**Exhibit 10.9**

 

**PROFESSIONALSERVICES AGREEMENT**

 

ThisProfessional Services Agreement (the “Agreement”) is made and entered into asof February 25, 2005 (“Effective Date”) by and between SpecializedMarketing Services, Inc. (“SMS”), a California corporation, with officeslocated at 17809 Gillette Avenue, Irvine, California 92614-6501 andAmerikal Nutraceutical Corp. (“Amerikal”), a California**corporation, with its principal place ofbusiness located at 17751 Mitchell Avenue, Irvine, California 92614.

 

**WHEREAS,**Amerikal desires to procure services in the area of marketingfulfillment (the “Services”) and wishes to retain Services of SMS as set forthin this Agreement.

 

**WHEREAS,**SMS wishes to provide Services to Amerikal on the terms and conditionsas set forth in this Agreement.

 

**NOW THEREFORE,**in consideration of the mutual covenants set forth in this Agreement,the receipt and sufficiency of which are hereby expressly acknowledged, theparties agree as follows:

 

1.                                       Professional Services.  SMSagrees to provide Amerikal with the Services as set forth in Exhibit A attachedhereto or any other Exhibits as from time to time may be added to thisProfessional Services Agreement.

 

2.                                     Fees.  In consideration for theServices to be performed under this Agreement, Amerikal hereby agrees to paySMS the fees set forth in Exhibit A below or any other Exhibits as fromtime to time may be added to this Professional Services Agreement. SMS willsubmit invoices to Amerikal on a monthly basis for Services provided in theprevious month. Amerikal will pay such invoices ten (15) days after receipt. Inthe event that Amerikal disputes any invoice submitted, Amerikal shall providewritten notice to SMS within ten (10) days of the receipt of invoice, detailingthe reason for the disputed amounts. Notwithstanding the foregoing, Amerikalshall pay SMS for any undisputed amounts due. Past due accounts are subject toa one and one half percent (1.5%) finance charge per month or the maximum allowedby law for each month that payment remains outstanding. Funds for postage orshipping shall be kept on deposit at SMS and requests for deposits will bepayable upon receipt.

 

3.                                     Confidentiality.  Theparties entered into a certain Mutual Confidentiality and Non-Disclosure Agreement(“NDA”) dated February 25, 2005 of which the terms and conditions are herebyincorporated herein.

 

4.                                     Term and Termination.  ThisAgreement is effective as of the date first written above, and will continue ineffect for a period of one (1) year from the Effective Date, unlessterminated earlier in accordance with the terms of this Agreement. Thereafter,this Agreement shall renew for additional 12 month periods.

 

(a)                              Amerikal may terminate this Agreement, withor without cause, upon sixty (60) days prior written notice to SMS. SMS mayterminate this Agreement, with or without cause, upon sixty (60) days priorwritten notice to Amerikal. Upon any termination of this Agreement, it isAmerikal’s obligation to pay SMS the fees due for Services completed prior tosuch termination. Furthermore Amerikal acknowledges and agrees to pay SMS forcosts related to closing out Amerikal’s account with SMS which shall consist of:(i) extracting data from the system and providing such data to Amerikal; (ii) performingan inventory cycle count, preparing outstanding orders for shipping, dumping,or recycling; (iii) coordinating the

 

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transfer of materials and information; (iv) dumpingand/or recycling fees; and (v) any additional services requested inwriting by Amerikal.

 

(b)                             SMS may terminate the Agreement immediatelyin the event Amerikal fails to pay any invoice within sixty (60) days ofreceipt of invoice.

 

(c)                              Where agreement, approval, acceptance, orconsent by either party is required by any provision of this Agreement, suchaction shall not be unreasonably delayed or withheld.

 

(d)                             Sections 2, 3, 4, 5, 7, 11, 13 and 14 shallsurvive any termination or expiration of this Agreement.

