EXHIBIT 10.8
AGREEMENT
Agreement (hereinafter: "Agreement") dated this 6th
day of January, 2004, by and between A.D. Pharma, Inc., a
Florida corporation with its principal office at 0000
Xxxxxxx X0X, Xxxxxxxxx Xxxxx, Xxxxxxx 00000 (hereinafter:
"PHARMA") and MedStrong International, Inc., a corporation
with its principal office at 500 Silver Spur Road, Suite
101(hereinafter: "MEDSTRONG")
WHEREAS PHARMA has negotiated a licensing agreement with
Imperial Gold Hong Kong, Inc. (hereinafter: "Imperial Gold")
to which PHARMA has been granted the exclusive right to
market within the United States of America an all natural
alcohol detoxicant manufactured by Imperial Gold called
"Notox" (as hereinafter defined: the "PRODUCT"); and
WHEREAS MEDSTRONG seeks to purchase from PHARMA up to ten
(10%) percent of the gross revenues to be received by PHARMA
from the sale of the PRODUCT within the United States of
America, for a term of five (5) years following the
execution of this Agreement; and
WHEREAS PHARMA wishes to sell to MEDSTRONG up to ten (10%)
percent of the gross revenues to be received by PHARMA from
the sale of the PRODUCT for a term of five (5) years
following the execution of this Agreement.
Now, therefore, in consideration of Ten ($10.00)
Dollars in hand exchanged by the parties, and the mutual
covenants hereinafter contained, the parties hereto agree as
follows:
1. Definitions. For purposes of this Agreement,
and in addition to those terms as may be defined in the text
of this Agreement, the following terms shall have the
following meanings:
A. "Product" - The Notox product line and
any other derivative or products derived from the Notox
product line developed and/or acquired by PHARMA.
B. "Gross Proceeds" - The consideration,
including cash, stock or other property, received by PHARMA
and/or its Affiliate attributable to the sale within the
United States of America of the PRODUCT to third parties.
C. "Sale" - means any bona fide transaction
for which consideration is received by PHARMA or its
Affiliate for the sale, use, lease, transfer or other
disposition of the PRODUCT. A sale of the PRODUCT shall be
deemed complete at the time PHARMA or its Affiliate receives
payment for such PRODUCT.
D. "Affiliate" - means any legal entity
directly or indirectly controlling, controlled by or under
common control with PHARMA.
E. "Control" - means the direct or indirect
ownership by PHARMA of more than ten (10%) percent of the
outstanding voting securities of a legal entity, or the
right of PHARMA to receive more than ten (10%) percent of
the profits or earnings of a legal entity, or the right of
PHARMA to control the policy decisions of a legal entity.
Section 2. Options. PHARMA hereby grants to
MEDSTRONG the right to purchase up to ten (10%) percent of
PHARMA's Gross Proceeds in accordance with the four options
set forth in this Section 2:
A. Option 1. Within (10) business days or
sooner following the execution by PHARMA and Medstrong of a
signed contract, MEDSTRONG shall deliver Seventy-Five
Thousand ($75,000.00) Dollars (hereinafter: the "First
Payment") to PHARMA, in consideration of which MEDSTRONG
shall receive Three (3%) Percent of the Gross Proceeds.
B. Option 2. Within thirty-one (31) days
following MEDSTRONG's delivery of the First Payment to
PHARMA, MEDSTRONG shall deliver Fifty Thousand ($50,000.00)
Dollars to PHARMA, in consideration of which MEDSTRONG shall
receive an additional Two (2%) Percent of the Gross
Proceeds;
C. Option 3. Within sixty-one (61) days
following MEDSTRONG's delivery of the First Payment to
PHARMA, MEDSTRONG shall deliver Fifty Thousand ($50,000.00)
Dollars to PHARMA, in consideration of which MEDSTRONG shall
receive an additional Two (2%) Percent of the Gross
Proceeds;
D. Option 4. Within ninety-one (91) days
following MEDSTRONG's delivery of the First Payment to
PHARMA, MEDSTRONG shall deliver Seventy-Five Thousand
($75,000.00) Dollars to PHARMA, in consideration of which
MEDSTRONG shall receive an additional Three (3%) Percent of
the Gross Proceeds.
