INDEPENDENT CONSULTING AGREEMENT
THIS AGREEMENT dated this 9th day of July, 1997, is entered into by and
between Biomune Systems, Inc., a Nevada corporation ("Biomune") and Andela
Group, Inc., a California corporation ("Andela") and Ira E. Ritter, an
individual residing in California ("Ritter").
RECITALS:
A. The business of Biomune requires substantial assistance from an
experienced marketing and distributing management consultant;
B. Andela is a California corporation owned by Ritter. Ritter and
Andela have the requisite marketing and distributing management qualifications
and experience desired by Biomune and Ritter is employed by Andela as its
President;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:
1. Engagement. Biomune hereby engages Andela, and Andela hereby
agrees to provide services through Ritter to or for Biomune, on the terms and
conditions set forth herein. It is agreed that Ritter shall be named
President of Biomune and serve in such office during the term hereof.
2. Duties. In his capacity as President of Biomune, Ritter shall
devote such portion of his time and attention as may be reasonably required to
assist in the commercialization, marketing, distribution and sale of Biomune's
products and technology, promoting the general business interests of Biomune
and to locating and assisting in development of new products of Biomune. He
shall not have responsibility for the day-to-day management of Biomune.
Except as provided above and subject to the limitations set forth in Paragraph
3, below, Ritter's duties as President shall be as outlined in the Bylaws of
Biomune and he shall at all times be under the direction of the Chief
Executive Officer and the Board of Directors of Biomune. The exact scope of
Ritter's duties hereunder may be reasonably enlarged or modified hereafter by
the Board of Directors of Biomune; provided that the duties, as expanded or
modified, shall relate to the same types of matters described above. Andela
and Ritter hereby represent that neither of them is under any obligation or
restriction which would in any way interfere or be inconsistent with, or
present a conflict of interest concerning, the services to be furnished to
Biomune under this Agreement. Andela further warrants that it will not enter
into any such obligation or restriction prior to the termination of this
Agreement. Andela shall comply with all rules, policies and procedures
established by Biomune for the conduct of its business.
3. Limitation of Authority. During the term hereof, Andela shall not
have authority to engage any additional consultants, attorneys, employees,
agent and/or accountants or to incur any expenses except as may reasonably be
required for the performance of its duties hereunder. Except for the
consulting fee to be paid hereunder to Andela, all commissions, salary, taxes,
travel costs, office supplies and other expenses incurred by Andela in
connection with its other business or the employment or engagement of its
other employees, consultants, attorneys, agents and/or accountants shall be
paid by Andela. Andela shall maintain its own liability insurance and health
insurance for all of its employees, including Ritter. Andela shall not
have the right or authority to bind Biomune or to create any obligation on its
behalf. Ritter shall have the authority given him by the Bylaws and the Board
of Directors of Biomune.
4. Term. The term of this Agreement shall commence upon execution
hereof and shall continue uninterrupted through and including June 30, 1998
from the date hereof, unless the parties shall then mutually agree to extend
the term hereof or unless it is terminated as provided elsewhere herein.
5. Compensation. For services rendered, Biomune shall pay to Andela
a consulting fee in the sum of FIFTEEN THOUSAND DOLLARS ($15,000.00) per
month. Such fee shall be paid monthly in advance, not later than the 5th day
after the close of the previous month, provided, however, that if such day is
a Saturday, Sunday or other legal holiday, then payment shall be made on the
next business day following such date; provided further, that the initial
payment shall be made on the date hereof. If any payment is made more than
fifteen days from the date such payment is due, then Biomune shall pay a late
payment fee of 5% of the amount of such payment.
6. Royalty. It is agreed that in addition to the consulting fee
described under Paragraph 5, above, Biomune shall pay a royalty to Ritter or
his assign, equal to 5% of the gross revenues from any new product line or
distribution opportunity realized by Biomune as a direct result of Ritter's
efforts hereunder. The royalty shall be paid monthly, no more than 30 days
after the end of the month in which the revenues are recognized. This
obligation shall survive the expiration or termination of this Agreement.
7. Expenses. Andela shall be reimbursed promptly, and in any event
within 14 days, for any and all ordinary and reasonable costs or expenses
incurred by Ritter in the performance of and relating to the consulting duties
hereunder. For record keeping and business analysis purposes, Andela shall at
least once each calendar month provide expense account reports in a manner
agreed upon by Biomune and Andela. Andela shall maintain its own records of
such expenses in sufficient form and content to comply with applicable state
and federal regulations. Expenses shall be subject to approval in advance by
Biomune.
