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PRODUCT STRATEGIC ALLIANCE AGREEMENT

Strategic Alliance Agreement

PRODUCT STRATEGIC ALLIANCE AGREEMENT | Document Parties: AZONIC CORP | CustomQuest,  Inc. You are currently viewing:
This Strategic Alliance Agreement involves

AZONIC CORP | CustomQuest, Inc.

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Title: PRODUCT STRATEGIC ALLIANCE AGREEMENT
Governing Law: Ohio     Date: 6/29/2005
Law Firm: Wuersch Gering LLP    

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                                                                    Exhibit 10.5

 

                      PRODUCT STRATEGIC ALLIANCE AGREEMENT

 

      THIS PRODUCT STRATEGIC ALLIANCE   AGREEMENT   ("Agreement") is made this 9th

day of   March,   2005,   by and   among   CustomQuest,   Inc.,   an   Ohio   Corporation

("CustomQuest"), and Azonic Corp., a Nevada corporation ("Azonic").

 

      A. Azonic has   developed An AMPS   Cellular   Telephone   Product   (hereafter

defined). Azonic also holds a license in connection with the Product, and is the

owner of all rights, title, and interest in the Product.

 

      B.   CustomQuest   has expertise in the areas of   manufacturing,   packaging,

distribution and marketing.

 

      C.   Azonic   and   CustomQuest   desire   to   form   a   strategic   alliance   to

collaborate   in the   development,   manufacturing,   packaging,   distribution   and

marketing   of the   Product   under   the terms   and   conditions   set forth in this

Agreement.

 

      The parties agree as follows:

 

      Definitions.

 

      The following terms as used in this Agreement shall be defined as follows:

 

      "AFFILIATE."   An   "Affiliate"   shall mean any Person serving as the agent,

representative, subcontractor, or employee of the parties in connection with the

performance of any right or obligation hereunder.

 

      "FCC   LICENSE." FCC License shall mean license number   P4F1100A   issued by

the Federal   Communications   Commission to Azonic and   designated as a "licensed

non-broadcast transmitter held to ear."

 

      "ANALOG PRODUCT." Current Product using analog technology.

 

      "DIGITAL    PRODUCT."   New   Product   to   be    co-developed    using   digital

technology.

 

      "PERSON."   Person shall mean an individual and shall also include   trusts,

corporations, partnerships, limited liability companies, and other organizations

and entities.

 

      "PRODUCT."    Product   shall   mean   the   AMPS   cellular   telephone   product

including   the   Cyclone   Recyclable   Cellular   Phone,    including   all   changes,

improvements, refinements and derivations thereto.

 

      "PRODUCT INTELLECTUAL   PROPERTY." Product Intellectual Property shall mean

(i) any   patents   and   licenses   required   to   manufacture,   use and operate the

Product; (ii) any software required to use and operate the Product.

 

      1.   Scope of   Agreement.   CustomQuest   shall have the   exclusive   right to

manufacture,   package, distribute, market, and sell the Analog Product including

airtime minutes

 

<PAGE>

 

for the Product in North America CustomQuest shall also have the exclusive right

to all potential sales generated by John Pickard.

 

            a.     CustomQuest   shall   negotiate for the services of John Pickard

                  as of March 31, 2005.

 

            b.     CustomQuest   shall   also   have   the   exclusive   right   to   all

                  potential sales generated by John Pickard.

 

            c.     CustomQuest   shall   acquire   Azonic's    inventory    (including

                  finished   products   and parts) and tooling at   Azonic's   cost.

                  CustomQuest   will only   purchase   Azonic's   inventory   for the

                  purpose of fulfilling CustomQuest's purchase orders.

 

            d.     Azonic   shall   retain   exclusive   rights   to sell   its   Analog

                  Products to financial   service   providers.   CustomQuest   shall

                  have the right to sell Azonic's   analog   Products to all other

                  markets and industries.

 

            e.     All   International   markets   outside of North America shall be

                  negotiated in the future on a specific   market   basis.   Azonic

                  maintains   its right to   manufacture   the Analog   Product   for

                  distribution outside North America.

 

      2. Term. This Agreement shall be effective on the date set forth above and

shall continue for a period of one (1) year (the "Initial Term"). This Agreement

shall   thereafter   automatically   renew for   additional   successive one (1) year

periods unless,   at least six (6) months prior to the end of the Initial Term or

any renewal term, either party gives the other party notice of non-renewal. This

Agreement may also be terminated prior to end of the Initial Term or any renewal

term pursuant to Section 12.

