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Product Endorsement Agreement

    The parties to this agreement are Rachel Electronics, Inc. (Company) and Robert Fullerman (Fullerman).

    1.0 Recitals

    Company is in the business of manufacturing educational learning products suited for children of elementary school age. Fullerman is a popular television personality, known on television as Mr. Wizard, who hosts a weekly educational science television program suited for children of elementary school age. To capitalize on recognition of Fullerman by children, Company wishes Fullerman to endorse and promote Company's products by touring school districts throughout the country and by permitting the use of his name, image and likeness in advertising of and on the packaging of Company's products.

    Negotiations to that end during August, 1997 precipitated a dispute between Company and Fullerman about whether Fullerman had agreed to the terms of an endorsement agreement. As a result of mediation of that dispute, the parties hereby agree to the terms set forth below.

    2.0 Definitions

    2.1 "Endorsement" or "endorse" means the Company's use of Fullerman's name, image or likeness in any advertising by Company of its products or on any packaging of Company's products, accompanied by any of the following words, or words to the same effect:  Recommended by Mr. Wizard or Mr. Wizard's Seal of Approval.

    2.2  "Promotional tours" or "promotes" means in person meetings between Fullerman and representatives of school districts in the United States which include elementary schools, in which Fullerman describes the features and educational benefits of Company products, demonstrates the use of Company products, and encourages representatives of school districts to consider use of Company products in the elementary school curriculum.

    3.0 Endorsement

    3.1 Prior to Fullerman's endorsement of Company products, Company shall furnish to Fullerman a sample of each product it wishes Fullerman to endorse. Fullerman shall promptly examine and evaluate such products to determine whether he believes such products to be safe and educational for age groups to which the products are targeted and shall, thereafter, promptly communicate his conclusion to Company in writing. If and only if Fullerman communicates such a conclusion to Company, Fullerman consents to endorsement of such products. Fullerman is not obligated under this paragraph to examine and evaluate more than two such products in any thirty day period.

    3.2 Advertising by Company which includes endorsement shall not appear in any radio or television spots aired after midnight on October 19, 1998, shall be removed from Company's web site no later than October 19, 1998, and shall not appear in any other medium bearing a publication date after October 19, 1998. Packaging of products manufactured after October 19, 1998 shall not include endorsement. Company may not manufacture or induce the manufacture of products before October 20, 1998 in any quantity unreasonably disproportionate to reasonably expected demand for Company products distributed in the ordinary course. Fullerman acknowledges that manufacturing of packaging for Company products to be sold during the Christmas season, 1998, will likely occur prior to October 20, 1998.

    4.0 Promotional tours

    4.1 Fullerman shall undertake eight promotional tours between December 1, 1997 and October 19, 1998.

    4.2 Company shall be responsible for making all arrangements necessary for Fullerman to undertake promotional tours, including contact of school district officials, scheduling of meetings with school district officials, transportation, and lodging. Company shall arrange transportation and lodging in accordance with Company's Rules and Regulations for Travel, Lodging and Expense Reimbursement, the provisions of which are incorporated herein by this reference. Company has furnished Fullerman with a copy of such rules and regulations and Fullerman has read those rules and regulations prior to execution of this agreement.

    4.3 Fullerman has furnished to Company a schedule of Fullerman's commitment to tape the television show Mr. Wizard. Company shall schedule promotional tours on days which do not conflict with Fullerman's taping commitments. Company shall schedule all promotional tours on weekdays, shall not schedule more than one promotional tour in any thirty day period, shall not schedule a promotional tour during the period December 24, 1997 through January 2, 1998, and shall not require a promotional tour which requires Fullerman to be absent from his residence for a period in excess of 72 hours.

    4.4 A senior sales representative of Company shall accompany Fullerman on each promotional tour.

    4.5 Prior to any promotional tour, Company shall furnish to Fullerman a sample of each product it wishes Fullerman to promote during a tour. Fullerman shall promptly examine and evaluate such products to determine whether he believes such products to be safe and educational for age groups to which the products are targeted and shall, thereafter, promptly communicate his conclusion to Company in writing. During a promotional tour, Fullerman need not promote any product which he concludes is either unsafe or lacking in educational value for age groups to which the product is targeted. Fullerman is not obligated under this paragraph to examine and evaluate more than two such products in any thirty day period.

    5.0 Compensation and reimbursement

    5.1 As compensation for examination and evaluation of Company products, for endorsement, and for promotional tours, Company shall pay Fullerman $250,000. Such compensation shall be payable in equal installments on October 30, 1997, January 31, 1997, April 30, 1997, and October 20, 1998.

    5.2 Company shall reimburse Fullerman for the reasonable and necessary expenses of promotional tours in accordance with Company's Rules and Regulations for Travel, Lodging and Expense Reimbursement.

    6.0 Release

    This agreement supersedes all negotiations and agreements between Company and Fullerman which occurred during August, 1997. Company and Fullerman hereby mutually release each other from any claim which either may have against the other by virtue of such negotiations or by virtue of any agreement allegedly entered between Company and Fullerman prior to the execution of this agreement.

    7.0 Costs and attorney's fees

    Each party shall bear his or its own costs and attorney's fees incurred in connection with the mediation leading to the preparation and execution of this agreement. Should a dispute arise relating to this agreement, the prevailing party in any arbitration or litigation concerning this agreement shall be entitled to recover from the other party reasonable attorney's fees expended in connection with such dispute.

    8.0 Assignment and delegation

    Company may not assign it rights or delegate its duties under this agreement to another. Fullerman may not delegate his duties under this agreement to another.

    7.0 Merger

    This agreement constitutes the complete agreement of the parties with respect to Fullerman's endorsement of Company products and promotional tours for Company, exclusive of any other prior or contemporaneous promises or representations.

    9.0 Modification

    This agreement may not be modified except by an agreement in writing signed by all of the parties to this agreement.

    10.0 Governing law

    This validity, interpretation and enforcement of this agreement shall be governed by the law of the State of California.

Agreed:

_____________________              ___________________

Rachel Electronics, Inc.                      Date
By Jane Roland, President

 

_____________________              ___________________

Robert Fullerman                                Date