FORM 10-KSB/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1998.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 000-7633
CONTINENTAL HERITAGE CORPORATION
(Exact name or Registrant as specified in its charter)
Delaware 75-1449332
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2140 America's Cup Circle, Las Vegas, Nevada 89117
(Address of principal executive offices)
Registrant's telephone number, including area code: (702) 228-8146
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange On Which Registered
None --
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value per share
(Title of class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [ x ] No [ ]
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ x ]
State issuer's revenues for its most recent fiscal year: $220,870
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as
of a specified date within the past 60 days: $ .
(ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 after
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 6,873,860 shares of Common
Stock outstanding as of January 31, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
None
Transitional Small Business Disclosure Format (check one): Yes [ ] No [x]
PURPOSE OF AMENDMENT
This amendment to the Annual Report of Continental Heritage Corporation on
Form 10-KSB for the fiscal year ended October 31, 1998, amends and modifies
Item 10. Executive Compensation
Item 13. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS OF
FORM 8-K. <PAGE>
PART III
Item 10. EXECUTIVE COMPENSATION
No compensation was paid or accrued for the benefit of any
executive officer of the Registrant during the fiscal year
ended October 31, 1998.
Lee Kaplan Consultant Agreement
Effective March 1999, Encore (now VisionQuest) retained Lee Kaplan as a
consultant with respect to matters concerning the establishment and maintenance
of the network of independent contractors to be assembled in connection with
the VisionQuest Marketing Program. Mr. Kaplan shall receive monthly
compensation of $5,000 commencing March 1999.
Prior to the acquisition by Registrant of Encore, Lee Kaplan acted as a
consultant to Encore. For such services, $172,000 was accrued as compensation
of which $43,000 was paid with a balance of $129,000 reflected as indebtedness
as of October 31, 1998. Expenses, such as travel and lodging, incurred by Mr.
Kaplan in performing such services were borne by Mr. Kaplan out of the
compensation paid or payable to him. Robert Bray Severance Agreement
Prior to the acquisition by the Registrant of Encore, Robert Bray received
compensation from Encore in the form of consulting fees in the amount of
$42,748 as payment for his services as an officer of Encore. Effective October
1, 1998, Encore (now VisionQuest) and Robert Bray entered into an agreement
which provides that VisionQuest shall pay to Robert Bray as severance
compensation the total sum of $30,000, payable $5,000 per month until paid, and
that said severance compensation shall be payable commencing January 1999.
Employment and Distributorship Agreements
Encore (now VisionQuest) and Steve Gould have entered into a five-year
employment agreement commencing October 15, 1998, which provides that Mr. Gould
shall receive an initial salary of $200,000 annually with a guaranteed annual
increase of not less than 10% and a bonus of 1% of the gross sales revenue as
computed on a monthly basis. Thus, Mr. Gould's aggregate annual income is
based on the revenue level he is able to attain for the Registrant.
Neither Mr. Kaplan nor Mr. Bray will receive a salary from the Registrant.
VisionQuest has granted a Master Distributorship to a group of eight investors,
which group includes Messrs. Kaplan and Bray, who advanced funds to Encore
prior to its acquisition by the Registrant. The Master Distributorship is the
sole distributorship granted directly from the Registrant and is the first (or
highest) tier of distributorship in the VisionQuest Marketing Program. All
distributorships held by individual Members branch from the Master
Distributorship. In accordance with the Registrant's Marketing Compensation
Plan, the Master Distributorship will receive a portion of the sales effected
by all Members holding Distributorships beneath it in the tier of organization.
Of the revenues generated under the Master Distributorship, Mr. Kaplan will
receive 55% and Mr. Bray will receive 10%. The remaining 35% of generated
revenues will be paid, on a pro rata basis, to the remaining six investors who
loaned funds to Encore prior to its acquisition by the Registrant.
VisionQuest has also granted a Distributorship to Steve Gould, which
distributorship is one of several second-tier distributorships and, as such,
branches directly off of Mr. Kaplan's Master Distributorship. Mr. Gould will
receive a portion of the sales effected by all Members holding distributorships
beneath his in the tier of organization.
The amount of revenues received under the various Distributorship agreements
will be paid in accordance with the Registrant's Marketing Compensation Plan,
which is being developed by management. Since the Marketing Compensation Plan
is not finalized, the Registrant is unable at this time to project the exact
amount of revenues which will be received by Messrs, Gould, Kaplan and Bray
under the Distributorships
Item 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS OF
FORM 8-K
(a) Financial Statements (indexed as F-1 to F-9)
Reports of Independent Certified Public Accountants:
Buchbinder Tunick & Company LLP F-1
Spillar, Mitcham, Eaton & Bicknell, LLP F-2
Consolidated Balance Sheet as of October 31, 1998 F-3
Consolidated Statement of Operations and Accumulated Deficit
for the two years ended October 31, 1998 F-4
Consolidated Statement of Cash Flows
for the two years ended October 31, 1998 F-5
Notes to Consolidated Financial Statements F-6
Exhibits:
(b) Exhibits (Index)
The following exhibits required to be filed by Item 601 of Regulation S-B
are incorporated by reference or attached to and filed as part of this Annual
Report on Form 10-KSB:
No. Description:
2.1 Plan and Agreement of Merger of Station One West with and into
Registrant dated January 9, 1994
2.2 Letter of Intent dated August 27, 1998 among the Registrant, Walter
G. Cook, Encore International, Inc. and Lee Kaplan **
3.1 Certificate of Incorporation of Registrant*
3.2 Bylaws of Registrant*
10.1 Promissory Note dated October 31, 1994 of Manhattan National
Properties, Inc. and Continental Heritage Corporation payable to
Walter G. Cook in the amount of $147,433.46*
10.2 Promissory Note of Continental Heritage Corporation dated October 31,
1994 payable to the order of Spanish West Enterprises, Inc. in amount
of $34,027.13*
10.3 Promissory Note of Continental Heritage Corporation dated October 31,
1994 payable to Walter G. Cook in the amount of $227,624.36*
10.4 Promissory Note of National Heritage Corporation and Continental
Heritage Corporation dated October 31, 1994 payable to Walter G. Cook
in the amount of $226,929.81*
10.5 Promissory Note of Apollo Enterprises, Inc. and Continental Heritage
Corporation dated October 31, 1994 payable to Walter G. Cook in the
amount of $41,860.79*
10.6 Promissory Note of Registrant and Apollo Enterprises, Inc., Manhattan
National Properties, Inc. and National Heritage Corporation dated
October 31, 1997 payable to Walter G. Cook in the amount of
$778,001.27. *
10.7 Stock Exchange Agreement dated November 27, 1998 by and among the
Registrant and the shareholders of Encore***
10.8 Employment Agreement between Steve Gould and Encore International,
Inc. dated as of October 15, 1998****.
10.9 Loan Agreement dated February 9, 1999****.
10.10 Form of $1,000,000 Promissory Note delivered to the Investors****.
10.11 Form of Class A Warrant****.
10.12 Form of Class B Warrant****.
10.13 Form of Class C Warrant****.
10.14 Non-Recourse Pledge Agreement****.
10.15 Irrevocable Proxy****.
10.16 Subordinated Promissory Note from Registrant in favor of Steve
Gould****.
10.17 Subordinated Promissory Note from Registrant in favor of Lee
Kaplan****.
10.18 Amended and Restated Supply and Marketing Agreement*****
10.19 Consulting Agreement with Dr. Leonard Haimes*****
21. List of Subsidiaries****.
27. Financial Data Schedule (for SEC use only). *****
*****Filed with this Amendment,
(c) Reports on Form 8-K.
None
INDEX TO FINANCIAL STATEMENTS
Page
Reports of Independent Certified Public Accountants:
Buchbinder Tunick & Company LLP F-2
Spillar, Mitcham, Eaton & Bicknell, LLP F-3
Consolidated Balance Sheet as of October 31, 1998 F-4
Consolidated Statement of Operations and Accumulated Deficit
for the two years ended October 31, 1998 F-5
Consolidated Statement of Cash Flows
for the two years ended October 31, 1998 F-6
Notes to Consolidated Financial Statements F-7
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders
Continental Heritage Corporation
We have audited the accompanying consolidated balance sheet of Continental
Heritage Corporation and subsidiaries as of October 31, 1998, and the related
consolidated statements of operations and accumulated deficit and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1998 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Continental Heritage Corporation and subsidiaries as of October 31, 1998 and
the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
BUCHBINDER TUNICK & COMPANY LLP
Boca Raton, Florida
January 22, 1999
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders
Continental Heritage Corporation
We have audited the accompanying consolidated statements of operations and
accumulated deficit and cash flows of Continental Heritage Corporation and
subsidiaries for the year ended October 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1997 consolidated financial statements referred to
above present fairly, in all material respects, the results of operations and
cash flows of Continental Heritage Corporation and subsidiaries as of October
31, 1997 in conformity with generally accepted accounting principles.
