Document:

exv10we

 

Exhibit 10(e)

EXCLUSIVE USE AND DISTRIBUTION AGREEMENT

     This EXCLUSIVE USE AND DISTRIBUTION AGREEMENT is made
as of the ____ day of _______, 2000, by and between e Smart Systems, Inc., a Nevada corporation
with
its principal office at 7225 Bermuda Road, Suite C, Las Vegas, Nevada USA 89119
(hereinafter “eSSI”), and NEWCO, a Sino-foreign Joint Venture company formed
under the laws of the People’s Republic of China (hereinafter “NEWCO”).

W I T N E S S E T H:

     WHEREAS, NEWCO has been assigned the certain rights to acquire and resell,
sell, manufacture and distribute IC Smart Cards and to operate a private
network
to monitor and keep track of IC Smart Card transactions throughout the PRC
all
in connection with the services under the dominion and control of the
Ministry of Construction of the PRC; and

     WHEREAS, eSSI is the holder of the exclusive right to manufacture, resell,
sell, promote and distribute the Super Smart Card in the PRC under license
from the technology owner, Intermarket Ventures, Inc (hereinafter “IVI”);
and

     WHEREAS, NEWCO desires to become the sole manufacturer and distributor of
eSSI’s aforementioned products in the PRC subject to its performance; and

     WHEREAS, NEWCO and eSSI shall simultaneously enter into an exclusive
joint
venture agreement with the rights to manufacture, distribute and transaction
monitoring and coordinating services for the Super Smart Card Technology used
in any way or form where the PRC Ministry of Construction has authority;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. APPOINTMENT:

     1.1 Subject to the limitations set forth herein, eSSI hereby grants to
NEWCO the exclusive right to manufacture, market and distribute the products
listed in Schedule A, attached hereto, any improvements to such products, and
any new smart card

1

 

systems and/or products developed by eSSI or any of its affiliates,
subsidiaries or related entities or any new smart card systems and/or products
jointly developed by eSSI and any other party (including NEWCO) with whom eSSI
may develop such products (the foregoing being referred to herein collectively
as the “Products”)within the Exclusive Territory (as defined herein below).
NEWCO shall be entitled to market and sell the Products under its own name and
trademarks and may, at its option, also market and sell the Products under
eSSI’s trademarks. NEWCO shall be entitled to market and sell the Products for
any use, including through any other division, subsidiary or affiliate of
NEWCO, in and through all markets and channels in the PRC where NEWCO is
granted the exclusive right to provide such Products by or through or under the
auspices of the PRC Ministry of Construction (the “Exclusive Territory”). The
Exclusive Territory may expand or contract during the term of this Agreement
based on the exclusive contracts assigned to or owned by NEWCO. NEWCO shall
purchase all components required to manufacture the Products from eSSI or eSSI
designated and/or approved suppliers. eSSI shall cause NEWCO to obtain such
parts at a price no higher than the lowest price that it charges to any other
customer anywhere in the world. As quality is of paramount importance any
breach of this provision can be declared by eSSI as a material breach.

     1.2 During the term of this Agreement, eSSI shall not within the
Exclusive
Territory: (i) grant any rights or make any sale of any Products to any
customers
which interfere or conflict with NEWCO’s business, (ii) appoint any other
distributor, dealer or agent to sell any Products which interfere or conflict
with NEWCO’s business or (iii) sell any other smart card product and/or service
which is competitive with the Products which interfere or conflict with
NEWCO’s
business. Under no circumstances may NEWCO sell any products, devices,
software
or systems which are competitive with the Products. For the avoidance of
doubt,
eSSI, by itself or with or through a third party shall have the right to: (1)
enter into and sell Products in any territory in the PRC that is not part of
the
Exclusive Territory, and (2) sell functions through other channels not being
promoted by NEWCO or its local affiliates within the Exclusive Territory.

2.0 NEWCO’S ACTIVITIES AND
RESPONSIBILITIES:

     NEWCO agrees:

     2.1 To use its best commercial efforts to promote the sale of the
Products in the Exclusive Territory, provided, that NEWCO

2

 

shall not be obligated to promote the sale of any Products in any market or
channel if NEWCO reasonably determines there is not a substantial and sustainable demand for Products in such market or channel.

     2.2 Except as may otherwise be provided herein, to assume all costs and
expenses which it incurs in fulfilling its obligations under this Agreement.

