CONTRACT SERVICES AGREEMENT

THIS AGREEMENT is made effective as of October 15, 2010, by and among ALTICOR CORPORATE ENTERPRISES INC., a Delaware corporation with offices at 7575 Fulton Street East, Ada, Michigan 49355 and AMWAY INTERNATIONAL INC., a Delaware corporation, with offices located at 7575 Fulton Street East, Ada, Michigan 49355 (collectively, “Alticor”), and INTERLEUKIN GENETICS, INC., a Delaware corporation with offices located at 135 Beaver Street, Waltham, Massachusetts 02452 (“Contractor”).

WHEREAS, Alticor wishes to retain Contractor on a limited basis to render services in accordance with Schedule A, PROJECT SPECIFICATIONS, and

WHEREAS, Contractor represents that it has sufficient training, expertise and time to provide such services, and is willing to provide such services as an independent contractor in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, the parties agree as follows:

1.           Services.  Alticor hereby retains Contractor as an independent contractor to provide the services detailed in Schedule A, attached hereto.  Additional Schedules A may be executed from time to time by the parties hereto during the term of this Agreement.  Any such Schedule A shall be a part of the Agreement and is hereby incorporated by reference.  This Agreement shall apply to any and all services provided to Alticor by Contractor and paid for by Alticor.  Contractor hereby warrants and represents that any employee, agent or subcontractor that Contractor assigns to Alticor is authorized to work in the United States, and that Contractor has complied with the Immigration Reform and Control Act of 1986 (IRCA).  Contractor further warrants and represents that Contractor has completed, in accordance with applicable law, the I-9 Employment Eligibility Verification form for each individual assigned to Alticor.  A copy of such I-9 Employment Eligibility Verification shall be made available to Alticor upon Alticor’s request.

2.           Term and Compensation.  This Agreement shall commence on the date above written and shall remain in effect for a period of one (1) year or for the time stated on an applicable Schedule A, whichever is later.  This Agreement may be renewed for successive one (1) year periods upon mutual written agreement of the parties hereto.  Execution of a new Schedule A after the expiration of a current one (1) year term of this Agreement may serve as notice of mutual agreement of the parties to renew this Agreement, however, amendments to any existing Schedule A shall not serve to renew the Agreement unless otherwise specified by the parties, in writing, in the amended Schedule A.  As compensation for Contractor’s services and consultation, Alticor shall pay Contractor as set forth on Schedule A.

3.           Independent Contractor.  The relationship between Contractor and Alticor under this Agreement is to be that of an independent contractor.  The personnel provided by Contractor shall be under the control of Contractor. Contractor shall be responsible for making Social Security payments on behalf of its employees and Alticor shall not be responsible for withholding any federal, state, city or other local income taxes or procurement of unemployment compensation or workers’ compensation insurance for services performed under this Agreement.  This Agreement shall not confer on Contractor, its employees, agents or subcontractors, any right to company service credit, employee benefits or fringe benefits, which are provided to Alticor employees.

If Contractor engages a subcontractor to provide services hereunder, Contractor’s agreement with such subcontractor shall include a provision that such subcontractor shall be responsible for making its own Social Security payments and shall account for compensation on its income tax returns.  Contractor shall be responsible for the acts, errors and omissions of its subcontractors.

4.           Confidentiality.  Contractor is aware of Alticor’s need to maintain the confidentiality of its business.  Contractor is also aware that certain records maintained by Alticor contain individually identifiable confidential information subject to confidentiality obligations imposed by state and federal laws or which individuals expect Alticor to maintain on a confidential basis.  Examples of such information includes but is not limited to health information, social security numbers, credit card and other financial account numbers, drivers licenses, and personnel records.  Therefore, Contractor agrees to take the utmost precautions to ensure that the confidentiality of Alticor’s records, papers, effects, and accounting matters are preserved, agrees not to divulge or discuss with any [***] or third parties Alticor’s confidential matters relating to the Alticor business or the confidential records it maintains, or to access, use or disclose individually identifiable confidential information except as expressly permitted by Alticor.  Upon termination of this Agreement, Contractor shall return all of Alticor’s records, papers, effects and materials which have been entrusted to Contractor, its employees, agents or subcontractors in connection with Contractor’s performance hereunder.  Additionally, Contractor shall return all notes, memoranda, correspondence, and reports completed, or in process, at the time of termination.