 

5.                                       Indemnification.

 

**A.****       ****Indemnification****:**To the fullest extent permitted by law,Amerikal shall, at Amerikal’s sole expense and with counsel reasonablyacceptable to SMS, indemnify, defend, and hold harmless SMS from and against allClaims arising from any cause, directly or indirectly arising out of orrelation to this Contract, or the Product without limitation; (a) the useof the Product by any other party; (b) the negligence or misconduct of Amerikalor of any employee, agent or contractor of Amerikal; (c) Amerikal’sconduct of business; (d) any breach or default in performance of anyobligation on Amerikal’s part to be performed under this Contract, whetherbefore or during the Contract Term or after its expiration and/or termination.The foregoing indemnification extends to and includes claims for: (a) injuryto any persons (including death); (b) loss of, injury or damage to, ordestruction of property (including all loss of use); and (c) all economic lossesand consequential or resulting damage of any kind. Amerikal’s insurance obligationsunder this Contract are independent of Amerikal’s exculpation, indemnification,and other obligations under this Contract and shall not be construed or interpretedin any way to restrict, limit, or modify Amerikal’s exculpation, indemnification,and such obligations of Amerikal or to limit Amerikal’s liability under thisContract.

 

**B.****       ****Duty to Defend****:**Amerikal’s duty to defend SMS is separate andindependent of Amerikal’s duty to indemnify SMS. The duty to defend includesclaims for which SMS may be liable without fault or strictly liable. The dutyto defend applies regardless of whether the issues of negligence, liability,fault, default, or other obligation on the part of Amerikal have beendetermined. The duty to defend applies immediately, regardless of whether SMShas paid any sums or incurred any detriment arising out of or relating(directly or indirectly) to any Claims. It is the express intention of theparties that SMS be entitled to summary adjudication or summary judgmentregarding Amerikal’s duty to defend SMS at any stage or any claim of suit withinthe scope of Section 13.

 

**C.****       ****Exculpation****:**To**thefullest extent permitted by law, Amerikal waives all Claims (in law, equity orotherwise) against SMS arising out of, and agrees that SMS shall not be liableto Amerikal for (and Amerikal knowingly and voluntarily assumes the risk of) thefollowing: (a) injury to or death of any person; (b) loss of, injuryor damage to, or destruction of any tangible or intangible property, includingthe resulting loss of use, economic losses and consequential or resultingdamages of any kind form any cause. This exculpation clause shall not apply toclaims against SMS to the extent that a final judgment of a court of competentjurisdiction established that the injury, loss, damage

 

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ordestruction was proximately caused by SMS’ fraud, gross negligence, willfulinjury to person or property, or violation of law.

 

**D.****        Survival:**The indemnification and exculpation provisions of Section 13 shall survivethe expiration or termination of thisContract until all Claims contemplated by these provisions are fully,finally and absolutely barred by the applicable statute of limitations.

 

**E.****   Damages:**In no event shall SMS be liable to Amerikal for any consequential losses, claims,damages or liabilities.

 

6.                                     Insurance. SMS is to be named as additional insuredon Amerikal’s Product Liability Policy. Proof of insurance to be forwarded toSMS within thirty days of this agreement. Amerikal is responsible to providetheir own insurance for product loss and fire while stored or in transit to theSMS warehouse on designated warehouse facility.

 

7.                                     Notice. Any notice or other communicationrequired or permitted to be given by either party under this Agreement shall begiven in writing, by personal delivery, or by registered or certified mail,return receipt requested, addressed to each respective party at its currentaddress as set forth above, or to such other address as either party shallindicate by proper notice to the other in the manner provided herein. All noticeswill be deemed to be given when received in accordance with the provisions ofthis Section 7.

 

8.                                     Assignment.  This Agreement may not be assigned by eitherparty without written consent of the other.

 

9.                                     Relationshipof the Parties.  It is understoodthat SMS is an independent contractor, and that this Agreement does not createany agency, employment, partnership, joint venture or similar relationship betweenthe parties, and neither Amerikal nor SMS has any authority to bind the otherwith respect to any matter. Under no circumstances shall either SMS or Amerikalhave the right or authority to act or make any commitment of any kind to anythird party on behalf of the other party or to represent the other party in anyway as an agent.

