Exhibit 10.08
AGREEMENT
PARTIES: QUANTUM QUANTUM RESEARCH, INC.,
an Arizona corporation
0000 X. Xxxxxx Xxxx, Xxxxx X000
Xxxxxxxxxx, Xxxxxxx 00000
and
HEALTHLINK: HEALTHLINK INTERNATIONAL, INC.,
a Nevada corporation
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxx 00000
DATE: December 27, 1999
RECITALS:
A. Quantum has the exclusive right to purchase specific colostrum/whey
extracts (the "Extracts") from a third party supplier for use in the
production of dietary supplements and homeopathic remedies formulated and
owned by Quantum.
B. HealthLink is in the business of manufacturing and marketing natural and
nutritional products, and other products, in the United States and desires
to market certain Quantum Products, and to manufacture products utilizing
the Extracts.
C. Quantum desires to sell its Products and the Extracts to HealthLink and
grant HealthLink the right to market and manufacture the Products on an
exclusive basis upon the terms and conditions set forth below.
NOW THEREFORE, for good and valuable consideration the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
SECTION 1 - DEFINITIONS
1.1 Affiliates. Any business entity shall be deemed to be affiliated with
HealthLink if it, directly or indirectly, controls such entity. An entity
shall be deemed to be affiliated with another entity, if one of them is the
subsidiary of the other or both are the subsidiaries of the same entity or
each of them is ultimately controlled by HealthLink. If two (2) entities
are affiliated with HealthLink at the same time, they shall be deemed to be
affiliated with each other.
1.2 Confidential Information: Confidential Information means all information
that is of a proprietary nature, including without limitations, the
Specifications and all other technical information, methods, processes,
techniques, data bases, computer programs, descriptions, drawings,
documents, sketches, files, records, data, designs, plans, and any other
information that concerns any dietary supplements or other products
formulated and owned by Quantum as well as the Products as defined herein.
Confidential information also includes as to HealthLink and its affiliates,
all information of a proprietary nature relating to its or their
independent associates including without limitation current and historic
population counts, names, addresses, telephone numbers, and e-mail
addresses; also current and projected recurring levels; current and
projected product inventory levels, turnovers and turnover ratios; current
and projected product sales levels, costs of sales, commissions and
proposals or plans for commission program changes.
1.3 Governmental Agencies: Governmental Agencies shall mean any agency having
jurisdiction over the Products in the Territory.
1.4 Payment: All references to payments shall refer to United States dollars.
1.5 Products: Products shall mean those certain Quantum products described in
Exhibit A attached hereto and any subsequent addenda thereto signed by both
parties.
1.6 Specifications: Specifications shall mean the specific formulae developed
by Quantum for the production of its products including the Products which
are the subject of this Agreement.
1.7 Territory: Territory shall mean the United States of America.
SECTION 2 - GRANT OF LICENSE
2.1 Quantum hereby grants to HealthLink and its Affiliates the right to
distribute and sell the Products in the Territory on an exclusive basis,
subject to the terms of this Agreement. Quantum further grants to
HealthLink the right to manufacture the Products utilizing the Extracts and
to distribute and sell same, subject to the terms of this Agreement.
SECTION 3 - QUANTUM'S OBLIGATIONS
3.1 Quantum shall supply HealthLink such amounts of the Products or Extracts as
HealthLink needs, subject to the other terms and conditions contained in
this Agreement.
3.2 Quantum will provide the technical information relating to the Products and
their ingredients and such other support reasonably required by HealthLink
in the context of consumer education and simplification of such technical
information. Quantum will provide, as reasonably required by HealthLink,
adequate training to sales support staff regarding the Products.
3.3 At HealthLink' request, Quantum will provide, in its reasonable discretion
and as such may relate to the Products, (i) current and subsequent
scientific, medical and clinical studies, (ii) the right to the use of the
name, image, likeness, picture sayings, writings and reputation of the
members of Quantum's medical professionals, and (iii) copies of all press
releases and other marketing materials used by Quantum.
3.4 To the extent HealthLink undertakes the manufacture of any Products,
Quantum will provide to HealthLink all necessary technical information
including raw material specifications, production and testing methods,
packaging specifications, stability data and technical support to enable
HealthLink to manufacture the Products.
3.5 Quantum shall not compete directly or indirectly with HealthLink or assist
any other person or entity to compete with HealthLink in the manufacture,
sale, or distribution of the Products in the Territory. However, Quantum
shall not be liable to HealthLink for third parties that, make, advertise,
sell or distribute the Products without Quantum's consent. HealthLink
understands that Quantum has developed other products that may be similar
in nature to the Products and that these products may be present or
presented in the Territory by others and that this covenant shall not apply
to such other products.
