in which any
JMC Client cause CDK technology to be used, and no "per unit fee has been
charged by CDK.
FOR EXAMPLE: A JMC Client requests a CDK CD-R master to be produced by
CDK for which CDK charges said client a flat fee. As a result, CDK issues 500
CDK Stock Options to JMC.
IV(c.) CDK STOCK OPTION PRICING: JMC's CDK Stock Options shall be
exercisable for 5 years and shall have an exercise price of $1.69 per share. Any
Options issued to JMC pursuant to this agreement will contain standard
representations and warranties by CDK and customary shareholder protections and
anti-dilution protections.
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V. JMC COMPENSATION FOR IDENTIFYING V-FLASH OR CDK INVESTORS - V-Flash
or CDK shall pay to JMC 2.5% of the total Investment into V-Flash or CDK by
Individuals, corporations, or other entities identified or introduced by JMC to
V-Flash or CDK. If such Investment is other than cash, then the value of such an
Investment for purposes of this subparagraph shall be equivalent to the actual
or implied valuation of the securities or other consideration received by
V-Flash or CDK from such an Investor at the time said consideration and/or
securities are received. V-Flash or CDK shall pay to JM the w.5% Fee upon the
collection by V-Flash or CDK of an Investment by the Investing Party. If
Investment is a cash Investment, JMC may elect to receive said compensation from
CDK or V-Flash in the form of cash or Stock Options, or a combination thereof.
If Investment is other than cash, compensation to JMC shall be in the form of
said Investment. Said Stock Options in either V-Flash or CDK shall have an
exercise price as described herein, and will be additional to JMC's total
allocation of V-Flash and CDK Stock Options as described herein. V-Flash or CDK
shall pay to JMC the 2.5% Fee within 10 business days of collection of any
Investment. V-Flash and CDK are not obligated to accept any Investment
introduced by JMC.
VI. V-FLASH AND CDK PRODUCT UPDATE/NEW PRODUCT/PRODUCT NAME ALTERATION
V-Flash and CDK agree to inform JMC and AMI of the following as
promptly as practicable: Updates or advancements of existing V-Flash and CDK
technology, products, and services; New V-Flash and CDK technology, product(s),
and services; Alterations and/or changes to the name or identity of existing
V-Flash and CDK technology, products, and services.
VII. TRANSFER OF RIGHTS / CHANGE OF OWNERSHIP
This Agreement shall survive any transfer of ownership of V-Flash or
CDK by means of acquisition, transfer of shares, or merger by any third party.
V-Flash and CDK will inform said third party of existence of this agreement and
inform JMC and AMI of any potential conflicts of interest issues related to said
transfer of V-Flash and/or CDK ownership.
VIII. TERM AND CONTINUING PROVISIONS
This Agreement shall have a term of 24-months, at which time the
Parties agree to discuss future agreements between the Parties. However, this
24-month term is inapplicable as to any provision of this Agreement that by its
terms extends beyond the 24-month period. This includes, but is not limited to,
JMC's compensation terms as it relates to V-Flash Residuals, indemnification
provisions, and JMC Client exclusively as described herein. It is understood by
the Parties that 24-month term will in no way ever, impact or effect the ongoing
provisions of this Agreement, which shall survive the expiration of said
24-month agreement. It is agreed that any JMC compensation shall be due and
payable to JMC by V-Flash and CDK on an ongoing basis as described here in. It
is understood by the Parties that JMC compensation described in this paragraph
does not include Stock Options, and/or cash bonuses.
IX. V-FLASH / CDK NOT OBLIGATED TO ACCEPT CLIENT
It is understood by the Parties that nothing herein shall obligate
V-Flash or CDK to transact any business with any client introduced by JMC.
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X. WARRANTS AND REPRESENTATIONS
X(a). INDEMNIFICATION - V-Flash and CDK hereby indemnifies and holds
JMC and AMI harmless from and against any and all damages, including reasonable
attorney's fees, arising from or in connection with any claims, damages, or lose
claimed by any JMC Client pursuant to JMC's and AMI's activities as described
herein, and/or as a result of Client purchase of V-Flash or CDK technology,
product, and/or service. JMC and/or AMI assume no responsibility for the
performance of V-Flash or CDK technology, product, and/or service. JMC and/or
AMI shall not be liable for any damages caused by the use of V-Flash or CDK
technology, product and/or service, by any JMC Client or any other third party.
X(b). PARTNERSHIP / JOINT VENTURE - Nothing contained herein shall be
construed as constituting a partnership or join venture between any of the
Parties.
X(c). TRADEMARKS - It is understood that JMC has no rights to the
trademark(s) copyrights, or patents of V-Flash or CDK, and that no transfer of
any rights to said trademarks copyrights, or patents is made herein.
X(d). INTERPRETATION / MODIFICATION - This Agreement shall be governed
by and construed in accordance with the laws of the State of New Jersey
regardless of the place of physical execution. Additionally, this Agreement may
not be changed or modified except by an instrument in writing signed by the
parties hereto.
X(e). This Agreement and any exhibits attached hereto comprise the
entire Agreement between the Parties and shall supercede and take the place of
any other Agreements between the Parties.