     2.3 That payment for Products shall be made by NEWCO to eSSI at the
prices
determined in accordance with the provisions of this Agreement, in the case
of
imported goods or technology fees, in foreign currency as designated from
time
to time by eSSI at any banking institution of eSSI’s choice; in the case of
goods produced domestically in the Peoples Republic of China, NEWCO shall pay
each vendor directly for what it orders.

     2.4 Not to alter, remove, obscure or otherwise interfere with or add to
any
markings or other indications, whether of the source of origin of Products or
otherwise, which may have been affixed to Products at the time they were sent
to
NEWCO to the extent any such interference is prohibited by applicable law.

     2.5 That, as soon as practicable after the commencement of operations,
NEWCO, shall take all steps necessary and proper to set up its own
manufacturing
facility in the PRC capable of the highest quality manufacturing of the
Products. Products so manufactured shall be distributed exclusively by NEWCO
to
clients in the Exclusive Territory ONLY, except as may be otherwise agreed in
a
duly executed writing by eSSI. For the avoidance of doubt, no rights of any
nature are granted to NEWCO pursuant to this Use Agreement to manufacture any
Products for any other territory except the Exclusive Territory without the
prior written consent of eSSI.

     2.6 To comply with all laws, rules and regulations for the importation,
manufacturing, handling, storage and sale of Products.

     2.7 To promptly notify eSSI of any complaint made by any customer with
respect to Products after NEWCO receives or becomes aware of such
complaint.
NEWCO shall include in its complaint report to eSSI such data as may be
reasonably requested by eSSI. NEWCO shall also promptly notify eSSI of
any
inspection initiated by any regulatory agency after NEWCO is notified
or
becomes
aware of same.

3

 

3.0 eSSI’s ACTIVITIES AND RESPONSIBILITIES:

     eSSI hereby agrees:

     3.1 To sell to NEWCO the Products or proprietary components ordered by
NEWCO at the prices determined in accordance with this Agreement, to
use reasonable efforts to promptly fill all such orders for Products and to
produce,
label and package all Products ordered by NEWCO in accordance with the
specifications attached hereto as Schedule B or as may be otherwise agreed to
by
the parties; provided, that eSSI shall have no responsibility to NEWCO by
reason
of any delay or failure to deliver caused by transit accidents, strikes, acts
of
God, severe weather, or other events beyond the control of eSSI.

     3.2 To provide such technical assistance, manufacturing, marketing and
sales training and support relevant personnel of NEWCO in connection with the
manufacture, promotion and sale of Products as NEWCO may reasonably request
at a
price and on terms to be agreed.

     3.3 To cooperate with NEWCO in monitoring quality control with respect
to
the Products, and to implement, at NEWCO’s expense, any quality control
measures
which eSSI may reasonably request with respect to the Products. eSSI
acknowledges and agrees that the implementation of any such measures
requested
by NEWCO shall not relieve eSSI of any of its obligations hereunder or in any
way prejudice any of NEWCO’s rights hereunder.

4.0 INTERIM MANUFACTURING PERIOD:

     4.1 The parties hereto agree that in order to deliver the Products in a
timely manner to capture market share, eSSI shall have the right to designate
an
interim manufacturer for the Products (until NEWCO is ready to manufacture the
Products itself), and that upon notice by NEWCO that it is ready to commence
manufacturing, eSSI shall direct all subsequent component orders for the
manufacturing of Products to NEWCO.

5.0 PRICE; QUANTITY; DELIVERY:

     5.1 (a) Subject to subsections 5.1(b) below, during the Initial Term,
NEWCO
agrees to purchase the Products, and eSSI agrees to sell to NEWCO the
Products,
at a price no higher than the lowest price eSSI charges in other markets for
the Products and acceptable to both
eSSI and NEWCO.

4

 

          (b) eSSI may increase the prices for the Products, upon not less than
sixty (60) days prior written notice to NEWCO, by the amount eSSI’s cost for
Products as of the date of this Agreement shall increase as a result of
increases beyond eSSI’s control, such as by way of example only, an increase in
the cost of resin used in the manufacturing of the Products; provided, that
eSSI
shall provide NEWCO with such evidence of any increase in eSSI’s unit cost as
NEWCO may reasonably request.

