AMENDED AND RESTATED
MARKETING AND CONSULTING SERVICES AGREEMENT
This Amended and Restated Marketing and Consulting (the "Agreement") is
amended as of December 10, 1998, by and between Harrogate Marketing, L.L.C.
("Harrogate") and Biomune Systems, Inc., a Nevada corporation ("Biomune") who
hereby mutually agree as follows:
1. Term. The term of this Agreement will begin on the date this Agreement is
executed by all parties hereto and continue until such time as Biomune
discontinues all of the Products (defined in Section 2, below) reasonably
contemplated by this Agreement, subject to termination as provided in
Section 8, below.
2. Services. Harrogate agrees to perform the following services in a
professional manner and in accordance with applicable industry
standards.
(a) This Agreement contemplates the personal services of Xxxxx
Xxxxxx and should Xx. Xxxxxx fail or become unable to perform such
services personally, then such failure will be deemed a breach of this
Agreement and Biomune may terminate the Agreement. Xx. Xxxxxx will
serve as the President of Biomune's Optim Nutrition, Inc. subsidiary
("Optim").
(b) For purposes of this Agreement, the term "Services" shall
include the following:
(i) identifying vitamin and nutritional supplement
formulations for marketing by Biomune through Optim, including,
but not limited to the NiteBite medical food bar and the Mountain
Lift food bars (collectively the "Products");
(ii) assisting and advising Biomune in negotiations with
vendors as to product formulation, manufacture, pricing,
packaging, delivery schedules, and all aspects of the Products;
(iii) assisting and advising Biomune in connection with
the preparation, design, content, style and production of all
literature, brochures, manuals, labels and other documentation
relating to the Products;
(iv) monitoring and advising Biomune concerning all
regulatory approvals, permits and issues relating to the Products,
including appropriate labeling, packaging and instructions;
(v) assisting and advising in connection with customer
support and training in the use of the Products;
(vi) formulating point-of-sale displays and marketing
literature and assisting in the creating of an over-all marketing
strategy for the Products;
(vii) attending trade shows, marketing seminars, and
similar events as directed by Biomune;
(viii) assisting in customer and distributor training and
promotion of Products;
(ix) monitoring and advising Biomune relative to
competitive issues pertinent to the Products.
(c) Notwithstanding the definition of Services, any demands of
Harrogate by Biomune will be reasonable in terms of volume of sales,
prior notice and availability.
3. Compensation.
(a) Fees. So long as this Agreement is in force, as compensation
for all Services rendered under this Agreement, Biomune will pay
Harrogate a fee (the "Marketing Fee") in an amount equal to forty-five
percent (45%) of gross revenues from the sale of the Products. At its
sole discretion and option, Biomune may pay part or all of such fee in
shares of its common stock; provided, that if it elects to do so, the
shares shall be valued at the fair market value of the common stock as
of the date of this Agreement ($0.20 per share).
(b) Expenses. Harrogate will finance its own operations and will
not be reimbursed by Biomune for any expenses incurred in connection
with the performance of Services under this Agreement. Harrogate will
not receive or accept any payment or consideration of any kind from or
on behalf of any Biomune vendor, or such vendor's officers, directors,
employees, subsidiaries, or related parties. Harrogate will assume and
pay from its funds all expenses (including, without limitation, legal
fees and costs) associated with the defense of the Xxxxxxx and Xxxxxx
litigation proceedings or will reimburse Biomune for any such expenses
paid by Biomune. If and to the extent that Biomune provides office
space, insurance, accounting or bookkeeping services or similar
services to Harrogate, Harrogate will reimburse or pay such expenses as
invoiced by Biomune. Biomune may, at its option, offset any amounts
owing under this Section 3(b) against the payment of fees under Section
3(a), above.
(c) Additional Consideration. As additional consideration for the
Services to be provided by Harrogate under this Agreement, Biomune
grants to Harrogate an options to purchase a total of 3,080,000 shares
of Biomune Common Stock at a price of $0.20 per share. It is understood
and agreed that of this amount, Olshen will receive an option to
acquire 80,000 shares of Common Stock. The options granted under this
section 3(c) will vest and become exercisable only as the exercise
thereof would not cause the holder, assuming exercise in full, to be
the beneficial owner of more than 5% of the issued and outstanding
Common Stock of Biomune. The options may be assigned or transferred to
employees, consultants and other affiliates of Harrogate or persons
providing services to Harrogate in furtherance of its duties under this
Agreement.