SPILLAR, MITCHAM EATON & BICKNELL LLP
Fort Worth, Texas
June 10, 1998
CONTINENTAL HERITAGE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
October 31, 1998
ASSETS
Current assets:
Cash $ 40,593
Prepaid expenses 3,883
Future tax benefits 31,000
Note receivable 2,613
------
Total current assets 78,089
Property assets, at cost less
Accumulated depreciation of $211,330 415,084
Other assets - raw land and development costs 260,917
-------
Total assets $ 754,090
=======
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable $ 37,646
Note payable 20,000
Current portion of long-term debt 60,000
Security deposits 5,630
-------
Total current liabilities 123,276
Long-term debt 784,033
Stockholders' deficiency:
Common stock - par value $.10;
10,000,000 shares authorized;
1,373,860 shares issued and outstanding 137,386
Additional paid-in capital 468,425
Accumulated deficit (759,030)
-------
Total stockholders' deficiency (153,219)
Total liabilities and stockholders' deficiency $ 754,090
=======
See notes to consolidated financial statements.
CONTINENTAL HERITAGE CORPORATION AND SUBSIDIARIES
Consolidated Statement of Operations and Accumulated Deficit
For the years ended October 31, 1998 and 1997
1998 1997
Rental income $ 220,870 $ 184,367
------- -------
Costs and expenses:
Building and operating costs 147,995 106,062
Interest 91,680 34,122
Depreciation 25,642 25,132
General and administrative 45,428 5,795
------- -------
Total costs and expenses 310,745 171,111
------- -------
(89,875) 13,256
------ -------
Other income (expenses):
Loss on sale of undeveloped land (7,920) -
Interest income 1,842 -
------- -------
Total other income (expense) (6,078) -
------ -------
Income (loss) before provision for
federal income taxes (95,953) 13,256
Provision (credit) for federal income taxes (6,800) 5,379
------ -------
Net income (loss) (89,153) 7,877
Accumulated deficit, beginning of year (669,877) (677,754)
------- -------
Accumulated deficit, end of year $(759,030) $(669,877)
------- -------
Net income (loss) per common share $ (.06) $ .01
======= =======
Weighted average number of
common shares outstanding 1,373,860 1,373,860
========= =========
See notes to consolidated financial statements.
<PAGE>
CONTINENTAL HERITAGE CORPORATION AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the years ended October 31, 1998 and 1997
1998 1997
Operating activities:
Net income (loss) $ (89,153) $ 7,877
Adjustments to reconcile net income (loss) to
net cash provided by (used in)
operating activities:
Depreciation 25,642 25,132
Loss on sale of undeveloped land 7,920 -
(Increase) decrease in deferred tax asset (6,800) 5,379
Increase (decrease) in accrued interest
due to stockholder (87,145) 29,045
Increase (decrease) in accounts payable 24,451 (1,218)
Other (12,214) (371)
------ ------
Net cash provided by (used in)
operating activities (137,299) 65,844
------- ------
Investing activities:
Purchase of property assets (1,616) (4,075)
Sale of undeveloped land 3,000 -
----- -----
Net cash provided by (used in)
investing activities 1,384 (4,075)
----- -----
Financing activities:
Proceeds from borrowings 170,000 3,370
Repayment of debt (29,800) (46,918)
------ ------
Net cash provided by (used in)
financing activities 140,200 (43,548)
------- -------
Increase in cash 4,285 18,221
Cash, beginning of year 36,308 18,087
------ ------
Cash, end of year $ 40,593 $ 36,308
====== ======
Supplementary cash flow disclosure:
Interest paid $ 177,000 $ 5,076
======= ======
See notes to consolidated financial statements.
CONTINENTAL HERITAGE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
October 31, 1998 and 1997
Note 1 - Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. Material intercompany items and transactions
have been eliminated in consolidation.
The Company is engaged in the business of operating and developing real
estate. In 1998 and 1997, approximately 65% and 70%, respectively, of the
Company's rental income was derived from one tenant, the State of Texas.
Reference is made to Note 7 elsewhere herein for information about transactions
effected subsequent to October 31, 1998 that result in a change in the nature
of the Company's business.
Property Assets
Property assets are recorded at cost. Depreciation expense is calculated by
the straight-line method over the estimated useful lives of the assets which
approximate 20 years for buildings and improvements and 6 years for furniture
and fixtures. The cost of improvements and betterments is capitalized, while
maintenance and repairs are charged to operations as incurred.
Raw Land
The Company's investment in undeveloped land is stated at cost plus
expenditures for interest and property taxes, which are capitalized.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note 2 - Property Assets
At October 31, 1998, property assets are summarized as follows:
Land $ 115,920
Buildings and improvements 506,223
Furniture and fixtures 4,271
-------
626,414
Accumulated depreciation 211,330
-------
$ 415,084
=======
Note 3 - Note Payable
A note payable to Encore International, Inc. (Note 7) matures in October,
1999, and bears interest at 8% per annum.
Note 4 - Long-Term Debt
At October 31, 1998, long-term debt consists of the following:
Note payable - bank (a) $ 150,000
Loans payable - stockholder (b) 694,033
-------
844,033
Portion due within one year 60,000
-------
$ 784,033
Due in monthly installments of $5,000 each, with interest at 7.3%. The
interest rate will be adjusted on April 15, 1999 to a rate equal to the then
prime lending rate, plus 1%. The note is collateralized by real estate.
From time-to-time, the Company's principal stockholder has advanced money to
it. The notes are due on demand or, if no demand, within three years of the
date made, bear interest at 12% per annum, and are unsecured. Included in the
indebtedness is accrued but unpaid interest aggregating approximately $283,000.
See Note 7 for information about the satisfaction of this obligation by the
transfer of the Company's operating assets to and the assumption of
substantially all related liabilities by the principal stockholder on November
20, 1998.
Note 5 - Related Party Transactions
The Company rents office space from its principal stockholder on a
month-to-month basis. Such rental expense amounted to $3,270 in both 1998 and
1997.
Note 6 - Income Taxes
The Company reports income for federal income tax purposes on a calendar
year basis. At October 31, 1998, it had net operating loss carryforwards of
approximately $346,000 available to it for application against future taxable
income. Such carryforward is exclusive of accrued but unpaid interest expense
aggregating approximately $149,000, which would become deductible when paid.
The carryforwards begin to expire in 2003. However, substantially all such
carryforwards will no longer be available to the Company as a result of
transactions effected in November, 1998, which result in a change in the nature
of its business. See Note 7 for additional information.
The Company has recorded a deferred tax asset to reflect the estimated
future tax benefits of its loss carryforwards. The provision for federal
income taxes reflects a valuation allowance, of $43,000 at October 31, 1998 and
$35,914 at October 31, 1997.
Note 7 - Subsequent Events
In a transaction effected on November 20, 1998, the Company effectively
terminated its previously conducted real estate operations by transferring all
its operating assets and substantially all related liabilities to its principal
stockholder in satisfaction of an indebtedness owing to him. The transaction
resulted in an extraordinary gain of approximately $96,500, net of related
income taxes of approximately $31,000.
On November 27, 1998, the Company entered into a Stock Exchange Agreement
with the shareholders of Encore International, Inc. whereby the Company
acquired the outstanding stock of Encore in exchange for 5,500,000 shares of
the Company's common stock with a maximum 2,000,000 additional common shares
issuable to Encore's stockholders in the event certain sales levels are
achieved by the Company on a consolidated basis during the two twelve month
periods commencing March 1, 1999 and March 1, 2000, respectively. The
combination will be accounted for as a reverse acquisition. <PAGE>
CONTINENTAL
HERITAGE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial
Statements (Continued) October 31, 1998 and 1997
Encore was organized on December 30, 1997, and has realized no revenues from
operations. It considers itself to be a development stage company and intends
to engage in the wholesale and retail distribution of nutri-ceutical and
homeopathic products.
After giving effect to the foregoing transactions, unaudited pro forma
combined financial position and results of operations as of and for the year
ended October 31, 1998 are summarized as follows:
Balance Sheet - October 31, 1998
Current assets $ 28,000
Property assets 5,000
Other assets 1,000
------
Total assets $ 34,000
======
Current liabilities $ 266,000
Long-term debt 112,000
Stockholders' deficiency (344,000)
--------
Total liabilities and stockholders' deficiency $ 34,000
======
Statement of Operations
for the year ended October 31, 1998
Development Stage Activities:
Revenues $ -
Discontinued Operations:
Loss from discontinued operations (89,000) (a)
Gain on disposal of discontinued operations
(net of income taxes of $31,000) 96,000
------
Loss from development stage operations $ (295,000)
Income from discontinued operations $ 7,000
Net loss $ (288,000)
=======
Loss from development stage activities $ (0.04)
----
Discontinued operations:
Loss from discontinued operations (0.01)
Gain on disposal of discontinued operations 0.01
----
Income from discontinued operations 0.00
----
Net loss $ (0.04)
====
(a) Revenues from rental activities amount to $220,000
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchanges Act of 1934, the Registrant has duly caused this amendment to its
Annual Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: May 14, 1999. CONTINENTAL HERITAGE CORPORATION
BY: /s/Steve Gould
Steve Gould, President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment to its Annual Report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.