6.0 WARRANTIES; INDEMNIFICATION:

     6.1 eSSI represents and warrants to NEWCO that all Products delivered to
NEWCO hereunder shall conform in all material respects to the
specifications
for
such Products attached hereto as Schedule B or subsequently agreed to by the
parties hereto, shall be free from material defects in materials and
workmanship
and shall comply with applicable regulatory agency requirements. Such
warranty
shall extend to NEWCO’s customers. Any Product determined by NEWCO to be
defective due to the fault of eSSI shall be replaced where located at eSSI’s
expense, and eSSI shall also reimburse NEWCO for all costs incurred by NEWCO
in
connection with the replacement of such Product. THIS WARRANTY IS EXCLUSIVE
REGARDING SUCH PRODUCTS AND IN LIEU OF OTHER WARRANTIES EXPRESSED, IMPLIED OR
STATUTORY, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. eSSI shall, at its expense, take any measures which may
be
reasonably required to prevent the recurrence of any defects in the Products
due
to its fault.

     6.2 eSSI shall be liable for and defend and indemnify NEWCO against any
loss or damage incurred or suffered by NEWCO as a result of or in connection
with any claim or action relating to the infringement or alleged infringement
on
the rights of any third party with respect to the Products or any part
thereof.
eSSI represents and warrants to NEWCO that, to eSSI’s knowledge, there are no
rights owned or possessed by any third party that could be asserted to
prevent
NEWCO from selling Products pursuant to this Agreement.

     6.3 Notwithstanding anything contained herein to the contrary, eSSI
shall
in no event be liable for any indirect, special or consequential damages
whatsoever, including but not limited to loss of profits.

     6.4 In selling Products, NEWCO shall not make any promises,

5

 

representations, warranties or guarantees with respect thereto, except those
consistent with the provisions of this Agreement. NEWCO shall defend and
indemnify eSSI from and against all third party claims arising out of or
related
to any breach of this covenant by NEWCO.

     6.5 NEWCO represents and warrants to eSSI that NEWCO shall not use any
technical information or any other trade secrets of eSSI or others affiliated
to
eSSI and/or its Products nor attempt to reverse engineer or reverse engineer
or
otherwise create or attempt to create any competitive products with the
Products.

     6.6 The representations, warranties and covenants of eSSI and NEWCO set
forth in this Section 6 shall survive the expiration or termination of
this
Agreement.

7.0 TERM AND TERMINATION:

     7.1 (a) This Agreement shall be effective from the date hereof and for a
period of thirty (30) years thereafter (the “Initial Term”), unless otherwise
terminated by either party pursuant to the provisions hereof. This Agreement
shall be automatically renewed for an additional five (5) year term unless
prior
written notice is given by either party no later than ninety (90) days before
the renewal of this Agreement.

          (b) Either party may, without prejudice to any other rights such party
may have at law or equity, terminate this Agreement at any time upon written
notice to the other party upon the happening of any of the following events:

               (i) the other party breaches any covenant or
agreement set forth herein, or in the Joint Venture Contract, Articles of
Association and/or the Memorandum and fails to cure such breach within thirty
(30) days after written notice of such breach;

or

               (ii) the suspension, liquidation, dissolution or bulk sale, or notice
thereof, of the other party’s business, an assignment by the other party
for the benefit of creditors, the insolvency of any kind of the other party; or
any filing of a voluntary or involuntary petition under the provisions of
federal or state bankruptcy or insolvency laws with respect to the other
party,
or any application for or appointment of a receiver for the property of other
party.

6

 

     7.2 Upon expiration or termination of this Agreement for any reason, the
parties shall have no further obligations to each other under this Agreement
except (i) obligations to deliver or make payment for Products ordered by NEWCO
prior to such termination, (ii) obligations arising from any breach of this
Agreement prior to expiration or termination, and (iii) as otherwise provided
herein.

     7.3 Upon the expiration or termination of this Agreement for any reason,
eSSI or its nominee shall have the option of purchasing all or any portion of
the Products which are held by NEWCO on the date of expiration or termination
and which are in good condition, not obsolete and marketable to usual
customers. This option shall be exercisable by eSSI giving NEWCO, within ten (10) days
after the termination date, written notice of its intent to purchase. The
purchase price for such Products shall be the original price paid for such
Products by NEWCO. All costs and expenses and risk of loss related to the
delivery of such Products to eSSI shall be borne by eSSI. Saleable goods in
inventory not sold to eSSI may be sold by NEWCO after the date of termination
or expiration.

