SERVICE AGREEMENT
between
1) Axel Kleinkorres Promotionsagentur, proprietor Axel Kleinkorres,
registered offices at Xxxxxxxxxx. 000 X-00000 Xxxxxxxxxx
- referred to hereinafter as "Promotion agency" -
and
2) Sangui Bio Tech International, Inc., registered offices at
0000 Xxxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx 00000, U.S.A
represented by the company's President and CEO, J rg Alte
- referred to hereinafter as "Sangui " -
WHEREAS, Sangui Bio Tech International is a U.S American corporation with
business interests in the research, development, manufacture and distribution of
diagnostic, pharmaceutical and medical products. While diagnostic equipment is
developed, manufactured and distributed in the U.S., SanguiBioTech AG, a 100 %
subsidiary of Sangui Bio Tech International, Inc., does the research and
development for an artificial oxygen carrier, which shall be used both as a
blood volume substitute and as a blood oxygen additive. GlukoMediTech AG, also a
100 % subsidiary of Sangui Bio Tech International, Inc., is engaged in the
research and development of a glucose sensor for long-term implantation.
WHEREAS, the Axel Kleinkorres Promotions Agency is a newly established company,
the staff and/or partners of which have gained a wealth of experience in the
field of advertising, promotion, design media work and lobbying and who have
successfully carried out commissions and assignments for renowned German and
international groups in these fields of activity.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1 SUBJECT OF THE AGREEMENT
(1) Sangui (the "corporation") commissions the promotion agency to provide
consulting, planning and supervising services for the public relations of the
corporation and its subsidiaries as well to conduct and follow up such public
relations services.
(2) The work of the promotion agency includes, but is not limited to the
following activities:
- planning, designing and placing advertisements and carrying out
advertising measures of all kinds, involving especially the printing and
broadcasting media;
- planning and conducting the public relations and providing consulting
services in this field, especially with regard to approaching political
organizations, authorities as well as public and private institutions in the
medical sector, in the media industry and in the financial and investment
sector;
- drawing up and doing the art work for a Corporate Design,
- planning the external presentation of the corporation and its individual
companies and providing consulting services in this field, especially for
political decision-making bodies and other political institutions, for
authorities, for public and private institutions in the medical sector as well
as sponsors of grants;
- planning, organizing and conducting information events and the
participation in fairs, especially in the Medica at D sseldorf.
- planning, designing, setting up and updating the corporate homepage in the
internet with comprehensive information about the corporation.
(3) The promotion agency shall render its individual services only at
Sangui's explicit request and by meeting the job specifications. Publications
referring to the corporation in particular shall only be published after having
obtained prior approval.
ARTICLE 2 REMUNERATION
(1) In consideration for the services detailed above, the promotion agency
shall receive 2 600 000 (in words: two million six hundred thousand) shares of
common stock at no par value in Sangui Bio Tech International, Inc.
(2) All and any claims of the promotion agency arising from this agreement
for the services to be rendered shall be settled with the transfer of the
shareholding. This shall include all labor, manufacturing, material and
production costs, the travelling, entertainment and any other expenses incurred
by the promotion agency, by sub-contractors or by third parties. Nor shall any
further claims arise for the expenses and fees of third parties, incurred
especially in connection with the services rendered by the promotion agency,
such as fees and charges for fairs and exhibitions, including the ancillary
costs and charges for advertising.
Not included in the above remuneration shall be the composition, printing
and manufacturing costs for equipping the company with suitable material, such
as printed note papers, packaging material, information brochures etc.
Internal labor, manufacturing and material costs shall be borne exclusively
by Sangui.
(3) All any claims of the promotion agency arising from the services
rendered between 1998 and the conclusion of the agreement shall also be covered
by the above settlement.
(4) The corporation's common stock shall be transferred to the promotion
agency within three (3) months after the conclusion of this agreement.
ARTICLE 3 TRANSFER OF STOCK
(1) The shareholding is made up of so-called Reg-S shares which are subject
to certain restrictions. They must not be sold or transferred in any other way
in the sense of the US Securities Exchange Act within the United States or to a
US citizen within 12 (twelve) months.
(2) The stock is transferred on the basis of the Offering Memorandum of
April 15, 1998, of the Sales Prospectus of July 27, 1998 (published by the D
sseldorf-based "Euro-American Beteiligungsvermittlungsgesellschaft") and of the
Subscription Agreement of April 27, 1999. The three documents form a substantial
part of this agreement and have been attached in Annexes 1-3. The promotion
agency explicitly confirms to have read and fully understood the contents of
these annexes, especially the references as to the risks involved, including the
risks concerning the so-called xxxxx shares and the restrictions concerning the
Reg-S shares.
(3) It has been mutually agreed to assume a stock value of US-$ 1.50/share.