Dated: May 14, 1999. /s/Steve Gould
. Steve Gould, President,
Chief Executive Officer, Chief
Financial Officer and Director
Dated: May 14, 1999. /s/ Lee Kaplan
Lee Kaplan, Chairman of the Board of
Directors and Vice President
Dated: May 14, 1999. /s/Robert Bray
. Robert Bray, Director
<PAGE>
AMENDED AND RESTATED
SUPPLY AND MARKETING AGREEMENT
THIS AGREEMENT (the "Agreement") amends and restates the SUPPLY AND
MARKETING AGREEMENT dated August 5, 1998, originally entered into between
Encore International, Inc. and Ultramarine Ltd., a Belize corporation. In the
event this amendment and restatement is not executed and made binding by the
parties, the original agreement previously mentioned, shall remain in full
force and effect. At such time as this amendment and restatement is fully
executed and made effective, the original agreement shall be null and void.
This Agreement is made and entered into this 23RD day of January, 1999, by and
among VisionQuest Worldwide, Inc. ("VISION"), a Nevada corporation, (successor
in interest to Encore International, Inc.) the address of which for purposes of
this Agreement is 2140 America's Cup Circle, Las Vegas, NV 89117 and Marine
Biologics, Inc., a Wyoming corporation ("MBI") whose address, for purposes of
this Agreement is 563 West 500 South, Suite #100, Bountiful, Utah 84010, with
MBI acting under an Exclusive Marketing and Management Agreement with
UltraMarine Ltd. (Ultramarine Ltd. represented by Santiago Gomez, President, 35
Barrack Rd., Suite 203, Belize City, Belize, Central America (VISION and MBI
collectively, the "Parties").
RECITALS
1. MBI is in the business of supplying Homeopathics, Ayurvedic herbals,
Marine dietary supplements, and other health related products including,
without limitation, those products described on Exhibit "A" attached hereto and
incorporated herein by this reference.
2. MBI is a supply and marketing entity which, for the purposes of this
Agreement, retains the sole and exclusive marketing rights (subject to the
rights granted to VISION in this Agreement) to those products described on
Exhibit "A" attached hereto and incorporated herein by this reference.
3. VISION is in the business of marketing products primarily through
direct marketing channels, utilizing independent contractor distributors
("Members").
4. The parties hereto desire to enter into this Agreement to further
define the rights and obligations of the Parties pertaining to the supply sale
and marketing of the Products.
NOW, THEREFORE, in consideration of the promises, covenants and agreements
herein made, and in consideration of an initial order of sixty-thousand units
of the Homeopathic Ayurvedic herbal combination LiveRx(tm), with an initial
payment of $28,000.00 and an additional payment of $80,000.00 on or before 17
February 1999, which will constitute 50% of the order, and the mutual benefits
to be derived therefrom, and other good and valuable consideration, the receipt
Ad adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
A. "Agreement" shall mean this Supply and Marketing Agreement.
B. "Consumer" shall mean the ultimate purchaser of Products purchased
from Distributors of VISION, whether intended for personal use or resale.
C. "Confidential Information" shall mean, in addition to its meaning
under applicable laws, information which is not generally known and which is
proprietary to either of the parties herein, including (i) all plans and
specifications, chemical analysis, formulas, technical and manufacturing data,
research and test results and data and similar information, all of which should
be considered "Trade Secrets" of MBI or VISION as the case may be, under
applicable law, (ii) any other information which would be considered trade
secrets of MBI or VISION and their products under applicable law, (iii)
information relating to the business of MBI provided to VISION which is
intended to be confidential, including, without limitation, pending patents,
licenses and similar proprietary interest, ownership and corporate structure,
identification of suppliers, and (iv) information relating to the business of
VISION provided to MBI which is intended to be confidential, including, without
limitation, information about ownership, corporate structure, financing,
marketing techniques, customer lists and distributor lists of VISION.
D. "Distributors" shall mean and refer to the independent contractors
("Members") enrolled in VISION's direct marketing program for the direct sale
of Products to Consumers.
E. "Product Information" shall mean and refer to all information which
is not included in Confidential Information regarding the Products, which is
intended to be supplied by MBI to VISION and disseminated by VISION to
Consumers and Distributors.
F. "Product" shall mean solely the products of MBI identified and
described on Exhibit "A" attached hereto and incorporated herein by reference.
G. Direct Marketing Industry shall mean businesses that use primarily
independent contractors compensated for the sale of merchandise to consumers,
directly or through downline Members.
Any additional terms defined elsewhere in this Agreement shall have the
meanings ascribed to them elsewhere in this Agreement.
2. Grant of Exclusive Marketing Rights. Subject to the terms and
conditions of this Agreement and for the term of this Agreement, unless earlier
terminated pursuant to terms hereof, MBI hereby agrees to obtain and supply the
Products and grants to VISION the exclusive right and privilege (the "Exclusive
Right") to sell, market and distribute the Products. MBI warrants that it has
the right to grant exclusive marketing rights to the products covered by this
Agreement and shall continue to have that right during the term of this
Agreement.
All products provided under this agreement will be proprietary and unique to
VISION. MBI or its affiliated companies shall not provide any of the products
covered by this agreement to any other company in the network or direct
marketing business.
VISION shall have a first right of refusal for any product not custom made
for another company, for a period of sixty (60) days from the delivery of
samples (minimum of six 1-month supply units) and documentation of product
ingredients and performance for any new MBI product.
The parties agree that in the event of a breach of the provisions of this
Section, the party harmed by a party failing to comply with this Section may
incur significant loss for which monetary damages may not be adequate, and that
the party harmed shall, without limiting any other available remedies at law or
equity, be entitled to injunctive relief from a court of competent
jurisdiction, notwithstanding the arbitration language within Section 20
herein. The parties understand and agree that MBI is supplying the Products
under private label to be distributed solely by VISION during the term of this
Agreement. MBI is prohibited from selling, marketing or distributing the same
Products in any company under any trademark belonging to VISION. During the
term of this Agreement VISION is prohibited from purchasing, selling,
marketing, supplying or distributing the same or products covered under this
agreement from any source other than MBI.
This Agreement shall commence and date back to the original commencement on
August 5, 1998, and will automatically renew for successive five (5) year
terms, unless sooner terminated due to a default as set forth in section 18
herein or notice of objection to renewal from one party to the other. The
Exclusive Right shall continue for a term of five (5) years in North America,
Central and South America. MBI agrees to grant the first right of refusal for
any remaining part of the world, with the exception of India. Said right of
first refusal must be exercised within sixty (60) days from the date of written
notification from MBI of its intent to exercise said rights.
3. Non Competition and Non Circumvention. Each Party covenants that it
will not compete with the business of the other party. In addition. during
the period of this contract neither party will seek to, or cooperate with any
other party who seeks to, circumvent the intent of this agreement. "Non
circumvention" includes but is not limited to making direct agreements with
suppliers or customers that removes one of the parties from a profitable
relationship which would otherwise occur under this agreement.
Notwithstanding the foregoing, in the event of termination of this
agreement because one of the parties has breached the agreement or has
discontinued its business, the nonbreaching party or non-discontinuing party
may seek other sources of supply or distributions and such seeking or
establishing a relationship with another source of supply or distribution shall
not constitute a violation of this non-compete or non-circumvention agreement.
4. Product Price. Products supplied by MBI for VISION will be sold to
VISION in accordance with the Price Schedule set forth on Exhibit "A" attached
hereto and incorporated herein by this reference, which prices include cost of
shipment to Las Vegas, Nevada. Such prices shall also not be subject to
adjustment, unless MBI documents a price change from Allen Laboratories.
However, the Price Schedule is guaranteed for a period of one (1) year
following the date of this Agreement. Such prices shall be exclusive of all
city, state and federal taxes, including, without limitation, manufacture,
value added, sales, use, receipts, gross income, excise, occupation or similar
taxes, which obligations attributable to the manufacture and sale to VISION are
the obligations of MBI.
Following the initial one (1) year period, MBI shall have the right to
adjust prices not more than once per year and then only to the extent necessary
to cover increased costs and expenses. In the event of such a price increase,
MBI will supply to VISION written notice of the price increases. Price
increases shall take effect on the date designated by MBI, but in no event
earlier than sixty (60) days following receipt of notice of such increase by
VISION. Any purchase order placed by VISION prior to the expiration of said
sixty (60) day period shall be filled by MBI at the pre- increase price.