8.0 NO AGENCY:

     The parties hereto agree that NEWCO, including for all purposes herein,
its
employees, officers, agents and representatives, is neither an agent nor an
employee of eSSI and that all activities of NEWCO pursuant to this Agreement
shall be as an independent contractor. Neither party shall represent itself to
be, or otherwise conduct itself as, an agent of the other party.

9.0 TRADEMARKS AND TRADE NAMES:

     Except as otherwise provided herein, neither party hereto shall have any
right, title or interest in or to the use of any name, trademark, service mark
or symbol owned or controlled by, or now or hereafter owned or controlled by,
the other party or any affiliate thereof. Each party agrees that it will not
anywhere or any time or for any reason apply for or seek to effect registration
as owner of any such names, trademarks, service marks or symbols of the other
party.

10.0 INTELLECTUAL PROPERTIES:

7

 

     1. NEWCO hereby acknowledges that all intellectual property rights
associated with the Products set forth in Schedule A, and any other
intellectual property rights including, but in no manner limited to eSSI’s
rights in the Products eSSI shall supply to NEWCO are the property of eSSI and or
Intermarket
Ventures, Inc., a Utah USA corporation. Upon the expiration or termination of
this Agreement, any and all intellectual property rights owned by eSSI shall
remain exclusive property of eSSI; Nothing contained herein shall be
construed
as granting to any party hereto any express or implied license to use any
intellectual property rights of the other party. All costs of applying for,
obtaining, perfecting, and maintaining intellectual property rights relevant
to
any products shall be borne by the party affecting such rights.

     2. NEWCO hereby grants a free and irrevocable license in perpetuity to
eSSI
and Intermarket Ventures, Inc. to and for any and all improvements to or the
Products or any outgrowths therefrom which NEWCO may invent or obtain during
the
term of this Agreement and for a five (5) year period after termination of this
Agreement (the “Improvements”). Similarly, IVI and ESSI hereby agree to grant a
free and irrevocable license to NEWCO to and for any improvements to the
Products or any outgrowths therefrom on the same terms and limitations as
this
Use Agreement. NEWCO shall provide, as soon as practicable, to eSSI and
Intermarket any and all written embodiments of the Improvements in a useable
format acceptable to eSSI and Intermarket Ventures, Inc.

11.0 RIGHT OF FIRST REFUSAL:

     Provided there subsists no material breach of any material term or
obligation of NEWCO, and provided Intermarket Ventures, Inc. has a
requirement
for other territories that NEWCO has the capacity and ability to successfully
and competitively provide by exporting Products to Intermarket, NEWCO may be
asked to fulfill Intermarket’s requirement on terms and conditions specified in
a separate OEM Agreement to be agreed as, when and if required.

12.0 NON-ASSIGNABLE AGREEMENT:

     This Agreement is non-assignable and non-transferable by any party. Any
attempt by any party hereto to assign or transfer rights or obligations under
this Agreement shall be a breach by such party. For purposes of this Agreement,
the transfer by a

8

 

party of all or substantially all of its assets or the
transfer of a majority of its outstanding voting stock shall be deemed to be
an
assignment of this Agreement.

13.0 MISCELLANEOUS:

     13.1 All notices under this Agreement shall be in writing at the
addresses
first above written or at any such address as any party may hereinafter
specify
in a written notice to the other. All notices hereunder shall be deemed given
when received by the recipient (if delivered in person) or three days after
being mailed by the sender (if sent by registered mail) unless a copy of said
notice is sent by e-mail to the correct e-mail address of the receiving party,
in which case, notice shall be deemed to have been given the next business
day
after the date of transmission.

     13.2 This Agreement shall be governed by and construed in accordance
with
the laws of New York, without giving effect to conflicts of laws principles thereof.

     13.3 This Agreement shall cancel and supersede all previous agreements
and
understandings between the parties relating to any matter covered by this
Agreement; provided, that the terms of that certain Confidentiality Agreement,
dated 4 April 2000 by and between the parties hereto, shall remain in effect,
notwithstanding the execution and delivery of this Agreement.

     13.4 The headings used herein are for ease of reference only and are not
to
be used in the interpretation or construction of this Agreement.

     13.5 The provisions of this Agreement shall not be extended, varied,
changed, modified or supplemented other than by agreement in writing signed
by
the parties hereto. There are no other terms or conditions, representations
or
understandings except as herein set forth.

