INVEST LINC CONSULTING CORP.
000 XXXX XXXXXXXXX XXXXXX, 0XX XXXXX
XXXX, XX 00000
PHONE: (000) 000-0000
FAX: (000) 000-0000
January 7, 1999
Xxxxx Xxxxxxxxx, President
ISW International, Inc.
000 Xxxxxxxx Xxxx, Xxxxx 0
Xxxxxxxx Xxxxx, XX 00000
Re: Business and Financial Advisory Agreement
Dear Xxxxx Xxxxxxxxx:
The purpose of this letter agreement (the "Agreement") is to confirm
and set forth the terms and conditions of the engagement of Invest Linc
Consulting Corp., a Nevada corporation (the "Advisor") by ISW International,
Inc., a Florida corporation (the "Company"), to render business and financial
advisory services to the Company for the purpose of assisting the Company's
growth and development.
The Company desires to develop business and marketing plans, financial
models and strategies, make its material information available to appropriate
parties, cause presentations of its business to be prepared and delivered, be
introduced to underwriters and financial sources and to possible merger and
acquisition candidates, and establish commercial and strategic partner and joint
venture relationships. The services to be rendered by Advisor to the Company
shall be subject to the following terms and conditions:
1. Engagement.
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The Company hereby engages Advisor to act as its business and exclusive
financial advisor on a best efforts basis upon the terms and conditions set
forth herein and Advisor accepts such engagement. During the terms of its
engagement, Advisor will consult with the Company in developing business and
marketing plans, financial models and strategies, making the Company's material
information available to the appropriate parties, will assist the Company in
obtaining and organizing its due diligence materials, making the Company's
material information available to appropriate parties, causing presentations of
the Company's business to be prepared and delivered, introducing potential
underwriters and financial sources for the Company and to possible merger and
acquisition candidates, establishing commercial and strategic partner and joint
venture relationships, and performing other services as agreed between the
Company and the Advisor. The parties agree that Advisor is not a registered
broker/dealer and that it cannot, and shall not be required hereunder to, engage
in the offer or sale of securities on behalf of the Company. While Advisor has
relationships and contacts with various investors, broker/dealers, underwriters,
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and investment funds, Advisor's participation in the actual offer or sale of the
Company's securities shall be limited to that of an advisor to the Company and
as a "finder" of investors, broker/dealers and funds. The Company acknowledges
and agrees that the solicitation and consummation of any purchases of the
Company's securities shall be handled by the Company or by one or more NASD
members firms engaged by the Company for such purpose.
2. Compensation to the Advisor.
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a) Compensation for Services. The Company will compensate Advisor as
follows: (i) the Company will pay Advisor a monthly fee of $2,500, accrued and
due upon receipt by the Company of any financing and on the last day of each
month thereafter through January, 2001, (ii) in consideration for the payment of
$1,000 for stock, the Company agrees to sell to Advisor three percent (3%) of
issued and outstanding, fully diluted shares, including warrants and options
(the "Shares"), of the Company's equity securities, including both shares of
common stock and preferred stock as of January 1999. This stock will be
non-dilutive until the date of a public offering of the company, and (iii) the
Company will grant Advisor common stock purchase warrants (the "Warrants") to
acquire that number of issued and outstanding, fully diluted shares of the
Company's common stock as is equal to five percent (5%) of the Company's
outstanding stock at the price of the current raising of capital. These warrants
will also be non-dilutive until the date of a public offering of the company,
and will also include a "take-along" provision specifying that the Advisor will
be granted the opportunity to participate in any subsequent offerings up to 5%
of each offering. The length of the warrant shall be five (5) years and the
Company acknowledges the warrant is issued only for advisory and consulting
services, and not in consideration of raising capital. The warrants shall be
redeemable and if the Company is a fully reporting company, under the 1933 and
1934 Securities Act, the warrants shall be registerable for sale. Furthermore,
the Company will take any and all actions necessary to assist Advisor to
register said warrants. (iv) in the event the Company merges into or is
otherwise acquired by a non-reporting public company (a "Public Company"), the
Company shall cause the Public Company to assume this agreement and the
obligations hereunder set forth. All Shares and Warrants, including the shares
of the common stock of the Public Company underlying the Warrants, shall be
issued pursuant to the requirements of Rule 701 of the Securities & Exchange
Commission.
b) Business Arrangements. Subject to the other terms and conditions of
this Agreement, in the event the Company consummates a Business Arrangement, as
hereinafter defined, Advisor shall be entitled to a normal finder's fee (a
"Finder's Fee"), which shall be no less than five percent (5%) of the aggregate
amount of the acquisition or sale price (whether payable in cash or otherwise
and including deferred payments, if any). The Company's agreement to cause the
Public Company to assume the Company's obligations under this Agreement shall
include the above obligation to pay Advisor the Finder's Fee in the event of a
Business Arrangement and such obligation shall include any Business Arrangements
entered into by the Public Company following the Public Company's merger with
the Company.