X(f). REPRESENTATION AS TO ABILITY TO ENTER AGREEMENT
V-Flash and CDK hereby warrant and represent that V-Flash and CDK are
under no disability, restriction or prohibition, whether contracted or
otherwise, with regard to V-Flash's and CDK's right to enter into this Agreement
and to perform each and every term and provision hereof.
JMC hereby warrants and represents that JMC is under no disability,
restriction or prohibition, whether contracted or otherwise, with regard to
JMC's right to enter into this Agreement and to perform each and every term and
provision hereof.
AMI hereby warrants and represents that AMI is under a disability,
restriction or prohibition, whether contracted or otherwise, with regard to
AMI's right to enter into this Agreement and to perform each and every term and
provision hereof.
X(g). AGREEMENT BINDING ON SUCCESSORS AND ASSIGNS - This Agreement
shall be binding and Inure to the benefit of the Parties, their successors and
assigns.
X(h). NOTICES - Any notice provided under this Agreement shall be in
writing. All notices shall be by either overnight mail, certified mail, telefax,
e-mail or personal deliver. The certified mail shall be effective within three
business days of sending. The overnight mail, telefax and e-mail shall be
effective within two
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business days of sending. Personal delivery will be effective upon delivery.
Notices to the parties shall be addressed as follows:
Xxxxxxx Xxxxxxx
Arcadia Marketing, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
000-000-0000 Phone
000-000-0000 Fax
xxxxxxxx@xxxxxxxxxxxxxxxx.xxx E-mail
Xxxxxxx Xxxxx with a copy to: Xxxxxx X. Xxxxxxxx, Esq.
CDKnet, LLC 000 Xxxxxx Xxxx Xxxxx
000 Xxxx 00xx Xxxxxx Xxxxx 000
Xxxxx 0000 Xxxxxx Xxxx, XX 00000
Xxx Xxxx, XX 00000 (000) 000-0000 Phone
000-000-0000 Phone (000) 000-0000 Fax
000-000-0000 Fax xxxxxxxxx@xxxxxx.xxx E-mail
Xxxxxxx@xxxxxx.xxx E-mail
Xxxxxxx Xxxxx with a copy to: Xxxxxx X. Xxxxxxxx, Esq.
XxxxxXxxxx.xxx, Inc. 000 Xxxxxx Xxxx Xxxxx
000 Xxxx 00xx Xxxxxx Xxxxx 000
Xxxxx 0000 Xxxxxx Xxxx, XX 00000
Xxx Xxxx, XX 00000 (000) 000-0000 Phone
000-000-0000 Phone (000) 000-0000 Fax
000-000-0000 Fax xxxxxxxxx@xxxxxx.xxx E-mail
Xxxxxxx@xxxxxx.xxx E-mail
Xxxx Xxxxxxxx
JMC Investments, LLC
000 Xxxxx Xxxx
Xxxxxxxxx, XX 00000
000-000-0000 Phone
000-000-0000 Fax
xxx@xxxxxxx.xxx E-mail
X(I). MODIFICATION: WAIVER - Any modification or waiver of terms
contained in this Agreement shall not operate or be construed so as to permit
any subsequent modification or waiver of any such terms.
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NOW,THEREFORE, show your agreement with the foregoing by signing where indicated
below thereby causing this letter to become a binding Agreement between V-Flash,
CDK, JMC, and AMI.
Agreed and accepted:
XxxxxXxxxx.xxx, Inc.
By: /s/ Xxxx Xxx-Xxxx Title: CEO
-------------------------- -----------------------
(Signature)
Xxxx Xxx-Xxxx Date: 5/4/2000
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(Print or type name)
CDKnet, LLC.
By: /s/ Xxxx Xxx-Xxxx Title: CEO
-------------------------- -----------------------
(Signature)
Xxxx Xxx-Xxxx Date: 5/4/2000
------------------------------- -----------------------
(Print or type name)
JMC Investments, LLC.
By: Title:
-------------------------- -----------------------
(Signature)
Date:
------------------------------- -----------------------
(Print or type name)
Arcadia Marketing, Inc.
By: Title: President
-------------------------- -----------------------
(Signature)
Date: CEO
------------------------------- -----------------------
(Print or type name)
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EXHIBIT A - JMC CLIENT LIST
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Exhibit A is intended to be attached to an supplement the terms of the Agreement
between V-Flash, CDK, AMI, and JMC. The Agreement and any subsequent addenda
thereto shall be referred to as "Agreement". This Exhibit A shall be referred to
as "JMC Client List". Said JMC Client List is exclusive to JMC as described in
section II. Of this Agreement.
JMC CLIENT LIST
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Blockbuster Inc.
SFM Media
Havas Advertising
Grey Advertising
FCB Worldwide
Bozell Worldwide
Xxxxxx & Xxxxx
NY Times Magazine Group
Golf Digest
American Airlines
Harpo Productions
Hachette Filipacchi
Xxxxxx Xxxxxxx
Media Edge
Reader's Digest
Connecticut Marketing Group (Xxxx Xxxx)
People Magazine
Hearst Magazines
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Fortune Magazine
United Airlines
Money Magazine
XXXXxxxxxx.xxx
Staples
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