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EXHIBIT 10.1
INVESTMENT BANKING AGREEMENT
THIS INVESTMENT BANKING AGREEMENT (this "Agreement") is entered into as
of the 1st day of March 1998 (the "Effective Date") by and between 1ST NET
TECHNOLOGIES, INC., a Colorado company ("Company"), on the one hand, and
ENTREPRENEUR INVESTMENTS, LLC, a Colorado limited liability company ("EI"), on
the other hand, with reference to the facts set forth in the Recitals below:
R E C I T A L S
A. COMPANY. Company requires expertise in the area of investment
banking to support its business and growth. Company now desires to engage an
advisor to assist it in sourcing of equity capital through investment from
private investors.
B. EI. EI is an unlicensed private investment banking firm involved
in the private solicitation, and sale of securities. EI has substantial contacts
among certain members of the investment community, and has substantial
investment banking expertise. EI now desires to act as an independent contractor
to Company in order to provide investment banking and advisory services
concerning the procurement of equity capital for Company.
C. PURPOSE. In order to facilitate the funding of Company's capital
needs, the parties desire to enter into this Agreement upon the terms and
conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth herein, the adequacy of which is hereby expressly acknowledged, and
subject to the terms and conditions set forth herein, the parties hereby agree
as follows:
1. APPOINTMENT OF AGENT.
1.1 AGENCY. On the basis of the representations, warranties
and covenants contained herein, and subject to the terms and conditions herein
set forth, Company hereby appoints EI as its non-exclusive agent for the purpose
of identifying a purchaser (or purchasers) and selling the Company's equity
securities on a "best efforts" basis. Company has initially engaged EI hereby
for purposes of raising on a best efforts basis up to $1,000,000 for Company
pursuant to a Regulation D, Rule 504 private offering.
1.2 BEST EFFORTS. EI accepts such agency and shall use its
best efforts to secure equity investment from private investors.
1.3 NO FIRM COMMITMENT. Company and EI agree that there is
no "firm commitment" on the part of EI to purchase or to sell any of the
Company's equity.
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1.4 ADDITIONAL SERVICES. EI shall additionally provide the
following services to Company:
1.4.1 ADVICE AND COUNSEL. EI shall provide advice and
counsel to Company regarding its strategic business and financial plans, as well
as strategies for negotiations (and direct negotiation, as requested) with
prospective (a) lenders and investors, (b) mergers, acquisition or joint venture
candidates, and (c) corporate partners or other participants in financial or
investment-related transactions.
1.4.2 INTRODUCTIONS TO SECURITIES COMMUNITY. EI shall
facilitate communications between Company and EI's national network of
investors, investment professionals, and broker-dealers. Specifically, EI shall
utilize its contacts in the securities brokerage community to assist Company in
possibly establishing relationships with securities dealers and shall provide
the most recent corporate information concerning Company to interested
securities dealers on a continuous and regular basis. EI expressly acknowledges
and understands that this function is consistent with Company's objective of
establishing a nationwide network of securities dealers who have an interest in
Company.
1.4.3 MARKET-MAKING INTELLIGENCE. EI is a venture and
private, unlicensed market-maker in various securities and has access through
its facilities and personnel to proprietary industry information. EI shall react
to sensitive market information on a timely basis and provide Company with
advice, counsel and proprietary intelligence (including but not limited to
information on price, volume and identification of potential market-makers,
placement agents and investors) in a timely manner. Company expressly
acknowledges that this information may be available from other sources but that
EI may provide it in a more timely manner or with significant value-added
interpretation of such information. Notwithstanding, no information shall be
provided to Company with respect to the activities of any other present or
former client of EI or its principals without such client's express prior
consent.
1.4.4 DUE DILIGENCE. EI shall undertake extensive due
diligence with respect to all proposed financial transactions of Company for
which EI is the procuring broker, including the investigation and advice
concerning possible terms of any securities transaction which may relate
(without limitation) to the valuation of the price of securities, dividend and
liquidation preferences, management control and voting issues, and securities
redemption.
1.4.5 OPTIONAL DUTIES. The parties may mutually agree
upon additional duties which EI may provide for additional compensation to be
paid by Company. Such additional agreement(s) and additional compensation shall
be attached hereto as Exhibit "A" and thereby made a part hereof.
1.4.6 BEST EFFORTS. EI shall devote such time and best
efforts as may be reasonably necessary to perform its services. EI is not
responsible for the performance of any services which may be rendered hereunder
without Company's timely provision of necessary
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information to EI. EI cannot guarantee results on behalf of Company, but shall
pursue all avenues available to it through its network of investment contacts.
At such time as an interest is expressed in Company, EI shall notify Company and
advise it as to the source and proposed terms and conditions of such interest.
Company expressly authorizes EI to negotiate on its behalf during the term of
its agency hereunder; provided, however, that the acceptance and consummation of
any transaction is subject to Company's acceptance of the terms and conditions
of the investment. Company expressly understands and agrees that a portion of
the compensation to be paid to EI hereunder is to ensure EI's availability to
assist Company with possible corporate financial or securities transactions
during the term hereof on an as-needed basis.
2. COMPENSATION TO EI. As compensation for the services of EI
hereunder, Company shall pay to EI the following non-refundable fee:
2.1 FEE. Company shall pay EI an initial fee of $30,000 for
activities necessary for EI to provide the services herein. This fee shall be
deemed in arrears if EI does not receive a stock certificate by the 60th
business day after the Effective Date.
2.2 NO SUCCESS FEE. The Company shall not be obligated to
pay EI a success fee from the gross proceeds from the issuance and sale of any
common or preferred stock or convertible securities of Company the buyer of
which was referenced to Company by EI.