     13.6 If and to the extent any court of competent jurisdiction shall hold
any provision (or any part thereof) of this Agreement to be invalid or
unenforceable, such holding shall in no way affect the validity of the
remainder
of this Agreement.

     13.7 The Parties hereto agree that any provision(s) of this Use
Agreement
may be changed to comply with the advice of a mutually agreed international
tax
planner so as to minimize the possibility of double taxation or unnecessary
taxation provided the intent of each such provision shall remain materially
the same.

9

 

     13.8 Except as otherwise provided herein, the failure of a party hereto to
enforce any of the provisions of this Agreement or any rights with respect
thereto or to exercise any election provided for herein, shall in no way be
considered a waiver of such provisions, rights or elections or in any way
affect
the validity of this Agreement. No term or provision hereof shall be deemed
waived and no breach excused, unless such waiver or consent shall be in writing
and signed by the party claimed to have so waived or consented.

     IN WITNESS WHEREOF, each of the parties hereto has cause this Agreement to
be executed on its behalf by its duly authorized representative as the date
first above written.

NEWCO

By:

eSSI

By:

 

SUPPLEMENT

TO 

       
EXCLUSIVE USE AND DISTRIBUTION AGREEMENT

          Whereas SCI, IVI and eSSI have reached the Exclusive Use and Distribution
Agreement, the Parties hereto agree the supplement clauses to the
Agreement as the following:

          IVI and eSSI will, as soon as practicable and expecting to be no later
than the end of September 2000, provide 500 to 2000 test quality Super Smart
cards and related readers and other products as described in Schedule A, to SCI
for its test. The cost of first 500 cards, readers and reader writers will be
paid by IVI, over that, will be paid by NEWCO.

SCI:

IVI:

eSSI:exv10wf

 

Exhibit 10(f)

Advisory and Occupancy Services Agreement (the “Agreement”) is made and entered
into on May 29, 2003, but retroactively effective to January 1, 2001 (the
“Effective Date”), by and between Associated Business Group, Inc., a Nevada
corporation with an office at 7225 Bermuda Road, Suite C, Las Vegas, Nevada
89119 (“ABG”) and e-Smart Technologies, Inc., a Nevada corporation with an
office at 7225 Bermuda Road, Suite C, Las Vegas, Nevada 89119 (the “Company”).
The Company and ABG are sometimes hereinafter individually referred to as a
“Party” and collectively as the “Parties”.

W I T N E S S E T H:

     WHEREAS, ABG maintains a staff and office facilities in Las Vegas, Nevada
has been offering specialized administrative services to ABG since the
Effective Date; and

     WHEREAS, the Company desires to memorialize its arrangement with ABG and
engage ABG to become the Company’s principal administrative services provider;
and

     WHEREAS, ABG is willing to become the Company’s principal administrative
services provider and to continue to provide services to the Company on the
terms and subject to the conditions set forth in this Agreement.

     NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby mutually acknowledged and accepted, the
Parties hereby agree as follows:

        1. Engagement. The Company hereby engages and retains ABG to perform
and supply the Services (as that term is hereinafter defined in Section 3) on
behalf of the Company; and ABG hereby accepts such appointment and agrees to
perform and render the Services for and on behalf of the Company on the terms
and subject to the conditions hereinafter set forth.

        2. Term and Termination.

            A. This Agreement commences on the Effective Date and shall continue in
full force and effect until May 29, 2003, when it shall become effective for a
period of one year thereafter (the “Initial Term”), unless sooner terminated in
accordance with the provisions hereof. After the Initial Term, this Agreement
shall be automatically renewed for successive one year terms unless sooner
terminated in accordance with the provisions hereof.

            B. This Agreement may be terminated as follows: (i) at any time upon
written agreement between the Parties; or (ii) by the Company without cause
upon giving not less than 90 days written notice to ABG, together with payment
of any outstanding Fees (hereinafter defined) and an amount equal to all Fees
that shall, in the ordinary course of the Agreement, become due and payable by
the Company during the period after delivery of such notice and the effective
date of termination specified therein; (iii) by either Party at any time
without prior notice to the other Party if the other Party is in breach or
default of any of its covenants, obligations or agreements

1

 

hereunder, which breach or default continues for a period of ten days following
written notification from the non-defaulting Party of such breach or default
and such breach or default has not been fully and effectively remedied within
such ten (10) day period; or (iv) by ABG at any time without prior notice to
the Company if the Company becomes bankrupt or if a receiver or trustee is
appointed to oversee the Company or its assets, or if the Company makes any
proposal to its creditors or is otherwise insolvent or ceases carrying on
business.

