Exhibit 10.2
INVESTMENT BANKING AGREEMENT
AGREEMENT, made this 22nd day of October, 2001 by and between,
Microislet, Inc., a Delaware corporation, and ASA Investment Company, having its
principal place of business at 0000 X. Xxxxx Xxx Xxxxxxx, Xxxxxx, Xxxxxxx 00000,
hereinafter the ("Consultant").
WHEREAS, the Company desires to retain the Consultant for consulting
services in connection with the Company's business affairs on a non-exclusive
basis, and the Consultants is willing to undertake to provide such services as
hereinafter fully set forth:
NOW, THEREFORE, the parties agree as follows:
1. CONDITIONS: This agreement is conditioned on the performance of the
Consultant. Two stages of financing are contemplated by this Agreement. The
first stage is One Million ($1,000,000) Dollars financing. The second stage is
at least an additional Three Million ($3,000,000) Dollars financing, but not
more than an additional Nine Million ($9,000,000) Dollars financing.
(a) The Consultant agrees to produce an investor, which will
deposit the stage one financing into a stock purchase escrow account on, or
before November 2, 2001. The form of escrow agreement is attached as EXHIBIT
"A". When the Consultant produces an investor that purchases Company capital
stock for One Million Dollars, the Ten percent fee, as outlined in paragraph
4(a) will be earned. Upon completion of the first stage equity financing, the
Consultant will have the exclusive right to perform the second stage financing
for a period of forty (40) calendar days. This financing exclusivity will
commence on the date the funds are received by the Company and terminate 40 days
thereafter. The warrant compensation outlined in paragraph 4(d) will be earned
pro rata to the total of first and second stage financing of Four Million
($4,000,000) Dollars. A copy of the form of Stock Purchase Agreement is attached
as EXHIBIT "B".
(b) When the Consultant produces investors who agree to
purchase Company capital stock for at least Four Million Dollars, the Company's
parent corporation, Microislet, Inc., a Delaware corporation, will agree to
enter into a business combination agreement whereby it will be acquired by an
NASD OTC Electronic Bulletin Board company. This business combination is
intended to take Microislet public by utilizing a "reverse acquisition" method.
It is the intention of the parties that the Four Million Dollar funding and
reverse acquisition business combination will occur simultaneously. The terms
and conditions of this business combination agreement are set forth in the Share
Exchange Agreement attached as Exhibit "D".
(c) RIGHT OF FIRST REFUSAL. When these two stages of financing
are completed, the Company grants the Consultant the first-right-of-refusal for
all subsequent equity financing for a period of eighteen (18) months from the
date of this agreement. In the event that the Company receives a bona fide
written offer (the "Offer") to purchase Company equity securities that the
Company desires to accept, the Company will notify the Consultant within five
(5) days thereafter in writing and include a copy of the Offer by the Offeror.
The Consultant will thereafter have a period of fourteen (14) calendar days from
1
receipt of the notice to elect whether or not it wishes to arrange for the sale
of the equity securities on the same terms and conditions as contained in the
Offer. If the Consultant does elect to arrange for the financing on the same
terms and conditions as contained in the Offer, then Consultant will have the
absolute right to do so upon giving written notice thereof to Company within the
fourteen (14) day period. If the Consultant does not elect to arrange for the
equity financing, then Company will have the absolute right to complete the sale
to the Offeror in accordance with the Offer, free and clear of any and all
claims arid rights of Consultant contained in this Agreement and, upon the
closing of the equity financing, that particular equity financing first-right-of
refusal will be terminated and no party hereto will thereafter have any rights,
liabilities or obligations whatsoever under this Agreement as to that particular
equity financing. Since the Consultant will be arranging for financing its
commitment to arrange for the particular financing must be accompanied by a
Letter of Commitment from the investor stating that it has the financial ability
and is willing to make the equity investment according to the terms and
conditions of the Offer.
2. NATURE OF SERVICES: The Company hereby engages Consultant to render
the services hereinafter described during the term hereof on a non-exclusive
basis (it being understood and agreed that Consultant is free to render the same
or similar services to any other entity selected by it).
