Mr. Bruce
Horton
President
Pulse
Beverage Corporation
1624
Washington Street
Denver,
Colorado 80203
|
December
24, 2010 |
Dear
Bruce,
It
was good to reach an understanding of the terms of the two matters between
Pulse Beverage Corporation (or otherwise named entity) and Catalyst Development
Inc. that will, in part, guide our relationship subsequent to the asset sale
between Pulse Beverage Corporation and Health Beverage LLC, which is scheduled
for closing on or before January 31, 2011. Thank you for your continuing effort
in arriving at the terms to allow the asset sale to complete.
Pulse
Beverage Corporation (Pulse) and Catalyst Development, Inc. (Catalyst) agree as
follows:
| I |
The
“Agreement For The Purchase of Assets Between The Pulse Beverage Corporation
and Health Beverage, LLC is contingent on the following terms and both parties
will use best efforts to meet them. |
| II |
Pulse (or otherwise named
entity) will loan Catalyst the sum of $200,000 dollars (USF) for the purpose of
Catalyst establishing a food and beverage production centre. The interest rate
of the loan is 4%. The term of the loan is 5 years. The amortization period of
the loan is 25 years. Loan payments commence one month from the date the funds
are received by Catalyst, which is expected to be by February 2011. Monthly
payments are expected to be approximately $1055 and the balance of the loan
owing to Pulse, without consideration for additional payments of principle, at
the end of five years (60 monthly payments) is approximately $174,209. Catalyst
has the right to make additional payments on the loan principle without penalty
through the term of the loan. Pulse
and Catalyst have discussed and agree to consider the option of converting the
loan to an equity position in the Catalyst production centre pending its
successful establishment. |
| III |
Pulse
and Catalyst have discussed Catalyst having certain rights and privileges to
manufacture and market Pulse beverages in a concentrate form. The terms of
these rights and privileges are as follows: |
| |
1. |
Concentrate
is defined as a concentrated form of Pulse beverage that is intended for
dilution with water or other liquid before consumption. It is not intended
to be a ready to drink (RTD) beverage or sold in containers that would
make commercial scale production of Pulse ready to drink beverages
feasible. |
#503 - 9222 UNIVERSITY CRESCENT, BURNABY, BC V5A 0A6
EMAIL: rkendrick@catalystdevelopment.ca TEL: (604) 628-1282
| |
2. |
Catalyst
agrees to produce Pulse concentrate in compliance with Good Manufacturing
Practices, applicable government regulations, and Pulse quality control
specifications and with no less care than any of its own products. |
| |
3. |
The
rights and privileges granted to Catalyst are not transferable to a third
party. |
| |
4. |
Pulse
grants Catalyst the exclusive right to directly market and sell Pulse
beverage concentrates via the Internet and also through retail locations
in British Columbia. |
| |
5. |
Catalyst
agrees to pay Pulse $0.05 (USF) for each liter of the total volume of
Pulse concentrate it markets and sells via these two methods. |
| |
6. |
Pulse
grants Catalyst the exclusive and worldwide right to produce Pulse
beverage concentrates, including when the agent selling the concentrates
is Pulse Beverage Corporation, either directly or by contracting to a
third party. |
| |
7. |
Catalyst
agrees to make all of its direct and indirect costs in producing the
beverage concentrates known to Pulse and charge Pulse on a cost plus 10%
basis for the beverage concentrates it produces for Pulse. |
| |
8. |
Catalyst
agrees to market and sell a minimum of 10,000 liters of Pulse beverage
concentrate per year and pay Pulse annual royalties accrued to the volume
of Pulse beverage concentrate it sells or otherwise pay Pulse an amount
equal to the royalties on this minimum amount. |
| |
9. |
Catalyst
agrees that Pulse has the right to “buy back” the rights and privileges
related to the Pulse beverage concentrate. Pulse agrees that production and
sales of Pulse beverage concentrate by Catalyst enhances the brand equity.
Further that the early efforts of Catalyst will be reflected only in
subsequent sales volume. The parties therefore agree that providing
Catalyst has met the performance requirements, noted in point 8, that
should Pulse decide to “buy back” these rights and privileges from
Catalyst it will pay the greater of $250,000 or three times the gross
profit Catalyst has achieved in the twelve months immediately preceding
the intended buy back date. Pulse agrees to provide Catalyst with six
months notice of “buy back” and to purchase all reasonable amounts of
unused raw material and finished goods inventory that is in good and
marketable condition. |
Bruce,
as we both have signing authority for our respective companies if the above
terms are acceptable I have provided space below for each of us to sign and
date our agreement.
| Company:
Pulse Beverage Corporation |
Company: Catalyst Development Inc. |
| Name:
|
Bruce Horton |
Name: |
Ron
Kendrick |
| |
|
|
|
| Title: |
President |
Title: |
President |
| |
|
|
|
| Date: |
December
24, 2010 |
Date: |
December 24, 2010 |
#503 - 9222 UNIVERSITY CRESCENT, BURNABY, BC V5A 0A6
EMAIL: rkendrick@catalystdevelopment.ca TEL: (604) 628-1282