In the event MBI is unable to deliver a product and it is back ordered for
reasons other than those covered in the Force Majeure clause contained herein,
MBI will pay the cost of delivering such back ordered item(s).
5. Terms or Payment. All terms and rights of this contract are subject
to the successful completion of the initial order set forth in the "NOW,
THEREFORE" paragraph. The initial payment of $28,000.00 set forth therein has
been received by MBI. Because of non recoverable expenses which will be
incurred by MBI as a result of the initial order, said initial payment is
non-refundable.
After receipt and payment in full of the initial order, the purchase price
for all Products ordered shall be payable to MBI at fifty percent (50%) upon
placement of an order and fifty percent (50%) following shipment of the entire
order to VISION's designated facility, verified by receiving documents and
receipt of an invoice from MBI.
In connection with the packaging of the Products, MBI will be responsible
for furnishing boxes and packaging of sufficient size and strength to ship the
Products. In addition, MBI shall have designs and/or labels approved by VISION
imprinted upon such containers.
6. Manufacturing Quality. In addition to any warranty requirements
pursuant to the terms of this Agreement, all products supplied by MBI and its
manufacturers shall be of merchantable quality and shall meet any and all
applicable U.S. governmental standards. VISION shall have the right, through
its duly appointed representatives, to examine, inspect and/or test any and all
of the Products supplied by MBI, and the production lines, production
facilities and storage facilities, during any stage of production. Without
limiting the foregoing, MBI shall not alter or substitute any ingredients used
in production of the Products without the prior written consent of VISION and
without compliance with applicable governmental standards. MBI warrants that
the goods delivered in accordance with this Agreement shall measure up to the
same standard and analysis as the sample Products previously submitted to
VISION. VISION may, from time to time, conduct laboratory tests on the
Products to verify that the content (if applicable) of the Products conform to
a Certificate of Analysis (the "Certificate") which must be provided to VISION
within 14 days following each shipment of product(s). Such testing shall be
conducted to assure quality control, and any material deviation from the
Certificate shall be deemed a breach of this Agreement, or, at the election of
VISION, MBI shall be required to immediately comply with supplying the Products
in accordance with the criteria in the Certificate.
7. Liquid and Ingestible Products. MBI shall, as pan of its packaging
obligations, provide for a "tamper-evident" seal for all Products which are in
liquid form or those products which are designed to be ingested. Said seals
shall be designed so that in the event any such seal is broken or pierced, it
shall be readily apparent to the consumer that the seal is broken.
8. Product Defects. The delivery of any defective products or packaging
to VISION which requires the return of such products to the purchasing
representative(s) shall result in a shipping and handling charge to MBI. Such
cost shall be the amount of such additional shipping (line dispatch to MBI and
the return to the purchasing representative(s) as charged by United Parcel
Service).
9. Product Liability Insurance. At all times during the term of this
Agreement, MBI and/or its suppliers shall maintain comprehensive product
liability insurance in such form and manner as shall be reasonably acceptable
to VISION with a combined single occurrence limit of not less than One Million
Dollars ($1,000,000.00). Said product liability insurance policy shall name
VISION as an additional insured thereunder and shall provide the sole remedy
for any product liability claims of VISION or its associates against MBI. MBI
shall provide proof that VISION is an additional insured within fourteen (14)
days of the execution of this Agreement. Such insurance shall not only provide
for Consumer physical injury but also Consumer property damage as well.
10. Product Information. MBI agrees to furnish to VISION in a timely
manner Product Information regarding the Products, which Product Information
shall accurately describe the nature, character and prescribed use of the
Products and the composition thereof, which information shall be appropriate
for distribution to Consumers and Members of VISION, in the discretion of
VISION. The Product Information shall not misrepresent or in any way
intentionally mislead VISION, its Members or consumers with respect to the
products. VISION may incorporate such Product Information in its sales
advertising and promotional literature and materials ("the Sales Materials").
Said product information so utilized shall not be deemed as Confidential
Information as set forth in section 1.C. of this Agreement.
11. Trademarks. VISION and MBI agree that trademarks of MBI and trademarks
of VISION are the sole and exclusive property of MBI and VISION respectively.
Each parry agrees that it will not use any trademark which is the property of
the other party. MBI specifically agrees that any Product it privately labels
and provides to VISION under a name provided by VISION shall be considered a
Trademark of VISION unless agreed in writing to the contrary.
12. Representations Warranties and Covenants of MBI. MBI hereby
represents, warrants to and covenants with VISION as follows:
A. MBI has the right to supply and distribute the Products and all
components thereof, and the Products shall not and do not, constitute any known
infringement of any license, trademark, copyright, patent or similar
proprietary interest of any third party.
B. MBI's supplier represents it has the capacity to supply the Products
necessary to meet the anticipated sales of VISION for the duration of this
Agreement.
C. MBI will exercise due diligence and reasonable efforts to expand its
production and shipping capabilities to the extent necessary to meet future
increased demand for products as sales of VISION increase.
D. MBI shall provide VISION in writing, copies of all research data on
Products provided to VISION.
E. Execution and delivery of this Agreement by MBI has been duly
authorized. The person executing this Agreement on behalf of MBI has full and
proper authorization to execute same, and this Agreement is the valid and
binding agreement of MBI and is enforceable against MBI in accordance with its
terms.
F. MBI warrants that it will provide delivery within the time designated
per product Exhibit(s) attached hereto and incorporated herein except in the
case of disruption of transportation systems by "force majure" or other factors
beyond the control of MBI.
G. VISION reserves the right to provide all product names, logos and
artwork for all products provided to them by MBI. All names, logos, and
artwork must conform to all governmental regulations and requirements.
H. MBI will assist VISION with technical and marketing support and Floyd
E. Weston (WESTON) and Dr. Leonard Haimes (HAIMES) will to the best of their
abilities promote the products and support VISION's marketing efforts for the
duration of the Agreement. VISION will have the right to utilize WESTON and
HAIMES in printed materials and for public appearances. All reasonable costs
for travel incurred by WESTON and HAIMES are the responsibility of VISION. As
compensation for use of HAIMES as a significant speaking part of any audio or
video material which is developed by VISION and sold by VISION for a profit, a
royalty of $.25 per tape sold will be paid to HAIMES or his designee on a
quarterly basis. Any such material shall be the property of VISION.
I. VISION will grant the right to MBI to have an independent
distributorship in the name of its designee. The designee of the
distributorship will agree to operate such distributorship in accordance with
VISION's policies and procedures.
13. Representations Warranties and Covenants of VISION. VISION hereby
represents, warrants to and covenants with MBI as follows:
A. VISION will exercise good faith and efforts to establish a sales
organization properly trained to market the Products throughout the Market
area.
B. VISION will use its best efforts to conduct its business operations in
a manner designed to properly promote the Products. Without limiting the
foregoing, VISION, acting on its own, behalf or through Distributors, will
conduct such advertising and marketing campaign as may be reasonably necessary
to promote the Product. The methods and content of such advertising shall be
in the sole discretion of VISION.
C. VISION has a good faith belief that it has the right to sell and
distribute Products under the "VISION" (LiveRx(tm) name, and knows of no
infringement on the license trademark or other similar proprietary interest of
any third party.
D. Execution and delivery of the Agreement by VISION has been duly
authorized by its board of directors. The officer executing this Agreement on
behalf of VISION has full and proper authorization to execute same, and this
Agreement is the valid and binding agreement of VISION and is enforceable
against VISION in accordance with its terms.
E. With the exception of the initial order set forth above, VISION
agrees to order in minimum quantities of 10,000 units, unless other order
quantities are specifically agreed to in writing by the parties.
14. Indemnity. VISION also agrees to indemnify, defend and hold MBI
harmless (on the same basis as above) from and against any and all claims
asserted by third parties due to any false, misleading or injurious
representations of VISION or its agents, employees or successors, or any other
person or entity affiliated with or representing VISION making any such
representations or engaging in any such conduct. All indemnifications as set
forth in this Agreement includes, but shall not be limited to all liability,
costs and fees (including reasonable attorneys fees) incurred in defending any
such claims brought by third parties.
15. Confidentiality. Each Party acknowledges that the other Party has
valuable business, source, trade and product information which belongs solely
to that Party and which will or may be revealed to the other Party in the
course of operating under this agreement. Each Party agrees and pledges to
hold such information in the strictest confidentiality, unless agreed otherwise
in writing signed by both parties. This confidentiality provision shall
survive the termination of this agreement.