The date by which the monies are to be received
by PHARMA as set forth in Options 1 through 4 herein is
referred to as the "Exercise Date".
The parties agree that although it is MEDSTRONG's
intention to exercise all four (4) options described herein,
there is no obligation on the part of MEDSTRONG to do so. In
the event that MEDSTRONG exercises less than all four (4)
options by the Exercise Date specified in each option,
MEDSTRONG acknowledges that it will receive less than Ten
(10%) Percent of the Gross Proceeds. Notwithstanding
anything herein to the contrary, if PHARMA does not receive
from MEDSTRONG the entire amount of the payment specified in
each option on or before the Exercise Date set forth herein
for each such option, and an alternate date for the receipt
by PHARMA of the entire payment due pursuant to such option
is not agreed to in writing by MEDSTRONG and PHARMA, then
MEDSTRONG shall be deemed to have waived its right to obtain
that percentage of the Gross Proceeds applicable to such
unexercised option. Any such waiver by MEDSTRONG affects
neither options previously exercised by MEDSTRONG and the
vested Gross Proceeds received by MEDSTRONG pursuant thereto
nor any future option whose exercise date has not passed,
but does affect the dollar amount of the "Re-Purchase
Option". The percentage of the Gross Proceeds to be received
by MEDSTRONG pursuant to its exercise of the options set
forth herein shall be called, collectively, the "Royalty
Interest".
Section 3. Term. MEDSTRONG shall receive the
Royalty Interest for a period of Five (5) years following
the date of this Agreement (hereinafter: the "Initial
Term"). MEDSTRONG has agreed to receive the Royalty Interest
over the period of the Initial Term based on the assumption
that revenues received by PHARMA from the sale of the
Product shall equal or exceed Five Hundred Thousand Dollars
($500,000.00) during the first year of the Initial Term and
One Million dollars ($1,000,000.00) during each of the
succeeding four (4) years. For each year during the Initial
Term that PHARMA fails to receive the assumed revenues,
MEDSTRONG shall be entitled to receive the Royalty Interest
for one additional year beyond the Initial Term. For
example, if PHARMA fails to receive the assumed revenues in
the first, third and fourth years of the Initial Term,
MEDSTRONG will be entitled to receive the Royalty Interest
for three (3) additional years beyond the Initial Term. The
Initial Term with such additional years (if any) as may be
added pursuant to this Section 3 shall hereinafter be
referred to as the "Final Term". Upon the expiration or
earlier termination of the Final Term all rights of
MEDSTRONG to receive the Royalty Interest shall end and
there shall be no further obligation on the part of either
party.
Section 4. All monies payable to MEDSTRONG as a
Royalty Interest by PHARMA pursuant to this Agreement shall
be paid by PHARMA within ten (10) business days after the
end of each calendar quarter following the execution of this
Agreement. Said payments shall be mailed by PHARMA to
MEDSTRONG at500 Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000. Simultaneously with each payment
by PHARMA of the Royalty Interest due to MEDSTRONG for the
preceding calendar quarter, PHARMA will provide detailed
information to MEDSTRONG showing the computation of Gross
Proceeds and the calculation of MEDSTRONG's Royalty
Interest. MEDSTRONG will have the right to audit the books
and records of PHARMA on a quarterly basis by providing
thirty (30) days prior to audit written notice is given to
PHARMA of said request.
Section 5. PHARMA may re-purchase the entirety of
MEDSTRONG's Royalty Interest at any time during the Term of
this Agreement for Five Million ($5,000,000.00) Dollars
(hereinafter: the "Re-Purchase Option"). PHARMA may exercise
it Re-Purchase Option by forwarding notice to MEDSTRONG of
the exercise of its Re-Purchase Option together with payment
of Five Million ($5,000,000.00) Dollars in good funds.
