Exhibit 10.5
Form 10-KSB, 2001
Viral Genetics, Inc.
File No. 000-26875
SERVICES AGREEMENT
SERVICES AGREEMENT dated as of March 25, 2002 (this "Agreement"), by and
between L&M Global Ventures, Inc., a Delaware corporation, having an address at
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Company"), and Viral
Genetics, Inc., a Delaware corporation, having an address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ("Viral Genetics").
WHEREAS, Viral Genetics has entered into a mutual cooperation and joint
venture agreement with New York International Commerce Group, Inc., a Nevada
corporation ("NYIC Group") of even date herewith (the "Cooperative Venture"), a
copy of which is annexed hereto;
WHEREAS, the Company introduced the representatives of Viral Genetics to
the representatives of NYIC Group, culminating in the negotiation and execution
of the Cooperative Venture; and
WHEREAS, in return for the introduction to NYIC Group, Viral Genetics
wishes to compensate the Company by granting the Company a finder's fee
consisting of five percent (5%) of the Gross Profits, as herein defined, earned
by the participation of Viral Genetics in the Cooperative Venture, as well as
certain shares of common stock of Viral Genetics, upon the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and legal
adequacy of which is hereby acknowledged, the parties hereby agree as follows:
1. Finder's Fee The Finders Fee shall consist of a Royalty and delivery of
common shares of Viral Genetics upon the terms and subject to the conditions as
follows:
a) Royalty; Payment
i) Within the term of this Agreement, for so long as revenues are
received pursuant to any relationship established by reason of the
Cooperative Venture, said revenues limited to those obtained and collected
within the Territory, as defined therein, Viral Genetics shall pay to the
Company, and the Company shall be entitled to, an amount equal to five
percent (5%) of the Gross Profits received by Viral Genetics as a result of
its participation in the Cooperative Venture ("the Royalties"). For the
purposes hereof, the term "Gross Profits" shall be as defined in the mutual
cooperation and joint venture agreement executed in connection with the
Cooperative Venture, and annexed hereto.
ii) Subject to the resolution of any Dispute under Section 1 (a) (iii)
hereof, thirty (30) days after the end of each fiscal quarter during the
Term, commencing the first fiscal quarter during which revenues are earned
and collected by Viral Genetics under the Cooperative Venture, (1) Viral
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Genetics shall deliver to the Company a quarterly statement of income
clearly defining the Gross Profits attributable to the Cooperative Venture
for the period then ended (the "Net Revenues Statement"), which Net
Revenues Statement shall be prepared in accordance with generally accepted
accounting principles (GAAP), as defined in the United States of America by
the Financial Accounting Standards Board; provided, however, that any such
preparation shall also be in a manner consistent with the definition of
"Gross Profits" and (2) concurrently with the rendering of the Net Revenues
Statement, Viral Genetics shall pay to the Company the amount of Royalties
deemed owing for that quarter based upon the Net Revenues Statement. Viral
Genetics will maintain at its principal corporate office books of account
and records with respect to the calculation of Gross Profits, Net Revenues,
Net Revenues Statements and Royalties attributable to the Cooperative
Venture.
