Free Advertising Agreement - Sample Legal Document

This agreement (together with the Exhibits, Schedules and Attachments hereto, if any, this “ Agreement ”) is made as of the ______ day of July 2008 by and between Cellynx Inc., a Nevada corporation (“ CELLYNX ”) and Dollardex, Corp. a Panama corporation, (“ DOLLARDEX ”).  CELLYNX and DOLLARDEX are sometimes referred to herein as a “ Party ” or collectively as the “ Parties .”

WHEREAS, CELLYNX is engaged in the development, production, assembly, marketing and licensing of certain proprietary amplification devices for wireless products, principally the 5BARz™ and related accessories line of products.

WHEREAS, DOLLARDEX proposes to establish a distribution network of CELLYNX’s line of products in the territory described herein as well as has the necessary ability to locate, train, and assist international dealers in the promotion, marketing and sales of the 5BARz™ and related accessories line of products, and to provide other related services to CELLYNX in connection therewith.

WHEREAS, CELLYNX and DOLLARDEX have previously entered into that certain Joint Venture Agreement dated January ___, 2008 pursuant to which CELLYNX granted to DOLLARDEX and certain JV Companies (as defined therein) exclusive distribution rights of DOLLARDEX’s products in a designated territory (the “ Prior Agreement ”).

WHEREAS, the Parties now wish to terminate the Prior Agreement, and replace it with this Agreement, upon the full execution of this Agreement by the Parties.

NOW THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

1.1               “ Change of Control " shall mean any of the following transactions involving another company (other than CELLYNX or any of its affiliates) (a) a merger or consolidation of DOLLARDEX which results in the voting securities of DOLLARDEX outstanding immediately prior thereto ceasing to represent at least 50.1% of the combined voting power of the surviving entity immediately after such merger or consolidation; (b) the sale of all or substantially all of the assets of the DOLLARDEX; or (c) any one person (other than CELLYNX, any trustee or other fiduciary holding securities under an employee benefit plan of CELLYNX, or any corporation owned directly or indirectly by the stockholders of CELLYNX, in substantially the same proportion as their ownership of stock of CELLYNX), together with any of such person's "affiliates" or "associates", as such terms are used in the Securities Exchange Act of 1934, as amended, becoming the beneficial owner of 50.1% or more of the combined voting power of the outstanding securities of DOLLARDEX or by contract or otherwise having the right to control the board of directors or equivalent governing body of DOLLARDEX or the ability to cause the direction of management of the DOLLARDEX.

1.2               “ Cost ” shall mean costs of goods sold as determined by U.S. generally accepted accounting principles.

1.3                “ Customer ” shall mean any reseller (whether wholesaler or retailer) or end user of the Products in the Territory.

1.4               “ Dealer(s) ” shall mean distributors and agents of the Products, as appointed by DOLLARDEX  and accepted by CELLYNX, in the Territory.

1.5               " Intellectual Property Rights " means the collective intellectual property rights now held or hereafter created or acquired by a party, whether arising under the laws of the United States or any other state, country or jurisdiction, for (i) all classes or types of patents, utility models, utility patents and design patents (including, without limitation, originals, divisions, continuations, continuations-in-part, extensions, renewals or reissues), patent applications and disclosures for these classes or types of patent rights in all countries of the world (collectively " Patent Rights "); (ii) all copyrights in both published works and unpublished works, software, all registrations and applications therefor and all moral rights in such works (collectively " Copyrights "); (iii)  all trade names, logos, common law trademarks and service marks, trademark, and service mark registrations, related goodwill and applications therefore throughout the world (collectively, “ Trademarks ”); (iv) all know-how, trade secrets, inventions, other confidential information, customer lists, software, technical data or specifications, testing methods, business or financial information, research and development activities, product and marketing plans, customer and supplies information, process technology, plans, drawings, and blue prints (collectively " Trade Secrets "); and (v) all rights (contractual or otherwise) to prevent disclosure or use of confidential information, and any other similar form of intellectual property or proprietary rights, statutory or otherwise, whether registrable or not and shall include applications thereto.