(d) commission of 10% of the value of certain sales contracts
payable in cash or stock or a combination thereof at the time of
execution of such sales contracts.
(e) Timing. Biomune will pay the Marketing Fee monthly, based on
the sales results of the previous month. Payment will be made within 15
days of the last day of each month and shall be accompanied by a
detailed accounting of all sales for such month, including where
practical, year-to-date information showing buyer and quantity
purchased.
4. Confidential Information.
(a) Proprietary and Confidential Information. As used in this
Agreement, "Proprietary and Confidential Information" will mean data,
techniques, technical information, know-how, equipment specifications,
or other information specifically designated as "Confidential
Information" during the term of this Agreement. Notwithstanding any
other provision of this Agreement, Proprietary and Confidential
Information will not include any information that is:
(i) independently developed by the receiving party;
(ii) becomes or is already available to the general
public without breach of this Agreement;
(iii) rightfully received by the receiving party from a
third party without obligation of confidence; or
(iv) released for disclosure by the disclosing party with
its written consent.
(b) Unilateral Transfer. Biomune does not desire to receive any
proprietary or confidential information of Harrogate or any third
party. Harrogate warrants and represents that none of the information,
Services, or results thereof shall contain any proprietary or
confidential information of Harrogate or any third party.
(c) Confidentiality Obligation. Harrogate agrees to use the same
care and discretion to avoid disclosure, publication or dissemination
of the received Proprietary and Confidential Information as it employs
for similar information of its own that it does not desire to publish,
disclose or disseminate, except to those employees or subcontractors of
Harrogate who have signed an agreement for protection of the
information and who have a need to know for purposes of achieving the
purposes of this Agreement.
(d) Return. Within thirty (30) days after termination of this
Agreement, Harrogate agrees to return or destroy all documents and
tangible items in its possession that contain any part of the
Confidential Information received by Harrogate or provide a certificate
of destruction if the information is destroyed.
(e) Limitations. This Agreement will not be interpreted to restrict
either party from using, disclosing or disseminating its own
Confidential Information in any way. Except as otherwise provided in
this Agreement, this Agreement will in no way preclude either party
from competing with the other or from independently developing, having
developed, acquiring or marketing any other material, products, and
services.
5. Representations. Harrogate represents and warrants as follows:
(a) that it is able to perform the Services and that it does not
have any understanding or agreement with anyone else which restricts
its ability to perform such services;
(b) that any Services it provides and information or materials it
develops for or discloses to Biomune will not in any way be based upon
confidential or proprietary information derived from any source other
than Biomune, unless Harrogate is specifically authorized in writing by
such source to use such proprietary information; and
(c) that if Biomune incurs any liability or expense as a result of
any valid claim that any of the above warranties is not true, Harrogate
will indemnify Biomune and hold it harmless against all such liability
or expense, including reasonable attorneys' fees, provided that Biomune
notifies Harrogate of the claim and cooperates with Harrogate in
defending against the claim. Harrogate will notify Biomune if it ever
becomes aware of any such claim.
6. Work for Hire. Everything Harrogate (including its employees) writes or
develops for Biomune or any copyrightable work created for Biomune while
performing the Services, provided that such writing or development is
contemplated by the Project, shall be works made for hire and therefore the
property of Biomune. In addition, Harrogate agrees to assign to Biomune all
right, title and interest in any invention, patentable or not, made or
conceived solely or jointly during the course of performing the Services and
related to or contemplated by the Project. Harrogate will promptly disclose
any such invention to Biomune and will, upon request, execute an assignment
to Biomune of any patent, trade secret or other proprietary right and will
do anything else reasonably necessary to enable Biomune to perfect its
rights therein. Harrogate will not license or grant any right to Products
developed under the Project to any other entity during the term of this
Agreement and it is acknowledged that the rights of Biomune under this
Agreement are exclusive worldwide.
(a) Preexisting Works. In the event that something Harrogate writes
or develops while performing the Services constitutes a derivative work
of any preexisting work, Harrogate shall provide Biomune with written
notification that indicates:
(i) the nature of such preexisting work;
(ii) its owner;
(iii) any restrictions or royalty terms applicable to
Harrogate's use of such preexisting work or Biomune's exploitation
of the deliverable as a derivative work; and
(iv) the source of Harrogate's authority to employ the
preexisting work in the preparation of any material required by
the Project Assignment.
