Exhibit No. 10.1
Form 10-QSB
Viral Genetics, Inc.
File No. 000-26875
Exhibit 10-1Q Ord
Viral Genetics, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx, XX 00000
January 30, 2003
Xxxxxx Xxx
[address]
Re: Consulting Engagement
Dear Xx. Xxx:
Viral Genetics, Inc. (the "Company") and Xxxxxx Xxx (the "Consultant") have
been discussing the possibility of Consultant assisting the Company as a
consultant. This agreement ("Agreement") will confirm the terms and conditions
under which Consultant will provide the consulting services described below, as
follows:
I. ENGAGEMENT OF CONSULTANT
1.01 Non-Exclusive Engagement of Consultant; Term.
(a) The Company hereby engages Consultant as its non-exclusive provider of
the consulting services described in this Agreement, for a term (the "Term")
which will commence on the date of this Agreement and terminate at the second
anniversary of such date.
1.02 Consultant Services. On the terms and conditions set forth in this
Agreement, Consultant will provide the following services to the Company:
(a) Consultant will advise the Company on increasing its executive
management depth and visibility.
(b) Consultant will advise the Company on expanding its Board of
Directors, creating a scientific advisory board and attracting
qualified personnel to serve as members thereof.
(c) Consultant will assist the Company's management in evaluating and
originating potential financing alternatives.
(d) Consultant will assist the Company in the development of a public
relations strategy, contact with media and celebrity personnel, and
relationships with humanitarian foundations or other groups.
(e) Consultant will assist the Company in identifying its strategic goals.
(f) Consultant will assist the Company in identifying potential strategic
partners.
1.03 Method of Providing Services. It is understood that the Company will
not control the manner or prescribe the method by which the services under this
Agreement are to be performed by Consultant. Consultant will perform services,
and may communicate with the Company's management and other parties, through
personal meetings, correspondence, telephone or video conferences, and such
other methods, and at such times, as Consultant may determine, subject to the
reasonable convenience of the parties. Consultant shall be available for regular
meetings with the management of the Company during the Term, but shall not be
required to devote a specific minimum number of hours to the Company's business.
Unless requested otherwise by the Company, Consultant shall communicate with the
Company's management through the Company's President.
1.04 Independence of Parties. Nothing contained in this Agreement shall
constitute either party as an employee, partner, co-venturer or agent of the
other, it being intended that each shall act as an independent contractor with
respect to the other.
II. COMPENSATION
2.01 Finder's Fee Payment in Shares. As a finder's fee (the "Finder's Fee")
for the sourcing of cash funding to the Company from Concord Development Corp or
its nominee ("Concord") the Company shall issue and sell to Consultant, at a
price of $.01 per share, shares of the Company's Common Stock ("Shares") as
follows, unless otherwise mutually agreed to by the Parties in writing:
(a) upon the receipt of $400,000 by the Company from Concord on or before
January 31, 2003, 250,000 Shares;
(b) upon the receipt of $1,200,000 by the Company from Concord on or
before February 7, 2003, 300,000 Shares;
(c) upon the receipt of $1,200,000 by the Company from Concord on or
before February 21, 2003, 300,000 Shares; and
(d) upon the receipt of $600,000 by the Company from Concord on or before
March 1, 2003, 150,000 Shares.
The certificate(s) for the Shares shall be issued and delivered to
Consultant within five (5) business days after the receipt by the Company of the
cash proceeds as detailed above. In no case shall Consultant be entitled to an
aggregate Finder's Fee of more than 1,000,000 Shares. The amounts of cash
proceeds as detailed above each represent a separate delivery of cash to the
Company. In the event that Concord delivers to the Company cash proceeds that
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are less than the amounts indicated above, Consultant shall be entitled to a
pro-rated lesser amount of Shares as a Finder's Fee.