iii) The Company shall have twenty (20) business days after receipt by
it of the Net Revenues Statement (the "Dispute Period") to dispute the
determination of Gross Profits, Net Revenues and Royalties, together with
any item, calculation or amount, or the method of calculation of any item
or amount, reflected in the Net Revenue Statements or any accompanying
accounting notes thereto (a "Dispute"). If the Company does not give
written notice of a Dispute (a "Dispute Notice") to Viral Genetics within
the Dispute Period, the Net Revenues Statement (and any accompanying
accounting notes) shall be deemed to have been accepted by the Company in
the form in which it was delivered by Viral Genetics. In connection with
the Company's review of the Net Revenues Statement pursuant hereto, Viral
Genetics shall, within a reasonable period of time and in a manner that
does not interfere with the conduct of its regular and ongoing business,
provide to the Company and its accountants and representatives full access
to Viral Genetics' books, records and inventory. In the event that the
Company does not agree with the Gross Profits, Net Revenues and/or
Royalties or any item, calculation or amount, or the method of calculation
of any item or amount, reflected on the Net Revenues Statement, the Company
shall give Viral Genetics a Dispute Notice within the Dispute Period,
setting forth the basis of its disagreement, and Viral Genetics and the
Company shall, within fifteen (15) days after receipt by the Viral Genetics
of such Dispute Notice, attempt to resolve such Dispute and agree in
writing upon the Net Revenues Statement and the amount of any Royalties. In
the event that the Company and Viral Genetics are unable to resolve any
such Dispute within the fifteen (15) day resolution period, then a
nationally recognized certified public accounting firm as may be mutually
agreed upon by the Company and Viral Genetics (the "Arbitrator") shall be
employed as arbitrator hereunder to settle such Dispute as soon as
reasonably practicable. If the Company and Viral Genetics are unable
mutually to agree upon the selection of a nationally recognized certified
public accounting firm, then the parties agree to the appointment of a
nationally recognized certified public accounting firm by the American
Arbitration Association ("AAA"). The parties agree that the Arbitrator
shall decide only the matters involved in the Dispute and not any other
matters, and shall have no other authority hereunder, other than to
calculate the Gross Profit, Net Revenue and/or Royalties, based upon the
Arbitrator's determination of the Dispute. The Arbitrator's determination
with respect to any Dispute shall be final and binding on all parties and
not subject to appeal on any ground, and judgment on the arbitration award
may be enforced in any court having jurisdiction over the subject matter of
the controversy. If such final determination results in an additional
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payment to the Company, then Viral Genetics shall pay the fees and expenses
of the Arbitrator and the reasonable attorneys' fees and expenses, if
applicable, incurred by the Company in connection with the arbitration. If
the final determination results in no additional payment to the Company or
the Company is being required to refund amounts previously paid to the
Company, the Company shall pay the fees and expenses of the Arbitrator and
the reasonable attorneys' fees and travel expenses, if applicable, incurred
by the Viral Genetics in connection with the arbitration.
b) Common Shares. Subject to paragraph (c) below, Viral Genetics shall
issue to the Company one million (1,000,000) common shares (the "Shares") of
Viral Genetics, which Shares shall be placed in escrow, to be released to the
Company from escrow, in increments of 250,000 shares, upon the occurrence of the
following:
i) Receipt by Viral Genetics of full payment for each $50,000,000
worth of Viral Genetics' Products (as defined in the Cooperative Venture)
sold pursuant to the Cooperative Venture. Each additional $50,000,000
increment of payments for the sale of Products shall result in an
additional 250,000 shares being released from escrow, up to maximum of
1,000,000 shares. The Shares shall be restricted under Rule 144 as
promulgated by the Securities and Exchange Commission, and shall carry
piggyback registration rights with management; and
ii) Receipt of payment for each 250,000 installment of the Shares
(each, a "Tranche") by Viral Genetics, as follows:
a. $62,500 as to the first Tranche
b. $125,000 as to the second Tranche
c. $125,000 as to the third Tranche
d. $437,500 as to the fourth Tranche.
c) Termination of Cooperative Venture; Return of Shares. Any remaining
escrowed Shares shall be returned to Viral Genetics for cancellation and the
Company shall not receive and shall not be entitled to any further
consideration, including, without limitation, any such remaining escrowed Shares
or any Royalties not yet earned in the event that any portion of the Shares are
not released from escrow:
i) prior to the termination of this Agreement or the Cooperative
Venture, except in the event that the requirements of Section 1(b) (i) and
(ii) have been performed and the failure to release any portion of the
remaining escrowed Shares is as a result of the escrow agent's negligence;
or
ii) after the one year anniversary of the reinstatement and extension
of this Agreement and the Cooperative Venture, except in the event that the
requirements of Section 1(b) (i) and (ii) have been performed and the
failure to release any portion of the remaining escrowed Shares is as a
result of the escrow agent's negligence; or
iii) due to failure to perform either of the requirements of Section 1
(b) (i) or 1 (b) (ii) by the appropriate parties contemplated therein.