Before initiating the preparation of any material that is a
derivative work of a preexisting work, Harrogate shall cause Biomune,
its successor, and assignees, to have and obtain an irrevocable,
nonexclusive, worldwide, royalty-free right and license to use such
derivative work(s) for any purpose whatsoever.
In the event that Harrogate fails to comply with this provision,
Harrogate shall grant and hereby grants to Biomune on behalf of itself
as well as each third party who has a color of title to the derivative
work(s) and such preexisting works as may be incorporated into the
derivative work(s) an irrevocable, nonexclusive, worldwide,
royalty-free right and license to use such derivative work(s) and
preexisting materials for any purpose whatsoever.
(b) Patent License. From any Services performed for Biomune under
this Agreement, Harrogate hereby grants to Biomune, its successors, and
assignees, the royalty-free, worldwide, nonexclusive right and license
under any patents developed for or owned by Harrogate, or with respect
to which Harrogate has a right to grant such rights and licenses, to
the extent required by Biomune to exploit the materials and exercise
its full rights in the same, including the right to make, use, and sell
products and services based on or incorporating such materials
developed under this Agreement or in connection with the Harrogate's
Services hereunder.
7. Exclusivity; Right to Purchase. The grant of marketing rights to
Harrogate hereunder is exclusive and Biomune agrees it will not appoint any
other party to represent the Products during the term of this Agreement.
Harrogate agrees to diligently provide the Services and promote sales of the
Products during the term hereof. In consideration of the grant of exclusive
rights to market the Products, Harrogate hereby grants to Biomune the
irrevocable right to acquire 100% of the equity interests of Harrogate in
exchange for $1,000,000 at any time so long as this Agreement is in full
force and effect.
8. Termination.
(a) By Either Party After September 30, 1999. After September 30,
1999, either party may terminate this Agreement at any time following
thirty (30) days written notice to the other party.
(b) By Either Party in the Event of Breach and Failure to Cure.
This Agreement may be terminated by either party at any time in the
event that the other party has not performed a material covenant or has
otherwise breached any material term of this Agreement upon receipt of
written notice thereof if the nonperformance or breach is incapable of
cure, or upon the expiration of 30 days after receipt of written notice
thereof if the nonperformance or breach is capable of cure and has not
been cured or significant steps have not been undertaken to effect such
cure.
(c) Certain Rights of Biomune. If Harrogate breaches this
Agreement, Biomune may (in addition to all of its other rights) require
Harrogate to give it all work in progress in exchange for reasonable
compensation based on the percentage of the work completed. Harrogate
acknowledges that its breach (or threatened breach) of any of its
obligations under Sections 4, 5, or 6 could irreparably injure Biomune
and Harrogate could not remedy the damage caused Biomune simply by
paying Biomune some amount of money.
(d) Limitation of Damages. OTHER THAN FOR BREACHES OF HARROGATE'S
OBLIGATIONS UNDER SECTIONS 4, 5, OR 6, IN NO EVENT WILL EITHER PARTY BE
LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INCIDENTAL OR SPECIAL
DAMAGES ARISING OUT OF ANY DEFAULT UNDER THIS AGREEMENT, WHETHER IN
CONTRACT OR TORT.
(e) Termination of Obligations. Upon termination of this Agreement,
all obligations of Biomune to pay Harrogate the compensation provided
for in Section 3 will cease. Termination of this Agreement will not
under any circumstances prevent or hinder Biomune from pursuing the
sale or marketing of the Products through third parties or otherwise
following such termination.
9. Dispute Resolution. Any dispute arising under this Agreement or its
interpretation will be resolved by arbitration in accordance with the rules
of the American Arbitration Association. Arbitration will occur in Salt Lake
City, Utah, with each party selecting one arbitrator and the two arbitrators
so selected choosing a third arbitrator. A decision of the majority of such
panel will be binding upon the parties and may be enforced in the courts of
the state of Utah in accordance with local law.
10. Non-competition. It is acknowledged and agreed by Harrogate that the
limitations imposed by Section 4 and Section 6 of this Agreement are
intended to prohibit and prevent Harrogate from competing in any way with
Biomune. Therefore, except as expressly permitted hereunder, Harrogate will
not, directly or indirectly, compete with Biomune as to the Project or the
Products during the term of this Agreement.