2.02 Quarterly Additional Payments in Shares.
(a) In addition to the Finder's Fee and in consideration of the services to
be performed under this Agreement, the Company will, within ten (10) days after
the end of each three-month period from the commencement of the Term, issue and
sell to Consultant 100,000 additional shares of the Company's Common Stock, at a
price per share of $0.01, and will continue to make such quarterly payments in
shares (the "Quarterly Payment Shares") for each three-month period during the
Term. In the event that the Company shall elect to terminate this Agreement for
any reason prior to the end of any such three-month period, the amount of the
Quarterly Payment Shares issuable for such period shall be prorated for the
elapsed portion of the three-month period, computed by dividing the number of
days from the inception of the three-month period to the effective date of such
termination by the total number of days in such three-month period and
multiplying the fraction so obtained by the amount of the Quarterly Payment
Shares. Any shares issuable in connection therewith shall be issued and
delivered within ten (10) days after the effective date of such termination.
III. REPRESENTATIONS AND WARRANTIES
3.01 Company Representations and Warranties. The Company hereby represents
and warrants, knowing that Consultant is relying thereon, that:
(a) The Company is duly organized, validly existing and in good standing
under the laws of the state of Delaware. The Company is qualified to do business
as a foreign corporation in each state in which its business requires it to be
so qualified.
(b) All shares issued to Consultant under this Agreement will be duly and
validly issued, fully paid and non-assessable, and will be delivered free and
clear of any liens, claims or encumbrances.
(c) The Company represents that the information concerning the Company and
its business, as furnished and to be furnished to Consultant, will be complete
and correct in all material respects and will not contain any untrue statement
of material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in light of the circumstances under which such
statements are made. The Company will notify Consultant promptly concerning any
statement which is not accurate or which is or has become incomplete or
misleading in any material respect. The Company understands that Consultant is
and will be relying on the continuing accuracy of such information in carrying
out its functions under this Agreement.
(d) This Agreement has been expressly authorized by the Company's Board of
Directors, has been duly and validly executed and delivered by and on behalf of
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the Company, and constitutes the valid and binding agreement of the Company,
enforceable in accordance with its terms.
(e) The Company is not subject to any material pending or threatened
litigation, arbitration or governmental or administrative proceedings, and is
not in default under any of its material agreements with employees, licensors,
licensees, suppliers, customers, shareholders, creditors or other third parties;
provided, however, that the foregoing representation excludes certain pending
disputes with vendors and suppliers.
(f) The Company possesses and owns, or has exclusive licenses to, all
intellectual property rights necessary to enable it to develop and conduct its
business as contemplated under its business plan and as represented to
Consultant. The Company's use of such intellectual property rights does not and
will not infringe on the rights of any third party.
(g) The Company's shares are listed for quotation on the OTC Bulletin Board
administered by the National Association of Securities Dealers. The Company is
registered as a public reporting company with the Securities and Exchange
Commission ("SEC"), and the Company has filed all annual and periodic reports
required to be filed with the SEC under the Securities Exchange Act of 1934.
3.02 Consultant Representations and Warranties. Consultant hereby
represents and warrants, knowing that the Company is relying thereon, that:
(a) Consultant is not a broker-dealer and is not authorized to perform
broker-dealer functions including, without limitation, the offering of any
Company securities for sale.
(b) Consultant is an Accredited Investor, as that term is promulgated by
the Securities and Exchange Commission, and Consultant has completed the
attached Schedule A.
IV. ADDITIONAL COMPANY UNDERTAKINGS
4.01 Access to Information and Documentation; Confidentiality. The Company
will make its personnel and documentation available for inspection, evaluation,
and due diligence by Consultant. In addition, the Company will cause its
directors, officers and professional advisers to furnish information and copies
of documents to, and to otherwise cooperate with, Consultant in connection with
Consultant's due diligence activities. The Company agrees to furnish Consultant
with all information and data concerning the Company which Consultant deems
reasonably necessary to the performance of its functions. Except as otherwise
agreed to by the Company, or required by law, all information concerning the
Company which is not publicly available will be kept confidential by Consultant.
V. REGISTRATION PROVISIONS
5.01 Stock Certificates and Registration Rights. All certificates issued in
respect of the Finder's Fee Shares and the Quarterly Payment Shares shall bear a
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restrictive legend in the form normally used by the Company for the issuance of
restricted shares, and shall be deemed restricted securities under SEC Rule 144.