2.3 NO EXPENSE REIMBURSEMENT. Company shall not be
responsible for reimbursement of EI's expenses, actually incurred in connection
with their services under this Agreement.
3. COVENANTS AND REPRESENTATIONS OF EI.
3.1 COMPLIANCE. EI shall comply with all rules and
regulations applicable to it in connection with the offer and sale of Companies'
securities and shall provide to all offerees and purchasers any and all
disclosure materials prepared by Company and provided to EI in accordance with
such rules and regulations.
3.2 CONFIDENTIALITY. EI shall keep confidential all material
non-public information provided to it by Company, except as required by law.
3.3 MATERIALS. EI shall use only the disclosure memorandum
prepared by Company and such other documents as Company may approve in writing
prior to their use, in connection with the offer and sale of Company's
securities. EI shall not furnish to a prospective investor who has expressed an
interest in purchasing equity any documents other than those referred to in the
preceding sentence, and shall not make any representations to a prospective
investor concerning Company or its business operations or financial condition,
past, present or future, other than as set forth in the documents referred to in
the preceding sentence. In the event EI furnishes any document
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approved by Company to a prospective investor and such prospective investor
elects not to purchase equity, EI shall attempt to obtain from such prospective
investor such documents and all copies thereof.
3.4 LITIGATION. There is not now pending or, to the
knowledge of EI, threatened against EI any action or proceeding of which EI has
been advised, either in any court of competent jurisdiction, before the SEC or
any state securities commissioner, nor has EI been named as a "cause" in any
action or proceeding.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY.
In order to induce EI to enter into this Agreement, Company
represents and warrants to EI that:
4.1 FORMATION. Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Colorado, with corporate power and authority to own its properties and
conduct its businesses as they are presently being carried on.
4.2 VIOLATIONS OF CONTRACTS. Company is not in violation of
its Articles of Incorporation or Bylaws or in default of the performance of any
obligation, agreement and consideration contained in any lease agreement or in
any note or any other evidence of indebtedness or in any material contract or
loan agreement of Company or any of its subsidiaries. The execution and delivery
of this Agreement, the fulfillment of the terms set forth herein and in the
consummation of the transactions contemplated hereby will not conflict with or
constitute a breach of, or default under, the Articles of Incorporation or
Bylaws of Company, any agreement, indenture or other instrument by which Company
is bound, or any law, administrative regulation or court decree.
4.3 AUTHORITY. Company has full legal right, power and
authority to enter into this Agreement, and this Agreement has been duly and
validly executed and delivered by Company and constitutes the valid and legal
binding agreement of Company enforceable in accordance with its terms.
4.4 VALID ISSUANCE OF SECURITIES. All of the outstanding
securities of Company have been duly and validly authorized and issued and are
fully paid and nonassessable.
4.5 LITIGATION. There is no litigation or governmental
proceeding pending or threatened against or involving Company not previously to
EI which might adversely affect Company.
4.6 DISCLOSURE DOCUMENTS AND AGREEMENTS. Prior to the sale
of any securities or entering into any commitment for such sale, Company shall
prepare all necessary agreements and related transaction documents with regard
to such proposed issuance. The documents shall contain, among other things,
appropriate limitations on the manner of offering and sale of securities,
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representations, warranties, covenants, opinions of counsel, letters of
independent public accountants (if appropriate) and closing conditions, all with
accurate factual representations.
5. INDEMNIFICATION. Company shall indemnify and hold harmless EI,
and each person, if any, who controls EI, against any and all loss, liability,
claim, damage and expense whatsoever caused by any untrue statement or alleged
untrue statement of a material fact contained in the disclosure documents (as
from time to time amended and supplemented), or caused by the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such loss, liability, claim, damage or expense caused by any such untrue
statement or omission or alleged untrue statement or omission is based upon
information furnished to Company by EI expressly for use in the disclosure
documents or the result primarily of the recklessness or bad faith of EI. If any
action is brought against EI in respect of which indemnity may be sought under
this Section 5, EI shall promptly notify Company in writing of the institution
of such action, and Company shall immediately assume the defense of such action.
6. MISCELLANEOUS.
6.1 EXCLUSIVITY. This Agreement has been and is made solely
for the benefit of EI and Company and the controlling persons, directors and
officers referred to herein, and their respective successors and assigns and no
other person shall acquire or have any right under or by virtue of this
Agreement.
6.2 CHOICE OF LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without
reference to principles of conflicts of law.
6.3 LEGAL FEES. If any legal action or arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the successful party or parties shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief to which they shall be
entitled.
6.4 AUTHORIZATION. EI is authorized to: (i) contact
directors, officers, accountants, counsel or other key personnel; (ii) visit
Company facilities and corporate offices; and (iii) perform any other
investigative activity which XX xxxxx appropriate. In accordance with the
federal Privacy Act, Freedom of Information Act and the Fair Credit Reporting
Act and other applicable laws, Company hereby authorizes EI and its agents to
obtain information from third parties concerning Company, and hereby waives any
rights concerning such information which may be obtained.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the Effective Date.
ENTREPRENEUR INVESTMENTS, LLC,
a Colorado limited liability company
/s/ XXXXX XXXXXX, JR.
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Xxxxx Xxxxxx, Jr.,
Managing General Partner
1ST NET TECHNOLOGIES, INC,
a Colorado corporation
/s/ XXXXXXX X. WRITER, JR.
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Xxxxxxx X. Writer, Jr.,
Chief Executive Officer
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