A Finder's Fee shall be payable with respect to any Business
Arrangement (i) consummated during the term of this Agreement or (ii)
consummated within twelve (12) months after the termination hereof. A Finder's
Fee shall be paid in cash at the closing of the Business Arrangement to which
such fee relates. For purposes of this Agreement, the term "Business
Arrangement" shall mean the acquisition, consolidation, merger, purchase, or
other union of the Company or its business or assets or any part thereof by or
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with another entity other than the Public Company with which the Company is to
merge.
c) Reimbursement of Expenses. The Company agrees to pay all accountable
out-of- pocket expenses, including legal fees, travel expenses, and other
business related disbursements, incurred by Advisor in acting on the Company's
behalf.
d) Compensation under Rule 701. The Company acknowledges and agrees
that all Compensation received and to be received by Advisor pursuant to this
Agreement as described in this section was in consideration for, and will be in
consideration for, as the case may be, Advisor's bona fide consulting services
hereunder and none of such compensation was paid Advisor in connection with the
offer and sale of securities in a capital-raising transaction and that such
compensation is not subject to the consummation of any transactions. In
addition, the Company acknowledges and agrees that this agreement constitutes a
written contract relation to the compensation of Advisor pursuant to the
requirements of Rule 701 of the Securities & Exchange Commission.
3. Obligations of the Company
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a) Corporate Authorization. The Company agrees to take all necessary
and appropriate corporate actions to authorize all actions required to
implement, and all agreements and additional documents relating to, the terms
thereof.
b) Furnishing of information. The Company will furnish to Advisor such
information and documents as Advisor may reasonably request to facilitate the
performance of Advisor's advisory services hereunder, including access to
facilities operated by the Company and to members of the management of Company
and copies of management reports, budgets and the like, furnished to the
management or directors of the Company.
4. Representations and Warranties of the Company. The Company
represents and warrants to Advisor, to the best of the Company's officers'
knowledge and belief, that any information furnished or to be furnished to
Advisor for use in any business and marketing plans, financial models or
strategies, or Business Arrangement(s) will contain no untrue statement of any
material fact nor omit to state any material fact necessary to make the
information furnished not misleading, except to the extent subsequently
corrected prior to the date of use of such information with third parties. The
Company further warrants and represents that if the circumstances or facts
relating to information or documents furnished to Advisor change at any time
subsequent to the furnishing of such documentation or information to Advisor and
prior to the date of the consummation of any transaction, the Company will
inform Advisor promptly of such changes and forthwith deliver to Advisor
documents or information necessary to ensure the continued accuracy and
completeness of all information and documents previously furnished.
5. Representations and Warranties of Advisor. Advisor represents to the
Company that during the term of this Agreement it will not, to the best of
Advisor's officers' knowledge and belief, make any untrue statement of material
fact. Advisor further represents and warrants to the Company that, to the best
of Advisor's officers' knowledge and belief, all actions taken by it on behalf
of the Company in connection with any advisory services and/or Business
Arrangements will be conducted in compliance with all applicable state and
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federal laws and any procedures that might be reasonably imposed by the Company
or its legal counsel to ensure compliance with such laws.
6. Review and Approval of Documentation. The Company shall have the
right to review and approve, prior to distribution, the content of any business
or marketing plans, financial models or strategies, funding strategies, or
disclosure or offering documents prepared by Advisor in the performance of its
services hereunder.
7. Cooperation of Parties. Advisor shall cooperate with the Company and
its counsel and Company shall cooperate with Advisor and its counsel with
respect to any due diligence of the Company and with respect to the preparation
of any Company business and marketing plans, financial models and strategies,
and in the preparation of any related documentation as may be required as a
result of any actions taken by Advisor in the rendering of services to the
Company hereunder.
8. No Obligation to Consummate Transactions. The Company shall not be
obligated to enter into any Business Arrangement which may be presented to it by
Advisor and Advisor shall have no authority to make any representations on
behalf of the Company or to otherwise bind the Company in any manner whatsoever.
If the Company elects to consummate a transaction presented to it by or as a
result of the efforts of Advisor, the final terms of the transaction shall be
subject to negotiation by the Company and its legal counsel. The parties
understand and acknowledge that neither party has represented to or assured the
other that a Business Arrangement will actually be entered into as a result of
Advisor's services hereunder.