1.6               “ Net Earnings ” shall mean the total net earnings, as defined under U.S. generally accepted accounting principles, before taxes, of DOLLARDEX from sales, licensing and other income relating directly or indirectly to the Products in the Territory.

1.7               “ Products ” shall mean the 5BARz™ and all related accessories, if any, and any and all future products of CELLYNX.

1.8               “ Territory ” or “ Territories ” shall mean the following nine (9) regions: Canada, South America, Europe, Middle East, China, India, Australia, Africa, and South East Asia or those countries which may be expanded from time to time by mutual agreement by the Parties to include other countries.

2.1   Termination of Prior Agreement .  The Prior Agreement will be terminated upon the full execution of this Agreement.  Neither Party shall remain liable for any monies owed by it to the other Party under the Prior Agreement, unless specifically provided for herein.

2.2   Exclusive Appointment .  Subject to DOLLARDEX compliance with the terms and conditions of this Agreement and subject to any limitations in this Agreement, CELLYNX appoints DOLLARDEX, and DOLLARDEX accepts such appointment, as the independent, exclusive distributor of the Products in and limited to the Territory. Except for the limited right to appoint other Dealers to market and distribute the Products as contemplated herein, and subject to the terms and conditions herein, DOLLARDEX shall have no right to sublicense the rights set forth herein.  Subject to DOLLARDEX’s compliance with the terms and conditions of this Agreement, during the term of this Agreement, CELLYNX will not appoint another distributor of the Products in the Territory.

2.3   Distribution .  DOLLARDEX will (a) sell and distribute the Products directly to Customers in the Territory, or (b) sell and distribute the Products to Dealers throughout the Territory for resale by such Dealers.  DOLLAREX  shall not sell to parties who resell Products outside the Territory and shall make reasonable efforts to monitor and detect such resales outside the Territory and prevent such resales.

2.4   Trademark License .  Subject to DOLLARDEX’s compliance with the terms and conditions of this Agreement, CELLYNX grants to DOLLARDEX an exclusive, non-transferable license to use the trade names, trademarks, logos and designations in or associated with the Products, as specified in Exhibit A (“Mark”), during the term of this Agreement, solely in connection with DOLLARDEX’s  marketing, promotion and distribution of the Products within the Territory.  Any such use of a Mark by DOLLARDEX must correctly attribute ownership of such mark to CELLYNX and must be in accordance with applicable law and CELLYNX’s then-current trademark usage guidelines.  DOLLARDEX will not remove or obscure any Marks on or in the Products, and will not attach any additional trademarks, logos or trade designations on or to the Products.  For the avoidance of doubt, the preceding language will not prohibit DOLLARDEX from noting DOLLARDEX as the exclusive distributor of the Products.  DOLLARDEX acknowledges and agrees that CELLYNX owns the Marks and that any and all goodwill and other proprietary rights that are created by or that result from DOLLARDEX’s use of a Mark hereunder inure solely to the benefit of CELLYNX.  DOLLARDEX will at no time contest or aid in contesting the validity of ownership of any Mark or take any action in derogation of CELLYNX’s rights herein, including, without limitation, selling any product or applying to register any trademark, trade name or other designation that is confusingly similar to any Mark.

2.5   License Restrictions .  DOLLARDEX may not market the Products under any other mark, and may not modify the Marks in any manner.  All rights not expressly granted hereunder are reserved to CELLYNX.  The processes, know-how, and related material proprietary to CELLYNX necessary to manufacture the Products (the “ Technology ”) and all Intellectual Property Rights therein are and will remain the sole and exclusive property of CELLYNX.

3.1             Dealers Network .  DOLLARDEX will develop a network of Dealers in the Territory for the introduction, sale, maintenance, and distribution of the Products in the Territory.  DOLLARDEX shall insure that any and all subsequent distribution agreements with its Dealers shall be subject to the terms and conditions of this Agreement.