            C. Upon the effective date of termination or expiration of this Agreement
for any reason without prejudice to any other rights which the Parties may
have, and subject to the provisions of this Section: (i) ABG shall immediately
discontinue the Services under this Agreement; (ii) ABG shall retain the Fees
(hereinafter defined) and all other payments made to it up to the effective
date of termination as payment in full in respect of the Services in which such
payments were made; and (iii) if and only if ABG is not the defaulting party,
the Company shall pay to ABG the full amount of any outstanding Fees and
expenses as well as such other expenses reasonably incurred by ABG arising from
the termination.

        3. Description of the Services. The Services shall be comprised as
follows:

Since the Effective Date ABG has served and shall continue to serve as the
Company’s principal administrative services provider in the following manner:
(i) administering the receipt of funds from investors to private offerings
conducted by the Company; (ii) paying expenses for and on behalf of the Company
pursuant to invoices and approved written debit authorizations received from
the Company; (iii) utilizing its best efforts to advance funds to cover
temporary shortfalls in the Company’s cash receipts on such terms and
conditions as shall be mutually agreed upon; (iv) providing photocopy, fax
secretarial, clerical, and printing services; and (v) and performing other
necessary and related administrative services. The foregoing are collectively
referred to as the “Services”. The Services will be undertaken by ABG on an ad
hoc basis pursuant to the instructions of the Company from time to time
provided to and agreed upon in writing. Within 30 days of the end of each
calendar quarter during the term of this Agreement, or more or less frequently
as the Parties shall agree, ABG shall provide the Company with a complete
written accounting of its receipts and disbursements on the Company’s behalf.

It is understood and agreed that in performing the Services ABG may offer
recommendations, but all decisions made in connection with the implementation
of such recommendations shall be the sole responsibility of, and shall be made
and implemented by the Company’s executives and its Board of Directors.

        4. Performance of the Services.

            ABG shall utilize its best efforts to perform the Services in a
professional and workmanlike manner consistent with the Company’s policies and
business practices. However, it is specifically agreed and understood that ABG
shall have the right and option to designate the personnel to perform the
Services and to engage and employ sub contractors to perform portions of the
Services subject to written

2

 

confidentiality agreements with such sub contractors and notice to the Company
of such engagement or employment. The Company may reasonably request removal
of any employee or subcontractor of ABG and in such event, the Company shall
provide notice thereof to ABG specifying in reasonable detail the basis of the
request and in the event that the Company desires ABG to provide a replacement
employee or subcontractor, ABG will use its best diligent efforts to provide a
replacement as soon as reasonably practicable. The Company shall not
unreasonably or unlawfully invoke its rights hereunder.

        5. Compensation.

As compensation for the Services, the Company hereby agrees to compensate ABG
as follows:

            A. Monthly Fee. In consideration for the Services, the Company shall pay
to ABG an administrative service fee of $10,000 per month (the “Monthly Fee”).
The Monthly Fee shall be payable on the 1st day of each month. Accordingly, the
Monthly Fee shall be deemed to have commenced on January 1, 2001. The Company
agrees and accepts that at ABG’s sole discretion, and on ten days prior written
notice to the Company (the “Conversion Notice”), all or any portion of the
Monthly Fee may be converted into restricted (i.e., unregistered) shares of the
Company’s Common Stock, $.001 par value per share (the “Shares”) on or before
December 31st of each year during the term of this Agreement. The Shares shall
be valued at a conversion price equal to 75% of the closing price for the
Company’s common stock on the day before the date of the Conversion Notice; and

            B. Expenses. It is expressly agreed and understood that ABG’s compensation
as provided herein does not include extraordinary expenses such as airfare,
out of town travel, litigation, etc. The Company hereby agrees to seek
pre-approval from the Company for any such expenses in excess of $100. Any and
all expenses will be invoiced by ABG to the Company as soon as practicable and
will be due upon receipt.

