UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Item 1.01 Entry into a Material Definitive Agreement.
On January 24, 2018, the Company entered into a Production Agreement (the “Agreement”) with Pure Health Products, LLC, a New York limited liability company (“PHP”). Unless otherwise terminated or extended pursuant to the terms and conditions of the Agreement, the Agreement shall have a term of ten (10) years. Pursuant to the Agreement, PHP shall manufacture, package, and sell the Company’s proprietary Cannabidiol (“CBD”) infused products (the “Products”) on an exclusive basis. PHP shall not produce or manufacture any product containing any cannabis or hemp derivative for any person or entity other than the Company. The Company shall have the right, at any time, to monitor and review the practices and procedures of PHP in the production and packaging of the Products and to inspect the facility in which PHP performs such services (the “Facility”). The Company controls the ingredients, recipe, manufacturing processes and procedures and quality and taste parameters for all Products produced at the Facility.
The Company shall be responsible for all costs associated with manufacturing of the Products, at PHP’s cost, with no mark-up or margin due to PHP. The Company will separately pay all expenses incurred by PHP for the shipment and delivery of ordered Products, including without limitation freight charges, import duties and insurance premiums, and any federal and state excise taxes, which PHP may pass along to the Company if PHP pays such taxes in compliance with federal laws. The Company shall determine, in its sole discretion, the price at which it resells Products to the Company’s customers.
PHP may also white label / rebrand or relabel the Products pursuant to “white label agreements” entered into between the Company and third party customers.
The Company has granted PHP a non-exclusive, non-transferable, revocable right to use the “Canbiola” trademark (“Canbiola Mark”) solely on the Products ordered by the Company pursuant to the Agreement and associated packaging. PHP has warranted that the Products manufactured and sold by it will be free from defects in material and workmanship, and will substantially conform to the technical specifications provided by the Company in writing. The Company shall be responsible for any warranty it extends, either directly or indirectly, expressly or by operation of law, beyond the warranty expressly granted by PHP. PHP is not responsible for (i) damages caused by the Company’s failure to perform its responsibilities or (ii) damages due to deterioration during extended periods of storage by the Company. PHP shall be responsible for all Product recalls.
Pursuant to the Agreement, the Company agreed to indemnify, defend and hold PHP harmless from and against any damages, claims, suits, actions, causes of action, demands, liabilities, losses, costs and expenses (including without limitation reasonable attorneys' fees and disbursements and court costs) as a result of or arising from any representations or warranties made by the Company to customers or end users which (a) exceed the scope of the representations or warranties made by PHP to the Company; or (b) contradict the documentation and/or information made available to the Company by PHP regarding specifications, performance and intended use of the Products, provided that (i) PHP shall have promptly provided the Company written notice thereof and reasonable cooperation, information and assistance in connection therewith, and (ii) the Company shall have sole control and authority with respect to the defense, settlement or compromise thereof. The Company acknowledges that PHP may perform its services pursuant to the Agreement through subsidiaries and the Company’s indemnification shall apply to all PHP subsidiaries, affiliates and agents providing services to the Company pursuant to this Agreement.
