THIS AGREEMENT (this "Agreement") for the distributorship of ULTIMATE ME2
is made and entered into as of November 28, 2006, by and between MACH 3
TECHNOLOGIES GROUP, LLC. a limited liability company duly registered in
the State of Nevada, hereinafter called MACH 3 and Essentially Yours
Industries Inc., hereinafter called DISTRIBUTOR.
R E C I T A L S:
WHEREAS, MACH 3 has acquired the authority and developed a certain
line of ecological product as a fuel enhancement catalyst for automotive
and other internal combustion engines, called "ULTIMATE XX0"
(XX EPA Registration #204320001), hereinafter called the PRODUCT.
The PROUDCT is a fuel additive completed with a set of fuel saving and emission
test reports on gasoline, diesel and bio-diesel fueled vehicles in accordance
with EPA 511 (including FTP-75), SAE Type II J1321, 40 CFR 86 and California
Title 13 Test Protocols by Automotive Testing and Development Services, Inc.
(ATDS), an independent testing laboratory recognized by the US EPA and the
California Air Resources Board (CARB).
MACH 3 has the exclusive worldwide rights under license from Xxxxxx Xxxxx to
manufacture and to distribute the PRODUCT and its future generation of
improvement from time to time, and desires the assistance of DISTRIBUTOR
in its efforts to market and distribute the PRODUCT.
1. RELATIONSHIP.
1.1 Appointment.
Upon the terms, and subject to the terms and conditions, contained
herein, MACH 3 hereby appoints DISTRIBUTOR as a distributor of the PRODUCT
in the Philippines. The rights granted hereunder shall permit DISTRIBUTOR
to market and to sell the PRODUCT anywhere in the Philippines exclusively
for the individual residential market, provided that an initial order not
days of the execution of this Agreement. It is also further understood and
agreed that such exclusive marketing rights can be extended to the
Philippine military armed forces market provided that an initial order for
the Philippine military armed forces market not less than 36,288 x 14 oz.
bottles of the PRODUCT or the equivalence in 2 liter, 20 liter and/or
210 liter containers within 60 days of the execution of this agreement.
1.2 Acceptance of Appointment. DISTRIBUTOR hereby accepts the
appointment as provided in Section 1.1 above, and hereby agrees fully
and faithfully to perform and discharge all of its duties, obligations
and responsibilities as set forth in this Agreement. It is understood
and agreed that the Authorized Distributor status is maintained with
special privileges to order the PRODUCT at the Special Authorized
Distributor Prices as shown in Schedule A, which may be revised from
time to time with minimum 60 days written notice. If the increase is
more than 5%, then Mach 3 shall provide the DISTRIBUTOR with 90 days
written notice. DISTRIBUTOR hereby also acknowledges the proprietary and
intellectual property rights of MACH 3 in the PRODUCT as well as the
exclusive distribution rights of MACH 3 and Chinaoil (USA) Inc. in the
said PRODUCT.
1.3 Competing Products. During the term of this Agreement,
DISTRIBUTOR and all officers, directors, shareholders, employees, agents
or representatives of a company to be formed (collectively, "Agents"), and
any entity in which DISTRIBUTOR or any of its Agents has a direct or
indirect controlling ownership interest, shall not, directly or indirectly,
promote, sell or distribute any fuel additive or similar product(s) which
are directly competitive with the PRODUCT. Any such violation by the
DISTRIBUTOR shall have the DISTRIBUTOR immediately deemed to be in default
of this Agreement.
1.4 Independent Contractor. The relationship of MACH 3
and DISTRIBUTOR established by this Agreement is that of independent
contractors. Nothing contained in this Agreement shall be construed to
(a) give either party hereto the power to direct and control the day to
day activities of the other, or (b) constitute the parties as partners,
joint ventures, co owners or otherwise as participants in a joint or
common undertaking. Neither party hereto nor any of its Agents is the
representative of the other party for any purpose except as MACH 3 has
set forth in this Agreement, and has no power or authority as agent,
employee or in any other capacity to represent, act for, bind, or
otherwise create or assume an obligation on behalf of the other for
any purpose whatsoever. All financial obligations associated with
Distributor's business are the sole responsibility of DISTRIBUTOR.
All sales and other agreements between DISTRIBUTOR and its customers
are DISTRIBUTOR's sole responsibility and shall have no effect on
MACH 3's obligations under this Agreement. MACH 3 shall substantiate
and be responsible for any information and/or claims provided to the
DISTRIBUTOR.
1.5 Product Development. From time to time DISTRIBUTOR may
recommend certain packaging modifications to existing PRODUCT and
MACH 3 shall work with DISTRIBUTOR to coordinate in developing same
into viable commercial products to the extent that MACH 3 believes
such recommendations are viable. The use of the PRODUCT labels must
comply with the provisions of 8.4 and 8.5, as applicable. No
representations regarding the PRODUCT shall be made in any private
label or branded marketing materials, packaging etc. without the
prior written approval of MACH 3, which approval shall not be
unreasonably withheld.
1.6 Promotional Duties.
(a) DISTRIBUTOR shall (i) exert its best efforts consistent
with sound business planning and projected profitability and sales
potential to introduce and diligently advertise, promote, sell,
distribute, and service (collectively, "Marketing") the PRODUCT,
(ii) make use of, and disseminate to its existing customers, and
to potential purchasers, all promotional materials, if any,
supplied by MACH 3, and (iii) cooperate with MACH 3 in activities
directed toward the Marketing of the PRODUCT. At MACH 3's request,
DISTRIBUTOR shall make immediately available to MACH 3 copies of
all print and electronic Marketing materials used by it for the
PRODUCT.
(b) DISTRIBUTOR shall at all times demonstrate and otherwise
represent the PRODUCT fairly and accurately in comparison with
competitive products from other manufacturers, shall make no false
or misleading representations with regard to the PRODUCT, and shall
not make any representations with respect to the specifications,
features or capabilities of the PRODUCT which is not consistent with
those described in the product literature or other material supplied
by MACH 3.