The parties acknowledge that in the event of breach of the provisions of
this section, the Non-Disclosing Party may incur significant loss for which
monetary damages may not be sufficient compensation, and that therefore the
Non-Disclosing Party shall without limiting any other remedies available at law
or in equity, be entitled to injunctive relief, from a court of competent
jurisdiction, and as set forth within Section 20 herein.
16. Termination. This agreement shall terminate in the event of
insolvency, bankruptcy, or assignment for the benefit of creditors of either
party. In the event of termination, work in progress shall be completed and
the rights and obligations of the parties hereunder shall continue to pertain
to such work even though its completion may follow the effective termination
date (including, without limitation, the obligation of MBI to honor ongoing
warranty, indemnity and similar claims). Furthermore, this Agreement may be
terminated by either party, in the event there is a breach of the terms hereof,
which breach remains uncorrected for a period of thirty (30) days after written
notice and demand for correction by the non-defaulting party. Notwithstanding
termination of this agreement pursuant to the terms of this section 18, the
provisions of all Miscellaneous Sections, all indemnity obligations, all
obligations for the payment of money which have accrued prior to such
termination and all provisions protecting proprietary rights shall survive
termination of this Agreement.
MISCELLANEOUS SECTIONS
17. Attorney's Fees. In the event either of the respective parties hereto
shall default in any of its covenants or obligations hereunder and the other
party not in default commences legal or equitable action against the defaulting
party, the defaulting party expressly agrees to pay all reasonable expenses of
said litigation, negotiation or appeal, including a reasonable sum for
attorneys' fees.
18. Arbitration and Venue. Should any dispute arise hereunder, the Parties
agree to submit such dispute to "binding arbitration" in Las Vegas, Nevada,
either by the American Arbitration Association or under its rules.
19. Severability. Should any provision of this agreement or the
application thereof, to any extent, be invalid or unenforceable, the remainder
of this Agreement and that application thereof, other than those provisions as
to which it shall have been held invalid or unenforceable, shall not be
affected thereby and shall continue to be valid and enforceable to the fullest
extent permitted by law or equity.
20. No Reliance. Each party hereto represents to the other party that it
has not relied upon any representation, warranties or statement made by the
other party or purportedly made on behalf of the other party in entering into
this Agreement except as expressly set forth herein; and each party understands
that the other party is not relying upon any representation or warranties in
entering into this Agreement except as expressly stated herein.
21. Relationship of Parties. The relationship among MBI and VISION is, and
during the term of this Agreement shall be, that of independent contractors.
No party shall be deemed a legal representative or agent of the other party for
any purpose and shall have no right or authority to assume or create in writing
or otherwise, any obligation of any kind, express or implied, with respect to
any commitments, in the name of the other party or on behalf of the other
party, unless given with the express written authority of such party.
Furthermore, the relationship among MBI and VISION hereunder shall not
constitute a joint venture, general partnership or similar arrangement.
22. Notices. Any notice or other communication given by either party
hereto to the other party relating to the interpretation of this agreement,
default of either party under this agreement, or any matters which would tend
to establish or enforce the legal rights of the parties shall he personally
delivered or shall be sent by registered or certified mail, return receipt
requested, addressed to such other party at the respective addresses set forth
below or at such other addresses as the respective parties may designate in
writing, and if mailed, such notice or other communication shall be deemed
given three (3) days after being placed in the United States mail, postage
prepaid and properly addressed.
If to VISION, to: Steven Gould, President
VisionQuest Worldwide, Inc.
2140 America's Cup Circle
Las Vegas, Nevada 89117
If to MBI, to: Floyd E. Weston, President
Marine Biologics, Inc.
563 West 500 South, #100
Bountiful, Utah 84010
Any other routine notice, communication and all payments shall be made by
either FAX, first class mail, express delivery or personal delivery, to the
appropriate parties at their respective addressed set forth above.
23. No Waiver. The waiver of any rights granted hereunder or the failure
to perform any obligations, or the breach of any of the terms which are waived,
shall not be considered as a continuing waiver.
24. No Assignment. No party shall have any right to assign this agreement
or any rights hereunder without the prior written consent of the other party
and any assignment or attempted assignment without such consent shall be null
and void and of no force and effect.
25. Governing Law. It is expressly understood and agreed by and between
the parties hereto that this agreement shall be governed by and its terms
construed under the laws of the State of Nevada.
26. Headings. Section headings used herein are for convenience of
reference and shall in no way define, limit or prescribe the scope or intent of
any provision of this agreement.
27. Entire Agreement. This agreement constitutes the entire written
agreement between the parties and supersedes any oral or other written
agreements. There shall be deemed to be no other terms conditions, promises,
understanding, statements or representations, express or implied, concerning
this agreement unless set forth in writing and signed by both parties hereto.
This agreement may not be altered, amended, assigned, encumbered or
hypothecated by either party without the express written consent of the other
party. This Agreement has been prepared by the joint efforts of both parties
and shall be interpreted fairly and simply and not strictly for or against
either party.
28. Time is of the Essence. It is agreed that time shall be of the essence
of this agreement and each and every provision hereof.
29. Binding Effect. This agreement shall be binding upon and inure to the
benefit of the panics hereto and their respective successors and assigns.
30. Force Majeure.
A. MRI's failure or inability to make, or VISION's failure or inability
to take, any delivery or deliveries when due, or the failure, or inability of
either Party to effect timely performance or any other obligations required of
it hereunder, other than the payment of money if caused by "Force Majeure," as
hereinafter defined, shall not constitute a default hereunder or subject the
Party affected by Force Majeure to any liability to the other, provided,
however, the Party so affected shall promptly notify the other Party when such
Force Majeure circumstances have ceased to affect it ability or perform its
obligations hereunder. However, each Party shall use its best efforts to
remove or alleviate the causes or circumstances of nonperformance as soon as
possible.
A. As used herein, the terms "Force Majeure" shall mean and include any
failure or delay of any party hereto to perform any obligations under this
Agreement solely by acts of God, acts of government, riots, wars (whether or
not declared), embargoes, strikes, lockouts, accidents in transportation, port
congestion and other causes beyond its control shall not be deemed to be a
breach of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused their representatives to
affix the appropriate signatures and seals and agree to be bound thereby, on
the day and year first above written.
VisionQuest, Worldwide, Inc. Marine Biologics, Inc.
/s/Steve Gould /s/Floyd Weston
By: Steven Gould, President By: Floyd Weston, President
<PAGE>
EXHIBIT "A"
PRODUCT EXHIBIT
PRODUCT DESCRIPTION: LiveRx(tm)
Kidney - Liver formula
(Constituent formula attached)
MINIMUM ORDER: 10,000
SHIPPING ORDER: F.O.B. to designate order
fulfillment center
12 boxes to custom designed
case
SHIP TO LOCATION: As requested
MARKETING FORM: Custom designed box
containing 180 500 mg two
color hard shell capsules
INITIAL PRICE: $3.60 per bottle.
IN WITNESS WHEREOF, the Parties have executed this instrument this _____ day
of March, 1999.
MARINE BIOLOGICS, INC. VISIONQUEST WORLDWIDE
By: Floyd E. Weston, President By: Steven Gould, President
EXHIBIT "B"
PRODUCT EXHIBIT
PRODUCT DESCRIPTION: ProAlgaen Omega(tm))
Marine Nutraceutical
(Constituent formula attached)
MINIMUM ORDER: 10,000
SHIPPING ORDER: F.O.B. to Las Vegas, Nevada
or vicinity
SHIP TO LOCATION: Las Vegas, Nevada or vicinity
MARKETING FORM: Custom designed box containing
100 500 mg two color blister
packed capsules
INITIAL PRICE: $5.95 per individual box
DELIVERY DATE: 45 days following approval
of artwork (initial order)
IN WITNESS WHEREOF, the Parties have executed this instrument this _____ day
of March, 1999.
MARINE BIOLOGICS, INC. VISIONQUEST WORLDWIDE
By: Floyd E. Weston, President By: Steven Gould, President
EXHIBIT "C"
PRODUCT EXHIBIT
PRODUCT DESCRIPTION: OceanGold(tm)
Norwegian shark liver oil capsules
containing a combination of
Alkoxyglycerol and Squalene.
MINIMUM ORDER: 10,000 individual boxes
totaling 1,200,000 capsules
SHIPPING ORDER: F.O.B. to Las Vegas, Nevada
or vicinity
SHIP TO LOCATION: Las Vegas, Nevada or vicinity
MARKETING FORM: Custom designed box containing
120 550 mg soft gel, blister
packed capsules
INITIAL PRICE: $6.21 per individual box
DELIVERY DATE: 45 days following approval of
artwork (initial order)
IN WITNESS WHEREOF, the Parties have executed this instrument this _____
day of March, 1999.
