Exhibit 10.20
XXXXX SECURITIES CORP.
XXX XXXXXXXXX XXXXX
XXXX XXX, XXX XXXXXX 00000-0000
December 7, 2004
PocketSpec Technologies, Inc.
0000 X. 0xx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, Chief Executive Officer and President
Re: Investment Banking Agreement
Dear Xx. Xxxxxx:
This letter confirms the agreement ("Agreement") of PocketSpec Technologies,
Inc. and its successors, subsidiaries and affiliates (referred to herein as the
"Company") to retain Xxxxx Securities Corp. ("SSC"), to provide during the Term
(as hereinafter defined), the services described below.
1. Services SSC agrees to perform such of the following financial advisory and
investment banking services ("Services") as the Company reasonably and
specifically requests:
1.1. Advisory Services. SSC will (i) familiarize itself to the extent it
deems appropriate and feasible with the business, operations,
properties, financial condition and prospects of the Company; (ii)
advise the Company's management in corporate finance, structuring the
nature, extent and other parameters of any transaction; and (iii)
evaluate financial matters and assist in financial arrangements and
investment banking transactions, including assistance and advice with
regard to maximization of shareholder value, which may include
effectuation of a reverse merger transaction. Advisory services will
also be rendered by SSC in the context of the Acquisition Transaction
described below.
1.2. Acquisition Transaction. SSC will seek to identify a target
corporation ("Target") with whom it is contemplated that an
Acquisition Transaction will be consummated. For purposes of this
Agreement, "Acquisition Transaction" shall mean: (i) any merger, share
exchange, consolidation, reorganization or other business combination
pursuant to which the businesses of Target is combined with that of
the Company; (ii) the acquisition, directly or indirectly, by the
Company of all or a substantial portion of the assets or common equity
of Target by way of negotiated purchase or otherwise; or (iii) the
acquisition, directly or indirectly, by Target of all or a substantial
portion of the assets or common equity of the Company by way of
negotiated purchase or otherwise.
In connection with the proposed Acquisition Transaction, SSC's
advisory services will, at the Company's request, include the
following: (i) assistance in the evaluation of a third party from a
financial point of view; (ii) assistance and advice with respect to
the form and structure of the Acquisition Transaction and the
financing thereof; (iii) conducting discussions and negotiations
regarding an Acquisition Transaction; and (iv) providing other related
advice and assistance as the Company may reasonably request in
connection with an Acquisition Transaction.
The Company agrees that if, during the period SSC is retained by the
Company or, within one (1) year thereafter, an Acquisition Transaction
is consummated with a third party introduced, directly or indirectly,
by SSC (a "SSC Introduced Party"), or the Company enters into a
definitive agreement with a SSC Introduced Party which at any time
thereafter results in an Acquisition Transaction, the Company will pay
SSC a transaction fee equal to 20% of the Consideration paid and/or
payable in the Acquisition Transaction. For purposes hereof, the term
"Consideration" shall mean the aggregate value, whether in cash,
securities, assumption (or purchase subject to) of debt or liabilities
(including, without limitation, indebtedness for borrowed money,
pension liabilities and guarantees) or other property, obligations or
services, paid or payable directly or indirectly (in escrow or
otherwise) or otherwise assumed in connection with an Acquisition
Transaction. The value of such Consideration shall be determined as
follows: (a) the value of securities, liabilities, obligations,
property and services shall be the fair market value as we shall
mutually agree upon at the date of the closing of the Acquisition
Transaction; and (b) the value of indebtedness, including indebtedness
assumed, shall be the face amount. See section 6.8. In addition, the
Company will pay 5% to Xxxxx Xxxxxxxxxx'x company, Strategic
Initiatives
If the Consideration payable in an Acquisition Transaction includes
contingent payments to be calculated by reference to uncertain future
occurrences, such as future financial or business performance, then
any fees of SSC relating to such Consideration shall be payable at the
earlier of the: (i) receipt of such Consideration; or (ii) time that
the amount of such Consideration can be determined.
