Exhibit 10.8
Beta Foods, LLC
10325 Avenida Magnifica
San Diego, California 92131
March 23, 2004
American Consolidated Management Group, Inc.
714 Fairview Road
Greer, South Carolina 29651
Re: Technology Transfer
Gentlemen:
When accepted by you, this shall constitute our complete agreement
concerning the transfer to you of certain technology, and the rights to
manufacture, market, and distribute products obtained by and through Beta Foods,
LLC's agreement with the inventor, Dr. Jack Watkins. The subject process is a
trade secret for which Beta, and/or Dr. Jack Watkins, the inventor, has not made
any application for Letters Patent in any jurisdiction.
For the purposes of this agreement, the subject technology relates to a
natural dry compound for producing a protective barrier for consumable food
products. The compound can be applied to both wet and dry processed foods. With
this technology, consumable food products that are freeze dried can be protected
and used as an ingredient to maintain a higher nutritional value through extreme
temperature processing. The technology produces a compound that adheres
molecularly to the food particles and acts as a partition barrier from heat and
degradation to the micronutrients and phytochemicals present in the foods. For
the purposes of this agreement, this technology shall be hereinafter referred to
as the "Technology." Furthermore, for the purposes of this agreement, it is
agreed and understood that this term "Technology" includes any future
developments, improvements, additions, and inventions hereinafter made to this
Technology, which may occur throughout the duration and utilization of the
Technology.
The Technology is a trade secret that ACMG and Beta agree will be jointly
protected and not revealed to any third parties, except for a general
description for marketing purposes. Any and all ~ommuniques, announcements,
marketing materials, whether oral or written, shall be drafted by Beta and/or
ACMG, as the case may be, to insure accuracy and to minimize the opportunity for
third parties to develop, or reverse engineer a competing technology.
For and in consideration of the covenants and agreements outlined herein,
and the specific consideration payable by ACMG to Beta, Beta and/or Jack Watkins
shall execute and deliver to you ("ACMG") all documents deemed necessary to
effectuate the intent of this Agreement. Likewise, ACMG shall execute and
deliver unto Beta such other documents as shall be deemed required to carry out
the intents and purposes of this Agreement. Beta represents and warrants to ACMG
that the inventor of the Technology, Dr. Jack Watkins has executed and delivered
to Beta certain assignments of the Technology, and that Beta has full right and
authority to execute and deliver this Agreement. Furthermore, Dr. Watkins is
executing this Agreement in his capacity as an officer of Beta, but also in his
individual capacity, insofar, and only insofar, as his consent to the terms and
conditions outlined herein, as well as his agreement and covenant to execute and
deliver any subsequent documentation that ACMG deems necessary regarding the
Technology, including, but not limited to, any patent application(s) ACMG deems
desirable for the countries in which it enjoys this exclusive transfer of
rights. In the event that a patent application(s) is made, it is expressly
agreed that such application shall be assigned unto ACMG, subject to the terms
and conditions outlined in this Agreement. Beta may elect to file for patent
applications in countries reserved from this transfer, and shall hold such
rights, if and when issued.
Notwithstanding anything herein to the contrary, it is expressly agreed and
understood that ACMG shall possess, and Beta hereby assigns and conveys unto
ACMG the exclusive rights to the Technology for the United States, Mexico,
Canada, Central America and all countries currently contained within the
European Union [hereinafter referred to as the "Core Countries"]; said exclusive
right(s) to include, but not be limited to, the right to produce, market and
sell products produced by, thorough and under the Technology, and shall include
the right to institute such action(s) as ACMG shall deem necessary to protect
ACMG and its exclusive rights. ACMG and Beta hereby agree and covenant to take
such action(s) and shall be deemed reasonable to protect each other's exclusive
rights regarding the Technology, including, but not limited to, contractual
reservations and provisions with third parties. It is further expressly agreed
and understood that the royalty described hereinbelow is limited to sales made
by ACMG in the Core Countries. For all other countries, Beta shall possess, and
does hereby reserve unto itself, the exclusive rights to the Technology, subject
to the limitations set out herein; provided that, Beta hereby covenants that it
shall not transfer or sell those rights to any third party for a period of three
(3) years after the execution of this Agreement; provided, that in the event
that ACMG shall be merged or acquired, this restriction shall be automatically
removed. Any sale by Beta and/or ACMG of the rights to the Technology shall
include prohibitions that protect the rights of ACMG and/or Beta, as the case
may be, from and against the infringement of the other party's rights in the
Technology. Upon the expiration of said three (3) year period, ACMG shall have
the right-of-first refusal upon any offer received by Beta from a third party.