(c) MACH 3 shall assist DISTRIBUTOR in its efforts by making
available reasonable quantities of such marketing materials as MACH
3 has developed and/or jointly developing such marketing materials
with DISTRIBUTOR as DISTRIBUTOR may recommend.
1.7 Technical Support. MACH 3 shall provide DISTRIBUTOR
with such technical support regarding the PRODUCTS as is reasonably
necessary for DISTRIBUTOR to assist MACH 3 under this Agreement,
including but not limited to copies of all applicable test results
of PRODUCT.
1.8 Reporting Obligations of DISTRIBUTOR. DISTRIBUTOR
shall provide to MACH 3, no later than the fifteenth (15th) day of
each calendar month, as to the following month, DISTRIBUTOR's sales
projection reports setting forth the non binding projected sales of
each size of the PRODUCT for the next 2 months for Mach 3 to make
reasonable preparations, as well as such other information that MACH
3 may reasonably request from time to time.
2. PURCHASE OF PRODUCT
2.1 Ordering Procedure. Purchase of PRODUCT shall be made
by DISTRIBUTOR by means of Purchase Orders submitted to MACH 3. Each
such Purchase Order shall specify the number of units of the PRODUCT
ordered by DISTRIBUTOR, the desired date and location of delivery,
which shall have a minimum time spans of 60 days from the date of
order. MACH 3 shall use its best efforts to comply with the
requirements of DISTRIBUTOR on the terms and conditions of this
Agreement. However, MACH 3 shall not be responsible for any delay of
delivery due to acts of God and/or any situations beyond its
reasonable control as more particularly described in Item 16 herein.
2.2 Purchase Order The DISTRIBUTOR shall submit each Purchase
Order for the PRODUCT. No additional or conflicting terms or
conditions may be proposed by DISTRIBUTOR in or in connection with
any Purchase Order, and no such additional or conflicting terms or
conditions shall be binding upon MACH 3 without its prior written
consent.
2.3 Productions, Supply and Delivery of PRODUCT. During the
term of this Agreement or thereafter, MACH 3 reserves the right,
without obligation or liability to MACH 3, to manufacture, produce,
warehouse or source the PRODUCT initially in California and later
at any worldwide location, including locations outside of the United
States of America. The PRODUCT ordered by DISTRIBUTOR shall be
delivered F.O.B. place of manufacturing. However, the freight for
any products produced outside the United States shall not exceed
the freight from California. MACH 3 further reserves the right,
in its sole discretion with thirty (30) days prior written notice
to modify and/or improve the PRODUCT and one hundred and twenty
(120) days prior written notice to DISTRIBUTOR, to discontinue
the production of any superceded version of the PRODUCT.
2.4 Titles and Risk of Loss. Title to the PRODUCT thus
ordered and all risk of loss shall pass from MACH 3 to DISTRIBUTOR
at the time and place of MACH 3's delivery of the PRODUCT to a
common carrier for delivery to DISTRIBUTOR in accordance with the
delivery terms prescribed in each purchase order, notwithstanding
that MACH 3 may retain rights of possession or repossession to
ensure collection of the purchase price thereof. DISTRIBUTOR
shall be solely responsible for insuring the PRODUCT after
delivery to a common carrier for delivery to DISTRIBUTOR.
DISTRIBUTOR shall designate the common carrier used for
transportation of the PRODUCT. MACH 3 shall not be responsible
for any delay caused by the carrier.
2.5 Inspections and Rejection. Upon written notice from
MACH 3 that the PRODUCT on order is ready for delivery at the
factory gate, DISTRIBUTOR or its representative shall have 3
business days to carry out inspections (for approval or rejection)
of the PRODUCT for compliance with the specifications of the
packaging for quality control as indicated in the PURCHASE ORDER,
which has been accepted by MACH 3.
3. PRICING STRUCTURE OF PROUCT.
3.1 It is understood and agreed that confidentiality of
the Special Authorized Distributor Price structure of the PRODUCT
is for the mutual protection of DISTRIBUTOR as the Exclusive MLM
distributor and MACH 3. Violation of such confidential information
by any authorized sub-distributors, DISTRIBUTOR itself, or any of
its personnel shall be deemed to be in default. DISTRIBUTOR shall
be responsible to regulate such violation(s). Failure by
DISTRIBUTOR to regulate any such parties shall have DISTRIBUTOR
deemed to be in default of this Agreement. DISTRIBUTOR will
therefore be fully and solely responsible to all consequences and
remedies. The Special Authorized Distributor Price list of
PRODUCT is subject to change upon sixty (60)-calendar days notice.
3.2 UNIFORM RETAIL PRICE STRUCTURE. It is understood and
agreed that all parties hereto will maintain a Uniform Retail
Price structure set jointly by MACH 3 and DISTRIBUTOR in order
to maintain a stable market condition of the PRODUCTS for the
protection of all parties. Violation to sell the PRODUCTS by
DISTRIBUTOR and/or any other sub-distributors at discounts
unauthorized by MACH 3 is prohibited. Any repeated violation
after written warning would constitute the violating party in
default of this Agreement. DISTRIBUTOR and/or any other authorized
sub distributors shall, however, be allowed to market and sell
product at prices that are more expensive than the Uniform Retail
Price structure.
3.3 SCHEDULE A herewith attached and known as
"The Special Distributor Price List of Ultimate ME2" and its
subsequent revisions, if any, shall be an integral part of this
Agreement.
4. PAYMENT FOR PRODUCTS.
4.1 Payment Terms.
i) DISTRIBUTOR shall pay by cash or cashier's check or wire transfer
directly into MACH 3 appointed bank account for the full amount of
the purchase up to the amount of $100,000 upon submitting the Purchase
Order, exclusive of shipping costs.
ii) For orders exceeding $100,000, exclusive of shipping costs,
DISTRIBUTOR shall elect to pay in full of the Purchase Order by wire
transfer or to pay a deposit equal to FIFTY PERCENT (50%) of the Purchase
Order together with an irrevocable letter of credit ("ILOC") for the
balance FIFTY PERCENT (50%) acceptable to the bank or banking agent
of Mach 3 plus shipping costs, if any. MACH 3 may assign such ILOC
to any party and upon commencement of manufacturing of the PRODUCT so
ordered by DISTRIBUTOR and to collect the balance 60% of the total
purchase order guaranteeing payment by such ILOC upon delivery of
the PRODUCT to the common carrier F.O.B. of MACH 3's premises of
manufacturing or warehousing. The ILOC shall be directly cashable.