(a) arrange for equity financing for Microislet, Inc. or its
successors, if it goes public, from investors in a dollar range from $4,000,000
to $10,000,000 with a price of $6.00 per share;
(b) assist the Company with its parent corporation,
Microislet, Inc., a Delaware corporation, "going public" process utilizing a
reverse acquisition transaction with a U.S. domestic corporation quoted on the
National Association of Securities Dealers, Inc. (NASD) Over-the-Counter
Electronic Bulletin Board;(1)
(c) consult with the Company concerning on-going strategic
corporate planning and long term, investment policies;
(d) render advice with respect to all Company corporate
financing arrangements.
3. RESPONSIBILITIES OF THE COMPANY: The Company will provide the
Consultant with all financial and business information about the Company as
requested by the Consultant in a timely manner. In addition, executive officers
of the Company will make themselves available for personal consultations with
the Consultant and/or third party designees, subject to reasonable prior notice,
pursuant to the request of the Consultant.
4. COMPENSATION: For corporate financial advisory services, due
diligence and other services which will be provided to the Company from time to
time over the course of our engagement, we mutually agree that the Consultant
will be entitled to compensation and other consideration mutually understood,
but understood, but not limited to the following:
-------------------
(1) It is understood that this type of transaction will not occur unless the
Consultant produces investors, which purchase at least $4,000,000 of Microislet
capital stock.
2
(a) For completed financing from any of the entities,
affiliations or persons of the Consultants, its employees or former employees,
agents, representatives, advisors or the Consultant introduces any of these to
the Company. not previously introduced to the Company, the Company will pay
Consultant or its nominee(s) a finders fee in cash (U.S. Dollars) equal to Ten
(l0%) percent of the financing. The Company will also pay the Consultant or its
nominee(s), as an additional fee, irrespective of any finders fee described
herein, the first $200,000 of any completed financing in excess of $6,000,000
under the terms of this Agreement.
(b) Upon the completion of the reverse acquisition "going
public" transaction, the Company agrees to pay Consultant or its nominee(s)
$US400,000 as follows: (1) $200,000 payable in cash, and (2) $200,000 payable in
33,334 of the publicly held acquisition corporation's common shares. The common
shares will have "piggy-back registration rights."
(c) The fees, at the option of Consultant or its nominee(s),
may be deducted from the financing proceeds payable to the Company. Any fees not
deducted from any financing transaction will be carried forward as a debt
evidenced by a demand promissory note bearing interest at the rate of Eight (8%)
percent per annum.
(d) The Company agrees to issue to Consultant or its
nominee(s) common stock purchase warrants for the purchase of One Million
(1,000,000) Microislet common shares at $6.00 per share and Five Hundred
Thousand (500,000) common shares at $12.00 per share. The warrants will have a
five (5) year exercise term and the underlying common stock will have piggyback
registration rights. A definitive warrant agreement will be executed immediately
following the closing of the first stage $1,000,000 funding.
(e) When the Consultant has produced investors who purchase
Company capital stock for an aggregate amount in excess of Six Million Two
Hundred Thousand Dollars ($6,200,000), the Company agrees to pay Consultant or
its nominee(s) $70,000, payable in the form of Two Hundred Thirty Three Thousand
Three Hundred Thirty Three (233,333) common shares of the publicly held
acquisition corporation's common shames (`Shares"). The Company agrees to pay
Consultant or its nominee(s) an additional $35,000, in the form of One Hundred
Sixteen Thousand Six Hundred Sixty Six (116,666) Shares for each additional One
Million Dollars ($1,000,000) of investment raised up to a maximum of Four
Hundred Sixty Six Thousand Six Hundred Sixty Six (466,666) Shares. The Shares
will have "piggy-back registration rights."
(f) The Company hereby irrevocably agrees not to circumvent,
avoid, bypass or obviate directly or indirectly, the intent of this Agreement,
to avoid payment of fees, in any transaction with any corporation, partnership
or individual, introduced by the Consultant to the Company in connection with
any project, any loans or collateral or funding, or any other financing
transaction of any nature whatsoever.
5. EXPENSES: The Company will also reimburse the Consultant for actual
out-of-pocket expenses including, but not limited to, facsimile, postage,
printing, photocopying, and entertainment, incurred by the Consultant without
the prior consent of the Company and in connection with the performance by the
Consultant of its duties hereunder, the Company will also reimburse the
3
Consultant for the costs of all travel and related expenses incurred by the
Consultant in connection with the performance of its services hereunder,
provided that all such costs and expenses have been authorized, in advance, by
the Company. Expenses will be due and payable when billed and after they have
been incurred. The Consultant will not expend more than $100 dollars on any
expense item without the prior written approval of the Company.