Immediately upon MEDSTRONG's receipt of notice of PHARMA's
exercise of its Re-Purchase Option and the Five Million
($5,000,000.00) Dollars, MEDSTRONG's rights to the Royalty
Interest it purchased pursuant to this Agreement shall end
and there will be no further obligation on the part of
either party. This "Re-Purchase Option" amount of
$5,000,000.00 is based on all four (4) Purchase Options
being fulfilled within 91 days from first Option Payment.
Each Option Payment paid represents a percentage of the
$5,000,000.00 total Re-Purchase Option (RPO) amount to be
paid by PHARMA to buy out the contract from MEDSTRONG as
follows: Purchase Option One paid - 30% ($1,500,000.00) RPO
Purchase Option One and Two paid - 50% ($2,500,000.00) RPO
Purchase Option One, Two and Three paid - 70% ($3,500,000.00) RPO
Purchase Option One, Two, Three and Four paid - 100% ($5,000,000.00) RPO
Section 6. If PHARMA's rights to market the
PRODUCT in the United States of America is sold or assigned
by PHARMA during the term of this Agreement, including
extensions, MEDSTRONG will receive from PHARMA that
percentage of the Gross Proceeds of such sale equivalent to
the percentage Royalty Interest acquired by MEDSTRONG
pursuant to this Agreement.
"Notwithstanding any sale or assignment of PHARMA's rights
hereunder, Medstrong shall remain entitled to receive the
Royalty Interest for the duration of the Final Term from the
purchaser/assignee."
Section 7. Representations by Pharma. PHARMA
hereby represents to MEDSTRONG that:
a. all information contained in the answers
to the due diligence request annexed hereto as Exhibit 1 are
true and correct as of the date hereof.
b. It has received documented assurances
from Imperial Gold that, with respect to the Notox product
name or under any other product name using the ingredients
of the PRODUCT or its proprietary extracting methods,
Imperial Gold will do whatever possible to avoid competition
between PHARMA and other companies with whom Imperial Gold
has or may have contractual agreements within PHARMA's
licensed territory.
c. The articles published by Xxxx-Xxx Xxxx,
PH.D., in the International Journal of
Neuropsychopharmacology, Volume III, Supplement 1, July,
2000, page S315, abstract number: P.13.26 and P.13.27
describe the effectiveness and content of the PRODUCT.
d. To the best of its knowledge, ownership
of the Notox formula is not in dispute and that Imperial
Gold has the worldwide manufacturing rights to the PRODUCT
developed by Professor Ying-Xxx Xxxx, PHD and his team of
researchers at the Xxxx Xxxx Pharmaceutical University in
Xxxx Xxxx, China.
e. It owns the design and trademarks of the
packages and the dies to produce same as set forth in
Exhibit 2.
Section 8. MEDSTRONG acknowledges that PHARMA has
a legitimate interest in trade secrets, its good name and
reputation, customers and customer lists. Further, MEDSTRONG
acknowledges that PHARMA may have acquired significant
goodwill associated with its name, trademarks (whether or
not registered), business location and trade address.
Accordingly, MEDSTRONG covenants and agrees that
during the Term of this Agreement and for three (3) years
following the expiration or earlier termination of this
Agreement, MEDSTRONG shall not, either alone or with the
combination of others, undertake any business activity or
otherwise engage in any activity that will require it to
reveal or use any Confidential Information (as hereinafter
defined) of PHARMA, nor directly or indirectly, own,
operate, manage, join, control, participate in the
ownership, management, operation and/or control of, or be
paid or employed by, or otherwise become associated with or
provide assistance to, as an employee, agent, advisor,
independent contractor, officer, director, shareholder,
owner or otherwise, any business or activity throughout the
United States of America which is a direct competitor of
PHARMA or any of its Affiliates.
Section 9. MEDSTRONG has the right to assign its
rights pursuant to this Agreement, including any extensions
of the Term of this Agreement pursuant to Section 3 hereof,
upon the giving of fifteen (15) days written notice to
PHARMA in accordance with the provisions hereof.