 

      3. Duties of Azonic. Azonic shall perform or cause to be performed through

its Affiliates each of the following duties during the term of this Agreement:

 

            (a) Training and Specifications. Within fourteen (14) days after the

      execution of this Agreement,   Azonic shall provide training to CustomQuest

      with   respect to the   Product   and shall   make the plans,   specifications,

      operating   parameters and other   technological   information   regarding the

      Product ("Product Technical Information") available to CustomQuest.

 

             (b)     Consultation.   Azonic   shall   consult   with   CustomQuest

      concerning   the    manufacture   of   the   Product,    including    introducing

      CustomQuest to existing manufacturers of the Product and providing Product

      Technical   Information   to   manufacturers    selected   by   CustomQuest   and

      approved by Azonic to manufacture the Product.

 

            (c)   Upgrades.   Azonic   shall   keep   CustomQuest   and   manufacturers

      approved by Azonic informed as to changes and   developments   regarding the

      Product,   Product Technical   Information and Product Intellectual Property

      (as defined below) and shall provide CustomQuest upon request with written

      materials   or   other    information   with

 

 

                                        2

<PAGE>

 

      respect thereto. CustomQuest acknowledges that Azonic may make changes and

      improvements to the Product, Product Technological Information and Product

      Intellectual   Property and that Azonic shall retain all right,   title, and

      interest therein, without compensation to CustomQuest.

 

            (d) Intellectual Property Development and Maintenance.   Azonic shall

      develop and maintain the Product Intellectual   Property (as defined below)

      as provided in this Agreement.

 

            (e)   Referrals.   Azonic   shall refer all Product   sales   production,

      parts and distribution inquiries to CustomQuest, except as follows:

 

                  (i) Azonic shall have the right to purchase units of the

            Product from CustomQuest for sale per the terms set forth in Exhibit

            A, payable at net 30 upon demonstration of commercial credit

            worthiness of the order.

 

            (f) Cooperation.   Azonic and CustomQuest shall communicate with each

      other   regarding   sales   leads and   contacts   to   prevent   duplication   of

      efforts.

 

            (g)   Compliance.   Azonic shall maintain the FCC License,   insure the

      compliance of the Product   Technical   Information with the FCC License and

      shall otherwise   comply with all applicable   laws,   licenses and contracts

      with third parties related to its performance under this Agreement.

 

      4.   Duties   of   CustomQuest.   CustomQuest   shall   perform   or   cause to be

performed through its Affiliates each of the following duties during the term of

this Agreement:

 

            (a)   Manufacturing,   Packaging and   Distribution.   CustomQuest shall

      arrange,    contract   for   and   direct   the    manufacture,    packaging   and

      distribution   of all Product   units sold   pursuant to this   Agreement.   In

      anticipation   of   substantial   orders of the   Product,   CustomQuest   shall

      engage multiple   manufacturers or create sufficient internal manufacturing

      capabilities in order to fulfill orders for Product. Azonic shall have the

      right   to   approve   the    manufacturer(s)    of   the   Product   selected   by

      CustomQuest. Such approval shall not be unreasonably withheld. CustomQuest

      agrees to pay all travel related expenses for a   representative   of Azonic

      to   accompany   CustomQuest   on its   facility   inspection   at the   time the

      manufacturer has been selected, and again to inspect the first order prior

      to shipment. Azonic shall have the right to demand an accounting and proof

      of payment to insure that the selected and   approved   manufacturer(s)   has

      been properly compensated by CustomQuest or otherwise.

 

            (b)   Upgrades.    CustomQuest    shall   implement    Product,    Product

      Technological   Information and Product Intellectual   Property developments

      as soon as commercially reasonable when and as they are made by Azonic.

 

            (c) Marketing and Promotion. CustomQuest shall arrange, contract for

      and direct the marketing,   advertising, sales and promotion of the Product

      in the CustomQuest Market pursuant to this Agreement.

 

 

                                       3

<PAGE>

 

            (d) Tech Support. CustomQuest shall arrange, contract for and direct

      any technical   support for end-users of the Product to the extent required

      under the terms of any order for the Product or   otherwise   in   accordance

      with the minimum   requirements   established by CustomQuest and approved by

      Azonic.   CustomQuest   shall   use its   best   efforts   to   respond   to sales

      inquiries   within   twenty-four   (24) hours and work with the sales team of

      Azonic and the potential customers with which they have worked.

 

            (e) Use of Marks.   CustomQuest shall ensure that all advertising and

      promotional   materials,   signs,   decorations   and other items   bearing the

      Azonic   Marks   are done   using   the   form,   color,   location,   and   manner

      prescribed by Azonic and in accordance   with this   Agreement.   Azonic will

      require   pre-approval,   in writing,   all uses of its Mark, and any and all

      Advertising,   Promotional Materials,   and marketing materials that include

      or reference the Product.