3.2             Pre-Approval of Dealers, Budgets and Business Plans .  CELLYNX shall have the right to pre-approve any Dealer introduced by DOLLARDEX and the  budgets and business plans of such Dealers, which approvals shall not be unreasonably withheld.  The Parties agree that, not excluding other reasonable criteria for non-approval, if any one or more of the following factors are present, the potential Dealer shall deemed to be unacceptable to CELLYNX unless specifically agreed to otherwise by CELLYNX:

3.3             Promotion .  DOLLARDEX will promote and advertise the Products in accordance with CELLYNX’s reasonable policies, as announced from time to time.  DOLLARDEX will obtain CELLYNX’s prior approval of any promotional or advertising material relating to the Products that are not expressly authorized be CELLYNX’s policies before publishing or distributing such materials.  If CELLYNX determines in its reasonable judgment that any Products or advertising or promotional materials used or planned by DOLLARDEX may be or are directly or indirectly injurious or prejudicial to the Marks or the rights thereto of CELLYNX, then upon notice from CELLYNX, DOLLARDEX shall promptly cease or cause the cessation of such activity.

3.4               DOLLARDEX Personnel .  DOLLARDEX will maintain sufficient technical and sales personnel having the knowledge and skills necessary to: (i) inform customers about the features and capabilities of the Products and, to the extent necessary, competitive products; (ii) service and support the Products in accordance with DOLLARDEX’s obligations under this Agreement; and (iii) otherwise perform its obligations under this Agreement. DOLLARDEX will, at its expense, comply with CELLYNX’s minimum training requirements for distributors of the Products.

3.5               Support .  DOLLARDEX will provide prompt and comprehensive pre-sales and post-sales support services, at its own cost, for the Products to DOLLARDEX’s Dealers and Customers in the Territory.  CELLYNX will maintain sufficient technical and sales personnel to provide such support service to DOLLARDEX  and its Dealers and Customers as reasonably necessary.

3.6               Drop Shipment .  CELLYNX will drop ship the Products to DOLLARDEX’s designated HUBs or such other location at the election of DOLLARDEX.  All costs related to such drop shipment are to be borne by DOLLARDEX or by the HUB or such other third party as separately agreed to between DOLLARDEX and the HUB or such third party. DOLLARDEX may establish such HUBs or other drop shipment locations with the written consent of CELLYNX which shall not be unreasonably withheld.  The risk of loss or damages to destruction of the Products shall be borne by DOLLARDEX.  For purposes of clarification the Parties acknowledge that the drop shipment costs to be borne by DOLLARDEX as provided for in this Section 3.6, shall be in addition to, apart from, and not counted as against, any other fee or monies to be paid by DOLLARDEX including without limitation the those provided for under Section 3.15 to this Agreement.

3.7               Facilities .  DOLLARDEX shall provide office facilities in the Territory to be used as training facilities by Dealers as DOLLARDEX deems necessary to meet its obligations.

3.8               Packaging .  DOLLARDEX will distribute the Products unmodified and with all packaging and proprietary rights statements intact, and any changes to such packaging or marking shall require CELLYNX’s pre-approval.   DOLLARDEX shall translate and provide all packaging material and related literature, including without limitation any CELLYNX users guides into the applicable language(s) in the Territory with all costs associated therewith to be borne by DOLLARDEX.

3.9               Business Conduct .  DOLLARDEX will: (i) conduct business in a manner that reflects favorably at all times on the Products and the good name, goodwill and reputation of CELLYNX; (ii) make no false or misleading representations or advertisements with regard to CELLYNX or the Products; and (iii) make no representations, warranties or guarantees to customers or to the trade with respect to the specifications, features or capabilities of the Products that are inconsistent with the literature and written instructions distributed by CELLYNX.

3.10               Inventory .  DOLLARDEX will maintain an inventory of the Products sufficient to meet the needs of its Customers on a timely basis, but, in any event, at least an inventory sufficient to meet DOLLARDEX’s reasonably anticipated demands for any thirty (30) day period.