8. Non-Disclosure. Andela and Ritter covenant and agree that:
a. Biomune's technology, know-how, product plans and specifications,
records, business concepts and other plans and information acquired by Andela
or Ritter in the course of their engagement by Biomune in any capacity
whatsoever, as such may exist from time to time, are valuable, special and
unique assets of Biomune. Neither Ritter nor Andela will, during or after the
term of this Agreement, disclose any such information to any person or entity
for any reason or purpose outside of Biomune's usual business activities as
defined hereunder, nor in any manner directly or indirectly aid or be a party
to any acts, the effects of which would tend to divert, diminish or prejudice
the technology, good will, business or business opportunities of Biomune. In
the event of a threatened breach by Andela or Ritter of the provisions of this
paragraph, Biomune shall be entitled to an injunction restraining Andela or
Ritter, as the case may be, from disclosing any such information or from
rendering any services to any person or entity to whom any such information
has been disclosed or threatened to be disclosed. Nothing herein shall be
construed as prohibiting Biomune from pursuing any other remedies available to
Biomune for actual breach of the provision of this paragraph, including the
recovery of damages from Andela and Ritter.
b. The covenants made by Andela and Ritter under this paragraph 8 shall
survive the expiration or termination of this Agreement.
9. Termination. Andela agrees that after ten (10) days written
notice of specific instances of gross negligence or illegal acts, without
curing the same after such notice, Biomune has the absolute right to terminate
the engagement of Andela and to terminate this Agreement with no further
obligations to Andela. Any payments due to Andela but not yet then provided
or paid out under the terms of this Agreement will be paid in the normal
manner following such termination. This Agreement shall terminate upon the
earlier of the Second Closing Date or the expiration or termination of the
Option, as such terms are defined in that certain Securities Purchase
Agreement dated as of July 9, 1997 by and among Biomune, Ritter and Rockwood
Investments, Inc. ("Rockwood").
10. Covenants of Consultant. Andela and Ritter, jointly and
severally, hereby promise and covenant that in the course of their performance
under this Agreement, they shall not, individually or collectively:
a. Interfere with any existing relationship between Biomune and any
person or entity who presently or during the term of this Agreement conducts
business or trades with Biomune;
b. Unless otherwise expressly directed by Biomune, have any
discussions concerning Biomune or any aspect of its business with any persons
known to either of them to be employed by or represent news media;
c. Adopt or urge a position with commissioners, representatives,
senators, legislators or other governmental policymaking bodies contrary to
the interests of Biomune as those interests are expressly stated by Biomune;
d. Testify as an expert witness against Biomune in any proceeding or
dispute; and
e. directly or indirectly, in any capacity, engage or participate
in, or become employed by or render advisory or consulting or other services in
connection with any business and any branch, office or operation thereof,
which is a competitor of Biomune in providing similar goods and services to
the biopharmaceutical or nutraceutical markets.
Notwithstanding the foregoing and the covenants set forth in herein, Biomune
acknowledges that although the parties agree that Ritter and Andela shall
devote substantial time and effort to the performance of their duties
hereunder, (i) Ritter, directly and indirectly (including through Andela
and/or Rockwood), is presently the owner of certain entities engaged in
manufacturing, marketing, distributing and promoting vitamins, health and
personal care products, cosmetics and nutritional supplements; for his own accou
nt and for third parties, (ii) Ritter presently anticipates that he will seek
to continue to operate such businesses and to seek additional opportunities in
these and in other fields where he may take advantage of his knowledge,
expertise and experience in marketing and distribution; and (iii) Ritter has a
variety of business interests which occupy and require much of his time and
attention. Therefore, Biomune agrees that in connection with Andela and
Ritter's performance of the services described above, (A) Ritter may actively
pursue those business interests in which he is now engaged or in which he may
become engaged during the term of this Agreement, provided the same do not
violate the terms of the foregoing covenants, and (B) on infrequent occasion
and from time to time, Ritter may not be immediately available to provide
services to Biomune as and when requested by Biomune. Ritter agrees to keep
Biomune fully apprised of his personal schedule at all times and to devote
such time as is required by Section 2 of this Agreement to his duties
hereunder.
11. Services of Ritter Personal. The parties agree that the services
of Ritter are material to and a condition of this Agreement. If at any time
and for any reason during the term hereof, Ritter shall die or become
permanently incapacitated (as certified by a doctor mutually acceptable to the
parties) or otherwise unable to continue to perform the duties and services
contemplated by Biomune to be provided hereunder, then Biomune may terminate
this Agreement immediately without any further obligation or duty to Andela
or any other person hereunder.
12. Independent Contractor. Andela is an independent contractor
under this Agreement. This Agreement does not establish a partnership or
joint venture. Andela is solely responsible for its employees, including the
terms of employment, wages, hours, required insurance and daily direction and
control.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts together shall constitute one and the same
instrument.
14. Attorney Fees and Costs. The parties agree that should either
party default in any of the covenants contained herein, the defaulting party
will pay all costs and expenses, including reasonable attorneys' fees, which
may arise from the enforcement of this agreement, whether such enforcement is
pursued by filing of a suit or otherwise. This Agreement is governed by the
laws of the state of Utah applicable to agreements intended to be performed
within such state.
DATED the day and year first written above.
Andela:
Andela Group, Inc.
By /s/ Ira E. Ritter
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Ira E. Ritter, President and CEO
/s/ Ira R. Ritter
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Ira E. Ritter, individually
Biomune:
Biomune Systems, Inc.
By /s/ David G. Derrick
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David G. Derrick, President and CEO