 

            (f)   Compliance.   CustomQuest   shall comply with all applicable laws

      and contracts   with third parties   related to its   performance   under this

      Agreement.

 

      5. Product Intellectual Property.

 

            (a) Azonic   grants   CustomQuest   a   non-exclusive,   non-transferable

      license to use the Analog Product Intellectual Property in connection with

      this Agreement.

 

            (b) Azonic   represents that it has the right,   title and interest to

      the   Product   Intellectual   Property,   and may   license   others to use the

      Product Intellectual Property.

 

            (c) Azonic shall maintain the Product   Intellectual   Property rights

      and shall file all necessary patent applications,   registrations and other

      documents   and   shall   take   all   other   commercially   reasonable   actions

      necessary   to preserve and protect the Product   Intellectual   Property and

      permit its use in the manner contemplated by this Agreement.

 

            (d)   CustomQuest   shall only use the Azonic Marks in connection with

      this Agreement and only in the manner   authorized and permitted by Azonic.

      CustomQuest shall execute any documents   reasonably requested by Azonic to

      ensure   protection   for the Azonic   Marks or to maintain   their   continued

      validity and enforceability.   CustomQuest   acknowledges that Azonic is the

      owner of all right, title, and interest in and to the Azonic Marks and the

      goodwill   associated   with and   symbolized by them and that any use of the

      Azonic Marks by CustomQuest does not give CustomQuest any ownership, title

      or interest in or to the Azonic Marks.

 

            (e) Azonic   reserves the right to substitute   different   proprietary

      marks for use as the Azonic   Marks at   Azonic's   sole   discretion.   Azonic

      shall   bear the costs of   modifying   CustomQuest's   signs and   advertising

      materials,   if required by Azonic,   to conform to Azonic's new Marks,   but

      shall otherwise have no obligation or liability to CustomQuest as a result

      of such substitution.

 

 

                                       4

<PAGE>

 

            (f) In the event Azonic sells or otherwise   transfers the Product or

      the Product Intellectual Property, such transfer shall not occur until and

      unless Azonic   assures that the purchaser or transferee   shall be bound by

      the terms of this Agreement.

 

            (g) Payments to Azonic.   CustomQuest   shall pay Azonic a royalty fee

      with   respect to sales of the   Analog   Product of $1.00 US Funds per phone

      sold   (calculated   and paid in   accordance   with this Section the "Royalty

      Fee").   Payment of the   Royalty   Fee will be no later than the 25th of the

      following month in which such Royalty Fee is earned.

 

             (h)   CustomQuest   shall pay Azonic a royalty fee of $.01 to $.03 per

      minute of airtime on Analog Products sold by CustomQuest.   Airtime royalty

      fee will   also be paid no later   than the 25th of the   following   month in

      which such fee is earned.   The   royalty   value will be   determined   when a

      separate deal with CanQuest has been completed.

 

            (i)   Option.   CustomQuest   shall   have the   option to   acquire up to

      1,000,000   shares of Azonic   common stock at a price of $0.10 per share on

      or before March 15, 2005

 

      6.   Digital   Products.   Azonic and   CustomQuest   agree to jointly   develop

Digital   Technology   Products   with   development   costs   equally   shared by both

parties. A separate   reciprocal Royalty Agreement between Azonic and CustomQuest

shall be drawn up along similar lines to the royalties   agreed to in this Analog

Agreement

 

      7. Reports and Records.

 

            (a) General.   CustomQuest   shall   maintain all financial   records in

      accordance with generally   accepted   accounting   principles,   consistently

      applied   ("GAAP").   CustomQuest   shall   prepare   on a current   basis,   and

      preserve   for not less than three years,   complete   and   accurate   records

      concerning   Gross   Sales   and   Net   Sales   and all   financial,   operating,

      marketing   and   other   aspects   of   the   business    conducted   under   this

      Agreement.   CustomQuest shall maintain an accounting system that fully and

      accurately reflects all aspects of such business.

 

            (b) Audit Rights. Azonic or its authorized agents may inspect and/or

      audit,   during   business   hours and upon not less than   (thirty)   30 days'

      notice,   any or all of the   records   CustomQuest   is   required to maintain

      pursuant to the terms of this   Agreement.   In the event the   inspection or

      audit discloses that the Royalty Fee has been understated for such audited

      period,   CustomQuest   shall   immediately pay to Azonic the amount by which

       the payments due Azonic have been understated.   Further,   if the amount by

      which such payments have been understated   exceeds two percent (2%) of the

      full amount due for the period (such period not to exceed one year), or if

      the audit is required because   CustomQuest has not strictly   complied with

      the provi


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