The irrevocable letter of credit provisions as described above may
be substituted by cash and/or cashier's checks or other means
acceptable to MACH 3.
iii) In lieu of providing an ILOC to MACH 3 to guarantee payment
for the balance of any Purchase Order of PRODUCT as stipulated
herein above in 4.1(ii), DISTRIBUTOR may choose to provide an
irrevocable assignment of its own receivables in a form acceptable
to MACH 3 and equal to a minimum of 125% of the outstanding balance
of the Purchase Order(s) to guarantee such payment. DISTRIBUTOR shall
be responsible to pay any and all reasonable expenses incurring from
such arrangement. In the event of any late payment or settlement,
DISTRIBUTOR shall pay 2.5% interest per month on any outstanding
balance owed to MACH 3. It is also understood and agreed that such
privilege extended to DISTRIBUTOR will automatically terminate and
DISTRIBUTOR shall be deemed in default of this Agreement should
DISTRIBUTOR fail to make the outstanding balance of payment of
the Purchase Order within 60 calendar days from the date that the
outstanding balance is due and payable.
5. REPRESENTATIONS AND WARRANTIES. DISTRIBUTOR represents
and warrants to MACH 3 that it: (a) has full and unrestricted
authority to enter into this Agreement and, by executing, delivering
or performing under this Agreement, it will not breach any agreement
to which it is currently a party; (b) has the legal right, free of
any right or interest of any third party, to perform its obligations
hereunder; and (c) currently is in material compliance with all
applicable Laws and has received all applicable product safety
certifications and registrations from appropriate governmental
entities necessary to perform its obligations under this Agreement.
MACH 3 represents and warrants to DISTRIBUTOR that it: (a) has
full and unrestricted authority to enter into this Agreement and,
by executing, delivering or performing under this Agreement, it
will not breach any agreement to which it is currently a party;
(b) has the legal right, free of any right or interest of any
third party, to perform its obligations hereunder; (c) currently
is in material compliance with all applicable Laws and has received
all applicable product safety certifications and registrations from
appropriate governmental entities necessary to perform its obligations
under this Agreement, and, (d) has legal ownership of the Products,
free and clear of any right or interest of any third party whatsoever.
5.1 AUTHORITY TO EXECUTE CONTRACT:
It is represented herein that Xxxxxx Xxxxx has the full and
complete authority to bind MACH 3 in executing the Distributorship
Agreement and any other related agreements with DISTRIBUTOR.
It is also represented herein that Xxx Xxxxxxxx has the full and
complete authority to bind DISTRIBUTOR in executing this
Distributorship Agreement and any other related agreements with
MACH 3.
6. CONFIDENTIAL INFORMATION.
6.1 Definition. The Parties recognize that the relationship
created by this Agreement may involve access by the parties to
information of substantial value to each other, including, but not
limited to, designs, drawings, plans, software, programs, material
and manufacturing specifications, devices, trade secrets, applications,
formulae, know-how, methods, techniques, and processes (whether
related to product Patents (as such term is hereinafter defined),
or otherwise), as well as financial, business, marketing and product
development information, and customer lists including contact lists
provided to MACH 3 relating to the Products (collectively,
"Confidential Information"), provided that Confidential Information
shall not include information:
(a) In the public domain or which subsequently falls into
the public domain;
(b) Specifically intended by MACH 3 for disclosure to
customers of DISTRIBUTOR;
(c) Which the recipient can prove was known through a source
independent of the disclosing party prior to any communication by
the disclosing party; or
(d) Disclosed to the recipient in good faith by a third
party having a legal right to do so.
6.2 Non-Disclosure. The Parties acknowledge and agree
that they own all rights, title and interest in and to their Confidential
Information. The Parties further agree that they shall (i) maintain the
secrecy and confidentiality of all Confidential Information which comes
to its attention, (ii) take all necessary precautions to prevent any
disclosure of Confidential Information by any of its Agents, and (iii)
during the term of this Agreement and for so long as Confidential
Information does not enter into the public domain through no act or
omission of DISTRIBUTOR, neither publish, disclose nor disseminate any
part of such Confidential Information, which shall include but not
limited to the Supply Price List of PRODUCT supplied by MACH 3 to
DISTRIBUTOR , in any manner, or use the same, without the prior written
consent of MACH 3. Failure in strictly observing the obligation of
non-disclosure of any secret and confidential information without
the written consent of the other party shall result the disclosing
party deemed in default of this Agreement. The disclosing party shall
then be fully responsible for all consequences.
6.3 Injunctive Relief. The Parties understand and agree
that the Confidential Information has special value, the loss of
which cannot be reasonably or adequately compensated in damages or
in an action at law, and therefore, in the event of any breach or
violation of the provisions of this Section 6 by any party to this
Agreement, the other party shall be entitled to equitable relief by
way of injunction without bond and without the necessity of proving
actual damages, in addition to, and not in limitation of, any other
relief or rights to which they may be entitled. The terms and
provisions of this Section 6 shall survive any termination or expiration
of this Agreement.
7. PRODUCT WARRANTY. MACH 3 warrants and guarantees that all
products supplied to DISTRIBUTOR to be free of any design and/or
manufacturing defects. Products that have been paid for and delivered
to DISTRIBUTOR, in the sole opinion of MACH 3, found to be defective
shall be replaced to DISTRIBUTOR by MACH 3 at no extra charge to
DISTRIBUTOR.