6. INDEMNIFICATION: The Parties agree to indemnify and hold harmless
each other and their affiliates, and their respective officers, directors,
employees, agents and controlling persons. The Parties and each such other
persons and entities being an "Indemnified Party" for purposes of this section
from and against any and all losses, claims, damages, and liabilities, jointly
or severally, to which such Indemnified Party may become subject under any
applicable law, or otherwise related to or arising out of any transaction
contemplated by this Agreement and the performance by the parties of the
Consultant of the services contemplated by this Agreement, and will reimburse
each indemnified party for all reasonable expenses (including reasonable counsel
fees and expenses) as they am incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim or any action or
proceeding arising therefrom, whether or not such Indemnified Party is a party
thereto provided that the other party will not be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Indemnified Party and further provide that such Indemnified
Party agrees to refund such reimbursed expenses if and to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification. In the event that the foregoing indemnity is unavailable or
insufficient to hold any Indemnified Party harmless, then the other party will
contribute to amounts paid or payable by such Indemnified Party in respect of
such losses, claims, damages and liabilities in such proportions as
approximately reflects the relative benefits received by, in fault of, the other
party and such Indemnified Party in connection with the matters as to which such
losses, claims, damages and liabilities relate and other equitable
considerations, provided however that nothing in this sentence will be construed
as altering or limiting in any way the effect of the provisions contained in the
immediately preceding sentence.
7. CAPITALIZATION: The Consultant has made tentative arrangements for
the Microislet, Inc., the Delaware corporation, to "go public" utilizing the
reverse acquisition method with a U.S. corporation which is presently listed on
the NASD Electronic Bulletin Board named ALD Services, Inc. To the extent, that
this transaction were to proceed, the proposed capitalization of the Company
would be as follows:
(a) 18,530,000 shares to Microislet, Inc. shareholders;
(b) 1,900,000 shares to Consultants, Finders, others(2);
(c) 206,000 shares publicly held;
(d) 1,166,666 shares privately placed assuming $7,000,000
funding at $6.00/share;
----------------------
(2) These shares will be subject to individual "Lock-up Agreements" in the form
of agreement attached as Exhibit E.
4
(e) All beneficial owners of the shares outlined in (b) and
(c) above are set forth in EXHIBIT F.
8. COMPLETE AGREEMENT: This Agreement contains the entire Agreement
between the parties with respect to the contents hereof and supersedes all prior
agreements and understandings between the parties with respect to such matters,
whether written or oral. Neither this agreement, nor any term or provision
hereof may be changed, waived, discharged or amended in any manner other than by
any instrument in writing, signed by the party against which the enforcement of
the change, waiver, discharge or amendment is sought.
9. COUNTERPARTS: This Agreement may be executed in two or more
counterparts, each of which will be an original but all of which will constitute
but one Agreement.
10. SURVIVAL: Any termination of this Agreement will not, however,
affect the on-going provisions of this Agreement that will survive such
termination in accordance with their terms.
11. DISCLOSURE: Any financial advice rendered by the Consultant
pursuant to this Agreement may not be disclosed publicly in any manner without
the prior written approval of the Consultant. All non-public information given
to the Consultant by the Company will be treated by the Consultant as
confidential information, and the Consultant agrees not to make use of such
information other than in connection with its performance of this Agreement,
provided, however, that any such information may be disclosed if required by any
court or governmental or regulatory authority, board or agency. "Non-public
information" will not include any information which (i) is or becomes generally
available to the public other than as a result of a disclosure by the
Consultant; (ii) was available to the Consultant prior to its disclosure to the
Consultant by the Company, provided that such information is not known by the
Consultant to be subject to another confidentiality agreement with another
party; or (iii) becomes available to the Consultant on a non-confidential basis
from a source other than the Company, provided that such source is not bound by
a confidentiality agreement with the Company.
12. NOTICE: Any or all notices, designations, consents, offers,
acceptance or other communication provided for herein will be given in writing
and delivered in person or by registered or certified mail, return receipt
requested, directed to the address shown above in the introductory paragraph.