The Company agrees that Consultant and its designees and assignees shall have,
with respect to all of the Finder's Fee and Quarterly Payment Shares, full
piggyback registration rights for a period of four years commencing one year
after the date of this Agreement at the Company's sole expense.
VI. RENEWALS AND TERMINATION
6.01 Extension and Renewal. The Term may be extended or renewed, and this
Agreement may be amended, only by the written agreement of the parties.
6.02 Termination. Either party may terminate this Agreement for cause upon
not less than 10 days notice in the event of a material breach of this Agreement
by the other party, which breach is not cured within 20 days after the giving of
notice to the breaching party specifying the circumstances of such breach.
(a) The Company may terminate this Agreement without further notice to
Consultant in the event that Consultant:
(i) becomes the subject of an investigation concerning a felony or a
violation of any securities laws;
(ii) declares bankruptcy;
(iii)becomes an employee, consultant, officer, director or principal
of a competitor;
(iv) misrepresents the Company; or
(v) acts in any other manner which materially affects the Company in
a negative manner.
6.03 Consequences of Termination. Any termination or expiration of this
Agreement, whether or not for cause, shall not affect the obligation of the
Company to pay compensation to Consultant which was earned or accrued prior to
the date of termination or expiration.
VII. MISCELLANEOUS
7.01 Governing Law and Disputes. This Agreement shall be governed by the
laws of the State of California, without regard to choice of law provisions. The
parties agree that any dispute under this Agreement will be resolved in a
federal or state court located in the California, and will submit to the
jurisdiction of such court for such purpose.
7.02 Waiver. Any party hereto may waive compliance by the other with any of
the terms, provisions and conditions set forth herein; provided, however, that
any such waiver shall be in writing specifically setting forth those provisions
waived thereby. No such waiver shall be deemed to constitute or imply waiver of
any other term, provision or condition of this Agreement.
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7.03 Assignment. The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective heirs, legal
representatives, successors and assigns. This Agreement may not be assigned
without the consent of the parties; provided, however, that nothing contained
herein shall prevent Consultant from assigning or transferring any of the
Finder's Fee Shares or Quarterly Payment Shares to any person or entity in
accordance with applicable securities laws and regulations.
7.04 Survival. The representations, warranties, and agreements of the
parties contained in this Agreement will remain operative and in full force and
effect and will survive any termination of this Agreement.
7.05 Notices. All notices required or permitted under this Agreement shall
be in writing and shall be sent by certified or registered first class mail,
return receipt requested, or shall be personally delivered, or sent by an
overnight delivery service such as Federal Express, or shall be transmitted by
telefax (provided such telefax message is confirmed by telephonic acknowledgment
of receipt or by sending via other authorized means a confirmation copy of such
notice) addressed to the parties at their respective last known business
addresses.
Please indicate your consent to the foregoing terms and conditions by
signing and returning a duplicate copy of this letter.
Sincerely yours,
VIRAL GENETICS, INC.
By /s/
President
AGREED:
XXXXXX XXX
/s/
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SCHEDULE A
PERSONAL ACCREDITED INVESTOR EXEMPTION
PERSONAL FINANCIAL INFORMATION. The following information pertaining to the
undersigned as a natural person and U.S. Persons within the meaning of
Regulation S is being provided here in lieu of furnishing a personal financial
statement.
(a) My individual net worth, or joint net worth with my spouse, exceeds
$1,000,000.
Yes [ ] No [ ]
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INITIAL
(b) My individual income in 2001 and 2001 exceeded $200,000 in each such
year, and I reasonably expect my individual income will be in excess of $200,000
in 2003.
Yes [ ] No [ ]
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INITIAL
(c) The joint income of my spouse and I in 2001 and 2002 exceeded $300,000
in each such year, and I reasonably expect our joint income will be in excess of
$300,000 in 2003.
Yes [ ] No [ ]
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INITIAL
(d) Considering the foregoing and all other relevant factors in my
financial and personal circumstances, I am able to bear the economic risk of an
investment in the Company.
Yes [ ] No [ ]
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INITIAL
The foregoing is a true representation of my financial status:
__________________________________
Xxxxxx Xxx
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