8. TRADEMARKS.
8.1 MACH 3's Marks and the Trademarks of ULTIMATE ME2. It is
understood and agreed that MACH 3 owns or has the right to use certain
trademarks, service marks and/or trade names in connection with the
distribution, sale and promotion of the PRODUCT.
8.2 Use of MACH 3's Marks and/or the ULTIMATE ME2 Trademarks
of the PRODUCT by DISTRIBUTOR. MACH 3 hereby assigns to DISTRIBUTOR
a non exclusive right and license to use the MACH 3'S Marks AND
Trademarks of the PRODUCTS during the term of this Agreement only in
connection with the Marketing of the PRODUCT including in the name of
MACH 3. This right and license shall not be assignable or transferable
by, or subject to any encumbrance of, DISTRIBUTOR in any manner
whatsoever, nor shall DISTRIBUTOR have the right to grant any
sublicenses without MACH 3's prior written consent. All rights with
respect to the MACH 3's Marks and the Trademarks of the PRODUCT and
all other trademarks, service marks and trade names used by MACH
3 not specifically granted to DISTRIBUTOR in this Agreement
shall be and hereby are reserved (ii) within thirty (30) days
of the expiration or other termination of this Agreement
DISTRIBUTOR shall change its name so as to no longer include
MACH 3's Marks and/or ULTIMATE ME2 Trademarks after the DISTRIBUTOR
has complete the sale of all remaining inventory or 6 months from
the date of expiration or early termination of this Agreement,
whichever may come sooner.
8.3 Acknowledgment of Ownership. DISTRIBUTOR acknowledges
that (i) MACH 3 owns the MACH 3's Marks and the ULTIMATE ME2 Trademarks
of the PRODUCT and all goodwill associated with or symbolized by the
MACH 3's Marks and the Trademarks of the PRODUCTS, (ii) MACH 3 owns
the MACH 3 Marks and Trademarks of the PRODUCT and all goodwill
associated with or symbolized by the MACH 3 Marks, (iii) DISTRIBUTOR
has no ownership right in or to any of the MACH 3 Trade Marks and/or
MACH 3 Marks, (iv) DISTRIBUTOR shall acquire no ownership interest
in or to any of the MACH 3 Marks and/or the ULTIMATE ME2 Trademarks
of the PRODUCT by virtue of this Agreement, and (v) DISTRIBUTOR
acknowledges that the MACH 3's Marks and the ULTIMATE ME2 Trademarks
of the PRODUCT have acquired secondary meaning. DISTRIBUTOR shall
do nothing inconsistent with MACH 3's ownership of the MACH 3 Marks
and the ULTIMATE ME2 Trademarks of the PRODUCT related goodwill
and agrees that all use of the MACH 3 Marks and the Trademarks of
the PRODUCT by DISTRIBUTOR shall inure to the benefit of MACH 3.
Nothing in this Agreement shall be deemed to constitute or result
in an assignment of any of the MACH 3 Marks and Trademarks of
the PRODUCT to DISTRIBUTOR or the creation of any equitable or
other interests therein. DISTRIBUTOR shall not use any of the
MACH 3's Marks and/or the ULTIMATE ME2 Trademarks of the PRODUCT
in any manner as a part of its business, corporate or trade name
or otherwise in violation of this Section 8.
8.4 Form of Use. DISTRIBUTOR shall use MACH 3's Marks
and the ULTIMATE ME2 Trademarks of the PRODUCT only in the form
and manner prescribed from time to time by MACH 3. DISTRIBUTOR
shall xxxx each Product and all Marketing or other materials
bearing any of the MACH 3's Marks and/or the ULTIMATE ME2
Trademarks of the PRODUCT with such notices as MACH 3 may
reasonably require, including, but not limited to, notices
that the MACH 3 Marks and the ULTIMATE ME2 Trademarks of the
PRODUCT are trademarks of MACH 3 are being used with the
permission of MACH 3. It will be deemed reasonable for references
to the MACH 3 name, satisfactory in form and substance to ATG
and/or MACH 3, to appear on all packaging and in all of MACH 3's
advertising of MACH 3 branded products.
8.5 Submissions. DISTRIBUTOR shall submit to MACH 3
for its written approval, before any use is made thereof,
representative samples of all stationery, invoices, catalogs,
brochures, packages, and marketing materials bearing any of the
MACH 3's Marks and/or the ULTIMATE ME2 Trademarks of the PRODUCT
which DISTRIBUTOR or its Agents prepare. DISTRIBUTOR shall not
make any use of MACH 3 Marks and/or ULTIMATE ME2 Trademark of
the PRODUCT unless and until it receives MACH 3's prior written
approval. MACH 3 shall have the absolute respective right to
approve or reject any proposed use of any of the MACH 3 Marks
and the ULTIMATE ME2 Trademark of the PRODUCT, in its sole
discretion. MACH 3 shall approve or reject each proposal
within 3 business days after submission, and Failure to
respond within such time period shall result in the automatic
approval of such proposal.
8.6 Registration. It is understood and agreed by
DISTRIBUTOR that MACH 3, as the originator and licensed
manufacturer of the PRODUCT shall have the sole right to
take such action, as it deems appropriate to obtain trademark
registration for any of the MACH 3's Marks and/or the ULTIMATE
ME2 Trademarks of the PRODUCT in the Distribution Territory.
If it shall be necessary for DISTRIBUTOR to be the applicant
to effect any such registrations, DISTRIBUTOR shall cooperate
with MACH 3 to effect any such registrations, and hereby does
assign all of its right, title and interest in and to each such
application, and any resulting registration, to MACH 3, and
shall execute all papers and documents necessary to effectuate
or confirm any such assignment. DISTRIBUTOR shall perform all
reasonable and necessary acts and execute all necessary documents
to effect the registration of the MACH 3's Marks and The ULTIMATE
ME2 Trademarks of the PRODUCT as MACH 3 may request, all at the
sole expense of MACH 3. DISTRIBUTOR shall not obtain or attempt
to obtain in the Distribution Territory, or elsewhere, any right,
title or interest, registration, or otherwise, in or to the
MACH 3's Marks and/or the ULTIMATE ME2 Trademarks of the PRODUCT,
any applications or registrations therefore, or any of them.