13. SEVERABILITY: Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law. If any provision of this agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule, such invalidity,
illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
5
14. MISCELLANEOUS:
(a) Neither the Consultant nor its affiliates, or their
respective officers, directors, employees, agents or controlling persons will be
liable, responsible or accountable in damages or otherwise to the Company or its
affiliates, or their respective officers, directors, employees, agents or
controlling persons for any act or omission performed or omitted by the
Consultant with the respect to the services provided by it pursuant or otherwise
relating to or arising out of this Agreement.
(b) All final decisions with respect to consultation, advice
and services rendered by the Consultant to the Company will rest exclusively
with the Company, and Consultant will not have any right or authority to bind
the Company to any obligation or commitment.
(c) This Agreement and the legal relations among the parties
hereto will be governed by and construed in accordance with the laws of the
California without regard to the conflicts of laws principles thereof or the
actual domiciles of the parties. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party will be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
(d) If the Consultant will incur any expense (whether paid or
not) in performing any acts which the Company is required to perform, or in
instituting any action or proceeding based upon a default by the Company, or in
defending, or in asserting a counterclaim, in any action or proceeding brought
by the Company, any and all expenses to the Consultant, including attorney's
fees, costs and disbursements, will be paid by the Company to the Consultant, on
demand; furthermore, the expenses incurred in connection with any action or
proceeding instituted by the Consultant to enforce the provisions hereof will
also be recoverable by the Consultant.
Agreed and Accepted on October 15, 2001 by and between:
ASA INVESTMENT COMPANY MICROISLET, INC.
/S/ XXXXX X. XXXX /S/ XXXX XXXXX, IV
-------------------------- -----------------------------
By: Xxxxx X. Xxxx By: Xxxx Xxxxx, IV
Title: President Title: President
6
FIRST AMENDMENT TO
INVESTMENT BANKING AGREEMENT
THIS FIRST AMENDMENT to that certain INVESTMENT BANKING AGREEMENT (the
"Agreement"), dated the 22nd day of October, 2001 by and between, Microislet,
Inc., a Delaware corporation, and ASA Investment Company, having its principal
place of business at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxx 00000,
hereinafter the ("Consultant").
WHEREAS, the parties have reconsidered and mutually agreed to adjust
the amount of compensation to paid to Consultant under the Agreement; and
WHEREAS, paragraphs 4.(d) and 4.(e) of the Agreement currently provide:
"(d) The Company agrees to issue to Consultant or its
nominee(s) common stock purchase warrants for the purchase of One
Million (1,000,000) Microislet common shares at $6.00 per share and
Five Hundred Thousand (500,000) common shares at $12.00 per share. The
warrants will have a five (5) year exercise term and the underlying
common stock will have piggyback registration rights. A definitive
warrant agreement will be executed immediately following the closing of
the first stage $1,000,000 funding."
"(e) When the Consultant has produced investors who purchase
Company capital stock for an aggregate amount in excess of Six Million
Two Hundred Thousand Dollars ($6,200,000), the Company agrees to pay
Consultant or its nominee(s) $70,000, payable in the form of Two
Hundred Thirty Three Thousand Three Hundred Thirty Three (233,333)
common shares of the publicly held acquisition corporation's common
shares ("Shares"). The Company agrees to pay Consultant or its
nominee(s) an additional $35,000, in the form of One Hundred Sixteen
Thousand Six Hundred Sixty Six (116,666) Shares for each additional One
Million Dollars ($1,000,000) of investment raised up to a maximum of
Four Hundred Sixty Six Thousand Six Hundred Sixty Six (466,666) Shares.
The Shares will have `piggy-back registration rights.'"
NOW, THEREFORE, the parties agree as follows:
Paragraphs 4.(d) and 4.(e) of the Agreement shall be, and are hereby
deleted from the Agreement in their entirety, and the terms of said paragraphs
shall no longer be effective bind the parties to the Agreement. All other
provisions of the Agreement not inconsistent with this Amendment shall remain in
full force and effect.
ASA INVESTMENT COMPANY MICROISLET, INC.
/S/ XXXXX X. XXXX /S/ XXXX XXXXX, IV
----------------- -----------------------
By: Xxxxx X. Xxxx By: Xxxx Xxxxx, IV
Title: President Title: President
7