        6. Representations Warranties, and Covenants. In order to implement the
operation of this Agreement, the Parties hereby jointly and severally
represent, warrant, covenant, agree and consent as follows:

            A. Good Standing. ABG and the Company are corporations duly formed,
validly existing and in good standing under the laws of the State of Nevada,
with full power and authority to conduct their respective business and to
deliver and perform this Agreement in the time and manner contemplated;

            B. No Breach. The execution, delivery and performance of this Agreement,
in the time and manner herein specified, will not conflict with, result in a
breach of, or constitute a default under any existing agreement, indenture, or
other instrument to which either ABG or the Company is a party or by which
either entity may be bound or affected;

3

 

            C. Authority. Both ABG and the Company have full legal authority to enter
into this Agreement and to perform the same in the time and manner
contemplated;

            D. Approval. This Agreement has been submitted to, ratified and approved
by the respective Boards of Directors of ABG and the Company. Except for the
foregoing, no action or proceeding on the part of ABG or the Company is
necessary to authorize this Agreement and the transactions contemplated hereby.
No filing with, authorization, consent or approval of any public body or
authority is necessary for the consummation by ABG and the Company of the
transaction contemplated by this Agreement;

            E. ABG’s Performance. ABG represents and warrants that all Services
provided hereunder shall be performed in a professional and workmanlike manner;

            F. ABG’s Investment Intent. ABG acknowledges, accepts and understands
that: (i) the Shares will be “restricted securities” as that term is defined
under the Securities Act of 1933, as amended (the “Act”); (ii) ABG will be
acquiring the and the Shares solely for ABG’s own account, for investment
purposes and without a view towards the resale or distribution thereof; (iii)
ABG will hold the and the Shares for the applicable one or two year holding
period proscribed by Rule 144 under the Act; and (iv) any sale of the and the
Shares will be accomplished only in accordance with the Act or the rules and
regulations of the Commission adopted thereunder. In addition, ABG hereby
consents to the imprinting of a standard form of restrictive legend on all
certificates representing the Shares as well as the imposition of a standard
form of stop transfer order against the Shares on the books and records of the
Company or its transfer agent;

        7. Confidential Data. The following confidentiality provisions shall be
applicable to this Agreement:

            A. ABG shall not divulge to others, any secret or confidential
information, knowledge, or data concerning or pertaining to the business and
affairs of the Company, obtained by it as a result of its employment, unless
authorized, in writing, by the Company; and

            B. The Company shall not divulge to others, any secret or confidential
information, knowledge, or data concerning or pertaining to the business and
affairs of ABG, obtained by it as a result of its employment, unless
authorized, in writing, by ABG; and

            C. Neither Party shall be required in the performance of its duties to
divulge to the other Party or any officer, director, agent or employee of the
other Party, any secret or confidential information, knowledge, or data
concerning any other person, firm or entity (including, but not limited to, any
such persons, firm or entity which may be competitor or potential competitor of
one Party) which either Party may have or be able to obtain otherwise than as a
result of the relationship established by this Agreement.

4

 

        8. Independent Contractor. ABG is, shall be, and be deemed to be, an
independent contractor in the performance of its duties hereunder, any law of
any jurisdiction to the contrary notwithstanding. The Company shall not, by
reason of this Agreement or the performance of its duties hereunder, be, or be
deemed to be, an employee, agent, partner, co-venturer or controlling person of
the Company; and ABG shall have no power to enter into any agreement on behalf
of or otherwise bind the Company. ABG shall not have, or be deemed to have,
any fiduciary obligations or duties to the Company and shall be free to pursue,
conduct and carry on for its own account (or for the account of others) such
activities, employments, ventures, businesses and other pursuits as ABG in its
sole, absolute and unfettered discretion, may elect.

        9. Rights and Obligations Subsequent to Closing. The representations,
warranties, agreements, covenants and obligations of each Party contained
herein are material, shall be deemed to have been relied upon by the other
Party and shall survive execution of this Agreement for one year, regardless of
any investigation, and shall not merge in the performance of any obligation by
any Party hereto.

        10. Expenses. Regardless of whether or not the transaction contemplated
herein is consummated, each Party shall be responsible for its own share of all
costs and expenses incurred in connection with this Agreement and transactions
contemplated hereby.

        11. Amendment. This Agreement may be amended by the Parties hereto by
action taken by their respective Board of Directors at any time. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the Parties hereto.

        12. Binding Effect. All of the terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of and be enforceable by
and against the successors and assigns of the Parties hereto.