In the event that any such right, title or interest should be
obtained by DISTRIBUTOR in contravention hereof, DISTRIBUTOR
shall hold the same on behalf of, and in trust for, MACH 3
and shall transfer the same to MACH 3 upon request without
any expense to MACH 3.
8.7. Infringement Information. DISTRIBUTOR shall
notify MACH 3 promptly of any unauthorized use of the MACH
3 Marks and/or of any xxxx confusingly similar, thereto which
comes to its attention. Within twenty (20) days after MACH 3's
receipt of such notice, MACH 3 and DISTRIBUTOR shall decide
jointly whether to proceed with any claim or litigation, and
each shall have the right to do so independently if the other
elects not to participate. If any action taken by MACH 3 and
DISTRIBUTOR is joint, then all parties shall share equally
in the costs and proceeds. If one party elects to proceed
with a claim or litigation independently, the party, which
proceeds with the claim or litigation, shall retain all the
proceeds thereof and shall bear all of the costs thereof. If
MACH 3 elects to make a claim or litigate, DISTRIBUTOR may not
proceed with its own separate claim or litigation without
first obtaining the written consents of MACH 3 to do so.
DISTRIBUTOR shall provide MACH 3 with all reasonable
assistance, at the expense of MACH 3, in any prosecution of
any such infringement, which MACH 3 may decide to institute.
If such infringement reduces the sales of the Products by
DISTRIBUTOR, then MACH 3 and DISTRIBUTOR shall mutually
agree upon a reduction of the Sales Requirement during the
period of such infringement. With respect to any joint
action, MACH 3 shall have the sole right to employ counsel
and to direct the handling of the action and litigation
and any settlement thereof. As to claims or litigation
with which DISTRIBUTOR decides to proceed but in which
MACH 3 elects not to participate, MACH 3 shall provide
DISTRIBUTOR with all reasonable assistance, at
DISTRIBUTOR's expense.
8.8 Termination of Use. Upon expiration or
earlier termination of this Agreement, DISTRIBUTOR shall
cease using MACH 3's Marks and/or ULTIMATE ME2 Trademarks
of the PRODUCT in any manner, either similar or dissimilar
to the uses enumerated above upon the completion of the
sale of all remaining inventory or 6 months from the date
of expiration or early termination of this Agreement,
whichever may come sooner.
9. PATENT OWNERSHIP AND RIGHTS TO INVENTIONS. DISTRIBUTOR
shall not be deemed by anything contained in this Agreement
or done pursuant to it to acquire any right, title or interest
in or to Product Patents (as such term is hereinafter defined)
or any patent now or hereafter covering or applicable to any
PRODUCTS, nor in or to any invention or improvement now or
hereafter embodied in any Product, whether or not such invention
or improvement is patentable under the laws of any country.
10. If DISTRIBUTOR becomes aware that a third party is or
may be making unauthorized use of (a) any patent owned by
MACH 3, or for which MACH 3 has the exclusive right of use,
which relates to the Product Patents, or (b) any other
intellectual property rights relating to the PRODUCT
owned or controlled by MACH 3, DISTRIBUTOR shall promptly
give MACH 3 a written notice thereof, which notice shall
fully describe the potentially infringing actions of such
third party. Within twenty (20) days after receipt of
such notice by MACH 3, MACH 3 and DISTRIBUTOR shall
decide jointly whether to proceed with any claim or
litigation, and each shall have the right to do so
independently if the other elects not to participate.
If any action taken by MACH 3 and DISTRIBUTOR is joint,
then each party shall share equally in the costs and
proceeds. If one party elects to proceed with a claim
or litigation independently, the party, which proceeds
with the claim or litigation, shall retain all the
proceeds thereof, subject to the rights of licensors of
MACH 3 regarding such proceeds, and shall bear all of
the costs thereof. If MACH 3 elects to make a claim
or litigate, DISTRIBUTOR may not proceed with its
own separate claim or litigation without first
obtaining the written consent of MACH 3 to do so.
DISTRIBUTOR shall provide MACH 3 with all reasonable assistance,
at the expense of MACH 3, in any prosecution of any such
infringement, which MACH 3 may decide to institute. With
respect to any joint action, MACH 3 shall have the sole right
to employ counsel and to direct the handling of the action and
litigation and any settlement thereof.
11. CLAIMS.
11.1 Product Liability Claims. DISTRIBUTOR shall notify,
as the case may be, MACH 3 in writing immediately of any products
liability claim or action brought with respect to the PRODUCT
based on alleged defects in the design or manufacture of the
PRODUCT. Upon receiving such written notice, MACH 3 shall assume
and have sole control of the defense of any such claim or action,
including the power to conduct and conclude any and all
negotiations, compromises or settlements. DISTRIBUTOR shall
comply with all reasonable requests from MACH 3 for information,
materials or assistance, with respect to the conduct of such
defense at DISTRIBUTOR's expense, provided MACH 3 shall
reimburse reasonable out of pocket expenditures of DISTRIBUTOR
which MACH 3 approved in advance in writing through MACH 3,
provided further that the retaining of any outside consultant,
attorneys and others requires the prior written consent of MACH
3. MACH 3 shall be responsible for payment of all claims based
on the design or manufacture of the Products, and all legal
expenses and costs incurred in that regard. Nothing in this
Section 11.1 shall be construed as requiring MACH 3 to conduct
and/or assume DISTRIBUTOR's independent defense against any
claim or action, to the extent that such claim or action
involves only the independent conduct, acts or omissions
of DISTRIBUTOR. The foregoing represents the entire liability
of MACH 3 as the case may be to DISTRIBUTOR through MACH 3
for products liability claims or actions brought with respect
to product design or manufacturing defects.
11.2 Notice from DISTRIBUTOR. DISTRIBUTOR shall promptly
notify MACH 3 of any potential or actual litigation or governmental
legal activity within the boundary of the Distribution Territory
relating to the Products or the business operations of MACH 3.