3.6 Quantum shall provide HealthLink the benefit and description of all
licenses, certifications and permits issued by any governmental,
regulatory, or non-public agency or organization with respect to the
Products, including Licenses, certifications and permits issued by the
United States Food and Drug Administration or any other authorized agency
as may be encountered in advancing the sale of the Products. Quantum shall
provide ongoing assistance to HealthLink to the extent necessary to secure
the benefits of any such licenses, certifications, and permits.
3.7 Quantum shall not disclose any Confidential Information peculiar to
HealthLink to any third parties without HealthLink's written consent.
3.8 Quantum warrants that the Products will be manufactured in the United
States of America to the standards of the nutritional supplement industry,
and Quantum will monitor the manufacturing processes as it deems necessary
and appropriate to assure quality and Product contamination avoidance. Such
monitoring will include, but not be limited to, obtaining appropriate
Certificate of Analysis for each ingredient in the Products and selecting a
manufacturer that applies appropriate standards to the manufacturing
process. Facilities selected for manufacturing will be selected based upon
criteria that includes licensing, quality control programs, and experience
in working with the Product materials and reputation.
3.9 Quantum will require each manufacturer to provide a certificate of
insurance listing Quantum as an additional insured appearing on their
product liability insurance policy and will, upon request, provide a copy
of the certificate to HealthLink.
3.10 Quantum will develop for HealthLink label copy for each product and provide
assurance that such labeling is in compliance with the current requirements
of applicable regulatory agencies. Legal fees incurred by Quantum in
connection with such product labeling will be paid by HealthLink.
3.11 Quantum, upon request from HealthLink, will assist in the development of
copy for collateral materials related to the Products. Quantum will, upon
request, review and approve all such collateral materials as directed by
HealthLink. Collateral materials include, but are not limited to,
brochures, audiotapes, videotapes, and training manuals. Such review will
include a legal review to determine that the collateral materials are in
compliance with the current regulatory requirements of applicable
regulatory agencies. Legal fees incurred by Quantum in completing this
review will be paid by HealthLink.
3.12 Quantum, upon request from HealthLink, will assist in addressing issues
related to its development of an appropriate consumer safety program. Such
assistance will cover product returns, safety seals, consumer FAQ, lot
storage, sampling guidelines and such other issues as the parties deem
appropriate.
3.13 Quantum shall indemnify, defend and hold harmless HealthLink, its
affiliates, officers and independent sales associates from and against any
and all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies, including reasonable attorneys' fees
and costs that HealthLink, its affiliates, officers and independent sales
associates may incur or suffer, which arise, result from, or relate to
Quantum's performance, or failure to perform, the warranties, duties and
responsibilities delineated in paragraphs 3.6, 3.8, 3.10, and 3.11.
SECTION 4 - OBLIGATIONS OF HEALTHLINK
4.1 HealthLink and its affiliates shall not modify, revise, repackage or
relabel any of the Products prior to sale or distribution of the Products.
HealthLink, its affiliates and its or their independent associates or
distributors shall not make any claims or representations regarding the
nature or composition of the Products or the performance attributes thereof
which claims or representations are not wholly encompassed within the
claims made by Quantum in the labeling, use instructions or marketing
literature or materials prepared or approved in writing for HealthLink, or
which are otherwise not specifically approved in writing by Quantum prior
to their use or publication by HealthLink or its affiliates.
4.2 On or before the last day of each month, HealthLink shall provide to
Quantum reports reflecting all sales of Products during the immediately
preceding month and all sales on a year-to-date basis through the end of
the immediately preceding month, the amount of inventory of Products on
hand at the end of the immediately preceding month, and the anticipated
production and ordering schedule for the three-month period following the
date of each report.
4.3 HealthLink shall indemnify, defend and hold harmless Quantum, its
affiliates and officers from and against any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including reasonable attorneys' fees and costs that Quantum
may incur or suffer, which arise, result from, or relate to any violation
by HealthLink, its affiliates or any of their independent sales associates
of the restrictions of paragraph 4.1 above.
4.4 HealthLink shall not disclose any Confidential Information peculiar to
Quantum to any third parties without the written consent of Quantum.