This value shall only be used as a guideline and calculation basis. It does not
represent any promise or any other guaranty of the corporation as to the current
or future value of the shareholding or as to the possible or actual revenue if
the shareholding was sold. The promotion agency accepts the shareholding without
reservations as the only and full consideration for the services to be rendered
under this agreement. The shareholding can only be sold or used in any other way
on behalf of and for the sole account and the risk of the promotion agency. No
claims whatsoever shall arise towards Sangui as to the sale, the realizability
or the sales revenue of the shareholding.
(4) The claim to the transfer of the stock cannot be assigned or pledged.
ARTICLE 4 TERM OF AGREEMENT; TERMINATION
(1) The agreement shall become effective on the day of execution and remain
in force until December 31, 2000.
(2) The agreement can only be terminated by either party for good reason.
The termination shall be communicated by registered letter. Good reasons shall
mean especially, but is by no means limited to the following occurrences, if one
of the contracting parties
- is verging on insolvency, or becomes otherwise insolvent, especially when
bankruptcy proceedings or court composition proceedings are opened against the
contracting party concerned or a petition in bankruptcy is dismissed for
insufficiency of assets;
- fails to perform its contractual duties to a more than negligible extent
and does not meet its commitments despite having been requested in writing to
set things right within a reasonable period of at least 30 days;
- has published confidential information about the other party without
having been duly authorized to do so or has disclosed such information in any
other way to third parties, is trading such information or is found to have
misused it in any other way.
(3) If the agreement is terminated by Sangui for good reason, Sangui shall
be entitled to request the payment of 225 000 shares of common stock at a price
of US-$ 1.50 each for each and every unfinished calendar month until the agreed
expiration date of the agreement.
ARTICLE 5 RESTRAINT OF COMPETITION
(1) During the term of this agreement, the promotion agency itself or in the
guise of a third party shall not act in the same or in a similar capacity for
any third party that is directly competing with Sangui or any of its
subsidiaries, neither for the own account of the promotion agency nor for the
account of any third party, neither directly nor indirectly.
(2) The promotion agency shall neither directly nor indirectly participate
or take a financial interest in any competitor company of Sangui.
(3) This restraint of competition is deemed to have been settled by the
remuneration agreed in Article 3 above.
ARTICLE 6 WARRANTY
(1) The promotion agency shall undertake to render all services due under
the agreement with the due care and diligence of a prudent businessperson and
pursuant to the standards prevailing in the industry. The promotion agency shall
report regularly about the progress made in rendering its services and consult
Sangui about its work. Both parties shall designate contacts who are responsible
for the coordination and the mutual communication.
(2) The promotion agency shall assign at least two suitably qualified staff
for 40 hours per month each to the performance of this agreement and make
available sufficient human and equipment resources at any time for discharging
its contractual duties.
(3) The promotion agency shall not be entitled to represent Sangui or any of
its subsidiaries or to make any other legal or business representations on their
behalf or to act on behalf of Sangui, unless an explicit written commission has
been received which shall be restricted to an individual assignment in any case.
ARTICLE 7 CONFIDENTIALITY
(1) The contracting parties shall undertake to maintain the strict secrecy
concerning the confidential information and the documents of the other party.
The contracting parties shall pledge its staff and any third parties having
access to such confidential information and documents to maintain the same kind
of secrecy for the term of the agreement and beyond.
(2) The promotion agency shall especially ensure that no confidential
information relating to the exchange of Sangui's shareholding will be used,
neither for its own purposes nor in the interest of third parties. Furthermore,
the promotion agency shall pass on to Sangui the names of all persons having
access to such information, which is to ensure sufficient control over all
persons who might indulge in xxxxxxx xxxxxxx.
ARTICLE 8 FINAL PROVISIONS
(1) Should any individual provision of this agreement be or become
ineffective, the validity of the remaining provisions shall in no way be
affected. In such case the contracting parties shall undertake to replace the
ineffective provision by relative provisions coming as close as possible to the
commercial purpose of the ineffective provision. The same shall apply in the
case of a loophole.
(2) Modifications and amendments to this agreement shall be made in writing
in order to become legally effective. The same shall apply to the amendment of
this clause requiring written amendment.
(3) This agreement shall be governed by the laws of the Federal Republic of
Germany, except the transfer and issue of the stock, which shall be governed by
the laws of the State of California. The place of jurisdiction for any legal
disputes arising from or about this agreement shall be the registered offices of
Sangui or any of its subsidiaries.
Xxxxxxxxxx, Xxxxx 00, 0000
Xxxx Xxxxxxxxxxx Promotionsagentur Sangui Bio Tech International,
Inc.
(Signature) (Signature)
_______________________________ _______________________________
Axel Kleinkorres Joerg Alte,
President and CEO