DISTRIBUTOR shall provide such notice within seven (7) days from
the time that DISTRIBUTOR learns of such litigation or activity.
MACH 3 shall have no liability for any judgment without such notice,
or any settlement, compromise, expenses or costs made or incurred by
DISTRIBUTOR without the consent of MACH 3.
11.3 Indemnification. Each party assumes sole responsibility
for all acts performed by it pursuant to this Agreement and shall be
solely responsible for all Claims (as defined herein) in connection
therewith. Each party shall indemnify, defend and hold the other
harmless from any and all claims, actions, lawsuits, demands, costs,
liabilities, losses, damages and/or expenses (including reasonable
attorneys' fees and costs of litigation) by any other party resulting
from or relating to any acts, omissions or misrepresentations of such
party, its Agents or any of them (collectively, "Claims"). As defined
herein, "Claims" shall not include claims or actions against DISTRIBUTOR
resulting solely from the Products' infringement of Third Party Rights
through no fault of DISTRIBUTOR or from product liability claims or
actions through no fault of DISTRIBUTOR.
11.4 Product Quality Complaints. DISTRIBUTOR shall notify
MACH 3 immediately in writing of any product quality complaints and
any product packaging quality complaints from any party, including,
without limitation, wholesalers, retailers, consumers, or governmental
entities. DISTRIBUTOR agrees to coordinate any response to such
complaints with MACH 3 and to follow instructions of MACH 3 and
that of MACH 3 in dealing with any such complaints.
12. PRODUCT LIABILITY INSURANCE. MACH 3 shall maintain in full
force and effect product liability insurance and property damage
insurance on its operations for a minimum coverage of FIVE MILLION
DOLLARS ($5,000,000) at a maximum of ONE MILLION DOLLARS ($1,000,000)
per incident. Mach 3 shall have up to 60 days to make such arrangement.
However, as the annual sales volumes of the PRODUCT increases beyond
TEN MILLION DOLLARS ($10,000,000) the coverage amount shall also be
increased proportionately to allow for the eventuality of any class
action with DISTRIBUTOR as co-insured.
13. TERM AND MINIMUM ANNUAL ORDER.
Subject to the termination provisions of Section 14 hereof, the
term of this Agreement shall commence on the date of this Agreement
for a term of THREE (3) years (the "Initial Term") commencing from
the date first written in this Agreement with minimum annual orders.
The minimum annual orders are as listed below. Notwithstanding the
aforesaid, unless terminated on six months advance notice or
DISTRIBUTOR is in incurable default of any terms of this Agreement,
this Agreement shall automatically be extended for a second term of
THREE (3) YEARS ("Renewal Term") with new minimum annual orders of
PRODUCT as mutually agreed upon.
Year Minimum Orders of PRODUCT for the
Philippine market
1 US $ 1,000,000
2 US $ 6,000,000
3 US $12,000,000
__________________
Total US $19,000,000
It is understood and agreed that the minimum annual purchase herein for
the Philippine market may be lumped together with Agreement of 10/13/06
for the US, Canada and Mexico market.
14. TERMINATION. This Agreement shall remain in full force and
affect as specifically set forth in Section 13 hereof, unless earlier
terminated as follows:
(a) By mutual consent of the parties in writing at any time.
(b) By either party upon giving written notice to the other party
if such other party is in default of any term or provision herein contained,
and such default is not cured within thirty (30) days of written notice of
such default. Any such notice shall identify the nature of the claimed default
and the action or actions required to cure each claimed default.
(c) By MACH 3's giving written notice to DISTRIBUTOR: (i) if all or
substantially all of DISTRIBUTOR's assets are transferred to another person
or entity other than the persons or entities exercising ownership of
DISTRIBUTOR at the date of this Agreement; or (ii) if a court having
jurisdiction in the premises shall enter a decree or order means for relief
in respect of DISTRIBUTOR in an involuntary case under any applicable
Bankruptcy, insolvency or other similar law now or hereinafter in effect,
or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrate
(or similar official) of DISTRIBUTOR or for any substantial part of its
property, or order the winding up or liquidation of its affairs, and such
decree or order shall remain unseated and in effect for a period of sixty
(60) consecutive days; or (iii) if DISTRIBUTOR shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consent to the entry of an order for relief in
any involuntary case under any such law, or consent to the appointment of
or taking possession by a receiver,liquidator, assignee, trustee, custodian,
sequestrate (or similar official) of such party or for any substantial part
of its property, or make any general assignment for the benefit of creditors,
or fail generally to pay its debts as they become due or shall take any action
in furtherance of any of the foregoing.(iv) Subsequent to DISTRIBUTOR repeatedly
violating the Non-disclosure and/or Non-circumvention covenants against MACH
3 for three (3) or more times in accordance with the provision(s) as contained
in Item 6.2.
15. EFFECT OF TERMINATION. Termination of this Agreement shall not
extinguish debts and other obligations created or arising between the parties
by virtue of this Agreement or by virtue of contracts or arrangements entered
into hereunder before the effective date of termination of this Agreement
(the "Termination Date"). Without limiting the generality of the foregoing,
upon the Termination Date:
(a) DISTRIBUTOR shall not be relieved of its obligation to (i) pay
for the PRODUCT ordered by DISTRIBUTOR prior to the Termination Date or
(ii) receive and pay for all quantity of the PRODUCT covered by orders
which have been accepted by MACH 3 prior to the Termination Date; MACH 3
shall be obligated to complete all Product orders which were accepted by
MACH 3 prior to the Termination Date, provided that MACH 3 receives
assurance satisfactory to MACH 3 in its sole discretion that it will be
paid in accordance with the terms of this Agreement; and in each such
case, DISTRIBUTOR shall be permitted to distribute such PRODUCT as well
as any quantity of the PRODUCT in DISTRIBUTOR's inventory. After the
Termination Date, MACH 3 shall have no obligation of any kind to accept
any orders, for the Products or otherwise, from DISTRIBUTOR.