3.11               Competition .  DOLLARDEX shall not, and shall ensure that its Dealers shall not, sell, contract to sell, arrange for the sell, or otherwise acquire any interest either directly or indirectly in any products that compete with the Products.

3.12               Maintenance of Regulatory Approvals, Licenses, Certifications and CE Mark .

(i)   CELLYNX shall be fully responsible for obtaining all necessary certification and registration for the sale of the Products in the Territory.  CELLYNX will be solely responsible for maintaining all obligations required as part of any regulatory approvals, licenses, ISO certifications and CE Markings issued under CELLYNX’s name. All such efforts shall be undertaken at CELLYNX’s cost.  CELLYNX shall also maintain in good standing all necessary regulatory approvals, licenses, ISO certifications and CE Markings issued under CELLYNX’s name.

(ii)   DOLLARDEX shall be fully responsible for obtaining all necessary certification and registration for DOLLARDEX to sell Products. DOLLARDEX will be solely responsible for maintaining all obligations required as part of any regulatory approvals, licenses, ISO certifications and CE Markings issued under CELLYNX’s name. All such efforts shall be undertaken at DOLLARDEX’s cost.  DOLLARDEX shall also maintain in good standing all necessary regulatory approvals, licenses, ISO certifications and CE Markings issued under CELLYNX’s name and will notify the issuing parties and/or governmental agencies in each country where such regulatory approvals, licenses, ISO certifications and CE Markings have been issued or are to be issued under CELLYNX’s name.

(iii)   DOLLARDEX will be solely responsible for ensuring its activities in the promotion, marketing, sales and distribution of Products is conducted in compliance with all regulations applicable to DOLLARDEX in each country where such activities take place. CELLYNX  commits to ensure that all regulatory approvals, licenses, ISO certifications and CE Markings of the Products are properly maintained or obtained, as applicable, such that there is no impairment of the good name and goodwill of CELLYNX.

(iv)   CELLYNX  will be solely responsible for communicating with pertinent governmental agencies or other regulating bodies with respect to all regulatory approvals, licenses, ISO certifications and CE Markings currently issued under CELLYNX’s name.

(v)   Upon termination of this Agreement for any reason, DOLLARDEX, at the request of CELLYNX, will use commercially reasonable efforts to transfer any and all regulatory or governmental certifications or approvals pertaining to Products to CELLYNX.  CELLYNX shall reimburse DOLLARDEX for all reasonable and actual costs incurred by DOLLARDEX related to any and all regulatory or governmental certifications or approvals pertaining to the Products, if obtaining such certifications or approvals had been approved by CELLYNX in writing prior to being obtained.

3.13               Invoices, Collections, and Taxes .  DOLLARDEX shall render all invoices directly to Dealers or Customers.  Invoice payment shall be made directly to DOLLARDEX.  It is expressly understood by the Parties that full responsibility for all collections rests with DOLLARDEX.  CELLYNX shall have no obligation to pay any taxes on the sale of the Products in the Territory and DOLLARDEX agrees to indemnify and reimburse CELLYNX for any such taxes imposed on CELLYNX by any governmental entity with respect to the sale of the Products in the Territory.

3.14               Insurance .  DOLLARDEX agrees to procure and to maintain general comprehensive liability insurance covering each occurrence of bodily injury and property damage in the amount of not less than $1,000,000 per occurrence, $2,000,000 aggregate coverage, with endorsements for product and completed operations, blanket contractual liability, and vendor’s liability. DOLLARDEX agrees to furnish upon request by CELLYNX a certificate of insurance indicating coverage in the required amounts and stating that the insurer shall endeavor to give CELLYNX written notice at least thirty (30) days prior to any cancellation, non-renewal, or material change in coverage. CELLYNX must be named as an additional insured or loss payee.

3.15               Cost of Product .   CELLYNX shall sell the Products to DOLLARDEX at Cost plus 10