Any sale of Beta shall be subject to terms and provisions of this Agreement.
Beta may elect to produced powders for any non-Core Country; however, it shall
first provide ACMG with the option of producing and selling all powders required
by Beta in the marketing of the Technology. Only in the event that ACMG cannot,
or will not produce and supply the relevant powders will Beta elect to produce
them itself. For all such sales, it is agreed that ACMG shall be compensated an
amount equal to four times its cost of producing said powder; said cost to be
defined as ACMG's costs of raw materials, including freeze dried fruits and
vegetables and the bonding materials; provided, that in the event that marketing
conditions result in Beta being unable to sell the powders for an amount less
than eight times ACMG's cost of goods sold, then it is agreed that the price to
be paid to ACMG by Beta shall be equal to one-half of the multiple obtained for
ACMG's costs of goods sold. Beta may also execute such agreements as are
necessary to permit third parties to market and utilize the Technology in the
manufacture of their food and/or beverage products; however, no such grant shall
include information concerning the Technology. It is further expressly agreed
that Beta, and its assignees may have full and complete utilization of the
copyrighted term "Sunutra" in the marketing of products in the Non-Core
Countries. In the event that ACMG does not receive funding from Cornell Capital
Partners, L.P. within ninety (90) days from this date, Beta may terminate this
Agreement.
As consideration for this transfer of rights herein, the parties agrees as
follows:
ACMG shall pay to Beta a cash payment of $300,000.00.
1. As an additional partial consideration, ACMG shall immediately cause
2,500,000 shares of unregistered stock of ACMG to be issued to Beta,
and/or its designees. These shares shall remain unregistered for a
period of two (2) years following the date you accept this Agreement,
following which, ACMG shall cause these shares to be registered and
free-trading shares, and shall cause any and all filings with the
appropriate regulatory bodies required to effectuate this status as
registered and free-trading shares. In the event that a merger of ACMG
shall occur prior to the expiration of the aforesaid two year period,
then upon such sale and/or merger, all of the shares transferred
pursuant hereto shall become fully registered and free-trading shares,
and ACMG, and/or its successors and assigns, shall file any and all
registration statements, or similar documents with the Securities and
Exchange Commission ["SEC"], or any other regulatory body with
jurisdiction over ACMG in order to effectuate said status as fully
registered and free-trading shares.
2. .Beta does hereby reserve unto itself, as an additional partial
consideration, a royalty payment equal to ten percent(10%) of the
gross sales receipts of ACMG from and out of all sales made by ACMG of
products manufactured by ACMG utilizing the Technology. This royalty
shall be paid on a monthly basis, and shall be made on, or before the
15th day of each month following the month that ACMG receives
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payments, and/or pre-payments for sales of products, or powders made
by ACMG subject to this agreement. This royalty obligation shall
survive the execution of this agreement, and shall be a continuing
obligation of ACMG, its successors and assigns so long as
3. ACMG, its successors and assigns continue to produce, market and/or
sell products utilizing the Technology. In the event that ACMG shall
cease to manufacture and market powders and/or products produced by
the Technology for a period of twelve (12) months, then this Agreement
shall automatically terminate, and all rights to the Technology shall
revert back to Beta; provided, that any obligations hereunder of ACMG
to Beta shall continue until satisfied. It is expressly agreed and
understood that this royalty payment shall concern only those sales
made by ACMG in the Core Countries.