        13. Assignment. This Agreement is binding upon and shall inure to the
benefit of the Parties hereto and their respective successors and assigns.
Notwithstanding the foregoing, neither party shall assign or transfer any
rights or obligations hereunder, except that: (i) the Company may assign or
transfer this Agreement to a successor corporation in the event of a merger,
consolidation, or transfer or sale of all or substantially all of the assets of
the Company, provided that no such further assignment shall relieve the Company
from liability for the obligations assumed by it hereunder; and (ii) ABG may
assign or transfer this Agreement to any firm which is an affiliate of ABG,
provided that no such assignment shall relieve ABG from liability for its
obligations hereunder.

        14. Entire Agreement. Each of the Parties hereby covenants that this
Agreement is intended to and does contain and embody herein all of the
understandings and agreements, both written and oral, of the Parties hereby
with respect to the subject matter of this Agreement, and that there exists no
oral agreement or understanding, express or implied, whereby the absolute,
final and unconditional character and nature of
this Agreement shall be in any way invalidated, empowered or affected. There
are no representations, warranties or covenants other than those set forth
herein.

5

 

        15. Laws of the State of Nevada. This Agreement shall be deemed to be
made, executed and delivered in, governed by and interpreted under and
construed in all respects in accordance with the laws of the State of Nevada,
irrespective of the place of domicile or residence of any Party. In the event
of controversy arising out of the interpretation, construction, performance or
breach of this Agreement, the Parties hereby agree and consent to the
jurisdiction and venue of the United States District Court for the District of
Nevada and further agree and consent that personal service or process in any
such action or proceeding outside of the State of Nevada and in the City of Las
Vegas shall be tantamount to service in person or within the State of Nevada
and in the City of Las Vegas and shall confer personal jurisdiction and venue
on the said Court.

        16. Originals. This Agreement may be executed in counterparts, each of
which so executed shall be deemed an original and constitute one of the same
Agreement.

        17. Notices. All notices that are required to be or may be sent pursuant
to the provisions of this Agreement shall be sent by certified mail, return
receipt requested, or by overnight package delivery service to the President or
Chief Executive Officer of each of the Parties at the address appearing
herein, and shall count from the date of mailing or the date following the date
of the airbill.

        18. Modification and Waiver. A modification or waiver of any of the
provisions of this Agreement shall be effective only if made in writing and
executed with the same formality of this Agreement. The failure of any Party
to insist upon strict performance of any of the provisions of this Agreement
shall not be construed as a waiver of any subsequent default of the same or
similar nature or of any other nature or kind.

        19. Severability. If any provision or any portion of any provision of
this Agreement, or the application of such provision or any portion thereof to
any person or circumstance shall be held invalid or unenforceable, the
remaining portions of such provision and the remaining provisions of this
Agreement or the application of such provision or portion of such provision as
is held invalid or unenforceable to persons or circumstances other than those
to which it is held invalid or unenforceable, shall not be affected thereby.

        20. Indemnification. The following indemnification provisions shall be
applicable to this Agreement:

            A. Each Party hereby irrevocably agrees to indemnify and hold the other
Party harmless from any and all liabilities and damages (including legal or
other expenses incidental thereto), contingent, current, or inchoate to which
that Party may become subject as a direct, indirect or incidental consequence
of any action by the indemnifying Party or as a consequence of the failure of
the indemnifying Party to act, whether pursuant to requirements of this
Agreement or otherwise; and

            B. In the event it becomes necessary to enforce this indemnity through an
attorney, with or without litigation, the successful Party shall be entitled to
recover from the indemnifying Party all costs incurred including reasonable
attorneys’ fees throughout any negotiations, trials or appeals, whether or not
any suit is instituted.

6

 

        21. Taxes. Each Party shall be responsible for all taxes which are based
on its own net income. All sales, value added, and use taxes arising out of
transactions occurring under this Agreement shall be the responsibility of the
Party conducting such transaction and each Party hereby indemnifies and holds
the other harmless from any and all claims relating to sales or use taxes
collected or due by the Party conducting each of the transactions hereof; and

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
the undersigned duly authorized respective officers, effective as of the day
and year first set forth above.

ASSOCIATED BUSINESS GROUP, INC.

	 	 	 
	By:
	 	 
	

	 	

Jerry Drizin, President

E-SMART TECHNOLOGIES, INC.

	 	 	 
	By:
	 	 
	

	 	

Mary A. Grace, President

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]