MARINE BIOLOGICS, INC. VISIONQUEST WORLDWIDE
By: Floyd E. Weston, President By: Steven Gould, President
EXHIBIT "D"
PRODUCT EXHIBIT
PRODUCT DESCRIPTION: SlenderQuest(tm)
Weight Management)
MINIMUM ORDER: 10,000
SHIPPING ORDER: F.O.B. to Las Vegas, Nevada
or vicinity
SHIP TO LOCATION: Las Vegas, Nevada or vicinity
MARKETING FORM: Custom designed box containing
180 500 mg blister packed,
two color hard shell capsules
(blue and white)
INITIAL PRICE: $4.95 per individual box
IN WITNESS WHEREOF, the Parties have executed this instrument this _____
day of March, 1999.
MARINE BIOLOGICS, INC. VISIONQUEST WORLDWIDE
By: Floyd E. Weston, President By: Steven Gould, President
CONSULTING AGREEMENT
This Consulting Agreement (hereinafter referred to as "Agreement") is
entered into this 25th day of March, 1999 (hereinafter the "Effective Date"),
between DR. LEONARD HAIMES (hereinafter referred to as "Haimes"), and
VlSIONQUEST WORLDWIDE, INC., a Nevada Corporation (hereinafter referred to as
"VQ").
RECITALS
WHEREAS, VQ is a multi-level marketing entity with a network of
independent representatives who sell (via direct sales) various consumer
products to the public; For purposes of this Agreement, the "Products" shall be
defined and deemed to be any nutritional supplements and health related
products, but excluding household products, skin and hair care and personal
care products, unless such excluded products are supplied by Marine Biologics,
Inc. (hereinafter "MBI");
WHEREAS, VQ desires to retain Haimes to endorse and promote the Products
and desires to enter into the following Agreement for Haimes' services as
defined herein; NOW THEREFORE, in consideration of the foregoing, the mutual
covenants and promises herein contained, and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the
parties agree as follows:
TERMS AND CONDITIONS
1. Effective Date; Term. This Agreement shall become effective on the
Effective Date and shall remain in full force and effect until the earlier of
the close of business of VQ or five (5) years from the Effective Date, unless
sooner terminated as provided herein. Notwithstanding the foregoing, this
Agreement and its obligations of both parties hereunder shall also terminate
upon (1) VQ's voluntary or involuntary cessation of the sale of MBI Products
(which Product line may be supplemented or diminished after the Effective Date
of this Agreement), (2) upon the voluntary or involuntary cessation of business
by VQ, or (3) upon the death or incapacity of Haimes,(except as hereinafter set
forth).
2. Renewal. This Agreement may be extended for an unlimited number of two (2)
year terms on each anniversary after the lapse of the initial term by written
agreement of both Haimes and VQ. The written agreement extending this Agreement
may contain additional terms or terms which vary from this Agreement. Such
additional terms or varying terms will be deemed to be part of this Agreement
and be binding on both VQ and Haimes when signed by both. If the terms of the
supplemental agreement conflict with the terms herein, then the terms within
the supplemental agreement shall control the intent of the parties. The
interpretation of non-conflicting terms shall be governed by this Agreement.
3. Independent Contractor Status. Haimes is an independent contractor with
respect to the provision of providing the Services (as hereinafter defined) and
any support personnel, supplies, space, equipment, administration for the
Services described in this Agreement and exhibits attached hereto. Nothing
contained herein shall be construed as creating any other type of relationship
between Haimes and VQ other than the relationship of independent contractor.
Since Haimes and his staff, employees and agents (if any) are not employees of
VQ, VQ will not withhold on behalf of Haimes any sums for income tax,
unemployment insurance, social security or otherwise, and all such
withholdings, if any is required, will be the sole responsibility of Haimes.
Haimes shall also comply (at his expense) with all applicable provisions of
workers compensation laws, unemployment compensation laws, federal social
security laws, the fair labor standards act and all other applicable federal,
state and local laws and regulations relating to terms and conditions of
employment required to be fulfilled by employers.
4. Scope of Consulting Work. Haimes agrees to perform consulting and support
services as hereinafter described in Exhibit "A" (the "Services") attached
hereto and made a part hereof. Haimes hereby agrees that such Services shall be
performed with promptness and diligence, in a good and workmanlike manner, and
to the reasonable satisfaction of VQ, it being understood that Haimes has a
private medical practice to which he will devote a significant part of his
time. The scope of the Services to be provided shall be broadly construed, it
being understood that the scope may be enlarged so long as such scope promotes
increased sales of the nutritional and dietary supplement Products sold by VQ,
or any other new product line developed by MBI or Haimes in the future. Haimes,
in performing the scope of his Services shall not incur any expenses on behalf
of VQ unless specifically authorized to do so in writing.
5. Work Product of Haimes to be Property of VQ - Confidentiality. All
proposals, research, studies, records, reports, recommendations, manuals,
findings, evaluations, forms, reviews, information, data, written material and
any other work product produced by Haimes for the benefit of and/or on behalf
of VQ (collectively the "Works") for the period covered by this Agreement (or
any extension thereof) is hereby acknowledged, agreed and deemed to be the
exclusive property of VQ, and Haimes hereby relinquishes all right, title and
interest in and to such material, unless otherwise agreed to in writing by
Haimes and VQ.
Any specifications, models, samples, computer programs, technical
information, confidential business, customer or personnel information or data,
written, oral or otherwise (all hereinafter referred to as "Information"),
obtained by Haimes from VQ shall remain VQ's property. All copies of such
Information in written, graphic or other tangible form shall be returned to VQ
upon request. Unless such Information was previously known to Haimes free of
any obligation to keep it confidential, or has been or is subsequently made
public by VQ or a third party, it shall be kept confidential by Haimes, shall
be used only in performing hereunder, and may not be used for other purposes
unless agreed upon in writing.
Haimes hereby agrees that the Works and any Information received by him
from VQ during any furtherance of the Haimes' obligations in accordance with
this Agreement will be treated by Haimes in full confidence and will not be
revealed to any other persons, firms or organizations, unless authorized to do
so in writing by VQ. Notwithstanding the foregoing, the release of such
Information and Works pursuant to subpoena or court order shall not violate the
terms of this Section 5. Upon fulfillment of the term of this Agreement or upon
the earlier termination thereof, all such Works and Information as set forth in
this Section shall be immediately turned over to VQ upon demand therefor. The
confidentiality of the Information and Works referenced in this paragraph shall
remain confidential in perpetuity, or to the extent allowed by law after the
lapsing of the term of this Agreement or the earlier termination thereof.
6. Indemnity. Haimes shall indemnify VQ from and defend or settle any claim or
action brought against VQ to the extent that any such claims or actions are
based on or in conjunction with the Services provided to VQ by Haimes,
including but not limited to claims which arise from willful or negligent
misrepresentations and/or the wrongful making of medical claims. Haimes shall
pay all costs, fees, (including attorneys fees) and damages which may be
incurred by VQ for any such claim or action or the settlement thereof, so long
as the damages (or portion thereof) are attributable to the willful or
negligent acts or omissions of Haimes.
7. Haimes' Compensation. For the performing of Haimes' Services, VQ shall pay
to Haimes a fee (the "Fee") which shall be based on the following sliding
schedule:
a. Three tenths of one percent (.30%) of VQ's gross monthly sales volume
of Products for monthly sales volume up to five million dollars;
b. Twenty five hundredths of one percent (.26%) of VQ's gross monthly
sales volume of Products for monthly sales between five and ten million
dollars;
c. Two tenths of one percent (.20%) of VQ's gross monthly sales volume of
Products for monthly sales between ten and twenty million dollars;
d. Fifteen hundredths of one percent (.15%) of VQ's gross monthly sales
volume of Products for monthly sales in excess of twenty million dollars
"Gross monthly sales" shall mean the monthly dollar volume of Product sold to
independently contracted members of VQ, less refunds and adjustments. Monthly
sales shall then be multiplied by the applicable rates above to arrive at the
Fees payable to Haimes in any given month.
The Fee as determined above shall be paid to Haimes (or order) within
thirty days of the last day of the previous month. Upon each payment of the net
monthly Fee, VQ shall provide to Haimes a schedule (the "Schedule") setting
forth the sales dollar volume of Products sold to VQ representatives. Haimes
may, no more than one time per twelve month period, audit the records to verify
the sales of Products as outlined above, wherein Haimes may contract with
independent auditors to make such determination. In the event the audit detects
a variance of more than five percent (5%) of a shortfall in the compensation
based upon such sales figures, then VQ will pay the difference within thirty
days of such determination, with interest at the legal rate, and reimburse
reasonable costs associated the audit undertaken at the request of Haimes.
Haimes shall be entitled to his Fee up to the time of the lapse of this
Agreement or the termination thereof.