ACMG, and each and every employee, consultant, and/or representative of
ACMG, including, but not limited to, all directors and officers, shall execute
and deliver unto ACMG a confidentiality and non-compete agreement identical in
form and substance to the document attached hereto as Exhibit "A," or any other
form deemed necessary. This obligation and condition shall be a continuing
obligation of ACMG, its successors and assigns. ACMG and Beta shall be the joint
beneficiaries of said agreements, and ACMG hereby covenants and agrees that it
is automatically bound, in Beta's favor, by the identical terms and conditions
as set out in Exhibit "A," on behalf of ACMG as a separate and distinct entity.
ACMG and Beta agree and covenant to cooperate with each other in the enforcement
all such agreements. Beta shall likewise require all of its officers, directors
and employees to execute and deliver confidentiality and non-complete
agreements, identical to Exhibit "A."
ACMG shall have access to the Technology including recipes utilized in the
formulation of the powders to be sold to by ACMG; provided, that ACMG agrees to
develop a procedure within ACMG such that no one employee, officer, director,
independent contractor, agent, or representative shall possess knowledge of the
entire Technology, and/or recipe contents. This program is to insure the
confidentiality of the Technology, and is for the mutual benefit of Beta and
ACMG. The only exception to this procedure shall be Dr. Watkins, and Mike
Takaki, who already possess this knowledge. In this regard, Dr. Watkins has
contracted with Beta to produce and supply a complete set of drawings, recipes
and formulae to enable Beta to produce products with the Technology, under an
agreement that such documents shall be placed in escrow in the event of the
death, incapacity, or refusal of Dr. Watkins to produce powders and products.
Beta does hereby transfer to ACMG the right to equal access to this technical
data.
Dr. Jack Watkins and Mike Takaki, may be engaged by ACMG as consultants,
from time to time, as ACMG may desire. These individuals may also be utilized by
ACMG in the development of specific formulations and applications for each
individual customer of ACMG and their respective food products, as well as
improvements and modifications of the Technology.
Furthermore, it is agreed and understood that Dr. Watkins, and/or Mike
Takaki may be engaged to work on research and development in attempts to enhance
the Technology, or to develop other technologies for utilization in the food and
beverage business. Any additional or further developments, amendments, and
alternations to the Technology, as well as any additional inventions developed
as a result of these research and development efforts shall automatically be
subject to this Agreement.
The terms contained herein, shall survive the issuance and delivery of this
Agreement, and continue to control, and shall be binding upon ACMG, its
successors and assigns, including but not, limited to, the continuing royalty
obligations covered by this agreement, as well as other continuing compensation
provisions contained herein. In the event that ACMG, its successors and assigns
shall fail to remit any royalty payment(s) covered herein, or any other payments
called for herein, then said payments shall earn interest at the maximum rate
allowable under the then current laws of the State of Texas. This penalty
provision shall not be applied to any payment received by Beta on, or before,
the expiration of a five (5) grace period for any month for which the payment(s)
is due and owing to Beta. At Beta's option, it may seek a monetary judgment for
any unpaid royalties with all parties agreeing that a court of competent
jurisdiction in the State of Texas shall be the proper court in which to bring
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such lawsuit, and Harris County, Texas being the county of venue.
Notwithstanding anything herein to the contrary, in the event that ACMG shall
fail to pay the royalty set out herein, for periods equaling or exceeding six
(6) months, then Beta shall possess the continuing right and option of
terminating this Agreement by providing ACMG with thirty (30) days written
notice, during which time ACMG may avoid termination by making payment, in full,
of all outstanding royalties.