2. Mutual Representations and Warranties. Each of the Company and Viral
Genetics represents and warrants to the other and agrees for the benefit of the
other that:
a) it has the power and authority to execute, deliver and perform this
Agreement and is not bound by any contract, agreement or other commitment,
restriction or limitation which would hinder or in any way restrict such
performance;
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b) it has duly authorized the execution, delivery and performance of this
Agreement in accordance with all applicable corporate power and authority;
c) no consent from, notice to or filing with any third party is required in
connection with its execution, delivery or performance of this Agreement;
d) the Company acted as an independent finder in introducing the parties
that culminated in the Cooperative Venture and none of the Company's officers or
directors serves in a similar capacity for either NYIC Group or Viral Genetics;
and
e) this Agreement constitute its legal, valid and binding obligation,
enforceable against it in accordance with their respective terms.
3. Confidentiality.
a) The Company and Viral Genetics each acknowledge that from time to time
during the Term the Company and Viral Genetics, as applicable, may gain access
to and become acquainted with various trade secrets and other confidential and
proprietary information of the other, including, without limitation, business
strategies, operating plans, financial information, market analysis, personnel
information, product information, report and data, formulas, product-testing
information, processes, sources of leads and methods of obtaining new business,
know-how, customer lists and relationships, contact lists and relationships,
supply, manufacturing and distribution methods or any other methods of doing and
operating the business of each of the Company and Viral Genetics and any of
their respective subsidiaries or affiliates, including entities that are
acquired by the Company or Viral Genetics, their subsidiaries or any of their
affiliates (the "Confidential Information"). The Company and Viral Genetics
covenant and agree that they will not, whether during the Term or at any time
thereafter, disclose, directly or indirectly, or make available to any person,
corporation, firm, or other entity, or in any manner use for their own benefit,
any Confidential Information or trade secrets relating to the business and
operations of the Company or Viral Genetics, The foregoing restrictions shall
not apply to any Confidential Information which
i) is or becomes generally available to the public through no action
by the party making disclosure;
ii) is or becomes available to the party making disclosure on a
non-confidential basis from a source, who, to the knowledge of the party
making disclosure, is not bound to a confidentiality agreement or similar
restriction; or
iii) is disclosed pursuant to applicable federal, state or local laws
or regulations or pursuant to subpoena or judicial order.
b) The Company and Viral Genetics acknowledge that because the breach or
attempted or threatened breach of any of the provisions of this Section 3 may
result in immediate and irreparable injury to the non-breaching party for which
such party may not have an adequate remedy at law and for which monetary damages
are not readily calculable, each of the Company or Viral Genetics, as
applicable, shall be entitled to obtain injunctive or other equitable relief
restraining and prohibiting such breach or threatened breach, including, without
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limitation, a temporary and permanent injunction, enjoining any such breach or
attempted or threatened breach (without being required to post a bond or other
security or to show any actual damages). The right to an injunction and other
equitable relief shall be in addition to, and cumulative with, all other rights
and remedies available to the Company or Viral Genetics at law, in equity or
otherwise.
4. Term and Termination. The term of this Agreement shall be
contemporaneous with the Cooperative Venture. This agreement shall be terminable
immediately and at any time with the mutual written consent of the parties, or
upon termination of the Cooperative Venture; provided, however, that this
Agreement shall be reinstated in the event of the reinstatement of the
Cooperative Venture, as provided in Section 2 (a) (ii) therein.
