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EXHIBIT 10.7
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 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. Granger, McMaster Carr, 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 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;
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Sales under $10,000 15% of the sale
Sales $10,000 - $20,000 $1,500 plus 12% of the amount of
the said 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.
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.
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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 without six (6) months of the employment of Robert
Teed 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.
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.
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3.4. Orders and Collections. Orders for products shall
be forwarded to and subject to inquiries and 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 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 compesnsation 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.
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
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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.
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 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
parities 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.
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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 note be deemed a waiver by such party of any
other provision or subsequent breach of the same 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.
CIC: CLARKSTONE INTERNATIONAL CORPORATION
BY: /s/ Linda L. Rose 2/25/00
Linda L. Rose Date
Vice President
Title
101 East Nora Ave., Spokane, Washington 99207
509-326-6654
THE COMPANY: EXHAUST TECHNOLOGIES, INCORPORATED
BY: /s/ Bob Sterling 2/25/00
Bob Sterling Date
President
Title
P.O. Box 2822, Spokane, WA 99220
509-838-4447
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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:
* a 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 electrical hook-up for lights and equipment)
* Equipment (Le.: lead machine)
* Event labor (should this be required)
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. Morgan Tire
8. Discount Tire
9. CPW, Inc. (Winston Tire)
10. Firestone Store, Inc.
11. Goodyear Tire, Inc.
12. Oreilly Auto Parts
13. Hefner Tire
14. Merchants Tire
15. Icarumba.com
16. Lucor, Inc.
17. Altons Tire
18. TBC (Big 0)
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. Purcell Tire
26. Lex Brodie Tire
27. Merlin Muffler
28. Econo Lube and Tune
29. Kar Kwik
30. Les Schwab
31. Mae Tools
32. Advanced Auto Parts, Inc.
33. CSK Auto, Inc.
34. Parts America.com
35. Meyers 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 of
soliciting Product sales.