Each party hereto possesses adequate rights and licenses to use all
trademarks, trade secrets, trade names, service marks, copyrights, inventions,
approvals and technologies that are the subject of this Agreement. Neither
entity has knowledge of any infringement upon their respective trademarks and
technologies, and Beta has no knowledge of a claim, action, or proceeding being
made or brought against it, or to Beta's knowledge any threatened action against
it, save and except that Phytogenics, Inc. claims that any invention of Dr. Jack
Watkins is owned by it. ACMG has made its own independent determination
concerning the validity and/or viability of these claims, and has conducted a
thorough review and analysis of those claims. ACMG is making that determination
independent of any legal counsel or advice from Beta. In this regard, attached
hereto as Exhibit "B," are the test results obtained for the powders produced by
the Technology.
Beta and ACMG are duly incorporated or organized and validly existing in
the jurisdiction of its incorporation, and has the requisite power and authority
to enter into this Agreement. Each party represents to the other that it has the
right, power, and authority to execute and deliver this Agreement, and all other
instruments contemplated herein. This Agreement is being executed and delivered
by each party, and will constitute the legal, valid and binding obligations of
each entity, enforceable against each respective party.
ACMG and Beta have such knowledge and experience required to evaluate the
risks associated with this Agreement, of bearing the risks entailed herein, and
of protecting their respective interests in connection with this Agreement. Beta
and ACMG represent and acknowledge that they have had the opportunity to review
this Agreement, and have reviewed same with their respective legal counsel, and
where appropriate, their respective tax and financial advisors. Each party is
relying solely upon those separate advisors and counselors in making the
decision to enter into this Agreement, and not upon any statements made by
parties associated with the other entity. Each entity understands that owners of
Beta may also be, or shall become shareholders in ACMG, and recognize the
potential conflicts, and accepts those conflicts when entering into this
Agreement.
Beta has been supplied with information relating to ACMG's business plan,
and potential financing sources, and ACMG has been provided with general
descriptive information concerning the Technology, and Dr. Watkins has supplied
ACMG's patent counsel with technical data on the Technology, each have been
afforded the opportunity to ask questions of the other. Neither entity has been
denied access to any requested information.
The execution, delivery and performance of this Agreement does not result
in any violations of the respective articles of incorporation of either party
hereto, or its respective By-Laws, or any outstanding preferred stock
restrictions, nor will this Agreement operate to create or result in a default
under indenture or debt instrument of each respective party, or violate any
known law, rule, judgment, order, decree or regulation to which either entity is
subject. The business of each respective party is not being conducted in a
manner that results in a violation of any material contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree, or order
applicable to each respective entity hereto.
ACMG has revealed to Beta that Phytogenics, Inc. has also made threats upon
ACMG to institute litigation against ACMG. Beta has made an independent
investigation and analysis of the risks associated with these threats, and is
relying upon, and has relied upon its own independent legal counsel in making
its decision to proceed ahead and enter into this Agreement. Beta acknowledges
that ACMG has not refused or failed to provide satisfactory answers to any and
all questions concerning this matter. In all respects concerning the various and
multiple threats made by Phytogenics, Inc., each party is aware of these
threats, and has made their independent analysis and decision concerning the
probability of such litigation, the viability of such threats, and has elected
to accept the risks associated with these threats. Watkins acknowledges that he
had had ongoing discussions concerning a comprehensive settlement with
Phytogenics and its shareholders; however, no agreement, as of the date hereof,
has been reached between said parties.
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ACMG is aware and familiar with Dr. Watkins' association with Phytogenics,
Inc., and has made their own independent investigation and analysis of the facts
surrounding that association, and the history of events, including, but not
limited to, ACMG's attempts to finalize a purchase of Phytogenics, Inc. As a
material consideration, ACMG and Beta hereby release Dr. Watkins from any
liability he may possess concerning this prior association; provided, that such
release does not concern any future acts. Dr. Watkins has not refused or failed
to answer any inquiries made of him by ACMG or Beta regarding this prior
association, and each entity hereby acknowledges that it understands that Dr.
Watkins is currently the apparent owner of an undivided 45% of Phytogenics. Dr.