Notwithstanding the foregoing, MEDSTRONG may not assign this
Agreement to any entity and/or enterprise which reasonably
may be considered competitive with PHARMA. Any such
assignment must be approved in writing by PHARMA, which
approval will not be unreasonably delayed or withheld.
Section 10. Arbitration. Any dispute under this
Agreement shall be settled in the County of Fairfield, State
of Connecticut, by arbitration before a panel of three
arbitrators: on selected by PHARMA, one selected by
MEDSTRONG and the third selected by the two so chosen. The
arbitration shall be commenced by the initiating party (I)
notifying the other of its demand for arbitration and the
name of the arbitrator it has selected and (ii) demanding
the other party select its arbitrator. If the second
arbitrator is not selected within (30) days of receipt of
demand, he/she shall be selected in accordance with the
rules and regulations of the American Arbitration
Association ("AAA"). Except as otherwise provided herein,
arbitration under this section shall be conducted in
accordance with the rules and regulations then in effect of
the "AAA" or its successor.
While the arbitration is pending, each party shall pay the
fees and expenses of the arbitrator it selected and one half
of the fees and expenses of the third arbitrator. The
failure by either party to pay the fees and expenses
described herein shall entitle the other party to an
immediate decision in its favor on all issues that re the
subject of the arbitration. At the conclusion of the
arbitration proceeding, fees and expenses shall be
reimbursed as set forth below.
If any action, whether at law, in equity, or in arbitration,
is necessary to enforce or interpret any provision of this
Agreement, the prevailing party shall be entitled to
reasonable attorney's fees and expenses, arbitrator's fees,
costs and necessary disbursements in addition to any other
relief to which it may be entitled.
Section 11. Notices. Any and all notices and
elections permitted or required to be given hereunder shall
be in writing and mailed, postage pre-paid, by certified or
registered mail, return receipt requested, addressed to the
party to whom given at the following addresses or to any
subsequent address of which the party has notified the other
in accordance with the provisions hereof:
If to PHARMA, then at: A.D. Pharma, Inc.
0000 Xxxxxxx X0X
Xxxxxxxxx Xxxxx, XX 00000
With a copy to: Xxxx X. Xxxxxx, Esq.
Xxxx Xxxxxxxx, P.A.
0000 X. Xxxxxxxx Xxxx.,
Xxxxx 000
Xxxxxxxxx, XX 00000
If to MEDSTRONG, then at: MedStrong International, Inc.
000 Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx Palos Verdes, California, 90274
With a copy to: Xxxx San Antonio
000 Xxxxxxx Xx.
Xxxxxxxx, Xxxxxxxxxxx 00000
Section 12. A. No amendment or modification to
this Agreement shall be binding unless in writing and signed
by all parties.
B. This Agreement shall be governed in all
respects as to validity, construction, capacity, performance
and otherwise by the laws of the state of Connecticut.
C. If any provision of this Agreement or the
application thereof shall be invalid or unenforceable, the
remainder of this Agreement shall not be affected thereby.
D. This Agreement supersedes any other
agreement, including any Letter of Intent, made and/or
executed by the parties hereto and related to the
transaction contemplated herein.
E. MEDSTRONG and PHARMA each acknowledge
that it has relied on no promise, understanding or
representation which may have been made prior to or
simultaneously with the execution of this Agreement, but
which is not specifically set forth herein. This Agreement
constitutes the entire Agreement between the parties hereto
with regard to the subject matter hereof, superseding all
prior understanding and agreements, whether written or oral.
Each party hereto agrees to execute any and all other and
additional documents and instruments as may be reasonably
requested by the other party to carry out the intent of this
Agreement.
Executed as a sealed instrument as of the date
set forth above.
Witness:
A.D. PHARMA , INC.
By:/S/ Xxx XxXxxx
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Xxx XxXxxx, President
Witness;
MEDSTRONG, INC.
By: /S/ Xxxxx X. Xxxxxx
--------------------
Xxxxx X. Xxxxxx, Chief Executive Officer