4.5 In the event HealthLink requests that any Quantum personnel or Xx. Xxxxx
Xxxxx travel with respect to the performance of any services required
hereunder, it shall reimburse Quantum the maximum rates specified in 41
Code of Federal Regulations Chapter 301 for reimbursement of per diem
expenses incurred during travel within the continental United States plus
the actual cost of travel to and from the destination. In the absence of
per diem guidelines, actual cost shall be reimbursed upon presentation of
appropriate documentation. Quantum shall furnish HealthLink with such
records and other documentary evidence as are customarily sufficient to
satisfy the requirements for substantiation of such expenditures as an
income tax deduction (or capitalization) pursuant to applicable laws and/or
regulations. All air travel shall be "First Class".
4.6 HealthLink shall allow upon reasonable request and notice by Quantum, the
inspection and random sampling by Quantum of the facilities, processes, and
the Products produced by HealthLink pursuant to this Agreement. Such
inspections shall not cause any delay of shipments of the Products to
distributors or purchasers. Quantum shall bear all costs of such
inspections and testing, including any repackaging costs.
SECTION 5 - FEES
5.1 HealthLink shall pay Quantum pursuant to the fee schedule set forth in
Exhibit A.
5.2 These prices set forth in Exhibit A may be adjusted by Quantum upon 90 days
notice to HealthLink. Such adjustments shall be based upon actual increases
of costs to Quantum for materials and production from its suppliers and
shall be made to ensure Quantum's margin of profit contemplated under fees
set forth in Exhibit A.
5.3 HealthLink shall pay Quantum the full price for the initial purchase order
for the Products upon submission of its purchase order. Thereafter,
HealthLink shall pay one-half of the price concurrently with the submission
of its purchase order and the balance upon shipment by Quantum. All
shipping expenses shall be paid by HealthLink.
5.4 Payments required by this contract shall be made by wire transfer directly
to the account of Quantum Research, Inc. Account information will be
provided by Quantum Research, Inc.
SECTION 6 - SUPPLY
6.1 Upon the terms and subject to the conditions contained herein, Quantum
shall produce, package, sell and deliver exclusively to HealthLink such
quantities of the Products as specified in purchase orders submitted by it
to Quantum from time to time (Purchase Orders) and HealthLink shall
purchase such Products. Unless otherwise expressly agreed in writing by the
parties, the terms and conditions of this Agreement shall apply to any
Purchase Order and shall be deemed to be incorporated into any Purchase
Order.
6.2 All Products manufactured by Quantum and delivered to HealthLink pursuant
to this Agreement shall conform in all respects to the formula, packaging
and labeling specifications set forth in Exhibit A to this Agreement.
6.3 Title to the Products, Extracts, or other components purchased by
HealthLink under this agreement shall vest in HealthLink when the Product
has been delivered at the F.O.B. point, which shall be determined by
Quantum.
6.4 The license granted herein in Section 2 shall remain exclusive so long as
HealthLink maintains the minimum purchases and pays the corresponding fee
in each year as set forth in Exhibit A.
6.5 HealthLink will specify in each Purchase Order the quantity of Products to
be delivered and Quantum shall ship same within sixty (60) days following
receipt of the Purchase Order. Concurrently upon the execution of this
Agreement, HealthLink will submit its initial Purchase Order.
6.6 Quantum shall maintain a supply of components necessary to meet the
requirements of this Agreement for a six month period, either in the form
of pure Extract or Extract being used in the process of manufacturing to
meet Purchase Orders currently being processed.
SECTION 7 - LIQUIDATED DAMAGES
7.1 The parties recognize that the calculation of damages in the event either
party should breach their obligations hereunder regarding the disclosure of
Confidential Information peculiar to the other party to third parties would
be difficult to calculate. The parties agree that a minimum assessment of
damages in the event of such breach by either party shall be $50,000. This
is not intended to be construed as a penalty but rather the parties' best
effort to ascertain the fair amount of damages they would sustain in the
event of such a breach.
SECTION 8 - INFRINGEMENT
8.1 In the event that HealthLink learns of any infringement or threatened
infringement or piracy of the Products, or any actual or intended
passing-off or unfair competition by reason of imitation or otherwise, or
that any third party alleges, or claims, or intends to allege or claim that
the Products infringe on its Products in any manner or that the production,
sale or use of the Products infringes or any other right of a third party,
HealthLink shall promptly give notice to Quantum together with all such
information with respect to the infringement as it may from time to time
obtain. The parties undertake and agree to consult with each other with
respect to how to respond to each infringement or violation.
8.2 In the event Quantum undertakes the defense or prosecution of any such
legal proceedings, HealthLink agrees on behalf of, and at Quantum's
expense, to execute any and all documents and do such acts and things,
including without limitation, being made a party to such proceedings, as
may, in the opinion of counsel for Quantum, be necessary of useful to carry
out such defense or prosecution.