 

10.                               ForceMajeure.  Neither party shall be indefault by reason of failure in performance of this Agreement if such failurearises, directly or indirectly, out of causes reasonably beyond the control orforeseeability of either party, including but not limited to, default bysuppliers, acts of God or the public enemy, U.S. or foreign governmental actsin either a sovereign or contractual capacity, transportation contingencies,fire flood, epidemic, restrictions and strikes.

 

11.                                 Waiverand Severability.  No waiver of anybreach of this Agreement shall constitute a waiver of any other breach of thesame or any other provision of this Agreement, and no waiver shall be effectiveunless made in writing. If any provision of this Agreement is held by a courtof competent jurisdiction to be illegal or unenforceable, such provision shallbe severed and the remainder of this Agreement shall continue in full force andeffect. Unless stated otherwise, all remedies provided for in this Agreementshall be cumulative and in addition to and not in lieu of any other remediesavailable to either party at law, in equity, or otherwise.

 

12.                                 FederalCompliance.  The parties agree tocomply with all applicable federal and state laws, regulations and requirementsin regard to all Services provided under this Agreement.

 

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13.                              Governing Law and Forum.  Theinterpretation and construction of this Agreement, and all matters relatinghereto, shall be governed by the laws of the State of California applicable toagreements executed and to be performed solely within such state. The partieshereby submit to the jurisdiction of, and waive any venue objections against,the United States District Court for the Central District of California, OrangeCounty Branch and the Superior and Municipal Courts of the State of California,Orange County in any litigation arising out of this Agreement. The prevailingparty shall be awarded its reasonable attorney’s fees and costs in any lawsuitarising out of or related to this Agreement.

 

14.                               General. * *Section headings in thisAgreement are for convenience of reference only and are not part of thisAgreement. This Agreement shall be governed by and interpreted in accordancewith the internal laws of the State of California. In any action arising out ofor related to this Agreement, the prevailing party shall be entitled to recoverits reasonable attorney fees and related expenses, in addition to any otherrelief granted. This Agreement and all exhibits attached hereto, sets forth theentire understanding between SMS and Amerikal relating to the subject matterhereof, and supersedes all prior or contemporaneous agreements related thereto.No modification of this Agreement shall be effective unless set forth in awriting executed by the party to be charged with such modification. ThisAgreement may be executed in two or more counterparts, each of which, when soexecuted and delivered, shall be an original instrument, but all of whichtogether shall constitute a single agreement.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to beexecuted by their authorized representatives, effective as of the date firstset forth above.

 

Specialized Marketing Services, Inc.

 
| Signature:                    | /s/ Michael D. Stannard |   |
|-------------------------------|-------------------------|--------|
|                          |
| Michael  D. Stannard          |
| General  Manager              |
|                          |
| Date:                         | 2/25/05                 |   |
|                          |
|                          |
| Amerikal  Nutraceutical Corp. |
|                          |
| Signature:                    | /s/  Herrie Tantono     |   |
|                          |
| Printed  Name:                | Herrie  Tantono         |   |
|                          |
| Title:                        | President               |   |
|                          |
| Date:                         | February 25,  2005 |   |
|                               |                         |        |  |  |  |  |

 

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**Mutual NonDisclosure Agreement**

 

ThisMutual Non Disclosure Agreement (the “Agreement”) is made and entered into asof the 25th dayof February, 2005 (the “Effective Date”) by and between **SPECIALIZEDMARKETING SERVICES, INC.,**a California corporation with offices at 17809 Gillette Ave, Irvine, CA92614 (“SMS”) and Amerikal Nutraceutical Corp. a CA**corporation with offices at 17751 Mitchell Avenue Irvine, CA 92614 (the “Company”).