(b) DISTRIBUTOR shall submit to MACH 3 within thirty (30) days
after the Termination Date a list of all the PRODUCT owned by DISTRIBUTOR
which were purchased from MACH 3 as of the Termination Date; MACH 3 may,
at its sole option, purchase none or any of all such PRODUCT from DISTRIBUTOR
upon written notice of its intention to do so, at prices to be agreed upon
between the parties but in no event greater than MACH 3's cost for such
PRODUCT; after receipt of such PRODUCT from DISTRIBUTOR, MACH 3 will pay
DISTRIBUTOR for such quantity of PRODUCT on thirty (30) day terms. DISTRIBUTOR
shall permit MACH 3 and its representatives to have access to its inventory of
the PRODUCT during Distributor's usual business hours for purposes of
inspection and verification of MACH 3's inventory of PRODUCT after the
Termination Date. If MACH 3 does not purchase the remaining inventory,
then DISTRIBUTOR will be permitted to sell off the PRODUCT.
(c) DISTRIBUTOR shall cease to use any Confidential Information
relating to or in connection with its continued business operations and
shall promptly return to MACH 3 any and all registrations of the MACH 3's
Marks ULTIMATE ME2 Trademarks of the PRODUCT and all physical, written
and descriptive matter (including all reproductions and copies thereof)
containing Confidential Information as MACH 3 shall specify.
(d) Distributor's license to use the MACH 3's Marks and the
ULTIMATE ME2 Trademarks of the PRODUCT shall terminate.
(e) NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY
FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, ON ACCOUNT OF TERMINATION OF THIS AGREEMENT IN
ACCORDANCE WITH ITS TERMS.
16. EXCUSABLE DELAYS. MACH 3 shall not be liable for any delay
in the manufacture or delivery of the PRODUCTS pursuant to the terms
and provisions of this Agreement, or for any damages suffered by
DISTRIBUTOR by reason of such delay, when such delay is, directly or
indirectly, caused by, or in any manner arises from, earthquakes, fires,
floods, accidents, riots, acts of God, war, governmental interference or
restrictions, strikes, labor difficulties, or any other cause beyond the
reasonable control of MACH 3, whether similar or dissimilar to the
foregoing. If any such delay occurs, MACH 3 shall make its best efforts to
find alternative sources for the ingredients to manufacture the PRODUCT
and shall permit DISTRIBUTOR to cancel its order and obtain the quantities
of PRODUCT in the canceled order from alternative sources, subject to
the approval of MACH 3 of the quality of such alternative product(s).
17. GENERAL PROVISIONS.
17.1 Successors and Assigns. This Agreement shall inure to
the benefit of, and be binding upon, the respective successors and
assigns of the respective parties hereto; provided, however, that
neither party hereto shall have the right to assign any of its rights
under this Agreement without the prior written consent of the other
party which consent shall not be unreasonably withheld or delayed,
except that MACH 3 may assign its rights and interests in this Agreement
in connection with the merger or consolidation of MACH 3 with a majority
owned subsidiary of its parent company; and provided, further, that
neither party hereto shall be relieved of its respective obligations
hereunder upon any assignment, whether voluntary, involuntary or by
operation of law, of its rights under this Agreement.
17.2 Notices. All notices, requests, demands and other
communications, which may be given or are required to be given under
this Agreement, shall be in writing and in English. All notices shall
be sent by facsimile transmission and confirmed by overnight courier,
and shall be deemed given on the date of such facsimile transmission.
All notices shall be addressed as set forth below:
If to MACH 3: MACH 3 Technologies Group, LLC.
00000 Xxxxxxxxx Xxxxx, Xxxxxxxxx,
XX 00000
Attention: Xxxxxx Xxxxx, President
& General Manager
Telephone: 0-000-000-0000
Cellular: 0-000-000-0000
Fax: 0-000-000-0000
Email: xxxxxxxx@xxx.xxx
If to DISTRIBUTOR: Xxx Xxxxxxxx /
Essentially Yours Industries, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, X. X. Xxxxxx X0X 0X0
Telephone: 0-000-000-0000
Fax: 0-000-000-0000
Cellular: 0-000-000-0000
Email: xxx@xxx.xx
Or to such other address as each party hereto may from time to time designate
by written notice to the other party as provided herein.
17.3 Governing Law. This Agreement has been executed and delivered
in, and shall be governed by and construed in accordance with the laws of
the State of Nevada without regard to its conflict of laws provisions.
17.4 Resolution of Disputes. Any controversy or claim relating to
this Agreement (whether contract, tort, or both) or to the breach of this
Agreement shall be arbitrated by and in accordance with the then existing
commercial arbitration rules of the American Arbitration Association, in
Las Vegas, Nevada. The arbitrator may render a judgment awarding actual
compensatory damages only, and the arbitrator may award no consequential,
incidental, or punitive damages. Judgment on the award rendered by such
arbitrator may be entered in any court having jurisdiction. Nothing in
this Section 17.4 shall affect MACH 3's or Distributor's right to bring
an action or proceeding against the other in the courts of any
jurisdiction where the purpose of such action or proceeding is to
(i) seek injunctive relief or (ii) collect moneys due and owing on account
of failure to pay for Products or services provided by the other.
Service of process in any such action or proceeding brought hereunder
may be made by mailing copies of such process to the address of the
parties provided for in Section 17.2 hereto, provided that nothing
in this Section 17.2 shall affect the right to serve legal process
in any other manner permitted by law. In the event of any action
or proceeding to enforce this Agreement, the successful or
prevailing party will be entitled to recover its attorneys' fees
actually incurred and other costs incurred in any such action or
proceeding, in addition to any other relief to which it may be
entitled.
17.5 Headings. The headings herein are for convenience only,
do not constitute a part of this Agreement, and shall not be deemed to
limit or affect any of the terms or provisions hereof.