6.           Insurance. Contractor shall maintain in effect at all times during the term hereof standard insurance of the types and in the amounts generally typical for the services being provided and acceptable to Alticor, protecting against losses, claims, demands, proceedings, damages, costs, charges and expenses for injuries to any person or damage to property arising out of Contractor’s performance under this Agreement, to the extent such injuries or damage are due to the fault or negligence of Contractor, or its employees, agents or subcontractors.  Alticor and its employees, agents or subcontractors shall not be deemed to be employees, agents or subcontractors of Contractor.  Upon request, Contractor shall furnish to Alticor insurance certificates which confirm Contractor’s insurance coverage and which include Alticor as an additional insured under such insurance policies.

7.           Warranty and Indemnification; Limitation of Liability. Contractor represents and warrants that the services to be performed hereunder shall be solely performed by Contractor, its employees, agents or subcontractors, that Contractor is the originator of such services, that Contractor will not knowingly or negligently conduct any work or create any materials under this Agreement that infringe or violate any rights of another party, and that Contractor can grant all of the rights set forth herein.  Contractor agrees to indemnify, hold harmless and defend Alticor and its employees, agents and subcontractors from all third party claims, liability, damages, loss and expense including fees, costs and reasonable attorneys’ fees, for injuries to persons or property or resulting from (i) violation of any law by Contractor in the conduct of its activities under this Agreement or (ii) any negligence or willful misconduct of Contractor in the course of activities under this Agreement, except when the same shall arise from the sole negligence of Alticor or its employees, agents or subcontractors.   Contractor shall also indemnify and hold harmless Alticor for any payments, fines, penalties and costs paid by Alticor as a result of: (a) Contractor’s, or its employees’, agents’ or subcontractors’ failure to pay Social Security or applicable income taxes; (b) Contractor’s failure to comply with IRCA; (3) Contractor’s failure to comply with the provisions of Section 1 regarding I-9 Employment Eligibility Verification responsibilities; or (4) breach of any warranty or representation made by Contractor in this Agreement.  Alticor shall promptly provide notice to Contractor of any claims for which it will seek indemnification, and Alticor shall have the right to control the defense of the claim, at its own expense.  Unless specifically set forth herein, nothing herein shall modify Contractor’s indemnification obligations to Alticor and its employees, agents, and subcontractors

(a) Unless otherwise expressly set forth herein, all intellectual property rights in work and documents created, conceived and/or first reduced to practice by Contractor through Contractor’s employees, agents or subcontractors who perform services pursuant hereto; (i) whether or not created, conceived, or first reduced to practice with the use of Alticor’s time, equipment, materials, supplies, facilities, trade secrets or Confidential Information;. and (ii) whether created, conceived, and/or first reduced to practice by Contractor acting alone or Alticor and Contractor personnel working together, which relate solely to genetic tests currently developed by or produced by Contractor without regard to Alticor’s channel of distribution, direct selling model, [***], or other operations and which result from the services performed by Contractor, Contractor’s employees, agents or subcontractors pursuant hereto (the “Genetic Test Intellectual Property”), shall be owned by Contractor and licensed to Alticor pursuant to Section 10(a) below; provided, however, that any trademarks, the registrations or applications for which are paid for by Alticor shall be owned by Alticor and not licensed to Contractor, whether or not they are Genetic Test Intellectual Property, Combined Intellectual Property (as defined below), or Non-Genetic Test Intellectual Property (as defined below.)  For the avoidance of doubt, all intellectual property rights in work and documents created, conceived and/or first reduced to practice by Contractor or Contractor’s employees, agents, or subcontractors developed prior to, during, or after the term of this Agreement which relate to genetic tests currently developed by or produced by Contractor or to other genetic tests and which do not result from the services performed hereunder shall be owned by Contractor and shall not be licensed to Alticor pursuant to this Agreement.