 

**WHEREAS**, SMSand Company have agreed to enter into certain business discussions and/ortransactions regarding Marketing Services (the “Transaction”);

 

**WHEREAS**, SMSand Company will disclose certain information and documentation that is**non-public, confidential and/orproprietary in nature during discussions regarding the Transaction in order toevaluate a potential business relationship between SMS and Company (the “Purpose”);

 

**NOW****THEREFORE,**inconsideration of the mutual promises and covenants contained in this Agreement,and intending to be legally bound by this Agreement, SMS and Company herebyagrees as follows:

 

1.                                       Any information and documents that arefurnished by one party to another, whether intentionally or unintentionally andwhether or not related to the Transaction, unless otherwise excepted, areproprietary and confidential and shall be used only for the Purpose. Thisinformation includes, without limitation: the terms of this Agreement;technical specifications and operating manuals; information relating to anddescriptions of current, future, or proposed products and services andcombinations of products and services; financial information; informationrelated to mergers or acquisitions; passwords and security procedures; computerprograms, software, and software documentation; customer and/or prospectiveclient lists, data files, and all other information relating in any way to thecustomer and/or prospective clients and printouts; records; policies, practicesand procedures; and any or all other information, data or materials relating tothe business, trade secrets and technology of a parry, its customers, clients,employees, business affairs, affiliates, subsidiaries and the affiliates of itsparent organization (all of the foregoing collectively referred to as “ConfidentialInformation”). For the purpose of this Agreement, the “Discloser” is the partyto whom the Confidential Information belongs and the “Recipient” is the partyreceiving Confidential Information.

 

2*.**                                      *Each party agrees to maintain the ConfidentialInformation in confidence using the same degree of care that it uses to protectits own information of a**confidentialnature, but in no event less than a reasonable standard of care. Each partyfurther agrees to (a) restrict disclosure of Confidential Informationsolely to persons who need to know the Confidential Information to performunder this Agreement, and (b) use the Confidential Information only forthe Purpose, and (c) not to disclose any Confidential Information to anythird party without written approval of Discloser, and (d) inform thosethird parties and other persons who receive Confidential Information of its confidentialnature and obtain their written agreement to abide by confidentialityprovisions that are no less stringent than those set forth in this Agreement.Recipient agrees that it shall not make copies of the Confidential Information exceptas absolutely required for the Purpose. All copies made, in any mediumwhatsoever, shall retain all confidential and proprietary markings of theoriginal and shall be covered by the terms and conditions of this Agreement.

 

3.                                       Except as required by law, without the priorwritten consent of Discloser, neither Recipient nor any of its representativeswill disclose to any other person or entity the fact that the ConfidentialInformation has been made available, that discussion or negotiations are takingplace concerning the Transaction, or any of the terms, conditions or otherfacts with respect to the Transaction.

 

4.                                       All Confidential Information is and willremain the property of Discloser. By disclosing the Confidential Information,Discloser does not grant any express or implied license or other rights to or underits copyrights, trademarks, trade secrets or other proprietary rights.

 

5.                                       The obligations imposed under this Agreementshall not apply to Confidential Information that (a) is made public byDiscloser, or (b) is or becomes generally available to the public otherthan as a result of disclosure by Recipient or its representatives, or (c) isor becomes available to Recipient on a non-confidential basis from a source (otherthan Discloser or its representatives) that is not known to Recipient to beprohibited from disclosing such

 

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ConfidentialInformation to Recipient by a legal, contractual or fiduciary obligation toDiscloser; or (d) is disclosed with the prior written consent ofDiscloser. In the event that Recipient or any of its agents becomes legallycompelled (by deposition, interrogatory, request for documents, subpoena, civilor criminal investigative demand or similar process) to disclose anyConfidential Information, then Recipient shall provide Discloser with promptprior notice so that Discloser may seek a protective order or other appropriateremedy. In the event that such protective order or other remedy is notobtained, or**that Discloserwaives compliance with the provisions of this Agreement, Recipient will furnishonly that portion of the Confidential Information which in the judgment of itscounsel is legally required and will exercise reasonable efforts to obtainassurances that confidential treatment will be accorded the Confidential Information.

 

6.                                       Each party acknowledges and agrees that anybreach or threatened breach of any of the provisions of this Agreement willresult in immediate and irreparable harm and that any remedies at law in suchevent will be inadequate. Each party agrees that such breaches, whetherthreatened or actual, will give the non-breaching party the right to terminatethis Agreement immediately and obtain injunctive relief to restrain suchdisclosure or use. This right shall, however, be in addition to and not in lieuof any other remedies at law or in equity.