9. Indemnification of Advisor. The Company agrees to indemnify and hold
Advisor and each of its affiliates, directors, officers, employees and agents
and any person controlling (within the meaning of Section 15 of the Securities
Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934,
as amended) any such person or entity (hereinafter referred to collectively as
the "Indemnified Persons") harmless against and from any and all losses, claims,
damages, liabilities, joint or several, suffered or incurred by, or asserted
against, any Indemnified Person (including any amounts paid in settlement of any
action, suit or proceeding brought or threatened to be brought, if such
settlement is effected with the written consent of the Company) under any of the
federal securities laws, under any other statute, common law, or otherwise,
which arises in connection with or is based upon any document provided by the
Company or transaction entered into by Company contemplated by this Agreement,
and to reimburse each Indemnified Person for any travel, legal or other
out-of-pocket expenses (including the cost of any investigation and preparation)
reasonably incurred by such Indemnified Person in connection with any action,
suit, preceding or claim ("Litigation") for which indemnification under the
preceding clause may be sought (including the fees of counsel of such
Indemnified Person's choice retained in connection with investigating or
defending against Litigation); provided, however, that there shall be excluded
from such indemnification and reimbursement any such loss, claim, expense,
damage or liability arising out of or based upon the breach of Advisor's
contractual duties to the Company hereunder or the simple negligence of the
Indemnified Persons; provided, further, that the Company shall not be liable for
any loss, claim, damage or liability resulting from any settlement entered into
by an Indemnified Person without the written consent of the Company as set forth
above; provided, further, that this indemnity shall not apply to any loss,
claim, damage, liability or expense resulting from information about an
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Indemnified Person furnished by such Indemnified Person for use in any offering
or disclosure documentation prepared for use in any financing transaction or
Business Arrangement contemplated hereby. The Company shall be notified by any
Indemnified Person seeking indemnification by registered letter, of any action
commenced against such Indemnified Person, within a reasonable time after such
Indemnified Person shall have been served with the summons or other first legal
process or shall have received written notice of the threat of a claim in
respect of which an indemnity may be claimed, giving information as to the
nature and basis of the claim, but failure so to notify the Company shall not
relieve the Company from any liability which it may have hereunder or otherwise
except to the extent that such failure so to notify the Company materially
prejudices the rights of the Company. The Company shall be entitled to
participate at its own expense in the defense, and if the Company so elects
within a reasonable time after receipt of such notice, or if all Indemnified
Persons seeking indemnification on such notice so direct, the Company shall
assume the defense of any Litigation brought to enforce any such claim, and in
either such case, such defense shall be conducted by counsel chosen promptly by
the Company and reasonably satisfactory to Advisor; provided, however, that, if
the defendants in any such action include both an Indemnified Person and the
Company and such Indemnified Person shall have been advised by its counsel that
there may be legal defenses available to such Indemnified Person which are
different from or additional to those available to the Company, and which in the
reasonable opinion of such counsel are sufficient to make it undesirable for the
same counsel to represent both the Company and such Indemnified Person, such
Indemnified Person shall have the right to employ his own counsel in such
Litigation, and in such event the reasonable fees and expenses of such counsel
shall be borne by the Company. The foregoing indemnity and reimbursement
agreement shall be in addition to any other rights which an Indemnified Person
may have at common law or otherwise.
10. Term and Termination of Agreement. This Agreement shall remain in
full force and effect for a term of twenty four (24) months from the date
hereof. During the term hereof, Advisor shall be the exclusive financial advisor
to the Company and the Company agrees not to enter into any similar or like
agreement with any other party during such period without the prior written
consent of Advisor. The indemnity provisions set forth herein shall survive any
termination of the Advisor's engagement hereunder.
11. Compliance with Rule 701. The Company shall use its best efforts to
ensure that all offers and sales of equity securities to Advisor hereunder shall
be in compliance with Rule 701 of the Securities & Exchange Commission, will
cooperate with Advisor in taking all such action as shall be necessary or
required to ensure that such securities are entitled to the benefits of such
Rule 701, and will not cause or permit the sale of securities of the Company in
such a manner as to restrict or prevent the sale or transfer of those securities
of the Company held by Advisor.
12. Rights of Parties. Advisor shall be entitled to assign all of its
rights and obligations hereunder to its designee reasonably acceptable to the
Company. Such assignment shall be effective upon the execution by such assignee
of a counterpart of this Agreement. Upon such assignment, the term "Advisor" is
used herein to refer to such assignee. Except as otherwise provided above, no
party shall be entitled to transfer or assign any of its rights or obligations
hereunder without the prior written consent of the other party. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of, the
parties and their respective successors and assigns.
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13. Legal Counsel: Waiver of Conflict of Interest. The parties have had
the opportunity to consider the terms of this agreement with their respective
legal counsel and have either obtained the advice of legal counsel in connection
with their execution hereof or do hereby expressly waive their right to seek
such legal counsel in connection with this transaction.
14. Governing Law. This Agreement shall be interpreted in accordance
with its terms and otherwise in accordance with the laws of the State of Utah
applicable to contracts entered into and to be performed entirely within such
State.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
all prior agreements, understandings, representations and statements, if any,
whether oral or written, with respect to the subject matter hereof. No
modification of this Agreement shall be valid or binding upon the parties hereto
unless made in writing and signed on behalf of each party hereto by its
respective authorized officer.
16. Headings. The headings used in this Agreement have been inserted
for convenience only and are not to be considered in construing the meaning of
the Agreement.
If the foregoing is in accordance with the Company's understanding,
please sign and return the enclosed copy of this letter, whereupon this
Agreement shall constitute a binding agreement between the Company and Advisor.
Sincerely yours,
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
President
This Business and Financial Advisory Agreement is acknowledged and agreed to by
the undersigned as of this 8 day of January, 1999.
ISW International Inc.
By /s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx, President
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