11. Miscellaneous.
(a) Harrogate will continue to be bound by all obligations
described in Sections 4, 5, 6 and 10 after the termination of this
Agreement for whatever reason.
(b) The laws of the state of Utah will govern this Agreement
(without regard to its laws governing conflicts of law). The parties
consent to the exclusive jurisdiction and venue of Utah state and
federal courts in any action arising out of this Agreement.
(c) This Agreement constitutes the entire agreement of the parties
regarding the subject matter hereof and supersedes all prior
representations, proposals, discussions, and communications, whether
oral or in writing. This Agreement may be modified only in writing and
shall be enforceable in accordance with its terms when signed by the
party sought to be bound.
(d) Harrogate will indemnify and hold Biomune harmless from all
loss and liability on account of claims of personal injury, death, and
property damages resulting from any act or omission by Harrogate
(including Harrogate's agents, employees, or subcontractors) in the
course of performing this Agreement. Biomune will indemnify and hold
Harrogate harmless from all loss and liability on account of claims of
personal injury, death, and property damages resulting from any act or
omission by Biomune (including Biomune's agents, employees, or
subcontractors) in the course of performing this Agreement.
(e) Harrogate agrees that it will not recommend to Biomune any
manufacturer of products unless said manufacturer will name Biomune as
an additional insured on a product liability policy of at least
$1,000,000 relating to the Products and agrees to provide Biomune with
copies of such policies and proof of insurance upon request.
(f) Neither this Agreement nor any of the rights or obligations of
Harrogate arising under this Agreement may be assigned or transferred
without Biomune's prior written consent. This Agreement is for the
benefit of Biomune's successors and assignees, and will be binding on
Harrogate's heirs and legal representatives.
(g) If either party cannot perform any of its respective
obligations because something has happened which is beyond its
reasonable control, then the non-performing party will notify the other
party, take reasonable steps to resume performance as soon as possible
and not be considered in breach during the period performance is beyond
the party's reasonable control.
(h) In the event that any term or provision of this Agreement will
be deemed by a court of competent jurisdiction to be overly broad in
scope, duration or area of applicability, the court considering the
same will have the power and is hereby authorized and directed to limit
such scope, duration or area of applicability, or all of them, so that
such term or provision is no longer overly broad and to enforce the
same as so limited. Subject to the foregoing sentence, in the event any
provision of this Agreement will be held to be invalid or unenforceable
for any reason, such invalidity or un-enforceability will attach only
to such provision and will not affect or render invalid or
unenforceable any other provision of this Agreement.
(i) Either party's waiver of a default by the other does not
constitute a waiver of future or other defaults.
(j) Harrogate is performing services for Biomune as an independent
contractor, and the parties are not partners or joint venturers.
Neither party may bind the other to any agreement with anyone else.
Harrogate shall not represent that Harrogate is or ever has been an
employee of Biomune. It is acknowledged that Harrogate is owned by a
former executive officer and director of Biomune and by the present
manager of a majority owned subsidiary of Biomune. The parties
acknowledge the conflict inherent in such relationships and waive any
claim of conflict of interest that may arise as a result of this
business transaction. The parties believe the terms of this Agreement
are fair to all parties and were negotiated at arms' length. Counsel
for Biomune participated in the preparation of this Agreement and has
advised each party that it should consider seeking independent legal
counsel in connection with this transaction. To the extent the parties
have not sought the advice of independent legal counsel, they waive
such right.
(k) Harrogate will be solely responsible for and must maintain
adequate records of expenses incurred in the course of performing
services under this Agreement. No part of Harrogate's compensation will
be subject to withholding by Biomune for the payment of any social
security, federal, state or any other employee payroll taxes. Biomune
will regularly report amounts paid to Harrogate by filing Form
1099-MISC with the Internal Revenue Service as required by law.
(l) Each provision of this Agreement has been subject to the mutual
consultation, negotiation and agreement of Biomune and Harrogate and
shall not be construed for or against either party.
[SIGNATURES ARE ON THE FOLLOWING PAGE.]
ACKNOWLEDGED AND AGREED, this 31 day of December 1998, effective December 10,
1998.
Biomune Systems, Inc.
By: /s/ Xxxxxxx X. Xxxxx
------------------------
Its: President/CEO
Date: December 31, 1998
Harrogate Marketing, L.L.C.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------
Its: Manager
Date: December 31, 1998