Watkins has represented to Beta and ACMG that the Technology is unique and
distinct to any technology claimed by Phytogenics, Inc., and that he developed
the Technology in 2004, after his decision not to be associated with
Phytogenics, Inc. All parties understand that Dr. Watkins currently claims that
he is the owner of the technology claimed by Phytogenics, and that there exists
potential litigation between Dr. Watkins, Phytogenics and certain individuals
associated with Phytogenics, Inc. Neither Beta nor ACMG claims any ownership or
rights in Dr. Watkins' claims that he is the owner of that technology, and
acknowledge that Dr. Watkins is under no obligation to transfer said technology
to either entity; provided, that should Dr. Watkins obtain a final court order
holding that he is the owner of that technology, Dr. Watkins hereby agrees and
covenants that he shall not market said technology, or any products manufactured
utilizing said technology in competition with any product(s) marketed by either
ACMG or Beta.
Other than the matters concerning Phytogenics, inc., there are no other
threats of litigation against either party hereto, nor are there any pending
litigation involving said entities. ACMG reserves the right to institute
litigation concerning matters that occurred prior to the institution of this
Agreement, but which have no relationship to this Agreement, or the Technology.
As ACMG may deem appropriate.
Prior to the execution and delivery of this Agreement, each party hereto
conducted its separate and distinct due diligence review, and acknowledges and
represents that each entity has no outstanding issues that have not been fully
responded to by the other party.
Notwithstanding anything herein to the contrary, in the event that ACMG
shall receive a legal opinion stating that there are severe adverse risks
associated with any claim(s) by Phytogenics to the Technology, ACMG, at is
option, may elect to terminate this Agreement. In this regard, it is agreed that
the shares being transferred would be returned to ACMG, and Beta, and/or its
designees, covenant to execute any documentation required to effectuate said
return of the shares. In such event, all records concerning the Technology would
likewise be returned to Beta, and upon such return, the parties hereto wold
release each other from and against any claims other than intentional actions or
fraud. This option to terminate shall automatically expire six (6) months from
the date of this Agreement.
Any notices required herein may be given by facsimile message, email, or in
person or on the telephone; provided that, a copy or written memorandum of same,
shall be mailed by U.S. certified mail, return receipt requested, or with a
nationally recognized overnight courier service, in case properly addressed to
the other party. Each party covenants that is shall provide the other party with
a designated address for such notice, and in the event such address shall
change, it shall promptly notify the other party of those changes.
This Agreement shall be construed in accordance with the laws of the State
of Texas, without regard to its rules for conflicts of law. The parties
agree promptly to execute any document reasonable necessary to assure that
the undertakings expressed herein are carried out and that this Agreement
is otherwise fully implemented in all respects. This Agreement may not be
amended, modified, or altered unless such amendment, modification or
authorization is in writing executed by each party. This Agreement
supercedes all prior and contemporaneous discussions, undertakings and
verbal agreements concerning the subject matter hereof.
The obligations and restraints imposed on the parties to this Agreement
shall be separate and severable from each other and shall be deemed to be so
notwithstanding that they appear in the same paragraph or sentence as any other
obligation or restraint or are imposed by the introduction of a word or phrase
conjunctively or disjunctively with or alternatively to the other words or
phrases. The language of all parts of this Agreement shall be construed as a
whole, according to its fair meaning, and not strictly for or against any
particular party. Should any provision of this Agreement be declared or be
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determined by any court to be illegal or invalid, the validity of the remaining
provisions shall not be affected thereby.
This agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same Agreement, and shall become effective when counterparts have been
signed and delivered to each respective party.
The terms and provisions hereof shall be maintained as confidential
information, except for information required to be divulged pursuant to any
regulatory body having jurisdiction over either entity hereto, and except as
required by court order from a court of competent jurisdiction.
If the foregoing is your understanding of our agreement, and is completely
satisfactory to you, please indicate your acceptance in the space provided below
and return two copies to our offices.
Regards,
Jack Watkins
President, and Individually
Agreed to and accepted this 23 day of March, 2004.
American Consolidated Management Group, Inc.
By: /s/ George E. Mappin
---------------------------------
George E. Mappin
Printed Name/Office
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