Further, Haimes (or order) shall be paid (on a monthly basis as specified
above) a royalty in the amount of twenty five cents ($.25) for each "If I'd
Have Only Known" audio tape presentation using the likeness/voice of Haimes,
which tape is produced and distributed by VQ for profit to its independently
contracted members. Haimes shall also be entitled to the same royalty
compensation for any future audio/video tapes produced and distributed by VQ
where Haimes has a significant speaking role. However, prior to Haimes being
entitled to a royalty on such future audio/video tapes, the parties shall be
required to supplement the terms of this Agreement to include the name of such
tape(s). VQ has the sole and unfettered discretion in approving content and
materials or dialogue. In the event this Agreement lapses (or any subsequent
written extension), Haimes shall be entitled to continue receiving royalty
compensation for audio/video tapes actually sold by VQ during the one year
period referenced in Section 12 herein.
Except for the compensation in the form of royalties based on sales of the
audio tape(s) described above, the Fee paid pursuant to the schedule set forth
in this section shall terminate upon the (1) lapse of this Agreement (or any
extension thereof), (2) the earlier termination thereof by either party, or (3)
the death of Haimes (except as provided below). Notwithstanding the terms of
this Agreement, the parties agree and acknowledge that the Fee paid (as opposed
to royalties) for the Services herein is based exclusively on Haimes providing
the Services to VQ, and on no other basis. However, in the event of the death
of Haimes, (1) royalties based solely upon the sale of audio tape(s) shall
continue to be paid to Haimes' estate for so long as VQ continues to sell such
tapes to its independent sales representatives, and (2) the Fee shall continue
to be paid to the estate of Haimes for a minimum period of three months and a
maximum of one year after Haimes' death, depending on how long VQ continues to
utilize Haimes' personage during such one year period.
8. Travel and Accommodations . In accordance with the Exhibit attached, Haimes
may be required to travel for speaking engagements, the filming of videos or
recording of audio tapes and appearances for promotion of the Products.
Travel, lodging, and like expenses, if any, which are authorized in Exhibit "A"
shall in all events conform to the standards set forth in Exhibit "A-1"
(Reimbursable Expenses"), attached hereto and made a part hereof. Haimes shall
make travel, lodging and accommodation arrangements exclusively through VQ's
administrative offices only expenses which are authorized and set forth on
Exhibit "A-1" attached shall be reimbursable expenses. Haimes shall present
bills, receipts, and other documentary proof supporting any authorized expenses
submitted for reimbursement. Haimes shall render an invoice to VQ at the
intervals set forth in Exhibit "A," which shall describe in detail the
reimbursable expenses and include receipts therefor. Haimes shall not be
entitled to any other compensation of any kind whatsoever unless such
compensation is specifically set forth by written agreement by the Haimes and
VQ.
9. Indemnification. In addition to the specific indemnity provided in Section
6 above, each party shall indemnify one another and their affiliates,
employees, shareholder and directors, and each of them, from and against any
loss, cost, damage, claim, expense or liability, including but limited to
liability as a result of injury to or death of any person or damage to or loss
or destruction of any property, resulting from or arising out of or in
connection with the performance of this Agreement by Haimes or a contractor or
an agent of the parties or an employee of any one of them, its contractors,
agents, or employees, except where such loss, costs, damage, claim, expense or
liability results from the negligence or willful misconduct of an indemnitee.
The indemnifying party shall pay any costs and attorneys fees that may be
incurred by the indemnified party in connection with any such claims or suits.
10. Exclusive Services. This Agreement is intended to exclusively secure to VQ
(subject to the restrictions below) the Services of Haimes for the period of
this Agreement (and its extensions) or the earlier termination hereof. The
parties understand that Haimes has a private medical practice to which he will
devote a significant part of his time, and by no means is performance of the
Services under this Agreement intended to restrict or disallow Haimes from
practicing medicine. For the duration of this Agreement, Haimes shall endorse
no other direct sales or multi-level marketing organization or their products.
Upon the lapse or termination (by either party) of this Agreement, Haimes shall
not engage in the acts prohibited within this Section 10 for a period of one
(1) year. At the end of such one year period, Haimes is free to engage in any
activity or business practice.
This Agreement shall operate to preclude Haimes from engaging in any activities
during the term of this Agreement, which activities would result in a breach of
or conflict of interest with the contractual relationship represented by this
Agreement, unless otherwise agreed to by Haimes and VQ as set forth below.
11. Conduct of Haimes. Haimes hereby understands and acknowledges that during
the term of this Agreement he shall act in the best interest of VQ in
performing the Services herein. The following actions taken by Haimes shall
constitute a material breach of this Agreement:
A. The failure of Haimes to utilize Haimes' reasonable efforts in performing
the Services herein.
B. The participation by Haimes in any unethical, illegal, immoral or improper
behavior adversely (in the sole discretion of VQ) reflecting upon the
reputation and integrity of VQ, their officers, directors, employees agents
and/or manufacturers.
C. The making of misrepresentations, including the making of false medical
claims.
D. The failure of the Haimes to act in a professional manner and dress in
professional business attire during the promotional events, which acts
adversely reflect upon the reputation of VQ.
E. The recruitment, solicitation or unauthorized contact with VQ independent
representatives by Haimes for any purposes other than the purposes authorized
by VQ, it being understood that Haimes shall have no contact with the
representatives outside a promotional event unless such contact is in the best
interest of VQ, or in the course and scope of his medical practice. Any contact
with representatives at a promotional event must relate to the promotion of the
sale of VQ products and not for a purpose which is contrary or creates a
conflict of interest to the best interests of VQ.
F. The exercise of undue influence of his/her position to engage in or
encourage, advise or approve of any other party to engage in any unethical,
illegal, criminal or immoral activity.
G. The conviction, plea of guilty, arrest or criminal investigation of Haimes
for any criminal acts.
H. The taking of any action which is materially damaging to the reputation, or
business interest of VQ without its written consent.
I. The failure to adhere to instructions of VQ to modify written or speaking
engagement materials or representations made to the public, unless such
instructions are contrary to public policy, constitute unethical or untruthful
representations, or are not supported by medical findings.
12. Use of Name and Personage. Haimes hereby agrees that VQ is and shall be
entitled to use, and continue to use (subject to the limitations set forth in
this Section 13 below) Haimes' name, personage, likeness, voice, literary
works, any and all photographs, video/audiotapes, appearances, professional
history and qualifications, etc., in marketing and promoting the Products sold
by VQ. Haimes expressly consents to the use of the foregoing and other
information and data regarding Haimes to assist VQ in marketing the products
sold by VQ. Such use rights shall continue for a period of one year beyond (1)
the lapse of the term of this Agreement, or (2) the earlier termination thereof
by either party.
13. Breach and Termination.
A. Breach by VQ. In the event of a breach by VQ for the payment of services
rendered by Haimes, Haimes shall give a 30 day written notice of such default,
and VQ shall be entitled to cure the default within such 30 day period. In the
event VQ fails to cure the defaulted payment within the cure period, Haimes may
terminate this Agreement upon providing written notice thereof to VQ, and
Haimes shall no longer be required to perform the Services.
B. Breach by Haimes. In the event of a breach by Haimes, VQ shall be
entitled to give written notice of such breach, and if such breach is incapable
of being cured, VQ shall be entitled to terminate this Agreement upon the
giving of such notice. If such breach may be cured, VQ shall provide Haimes a
30 day written notice of such breach, and Haimes shall be entitled to cure the
default within such period. In the event Haimes fails to cure such breach or
this Agreement is terminated due to an incurable breach, VQ shall be released
from the payment of the Fees after the date of termination, and any other
obligations (including the royalties) set forth within this Agreement upon the
providing of the foregoing notice(s)(which shall include the forfeiture of
royalties during the one year period after termination for which VQ shall be
entitled to continue marketing such audio/video cassettes, as set forth in
Section 12 herein).
The terms and conditions contained in this Agreement that by their sense and
context are intended to service the performance hereof by either or both
parties hereunder shall so survive the termination, cancellation or completion
of performance of this Agreement. Such clauses include, but are not limited to,
indemnity and confidentiality.
14. Non-Assignment. Haimes and VQ agree not to assign this Agreement or any
interest therein without the non-assigning party's prior written consent, it
being understood that the Services provided by Haimes are personal . Any such
assignment without the prior written consent of the non-assigning party shall
be voidable at the option of the non-assigning party. Except as set forth
above, this Agreement shall inure to the benefit of and be binding upon the
parties hereto, their successors and assigns.
15. Records and Audits. Haimes shall maintain accurate and complete records
specifically relating to the Services and the Works provided hereunder. To the
extent that such records may be relevant in determining whether Haimes is
complying with its obligations hereunder, VQ may audit such records with or
without notice. All such Work shall be delivered to VQ in an orderly fashion
upon termination or upon the lapse of this Agreement, whichever occurs first.