5. Assignment. This Agreement shall be binding upon and inure the benefit
of the parties hereto and their respective successors (by merger, consolidation
or sale of all or substantially all of the assets of such party) and permitted
assigns. This Agreement may not be assigned by either party, without the prior
written consent of the other party hereto.
6. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California, without regard to its
conflicts of law principles. This Agreement shall not be construed or
interpreted with any presumption against the party causing this Agreement to be
drafted.
7. Entire Agreement. This Agreement constitutes the complete and exclusive
understanding and agreement between the parties with respect to the subject
matter hereof, superseding and replacing any and all prior agreements,
communications, and understandings (both written and oral) regarding such
subject matter all of which are merged herein. There are no representations,
promises or understandings regarding such subject matter, except to the extent
expressly set forth herein.
8. Remedies Cumulative; Invalidity. All remedies, rights, undertakings,
obligations and agreements contained in this Agreement shall be cumulative, and
none of them shall be in limitation of any other remedy, right, undertaking,
obligation or agreement available to either of the parties hereto. The
invalidity, illegality or unenforceability of any term or provision contained in
this Agreement (as determined by a court of competent jurisdiction) shall not
affect the validity, legality of enforceability of any other term or provision
hereof. It is the intent of the parties that this Agreement be enforced to the
fullest extent permitted by applicable law.
9. Waiver; Amendment. No waiver by a party of any breach of any provision
of this Agreement shall be deemed to be a waiver of any preceding or subsequent
breach of the same or similar nature or of any other provision of this
Agreement. Any waiver shall be limited to the specific instance and purpose for
which it is given. Any amendment, modification or waiver of any term or
provision of this Agreement shall only be effective if such amendment,
modification or waiver is evidenced by an instrument in writing duly executed by
each of the parties hereto.
10. Relationship of Parties; Expenses. Nothing contained herein shall be
deemed to constitute a partnership between, or a joint venture by or employment
relationship between or among the parties hereto. This Agreement is between two
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independent contracting parties. Nothing herein is intended nor shall it make
either party a fiduciary of the other party.
11. Notices. All notices, demands, consents, requests, instructions and
other communications to be given or delivered or permitted under or by reason of
the provisions of this Agreement or in connection with the transactions
contemplated hereby shall be in writing and shall be deemed to be delivered and
received by the intended recipient as follows: (a) if personally delivered, on
the business day of such delivery (as evidenced by the receipt of the personal
delivery service), (b) if mailed certified or registered mail return receipt
requested, four (4) business days after being mailed, (c) if delivered by
overnight courier (with all charges having been prepaid), on the business day of
such delivery (as evidenced by the receipt of the overnight courier service of
recognized standing), or (d) if delivered by facsimile transmission, on the
business day of such delivery if sent by 6:00 p.m. in the time zone of the
recipient, or if sent after that time, on the next succeeding business day (as
evidenced by the printed confirmation of delivery generated by the sending
party's telecopier machine). If any notice, demand, consent, request,
instruction or other communication cannot be delivered because of a changed
address of which no notice was given (in accordance with this Section 11), or
the refusal to accept same, the notice, demand, consent, request, instruction or
other communication shall be deemed received on the second business day the
notice is sent (as evidenced by a sworn affidavit of the sender). All such
notices, demands, consents, requests, instructions and other communications will
be sent to the addresses as first set forth herein. A copy of any notice to the
Company shall be sent to: Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, The Chrysler
Building, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Attn: ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.); Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇. A copy of any notice to Viral Genetics
shall be sent to: Viral Genetics, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, (Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇); Fax No: (▇▇▇) ▇▇▇-▇▇▇▇.
12. Currency. All references to currency in this agreement are to the
lawful currency of the United States of America.
13. Headings. Section headings have been inserted herein for convenience of
reference only and shall not have any impact on the construction or
interpretation of this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, each of
which, when taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has duly executed this Agreement as
of the day and year first above written.
L&M GLOBAL VENTURES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
VIRAL GENETICS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
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