8.3 Notwithstanding the forgoing, if Quantum declines to institute legal
proceedings, HealthLink may institute legal proceedings at its sole expense
and Quantum shall fully cooperate with it in connection with such
proceedings provided, however, Quantum shall always be free, at its own
cost and expense, to subsequently join in any pending proceedings.
8.4 Legal proceedings as used herein shall include demand letters, negotiation
and settlement of disputes, as well as the filing of formal legal actions
with a court of proper jurisdiction. Under no circumstances shall
HealthLink have the authority to settle or compromise a matter which in any
way mitigates, lessens of restricts Quantum's ownership in or rights to the
Products, Extracts, or other components.
SECTION 9 - REPRESENTATIONS AND WARRANTIES OF QUANTUM
9.1 Quantum hereby represents and warrants that:
9.1.1 It is the holder of sole and exclusive rights, title, property,
benefit and interest in and to the Products and Extracts for use in
the Territory;
9.1.2 It has every legal right to enter into this Agreement and to perform
the terms and conditions hereof, except as described herein, free of
any encumbrances whatsoever;
9.1.3 It has entered no relationship or agreement, written or oral,
expressed or implied, which is inconsistent with the provisions of
this Agreement;
9.1.4 The sale of the Products by HealthLink will not, to the best of its
knowledge, constitute an infringement of any patents or other
proprietary rights owned by any third party or a violation of any
statutory or regulatory provisions.
9.2 Each of the parties hereto hereby represents to the other that the
execution and delivery of this Agreement and the performance thereof will
not contravene or constitute a default under its charter, by-laws or any
other agreement, instrument or other forms of commitment to which any party
hereto is also bound.
SECTION 10 - TERM OF AGREEMENT
10.1 This Agreement will run for an initial period of three (3) years commencing
on the effective date of this Agreement, and is renewable for an additional
period of five (5) years, subject only to the minimum quantities specified
in Exhibit A.
10.2 Quantum may suspend or terminate this Agreement as it thinks fit in the
event of a material breach of its terms which remains uncured for more than
sixty (60) days from the date HealthLink is notified in writing of such
breach, or if HealthLink ceases operation or files for relief under the
insolvency laws of the Territory.
SECTION 11 - GENERAL PROVISIONS
11.1 The Parties hereby acknowledge and agree that each is an independent
contractor that neither party shall be considered to be the agent,
representative, master or servant of the other for any purpose whatsoever
and that neither party has any authority to enter into any contract to
assume any obligations or to give any warranties or representations on
behalf of the other party hereto. Nothing in this Agreement shall be
construed to create a relationship of partners, joint ventures,
fiduciaries, agency or any other similar relationship between the parties.
11.2 Time shall be of the essence of this Agreement.
11.3 The terms of this Agreement will be kept strictly confidential by both
parties except to their attorneys, accountants or other professional
advisors or unless required according to the regulations of any Government
Agency having competent jurisdiction.
11.4 HealthLink shall have the option to terminate this agreement upon 90 days
written notice to Quantum Research, Inc.
11.5 This Agreement has been entered into in the State of Arizona and all
questions with respect to this Agreement and the rights and liabilities of
the parties hereto shall be governed by the laws of the State of Arizona.
11.6 If a dispute arises out of or related to this Agreement or the breach
thereof and if the dispute cannot be settled through negotiation, the
parties agree first to try in good faith to settle the dispute by mediation
administered by the American Arbitration Association under its Commercial
Mediation Rules before resorting to arbitration. Such mediation shall be
conducted in Phoenix, Arizona within thirty (30) days following receipt by
the American Arbitration Association of a Request for Mediation or a
Submission to Dispute Resolution. If the dispute is not resolved through
mediation it shall be settled by arbitration administered by the American
Arbitration Association under its Arbitration rules. Such arbitration shall
be conducted in Phoenix, Arizona by a single arbitrator. No discovery shall
be conducted prior to such arbitration hearing except that the arbitration
shall require the parties to exchange a list of witnesses and copies of all
documents or exhibits either party intends to use at the arbitration.
11.7 This Agreement may not be assigned except to an Affiliate or, with the
permission of the other party, which permission cannot be unreasonably
withheld, to the buyer of the party's entire business.