 

(b) Unless otherwise expressly set forth herein, all intellectual property rights in work and documents created, conceived and/or first reduced to practice by Contractor through Contractor’s employees, agents or subcontractors who perform services pursuant hereto (i) whether or not created, conceived, or first reduced to practice with the use of Alticor’s time, equipment, materials, supplies, facilities, trade secrets or Confidential Information; (ii) whether or not otherwise resulting from or suggested by the services to be provided by Contractor hereunder; and (iii) whether created, conceived, and/or first reduced to practice by Contractor acting alone or Alticor and Contractor personnel working together, which relate to genetic tests currently developed by or produced by Contractor as they apply to or are used in Alticor’s channel of distribution, direct selling model, [***], or other operations (the “Combined Intellectual Property”), shall be owned by Alticor and licensed to Contractor pursuant to Section 10(b) below; provided, however, that any trademarks, the registrations or applications for which are paid for by Alticor shall be owned by Alticor and not licensed to Contractor, whether or not they are Genetic Test Intellectual Property, Combined Intellectual Property, or Non-Genetic Test Intellectual Property (as defined below.)

(c) Unless otherwise expressly set forth herein, all intellectual property rights in work and documents created, conceived and/or first reduced to practice by Contractor through Contractor’s employees, agents or subcontractors who perform services pursuant hereto (i) whether or not created, conceived, or first reduced to practice with the use of Alticor’s time, equipment, materials, supplies, facilities, trade secrets or Confidential Information; (ii) whether or not otherwise resulting from or suggested by the services to be provided by Contractor hereunder; and (iii) whether created, conceived, and/or first reduced to practice by Contractor acting alone or Alticor and Contractor personnel working together, which are unrelated to genetic tests (the “Non-Genetic Test Intellectual Property”) shall be owned by Alticor and not licensed to Contractor, including any trademarks, the registrations or applications for which are paid for by Alticor, whether or not they are Genetic Test Intellectual Property, Combined Intellectual Property, or Non-Genetic Test Intellectual Property.

1. Definitions of Individually Identifiable Confidential Information (“IICI”).  As used in this Addendum, IICI is information collected and/or maintained by Alticor that identifies or describes, or may be used to identify an individual, including, but not limited to, names, date and location of birth, gender, account information, credit card numbers, driver’s license information, salary history, personal check information, tax or financial information, medical information, employment information, information governed by Federal and State privacy laws and regulations, information that individuals reasonably expect to be kept confidential, and any other individually identifiable information deemed confidential by Alticor.

 

2. Obligations and Activities of Contractor.

 

2.1.            Contractor and its directors, officers, employees, contractors and agents shall not use or further disclose IICI other than as permitted or required by this Addendum, as authorized in writing by an authorized representative of Alticor or as required by law.

 

2.2.            Contractor shall use appropriate safeguards to prevent unauthorized use or disclosure of the IICI and shall report to Alticor any unauthorized use or disclosure of IICI.

 

2.3.            To the extent that Contractor creates, receives, maintains or transmits electronic IICI, Contractor hereby represents and warrants that it will:

 

2.3.1.  Implement administrative, physical and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the electronic IICI that Contractor creates, receives, maintains or transmits on behalf of Alticor;

 

2.3.2. Ensure that any agent, including a subcontractor, to whom Contractor provides electronic IICI implements reasonable and appropriate safeguards to protect the IICI; and

 

2.3.3. Report to Alticor any security incident involving IICI of which Contractor becomes aware.

2.4.            Contractor shall mitigate, to the extent practicable, any harm arising out of any unauthorized use or disclosure of IICI.  In the event of an unauthorized disclosure or a security incident, if Alticor reasonably concludes that individuals must be provided notification of such event, Contractor will provide such notification at its own expense in a form and manner acceptable to Alticor.

