EXHIBIT 10.29
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AGREEMENT BY AND BETWEEN XXXXXXXXXX.XXX, INC., CDKNET, LLC,
TRACK MARKETING AND ARCADIA MARKETING, INC.
WHEREAS, XxxxxXxxxx.xxx, Inc. ("V-Flash"), CDKnet, LLC. ("CDK"), Track Marketing
Partners, Inc. ("Track") and Arcadia Marketing, Inc. ("AMI") (collectively "the
Parties") hereby wish to enter into the following Agreement; AND
WHEREAS, the Parties acknowledge that Track is an exclusive client of AMI and
Track has been introduced to V-Flash and CDK by AMI; AND
WHEREAS, Track desires to market V-Flash and CDK technologies to individuals,
companies or other entities, collectively designated as "Track Clients" as set
forth on Exhibit A attached hereto; AND
WHEREAS, V-Flash and CDK acknowledges that Track is an AMI client and V-Flash
and CDK desire Track to market V-Flash and CDK Technologies to Track Clients,
NOW THEREFORE, the parties hereby agreement 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 Track 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 Track and/or AMI.
II. EXCLUSIVITY
II(a.) CLIENT LIST: Track will communicate with a specified list of
individuals, corporations, and other entities as listed in Exhibit A of this
Agreement entitled "Track Client List". In addition to said Track Client List,
Track shall submit additional names of individuals, corporations and other
entitles to V-Flash, CDK, and AMI as an addendum(s) to this Agreement on an on
going 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 Track Client List is
exclusive to Track. Furthermore, should any dispute arise regarding the
exclusive right of Track to represent V-Flash or CDK technologies or services to
said Track 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 Track Client List contact V-Flash or CDK directly. V-Flash or
CDK agree to promptly notify Track and AMI of said contact. V-Flash and/or CDK,
upon notification to Track and AMI, may choose to pay additional compensation to
a third party who claims to represent a Client included on Track Client List,
but in no way shall Track and AMI forfeit their right to any compensation as a
result of any Client usage of V-Flash or CDK technology, as defined
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within the Agreement. Any payment by V-Flash or CDK to such third party shall
not reduce the amount of Track and AMI compensation, or, the definition of the
term "gross" or "net" as defined herein.
II(b.) INITIAL CLIENT CONTACT: Track 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 of said written request.
Within ten business days of receipt of written approval, Track agrees to provide
V-Flash, CDK and AMI with evidence of a scheduled meeting date with any Track
Client, to take place within sixty days of such approval, concurrent with Track
Client being added to Track Client List.
II(c.) TERMS OF EXCLUSIVITY: Track agrees to provide V-Flash, CDK and
AMI with notification of a confirmed meeting date and time with each Client that
Track submits for addition to Track Client List. Said Clients shall remain
exclusive to Track under the terms of the Agreement for an initial 45-day
period. Should Client maintain a substantive dialogue with Track 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 Track Client. Should Client utilize V-Flash or CDK technology and/or
services within said exclusive period, Said Client shall remain exclusive
exclusive to Track 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
TRACK/V-FLASH CLIENTS ("V-FLASH RESIDUALS"): Track shall receive a percentage,
herein identified as V-Flash Residuals, of all collected V-Flash gross revenues
generated by each Track Client. When calculating Rack'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 Track Client's V-Flash operations:
TRACK 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 Track's V-Flash
Residuals will apply to all V-Flash revenue generated by Track/V-Flash Clients
without regard to the composition of such revenue.
III(c.) REPORTING V-FLASH RESIDUALS TO TRACK AND AMI: Track and AMI
shall receive a complete accounting from V-Flash of all gross revenues generated
by each Track client. In addition, Track and AMI shall receive a complete
accounting from V-Flash of all
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Track 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 Track and AMI on a monthly basis. Additionally, V-Flash
agrees to provide to Track 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. Track and AMI shall provide copies of all relevant
correspondence and documentation to V-Flash. Track and AMI shall also have the
right to audit the records of V-Flash with regard to Track'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 Track the
V-Flash Residuals due to Track from each Track client's V-Flash operations, on a
monthly basis within 10 business days following the end of each calendar month.