11.8 All notices, requests, demands, and other communication required or
permitted to be given under this Agreement shall be in writing addressed to
the other party at the address set forth above, or such other address as
either party may designate in writing to the other subsequent to the
execution of this Agreement, and shall be conclusively deemed to have duly
given (1) when hand delivered to the other party; or (2) when received when
sent by telex or facsimile at the address and number set forth below
(provide, however, that notices given by facsimile shall not be effective
unless either (a) a duplicate copy of such facsimile notice is promptly
given by depositing same in a United States post office or mailbox with
first-class postage prepaid and addressed to the parties as set forth
below, or (b) the receiving party delivers a written confirmation of
receipt for such notice either by facsimile or any other method permitted
under this section; or (3) three business days after the same have been
deposited in a United States post office or mailbox with a first-class or
certified mail, return receipt requested, postage prepaid; or (4) the next
business day after same have been deposited with a national overnight
delivery service reasonably approved by the parties (Federal Express,
Airborne, United Parcel Service, and DHL WorldWide Express being deemed
approved by the parties), shipping prepaid, addressed to the parties as set
forth below with next-business day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery service
provider. Any notice sent by telex of facsimile received after 4 PM at the
receiving party's office shall be deemed received on the following day.
11.9 No waiver of any provision or consent to any action shall constitute a
waiver of any other provision or consent to any other action, whether or
not similar. No waiver or consent shall constitute a continuing waiver or
consent or commit a party to provide a waiver in the future except to the
extent specifically set forth in writing.
11.10 No amendment, modification, or supplement to this Agreement shall be
binding on any of the parties unless it is in writing and signed by the
parties in interest at the time of the modification.
11.11 If any term or provision of this Agreement is determined to be illegal,
unenforceable, or invalid in whole or in part for any reason, such illegal,
unenforceable, or invalid provisions or part thereof shall be stricken from
this Agreement, and such provision shall not affect the legality,
enforceability, or validity of the remainder of this Agreement. If any
provision or part thereof of this Agreement is stricken in accordance with
the provisions of this section, then this stricken provision shall be
replaced, to the extent possible, with a legal, enforceable, and valid
provision that is as similar in tenor to the stricken provision as legally
possible.
11.12 The headings of the various sections and paragraphs hereof are for
convenience of reference only, and shall in no way alter of affect the
meaning or construction of any of the provisions of this Agreement.
11.13 All exhibits attached to this Agreement are incorporated in and made a
part of this Agreement.
11.14 Quantum shall have the option to terminate this agreement upon ninety-(90)
days written notice to HealthLink if it fails to effectively market the
Products. Failure to market effectively would be evidenced by an
accumulation of inventory by HealthLink exceeding twelve (12) months sales
based on the aggregate monthly sales recorded for the preceding
twelve-month period. HealthLink undertakes to have an inventory reflecting
the potential for growth, international market factors and reaction time
considerations. Quantum also retains the right to terminate the agreement
upon thirty (30) days written notice to HealthLink should it violate any
laws, or be formally accused of violating any laws by any governmental
organization. Quantum shall have sole discretion to determine the efficacy
and impact of such violations for purposes of this termination provision.
11.15 Any obligations of either party under this agreement that by their nature
would continue beyond termination, cancellation or expiration of this
agreement shall survive termination, cancellation or expiration of this
agreement.
11.16 Neither party shall be responsible for any delay or failure in performance
of any part of this agreement to the extent that such delay or failure is
caused by failure of subcontract manufacturing facilities, fire, flood,
explosion, war, strike, embargo, government requirement, civil or military
authority, act of God, act or omission of carriers, acts or omissions by a
government authority (de jure or de facto), riots, revolutions, fuel or
energy shortages, earthquakes, interruptions in electricity, natural gas,
water or fuel, or shortages of essential materials ("Force Majeure
Conditions"). If any Force Majeure Condition occurs, the party and the
other party affected by the other's delay or inability to perform may elect
to: 1) terminate this agreement or the affected part, or 2) suspend this
agreement for the duration of the Force Majeure Condition. Unless written
notice is given within thirty (30) days after the affected party is
notified of the Force Majeure Condition, option (2) shall be deemed
selected.
11.17 In the event of termination, HealthLink reserves the right to sell its
ongoing operations or its inventory to a third party within a reasonable
liquidation period in order to deplete its complete inventory. Quantum
shall have the right of first refusal to purchase the Products at the same
cost.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement on the
dates indicated below to become effective on the date first written above.
QUANTUM RESEARCH, INC.,
an Arizona Corporation
By
Xxxxx X. Xxxxxxx
Its President
HEALTHLINK INTERNATIONAL, INC.,
a Nevada corporation
By
Xxxxxxxx X. Xxxxxxx
Its President and CEO