 

2.5.            Contractor shall ensure that any agent, including a subcontractor, who may have access to IICI agrees in writing to the same restrictions and conditions that apply to Contractor with respect to such information.

 

2.6.            At the request of Alticor, Contractor shall make available to Alticor its internal practices, books, and records relating to the use and disclosure of IICI received from Alticor, or created or received on behalf of Alticor, in a time and manner designated by Alticor.

 

2.7.            In the event Contractor receives a subpoena, court or administrative order or other discovery request or mandate for release of IICI, Alticor shall have the right to control Contractor's response to such request.  Contractor shall notify Alticor of the request as soon as reasonably practicable, but in any event within two (2) business days of receipt of such request.

 

3. Restrictions on Use; Non Disclosure.  Except as otherwise expressly permitted in writing by an authorized representative of Alticor, Contractor shall not access or use IICI unless necessary to perform functions, activities, or services for, or on behalf of, Alticor except as necessary to perform the services set forth in Schedule A of the Contract Services Agreement.   Contractor will not disclose, reveal or otherwise provide access to IICI to any person or entity other than its employees without express written permission by an authorized representative of Alticor.

 

4. Term and Termination.

 

4.1.            Term.  This Addendum shall be effective as of the date it is executed, and shall terminate when all of the IICI provided by Alticor to Contractor, or created or received by Contractor on behalf of Alticor, is destroyed or returned to Alticor, or, if it is infeasible to return or destroy IICI, protections are extended to such information, in accordance with the termination provisions in this Section.

 

4.2.            Termination for Breach.  Upon Alticor’s knowledge of a material breach of the terms of this Addendum by Contractor, Alticor shall either:

 

4.2.1. Provide an opportunity for Contractor to cure the breach or end the violation and terminate the Agreement and this Addendum if Contractor does not cure the breach or end the violation within the time specified by Alticor;

 

4.2.2. Immediately terminate the Agreement and this Addendum if Contractor has breached a material term of this Addendum and cure is not possible; or

 

4.2.3. If neither termination nor cure is feasible, report the violation to the appropriate government agency.

 

4.3.            Other Conditions Allowing for Immediate Termination.  Notwithstanding anything to the contrary in the Agreement or this Addendum, Alticor may terminate the Agreement and this Addendum immediately upon written notice to Contractor, without any term of notice and/or judicial intervention being required, and without liability for such termination, in the event that:

4.3.1. Contractor receives (i) a Criminal Conviction, (ii) is excluded, barred or otherwise ineligible to participate in any government health care program, (iii) is named as a defendant in a criminal proceeding for a violation of any information privacy and protection law; or (iv) is found to have or stipulates that it has violated any privacy, security or confidentiality protection requirements under any applicable information privacy and protection law in any administrative or civil proceeding in which Contractor has been joined.;

 

4.3.2. A trustee or receiver is appointed for any or all property of Contractor;

 

4.3.3. Contractor becomes insolvent or unable to pay debts as they mature, or ceases to so pay, or makes an assignment for benefit of creditors;

 

4.3.4. Bankruptcy or insolvency proceedings under bankruptcy or insolvency code or similar law, whether voluntary or involuntary, are properly commenced by or against Contractor;

 

4.3.5. Contractor is dissolved or liquidated.

 

4.4.            Effect of Termination.

 

4.4.1. Except as provided in Section 4.4.2 of this section, upon termination of the Agreement or this Addendum, for any reason, Contractor shall return or destroy all IICI received from Confidential, or created or received by Contractor on behalf of Alticor.  This provision shall apply to Confidential Health Information that is in the possession of subcontractors or agents of Contractor.  Contractor shall retain no copies of the IICI.

 

4.4.2. In the event that return or destruction of the IICI is not feasible, Contractor shall extend the protections of this Addendum to the IICI and limit further uses and disclosures to those purposes that make the return or destruction infeasible, for so long as Contractor maintains such IICI.