For example, all V-Flash Residuals earned by Track during the month of January
would be paid to Track within the first 10 business days of February.
III(e.) V-FLASH STOCK OPTIONS FOR CLIENT AGREEMENTS: Track shall
receive 2,600 Stock Options from V-Flash for any Track 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 Track based on Client Agreements.
III(f.) V-FLASH STOCK OPTIONS BASED ON V-FLASH REVENUES: Track shall
receive Stock Options when V-Flash Revenues are generated by Track Clients. Said
Stock Options based on V-Flash Revenues shall be issued on a pro-rata 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: Track Clients generate $1,000,000 of V-Flash Gross
Revenues, therefore, Track would receive 25,000 Stock Options.
A total of 62,500 V-Flash Stock Options shall be available for issuance
to Track based on V-Flash Revenues.
III(g.) V-FLASH STOCK OPTION PRICING: Track'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 Track 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: Track shall receive an additional 5% of all
earned V-Flash Revenues, generated by Track 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 Track said 5% Cash Bonus within 10 business days following the end of
each calendar month in which said Cash Bonus has been achieved and collected.
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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 Track 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 Track 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 CDs are replicated by CDK,
manufacturing costs shall consist of any direct costs, including but not limited
to cost of physical CDs, packaging, and shipping and handling costs. CDK shall
provide Track 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, Track, and AMI (No V-Flash Used)
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Track: 30% of Net Revenue
AMI: 20% of Net Revenue
CDKnet: 50% of Net Revenue
Should any Track Client that purchases CDK technology, also use V-Flash
technology, the above allocation of Net Revenue shall be adjusted as follows:
Track: 1/3 of Net Revenue
AMI: 1/3 of Net Revenue
CDKnet: 1/3 of Net Revenue
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 delivery 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 TRACK AND AMI
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CDK shall pay to Track and AMI their Percentage of Net Revenue from
each of the above referenced Client Payments within 10 business days of
collection or receipt of Credit from each said Client Payments by CDK.
Additionally, CDK agrees to provide to Track and AMI copies of all contract and
agreements, purchase orders, and/or all invoices and any modification thereto
and amendments thereof with regard to Client's CDK usage and operation promptly
upon receipt of same. Track and AMI shall provide copies of all relevant
correspondence and documentation to CDK. Track and AMI shall also have the right
to audit the records of CDK with regard to Track'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 Track
that will be issued as follows:
IV(b1.) STOCK OPTIONS BASED ON CDK REVENUES - Track shall
receive CDK Stock Options when CDK Gross Revenues are generated by Track
Clients. Said CDK Stock Options based on CDK Gross Revenues shall be issued on a
pro-rata basis using the ratio of 1 CDK Stock Option for every $200 of CDK Gross
Revenues. Stock Options are to be issued and delivered on a quarterly basis.
FOR EXAMPLE: Track shall receive 5,000 CDK Stock Options for every
1,000,000 of CDK Gross Revenues generated by Track Clients.
IV(b2.) STOCK OPTIONS BASED ON CDK UNITS - Track shall receive
CDK Stock Options when CDK Units are produced, and a per-unit fee has been
charged to a Track Client. Said CDK Stock Options based on CDK per-unit sales
shall be issued on a pro-rata basis using the ratio of 1 CDK Stock Option for
every 200 CDK units produced.
FOR EXAMPLE: Track shall receive 5,000 CDK Stock Options for every
1,000,000 CDK units produced in which a per-unit fee was charged to Track
Client.
IV(b3.) ITEMS (b1.) AND (b2.) may occur concurrently, in which
CDK will issue CDK Stock Options to Track based on both Gross Revenues and total
number of CDK units produced, as in the following example:
FOR EXAMPLE: Track'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 Track.