16. No License Granted. No licenses, express or implied, under any patents,
copyrights or proprietary rights are granted hereunder by VQ to Haimes. Except
as provided in this Agreement, no licenses, express or implied under any
patents, copyrights or proprietary rights are granted by Haimes to VQ.
17. Compliance With Laws. Haimes agrees that it will comply with all
applicable federal, state and local laws, regulations and codes within the
scope of the Services performed pursuant to the terms of this Agreement. Haimes
further agrees to indemnify VQ for any loss or damage that may be sustained by
reason of Haimes's failure to comply with such federal, state and local laws,
regulations and codes in the performance of this Agreement.
18. Miscellaneous Additional Provisions.
A. Mutual Cooperation: All parties hereto hereby agree to cooperate with each
other in particular regarding any documents that need to be signed or actions
that need to be taken in order to effectuate the intent of this Agreement. Any
party not cooperating by taking such action or signing any documents as
requested by notice sent to that particular party as provided for in this
Agreement shall be deemed to have breached this Agreement.
B. Invalidity of Provisions: If any term or provision of this Agreement is
declared invalid or unenforceable by a court of competent jurisdiction, the
remaining provisions shall remain in full force and effect.
C. Governing Law: This Agreement is executed and intended to be performed in
the State of Nevada and the laws of Nevada shall govern its interpretation and
effect.
D. Entire Agreement: This Agreement contains the entire agreement of the
parties and each party acknowledges there were no other oral agreements,
representations, warranties or statements of fact made prior to or at the time
of the signing of this Agreement. Any prior oral communications, statements or
negotiations shall be of no force and effect unless contained in this
Agreement.
E. Successors: Except as provided herein, this Agreement shall inure to the
benefit of and be binding upon the heirs, administrators, executors and
permitted assigns of each of the parties hereto.
F. Captions: Paragraph titles or captions herein are inserted as a matter of
convenience and for reference only and in no way define, limit, extend or
describe the scope of this Agreement or any provisions contained herein.
G. Time of the Essence: Time is of the essence in this Agreement and in all
provisions contained herein.
H. Reference to Gender: Any reference to the male or female gender or to
singular parties in this Agreement shall also include reference to the female
or male gender or to multiple parties, if appropriate.
I. Attorney Fees: In the event of any disputes between the parties arising out
of this Agreement, the prevailing party shall be allowed actual attorney fees
and costs incurred in any negotiation, arbitration, litigation or any appeal.
J. Acknowledgment of Independent Advice: Each party whose signature appears
below acknowledges that he has read all of the provisions of the foregoing
Agreement, understands them, has sought independent advice regarding the legal
effect of the provisions herein, and agrees to be bound by said provisions.
K. Modification: No alteration, modification or amendment of this Agreement
shall be effective or enforceable unless it shall be in writing and signed by
the parties.
L. Venue: The venue of any lawsuit or other action based upon this Agreement
shall be in Clark County, Nevada.
M. Counterparts: This agreement may be signed in facsimile form followed by
overnight delivery of the original. Additionally this Agreement may be signed
in one or more counterparts by different parties on the separate counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement.
N. Agreement Drafted Jointly by Both Parties: This Agreement has been
prepared by the joint efforts of both parties and shall be interpreted fairly
and simply and not strictly for or against either party.
O. Waiver: No course of dealing or delay between the parties shall operate as
a waiver of the rights of any party to this Agreement. No default, covenant or
condition of this Agreement may be waived other than in writing.
P. Warranty: If any party to this agreement is a corporation, the officer
signing this agreement for the corporation warrants that he is authorized and
has authority to sign this agreement on behalf of the corporation.
Q. Notices: All notices given or required by this Agreement shall be deemed
duly given only if sent by registered or certified mail, postage prepaid to the
party at the address specified in this Agreement, or otherwise designated in
writing by the parties. Notice shall be deemed received three (3) days after
the date of mailing. Notice may also be given by overnight delivery or hand
delivery. All notices made by hand delivery or via overnight delivery shall be
deemed given and received as of the date of receipt. Addresses for such notices
are as follows:
If to Haimes: With copy to: Leonard Haimes
Leonard Haimes
If to VQ: With copy to:
Steve Gould, President Richard Tobler, Esq.
Visionquest Worldwide, Inc. 6900 Westcliff Drive, Suite 515
Las Vegas, NV 89128
Las Vegas, NV 891
R. Arbitration and Venue. Any dispute arising under this Agreement which
cannot be settled amicably between the affected parties shall be referred to
arbitration before the American Arbitration Association ("AAA") and such
arbitration shall be held and such dispute resolved in accordance with the
rules then in effect under the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA" Rules). Such arbitration shall take place in
Clark County, Nevada. Any injunctive or other equitable relief issue shall be
determined by a court of competent jurisdiction in Clark County, Nevada, or in
the jurisdiction in which any wrongful act is to be enjoined. The parties
hereby waive any personal jurisdiction defense, and agree to submit and appear
before the jurisdiction of the Clark County Courts.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be
executed by their respective duly authorized representatives.
VlSlONQUEST WORLDWIDE, INC., a
Nevada corporation
/s/Leonard Haimes By: /s/Steve Gould
Leonard Haimes, individually Steve Gould, President
<PAGE>
EXHIBIT "A"
1. DESCRIPTION OF SERVICES - Haimes will provide consulting services to VQ,
including but not limited to the following:
(a) consulting with manufacturers in developing and manufacturing existing
and newly developed scientific and technical mineral, herbal, homeopathic and
nutritional formulas used in the manufacturing process in accordance with VQ's
objectives;
(b) the appearance at a minimum of five (5) speaking engagements per year,
including but not limited to VQ seminars, conventions, video or audio tape
sessions, and any other gathering designed to promote the sale of VQ products.
VQ shall provide reasonable notice (SO days) of such speaking engagements, and
both parties will make their best effort to accommodate one another for any
additional engagements required;
(c) the development of formulas to implement into VQ's product line;
(d) the development and providing of written materials, brochures, script
etc., for the enhancement of the sales of VQ products;
(e) the providing of staff to support the services to be rendered by Haimes
(if any);
(f) the timely reporting to VQ any and all matters materially affecting the
purchase, development and manufacturing of product:
(g) the development and formation of a medical advisory board through
reviewing applicants and establishing parameters for the board's function, and
shall direct the board when the board meets to review VQ's product development
needs;
(h) the assistance of VQ as a source of information and nutritional and,
medical trends as well as new product ideas;
(i) assist in the evaluation and testing of Products and new products
clinically and electromagnetically;
(j) assist in the review of medical claims in VQ's marketing and educational
materials;
(k) the writing of articles as requested by VQ for periodic newsletters,
product bulletins and other publications. Such services will be supported and
assisted through VQ staff;
(l) any other function Haimes is capable of performing that VQ reasonably
requests.
II. EXPENSES - VQ shall reimburse Haimes for the actual costs incurred in
rendering the Services described in this Agreement limited to the expenses as
set forth on Exhibit "A-1" attached hereto and incorporated by this reference.
Monthly expense reports shall be submitted to VQ no later than the tenth (10th)
day after the end of each month. Payment of all such reasonable expenses
incurred and reported by Haimes shall be paid no later than 15 days after the
receipt of the expense report. VQ reserves the right to refuse payment on
unreasonable expenses, or unauthorized expenses.
III. CONFIDENTIALITY - In addition to the confidentiality provisions
within the Agreement, Haimes shall be required to obtain from its
subcontractors, agents and employees a written agreement having such parties
acknowledge that the information, formulas and other proprietary property or
information provided by VQ and/or Haimes shall be kept confidential and that
such property and information shall be returned when the relationship requiring
the sharing of such proprietary information is no longer necessary. Said
agreement shall also provide that the third party shall not misappropriate or
utilize such information or any derivative thereof for their own benefit
without the written consent of VQ.
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EXHIBIT "A-1"
EXPENSES TO BE REIMBURSED BY VQ
The following guidelines shall set forth the standards to be applied in
reimbursing Haimes for the actual costs of expenses incurred in the performance
of its services, provided such reimbursements are authorized in Exhibit "A" of
the Agreement:
A. Travel and Lodging. All travel and accommodations shall be made through
VQ, and the following costs shall be borne by VQ:
(1) Airfares (first class so long as accommodations are timely made to
secure such seating at a reasonable cost) authorized by VQ;
(2) out of state rental car (no smaller than mid-size vehicle) expenses
plus fuel costs;
(3) Parking charges, toll bridge charges and other incidental traveling
costs;
(4) Reasonable lodging (no less than a three star facility as determined by
AAA);
(5) A meal per diem allowance of 75.00 per full day of Services.
B. Other Expenses. VQ shall reimburse Haimes for all other reasonable
expenses authorized by VQ in writing. The determination of "reasonableness" of
any such expenses shall be within the sole discretion of VQ.
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