 

5. Miscellaneous.

 

5.1.            Amendment.  No provision of this Addendum may be modified except by a written document signed by a duly authorized representative of the parties.  The parties agree to amend either the Agreement or this Addendum, as appropriate, to conform with any new or revised legislation, rules and regulations to which Alticor is subject now or in the future.  If within ninety (90) days of either party first providing written notice to the other of the need to amend the Agreement or Addendum , the parties, acting in good faith, are i) unable to mutually agree upon and make amendments or alterations to the Agreement or Addendum to meet the requirements in question, or ii) alternatively, the parties determine in good faith that amendments or alterations to the requirements are not feasible, then either party may terminate the Agreement upon thirty (30) days written notice.

 

5.2.            Assignment.  No party may assign or transfer any or all of its rights and/or obligations under this Addendum or any part of it, nor any benefit or interest in or under it, to any third party without the prior written consent of the other party, which shall not be reasonably withheld.

 

5.3.            Survival.  The respective rights and obligations of Contractor under Section 4.4 of this Addendum shall survive the termination of this Addendum.

 

5.4.            Interpretation. If there is an inconsistency between the language in the Agreement and this Addendum, the language in this Addendum shall control.

 

5.5.            Breach of Contract.  In addition to any other rights Alticor may have in the Agreement, this Addendum, or by operation of law or in equity, Alticor may i) terminate the Agreement if Alticor determines that Contractor has violated a material term of this Addendum, and ii) at its option, cure or end any such violation.  Alticor's cure of a breach of this Addendum shall not be construed as a waiver of any other rights Alticor has in the Agreement, this Addendum or by operation of law or in equity.

 

5.6.            Indemnification.  Contractor shall indemnify Alticor for any and all claims, inquiries, costs or damages, including but not limited to any monetary penalties, that Alticor incurs arising from a violation by Contractor of its obligations hereunder.

 

5.7.            Third Party Rights.  The terms of this Addendum are not intended, nor should they be construed, to grant any rights to any parties other than Contractor and Alticor.

 

5.8.            Electronic Data Security.  To the extent that Contractor creates, receives, maintains or transmits electronic IICI, Contractor hereby represents and warrants that it will:

 

5.8.1.  Implement administrative, physical and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the electronic IICI that Contractor creates, receives, maintains or transmits on behalf of Alticor;

 

5.8.2. Ensure that any agent, including a subcontractor, to whom Contractor provides electronic IICI implements reasonable and appropriate safeguards to protect the IICI; and

 

5.8.3. Report to Alticor any security incident involving IICI of which Contractor becomes aware.

 

5.9.            Minimum Necessary.  Contractor hereby represents and warrants that, for all IICI that Contractor accesses or requests from Alticor for the purposes of providing services under the Agreement, it shall access or request only that amount of information that is minimally necessary to perform such services.  In addition, for all uses and disclosures of IICI by Contractor, Contractor represents and warrants that it shall institute and implement policies and practices to limit such uses and disclosures to that which is minimally necessary to perform its services under the Agreement.

 

5.10.           Injunctive Relief.  Contractor acknowledges and stipulates that its unauthorized use or disclosure of IICI while performing services pursuant to the Agreement or this Addendum would cause irreparable harm to Alticor, and in such event, Alticor shall be entitled, if it so elects, to institute and prosecute proceedings in any court of competent jurisdiction, either in law or in equity, to obtain damages and injunctive relief, together with the right to recover from Contractor costs, including reasonable attorneys' fees, for any such breach of the terms and conditions of the Agreement or this Addendum.

 

5.11.          Notice.  All notices required under this Addendum shall be in writing and shall be deemed to have been given on the next day by fax or other electronic means or upon personal delivery, or in ten (10) days upon delivery in the mail, first class, with postage prepaid.  Notices shall be sent to the addressees indicated below unless written notification of change of address shall have been given.