IV(b4.) CDK agrees to issue 500 CDK Stock Options to Track in
which any Track Client cause CDK technology to be used, and no "per unit fee"
has been charged by CDK.
FOR EXAMPLE: A Track 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 Track.
IV(c). CDK Stock Option Pricing: Track'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 Track 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.TRACK COMPENSATION FOR IDENTIFYING V-FLASH OR CDK INVESTORS: V-Flash or CDK
shall pay to Track 2.5% of the total investment into V-Flash or CDK by
individuals, corporations, or other entities identified or introduced by Track
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 Track the 2.5% Fee upon the
collection by V-Flash or CDK of an Investment by the Investing Party. If
Investment is a cash Investment, Track 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 Track 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 Track's total
allocation of V-Flash and CDK Stock Options as described herein. V-Flash or CDK
shall pay to Track 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 Track.
VI. V-FLASH AND CDK PRODUCT UPDATE/NEW PRODUCT/PRODUCT NAME ALTERATION
V-Flash and CDK agree to inform Track 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 Track and AMI of any potential conflicts of interest issues related to
said transfer of V-Flash and/or CDK ownership.
VIII. TERMS 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
Track's compensation terms as it relates to V-Flash Residuals, indemnification
provisions, and Track Client exclusively as described herein. It is understood
by the Parties that 24-month term will in no way alter, impact or effect the
ongoing provisions of this Agreement, which shall survive the expiration of said
24-month agreement. It is agreed that any Track compensation shall be due and
payable to Track by V-Flash and CDK on an ongoing basis as described herein. It
is understood by the Parties that Track 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 Track.
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X. WARRANTS AND REPRESENTS
X(a). INDEMNIFICATION: V-Flash and CDK hereby indemnifies and holds
Track 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 loss claimed by any Track Client, pursuant to Track'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. Track and/or AMI assume no
responsibility for the performance of V-Flash or CDK technology, product, and/or
service. Track 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 Track Client or any
other third party.
X(b). PARTNERSHIP/JOINT VENTURE: Nothing contained herein shall be
construed as constituting a partnership or joint venture between any of the
Parties.
X(c). TRADEMARKS: It is understood that Track 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.
Track hereby warrants and represents that Track is under no disability,
restriction or prohibition, whether contracted or otherwise, with regard to
Track'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 no 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 SIGNING 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 delivery. 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
New York, NY (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
Xxx Xxxxxx
Track Marketing Partners, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
000-000-0000 phone
000-000-0000 fax
xxxxxxx@xxxxx.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, Track, and AMI.
AGREED AND ACCEPTED:
XxxxxXxxxx.xxx, Inc.
By:___________________________ Title: _______________________
(Signature)
______________________________ Date: ________________________
(Print or Type name)
CDKnet, LLC.
By:___________________________ Title: _______________________
______________________________ Date: ________________________
(Print or Type name)
Track Marketing Partners, Inc.
By:___________________________ Title: _______________________
______________________________ Date: ________________________
(Print or Type name)
Arcadia Marketing, Inc.
By:___________________________ Title: _______________________
______________________________ Date: ________________________
(Print or Type name)
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Exhibit A - Track Client List
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Exhibit A is intended to be attached to and supplement the terms of the
Agreement between V-Flash, CDK, AMI, and Track. The Agreement and any subsequent
addenda thereto, shall be referred to as "Agreement". This Exhibit A shall be
referred to as "Track Client List". Said Track Client List is exclusive to Track
as described in section II. of this Agreement.
Track Client List
-----------------
DDB Xxxxxxx
Omnicom Group
J. Xxxxxx Xxxxxxxx Advertising
National Football League
Pepsi
Compaq Computer Corporation - Corporate Marketing which includes sponsorship,
advertising, digital
DKNY Fragrances
Xxxxx Xxxxxx Cosmetics
XxXxxxxx'x Corporation
Burger King
Arizona Jeans
Redken
Esprit
Xxx Xxxx
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