 

7.                                       Either party may terminate this Agreement atany time upon ten (10) days prior written notice to the other party. Eitherparty may immediately terminate this Agreement upon written notice in the eventof a breach by the other party of any term or condition of this Agreement. Notwithstandingany termination of the Agreement, and whether or not the Transaction proceeds,all provisions of this Agreement will remain in effect for a period of two (2) yearsfrom the Effective Date hereof unless sooner terminated or superseded by mutualagreement of the parties.

 

8.                                       Upon termination of the Agreement, all copies ofthe Confidential Information, except for that portion of the ConfidentialInformation that consists of analyses, compilations, forecasts, studies orother documents prepared by Recipient will either be destroyed or returned tothe Discloser within ten (10) days following written request. That portionof the Confidential Information that consists of analyses, compilations,forecasts, studies or other documents prepared by Recipient will be held byRecipient and kept confidential and subject to the terms and conditions of thisAgreement or destroyed in the event negotiations for the Transaction areterminated.

 

9.                                       This Agreement is not intended to and shallnot be construed as creating a joint venture, partnership, or other form ofbusiness association between the parties. Neither party shall have the power orauthority or bind or obligate the other party.

 

10.                                 This Agreement will be governed by and construedin accordance with the laws of the State of California irrespective of itschoice of laws principles.

 

11.                                 This Agreement constitutes the only agreementbetween the parties relating to the confidentiality of information provided inconnection with the Transaction. This Agreement will expressly survive whateverdetermination the parties may make regarding the Transaction. Without limitingthe scope of**the preceding sentence,the terms and restrictions of this Agreement will continue to apply during anytransaction between the parties, except and only to the extent otherwise setforth in the documents pertaining to such transaction.

 

12.                                 Any notices required or permitted hereunderwill be in writing and will be deemed to have been properly given: (i) upondelivery if delivered personally or by courier or overnight service; or (ii) five(5) business days after mailing by certified mail, postage prepaid, returnreceipt requested, to the parties at the following address (or to such otheraddress of which either party may notify the other in a notice that complieswith the provision of this section):

 
| To  Specialized Marketing Services, Inc. | To:    | AMERIKAL NUTRACEUTICAL  CORP. |
|-----------------------------------------------|--------|-------------------------------|
| 17809  Gillette Ave                           |   | ATTN  HERRIE TANTONO, PRES    |
| Irvine,  CA 92614                             |   | 17751  MITCHELL AVE           |
| ATTN:  General Manager                        |   | IRVINE CA 92614               |

 

13.                                 No modification or waiver of any provision ofthis Agreement will be valid unless such modification or waiver is in writingand) signed by the party against whom it is sought to be enforced. No waiver atany time of any provision of this Agreement will be deemed to be a waiver ofany other provision of this Agreement.

 

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14.                                 If any provision of this Agreement is held forany reason to be invalid, illegal or unenforceable, such invalidity, illegalityor unenforceability will not affect any other provisions of this Agreement andthis Agreement will be construed as if such invalid, illegal or unenforceableprovision had not been contained herein.

 

INWITNESS WHEREOF, the parties have caused their respective authorizedrepresentatives to enter into this Agreement.

 
| Specialized  Marketing Services, Inc. | Company:                    | AMERIKAL NUTRACEUTICAL  CORP. |   |
|--------------------------------------------|-----------------------------|-------------------------------|--------|
|                                       |                        |
| By:                                        |  /s/  Michael Stannard |                          | By:    |   |  /s/  Herrie Tantono |   |
| Name:                                      | Michael  Stannard           |                          | Name:  | Herrie  Tantono |   |
| Title:                                     | G.M.                        |                          | Title: | President |   |
| Date:                                      | 2/25/05                     |                          | Date:  | Feb 25, 2005 |   |
|                                            |                             |                               |        |  |  |  |  |  |  |  |  |  |

 

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**EXHIBIT “A”**

 

**SCOPE OF WORK &**FEES**

 

**SMS will perform the following as part of our orderprocessing price**

 

1.               Downloadorders or program information from in-bound telemarketing services.

2.               Prepareorders and download to merchant bank for credit authorization (declined c.c. areattempted 6 times in a 35 day credit card cycle).