17.6 Construction. Whenever in this Agreement the context
so requires, references to the masculine shall be deemed to include
feminine and the neuter, references to the neuter shall be deemed
to include the masculine and feminine, and references to the plural
shall be deemed to include the singular and the singular to include
the plural. Any reference in this Agreement to either party hereto
shall include such party's Agents.
17.7 Waiver and Amendment. No waiver, amendment, modification
or change of any provision of this Agreement shall be effective unless
and until made in writing and signed by all of the parties hereto.
No waiver, forbearance or failure by any party hereto of its right to
enforce any provision of this Agreement shall constitute a waiver or
estoppels of such party's right to enforce any other provision of
this Agreement or a continuing waiver by such party of compliance
with any provision.
17.8 Severability. The provisions of this Agreement are
intended to be interpreted and construed in a manner so as to make
such provisions valid, binding and enforceable. In the event that
any provision of this Agreement is determined to be partially or
wholly invalid, illegal or unenforceable, then such provision
shall be deemed to be modified or restricted to the extent
necessary to make such provision valid, binding and enforceable,
or, if such provision cannot be modified or restricted in a manner
so as to make such provision valid, binding and enforceable, then
such provision shall be deemed to be excised from this Agreement
and the validity, binding effect and enforceability of the
remaining provisions of this Agreement shall not be affected
or impaired in any manner.
17.9 Cooperation. Each party hereto shall cooperate with
the other party hereto and shall take such further action and shall
execute and deliver such further documents as may be necessary or
desirable in order to carry out the provisions and purposes of
this Agreement.
17.10 Counterparts and Facsimiles. This Agreement may
be executed in one or more counterparts by original or facsimile
copies, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
17.11 Entire Agreement. This Agreement (including the
exhibits and schedules hereto, each of which is incorporated
herein and made a part of this Agreement) constitutes the
entire agreement and understanding of the parties hereto and
terminates and supersedes any and all prior agreements, arrangements
and understandings, both oral and written, or implied, between the
parties hereto concerning the subject matter of this Agreement.
It is also agreed and understood that if any part of this
Agreement is deemed unenforceable, all other parts of this
agreement shall remain valid and in full force.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.
ESSENTIALLY YOURS INDUSTRIES, INC.
/s/ Xxx Xxxxxxxx
______________________________________
Xxx Xxxxxxxx, President
MACH 3 TECHNOLOGIES GROUP, LLC
/s/ Xxxxxx Xxxxx
_______________________________________
Xxxxxx Xxxxx, President and General Manager
Acknowledged by: CHINAOIL (USA) INC.
_______________________________________
Xxxxxxx Xx, President
SCHEDULE A: (11/17/2006)
Special Authorized Distributor Price List of ULTIMATE ME2
(Private & Confidential)
Unit Cash Price Required Minimum Order Remark
_________________________________________________________________________________
$8.25* / 14 oz. bottle 36,288 bottles (under ONE 40 ft. container) See notes below
$8.25* / 14 oz. bottle 103,680 bottles (TWO 40 ft. containers,approx.) See notes below
$8.25* / 14 oz. bottle 207,360 bottles (FOUR 40 ft. containers,approx.) See notes below
$8.25* / 14 oz. bottle 414,720 bottles (EIGHT 40 ft. containers,approx.) See notes below
_________________________________________________________________________________
Notes:
1. Product orders require 50% prepaid due and payable at time of
order with the balance 50% due and payable within 5 days of
written notice of product ready for delivery FOB at southern CA
factory gate. The balance 50% payment shall be guaranteed by
the assignment of unencumbered EYI receivables, equal to 125%
of the required amount of payment acceptable to Mach 3. Refer
to Article 4.1 Payment terms for details. DISTRIBUTOR shall be
responsible for any shipping, storage or warehousing charges
and any other related expenses should delivery of product
be delayed only or be required at DISTRIBUTOR's request.
2. DISTRIBUTOR may arrange for independent third party inspection
of PROFUCT at the factory at his own cost with prior arrangement
and procedure being mutually acceptable.
3. Mach 3 shall provide (i) cardboard packaging (200B #3 Kraft
white one side) for color printing on the outside cardboard face
to the size of the bottle label for a 6-bottle pack and (ii)
cardboard boxes in 275 lb/C Kraft plain for master packaging for
each and every 12 x 6 bottle packs shrink wrapped into each pallet
of 2,592 (i.e. 6 x 48 x9) bottles ready for shipping.
4. Minimum 4 to 5 weeks lead time from the execution of this
Agreement and the product order in accordance with the Payment
Terms of Article 4.1 herein shall be allowed for MACH 3 to deliver
the first order of product. 3 to 4 weeks lead time shall be required
for subsequent orders.
5. Prior to DISTRIBUTOR making the first order of product, MACH 3
shall be responsible to provide for a minimum of one series containing
one of each (of gasoline and diesel engines) of the basic mileage and
exhaust emission reduction test report by an independent laboratory
recognizable by the EPA and/or the California Air Resources Board (CARB).
The DISTRIBUTOR shall pay for any other additional product test
report(s) if so desired by the DISTRIBUTOR.
6. * Denotes $1.60 + 0.69 = $2.29 applicable supplement to the Unit
Cash Price of the Ultimate ME2 product in 12 oz. bottles, as
specified herein above, on the Purchase Orders to be made by DISTRIBUTOR
for the duration of this Agreement as an irrevocable bonus to compensate
MACH 3 for the exclusivity of Ultimate ME2 granted to DISTRIBUTOR for the
individual residential market in the US, Canada and Mexico. This $2.29
supplement to the Unit Cash Price shall be paid forthwith to MACH 3
by means of ESSENTIALLY YOURS INDUSTRIES INC. (EYII) common stock warrants
at the equivalent fixed price of 6 cents per share. The volume of EYII
common stock warrants due to MACH 3 at each time of the purchase order
made by DISTRIBUTOR shall be calculated thus: ($2.29 x number of 14 oz.
bottles ordered / 6 cents), to the limit of
15,000,000 x 8.94/8.25 = 16,250,000 EYII common stock warrants at the
fixed price of 6 cents each share.
