EXHIBIT 10.2
MEMORANDUM OF UNDERSTANDING
The following Memorandum of Understanding (MOU) between the undersigned
parties, Natural Health Trends Corporation, Inc. (hereafter NHTC) and Sierra
Medicinals, Inc. (hereafter SMI), is intended to express the intent of the
parties to enter into an agreement to align certain interests as outlined below
for mutual benefit.
It is the understanding of the parties that this MOU is intended to
outline certain terms of agreement between the parties during the period of time
between the execution of this MOU and the execution of further written
agreements setting fourth all the terms of agreement between the parties. The
purpose of such MOU is to set forth the understanding of the parties with regard
to certain material terms, thus allowing the parties to commence with their
business relationship prior to the execution of a comprehensive written
agreement signed by both parties.
1. PRODUCT MANUFACTURING/DISTRIBUTION: NHTC has decided to release a weight
management starch blocker product through its marketing subsidiary, Lexxus
International, Inc. The product's key ingredient will be Phase 2, an ingredient
manufactured by Pharmachem Labs. The product will be taken to market through
Lexxus' international distribution platform. Lexxus currently has product direct
sales and distribution infrastructure in place in 30 countries worldwide with
continuing international expansion plans, Lexxus specifically markets products
using the marketing method known as Network Marketing, also known as Multi Level
Marketing.
2. PREFERRED INGREDIENT PRICING: SMI enjoys preferred pricing agreements with
Pharmachem Labs for the purchase of the Phase 2 ingredient as a distributor,
currently at the preferred price of $56 per kilogram. SMI agrees to purchase
Phase 2 at its cost plus freight on behalf of NHTC or its agents when payment is
received from NHTC for such purchases. All purchases of Phase 2 by NHTC or its
agents shall be made exclusively through SMI for a period of 3 years, continued
only by mutual agreement.
3. PRODUCT FORMULATION: SMI, and more specifically Dr. Xxxxxx Xxxxxxxxxx, agree
to provide a proprietary formulation for NHTC to use in the creation of the
starch blocker product.
4. EXCLUSIVE ENDORSEMENT: NHTC's "advanced and proprietary version" of the
starch blocker product for distribution through Network Marketing will have the
endorsement of Dr. Xxxxxx Xxxxxxxxxx as the product's formulator. Xx. Xxxxxxxxxx
markets and endorses other versions of a Phase 2 starch blocker product through
various marketing channels. However, Xx. Xxxxxxxxxx will not endorse nor
formulate any starch blocker product for any company in the Network Marketing
(Multi Level Marketing) industry other than NHTC. Xx. Xxxxxxxxxx will further
make himself available to speak at Lexxus International conventions, both
domestically and internationally for a maximum of 4 appearances per year. NHTC
will pay all related expenses to , during and from such events and pay for each
appearance at the rat of $500 per day including travel time. NHTC agrees to
promote Xx. Xxxxxxxxxx'x book, The Starch Blocker Diet, at said events.
5. CONSIDERATION: For the above described reduced purchase price of Phase 2, and
for the above outlined services and endorsements, NHTC will pay to SMI a royalty
of $0.60 per bottle. Such royalty shall be based on a 90 count bottle of NHTC
starch blocker containing 45 grams of Phase 2, in other words, at the rate of
$13.30 per kilogram. Royalty shall be paid by NHTC to SMI at the time of
purchase of Phase 2, plus Phase 2 product cost and shipping. Failure to make
payment in a timely fashion may result in suspension or termination of this
agreement.
Further, NHTC shall pay to SMI the sum of $35,000 as an advance payment on
future royalties due at the signing of this Memorandum of Understanding. 6.
CONFIDENTIALITY: The parties agree and understand that during the course of
their business relationship that they will communicate and make available to one
another certain confidential and proprietary business information and/or trade
secrets (the "Confidential Information"). The parties will not during the term
of this MOU or after its termination disclose, divulge, or communicate in any
direct or indirect manner any Confidential Information belonging to the other
party. Such Confidential Information includes, but is not limited to, product
formulae, business ads, marketing plans, business strategies, customer lists,
vendor lists and other similar information.
7. COMPREHENSIVE AGREEMENT: The parties intend to proceed to negotiate in good
faith a comprehensive agreement incorporating the above-listed terms and all
other definitive terms and conditions of the relationship between the parties,
including without limitation, usual and customary representations, warranties,
covenants, and confidentiality agreements and indemnities, and all necessary
exhibits, schedules and related agreements deemed necessary.
8. TERMINATION: The parties understand and intend that this MOU will be
superseded and therefore terminated by the drafting and signing of a
comprehensive written agreement. Notices shall be sent to the addresses and
persons set forth below.
Accepted and agreed this 19th day of September, 2003.
NATURAL HEALTH TRENDS CORPORATION, INC.
By: Xxxx Xxxxxxxx
Xxxx X. Xxxxxxxx
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00000 Xxxxxx Xxxxx, Xxxxxx, XX 00000
SIERRA MEDICINALS, INC.
By: Dr. Xxxxxx Xxxxxxxxxx
Dr. Xxxxxx Xxxxxxxxxx per HR
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0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000