3.               Preparepacking slips, labels and manifest for shipping.

4.               Settlecredit card sales for deposit to account.

5.               Receivemerchandise, prepare receiving reports and maintain inventory reports, whichinclude:

A.           Product activity

B.             Shippedmanifest reports

C.             Unshippedmanifests

D.            Backorderreports by unit and dollars

6.               Additionalreports include

A.           Sales by source (individual TV stations on media)

B.             Cashieringjournal (credit cards, checks or e-checks)

C.             Depositverification by source

D.            Customerservice detail reports 

E.              Continuityand installment reports

7.               Monthlypreparation of necessary state sales tax reports.

8.               Sales,inventory, delivery confirmation are provided daily

 

Cost for the abovedescribed services:

$1.95 for 1-2999per order 

$1.90 for 3000-3999per order 

$1.85 for 4000-5000per order 

(excludingpostage, assembly and packaging materials)

 

Assemblyof client supplied shipper box with insert will bill at $.l7ea

Additional itemsshipped in the same order will bill at $0.50

Monthly continuityshipments will bill at $1.45 ea

Installmentbilling each installment will bill at $.75 ea (excluding postage)

Manual input oforders will bill at $.75 each.

Packingmaterials will be billed on usage

Additional assembly or custom packaging will be estimated as needarises.

 

**(Above prices do not include postage or shippingcharges. All outgoing postage must be paid in advance of shipping.)**

 

**Return Service**

The followingprocedures are all included in the return price.

A.         Receivemerchandise from consumer

B.           Inspectmerchandise and remove shipping label and match to any correspondence.

C.           Read andassign customer service codes from return labels and correspondence.

D.          Data entryreturn information to include name, address, order number, quantity and actionto be taken.

E.            Issueelectronic credit for credit card return and credits to issue a check forreturns when original payment was by check. (An advance refund account must beestablished prior to issuing any refund checks.)

 

Cost per return$1.95 each.

 

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**Live Customer Service Call**

A.           Customerservice agents will be trained to answer to specific inquiries on product or service.

B.             Agents can answer questions or issue credits,authorize returns, cancel future shipments, send out tracers or perform over twentyadditional customer service functions.

 

Cost per customer service call $1.95 for first 3 min.

Additional minutes at $.75 per minute.

Additional phone charges will bill at actual cost.

Chargebacks will bill at $3.00 each.

 

**E-Mail Customer Service**

 

SMS will answer e-mail inquiries, returns, credits,change of shipment dates and additional customer requests via e-mail.

 

Cost per e-mail transaction $1.95 each.

 

**Warehouse Charges**

 

Storage per month will billat $15.00 per pallet.

 

**Truck Unloading**

 
| Partial  20’ ft. truck unloading |   | $ | 45.00  |   |
|---------------------------------------|--------|---|--------|--------|
| 20’  ft. truck unloading         |   | $ | 135.00 |   |
| 40’  ft. truck unloading         |   | $ | 260.00 |   |

 

**Postage Account**

 

ANC will maintain with SMS an advance postage account in an amount tocover cots of shipping for ANC. **In the even the accounthas no funds in it, SMS will not ship orders until the account has beenreplenished.**

 

**Minimum Billing**

 

The above prices quoted are based on a guaranteed minimum of 2,200orders per month. In the event the guaranteed minimum billing is not generated,SMS reserves the right to renegotiate prices based on the lower projectedvolume. Prices quoted do not include any special computer programming you mayrequire, postage, packaging materials or labor for over packing or speciallabor projects.

 

II.                                  SMS shall have the right to increase priceson labor or materials due to increases assessed SMS by material suppliersand/or federal or state minimum labor rate increases equal to the percentage ofincrease passed to SMS.

 

SMS shall charge a minimum weekly of $250.00 for anyperiod requiring order processing, cashiering and sales reporting.

 

Computer and program set up charge for the initialprogram will be $1,000.00 if we already work with Telemarketers and MerchantBank. Any additional specialized programming will be based on an hourly rate of$115.00 per hour.

 

III.                              SMS shall have the right to increase theprices as a result of an annual review beginning with the first option term.Increases shall not exceed ten percent (10%).

 

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