The parties acknowledge and agree that the phrase "SSC Introduced
Party" as used herein is intended to include any person or entity
directly or indirectly introduced to the Company by SSC, including,
without limitation, situations where (i) SSC has taken any steps to
develop or communicate a specific transaction with the Company to that
person or entity, even if that third party has previously been known
to the Company or (ii) SSC merely brings such person or entity to the
attention of the Company, provided that the Company had no prior
contacts with the third party.
1.3 Reasonable Efforts. SSC agrees to devote such time and effort to the
affairs of the Company as is reasonable and adequate to render the
Services contemplated by this agreement. The Company understands and
agrees that SSC shall not be responsible for the performance of any
services which may be rendered hereunder without the Company providing
the necessary information in writing prior thereto, nor shall SSC
include any services that constitute the rendering of any legal
opinions or performance of work that is in the ordinary purview of the
Certified Public Accountant retained by the Company. SSC does not
guarantee results on behalf of the Company, but shall pursue
reasonable avenues available through its network of contacts. At such
time as an interest is expressed by a third party in the Company's
needs, SSC shall notify the Company and advise it as to the source of
such interest and any terms and conditions of such interest.
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The Company acknowledges that SSC's responsibilities shall be limited
to the foregoing, and that SSC shall have no responsibility for
fulfilling any reporting or filing requirements of the Company
pursuant to applicable federal and state securities laws. In addition,
the Company expressly acknowledges and agrees that SSC's obligations
hereunder are on a reasonable effort basis only and that the execution
of this Agreement does not ensure that a Target will be located by
SSC.
2. Term
2.1. This Agreement shall take effect immediately upon execution and shall
continue for an initial term of one year ("Term"). Thereafter, the
Agreement will terminate unless renewed by the parties in writing.
Notwithstanding the expiration or termination of this Agreement, the
indemnification, contribution, reimbursement and "tail" obligations of
the Company shall survive and all previously paid fees (including,
without limitation, any securities previously issued to SSC) shall be
retained by SSC on a non-accountable basis.
3. Information
3.1. In connection with SSC's engagement hereunder, the Company will
furnish SSC and any prospective Target with any information concerning
the Company that SSC reasonably deems appropriate and will provide SSC
and prospective Entities with reasonable access to the Company's
officers, directors, accountants, counsel and other advisors, subject
to the Company's non-disclosure agreement. In addition, SSC shall be
kept fully informed of any events that are reasonably likely to have a
material effect on the financial condition of the Company. The Company
represents and warrants to SSC that all such information concerning
the Company and all materials used in attempting to locate a Target
for an Acquisition Transaction ("Materials") will be true and accurate
in all material respects and will not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to
make the statements therein not misleading in light of the
circumstances under which such statements are made. The Company
acknowledges and agrees that SSC will not undertake any "due
diligence" investigation and will be using and relying upon the
information supplied by the Company and its officers, agents and
others, the Materials, and any other publicly available information
concerning the Company.
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4. Non-Circumvent.
4.1. In order to prevent the Company from circumventing SSC's position with
a Target, the Company agrees that whether or not any Acquisition
Transaction concerning the Company is completed, for a twelve month
period commencing from the date of this Agreement, without the prior
express written consent of SSC, that the Company will not (a) contact
a Target introduced to the Company by SSC during the term of this
Agreement in order to (i) deprive SSC of the fees it is entitled
pursuant to this Agreement or (ii) arrange any other type of
transaction with a Target introduced to the Company by SSC; or (b)
otherwise circumvent SSC's right to earn a fee pursuant to this
Agreement or otherwise with respect to Entities, introduced to the
Company by SSC, in any manner whatsoever.
5. Indemnification
5.1. The Company shall indemnify SSC under the indemnification provisions
attached hereto as Schedule A and made a part hereof.
6. General Provisions.
6.1. Any and all claims, disputes, or controversies arising out of this
Agreement will be resolved by arbitration before the American
Arbitration Association ("AAA") and that with respect to this
Agreement, a party may seek injunctive relief and ancillary damages
before the AAA. Each party irrevocably consents to subject matter
jurisdiction before the AAA. The parties shall restrict themselves to
claims for compensatory damages and no claims shall be made by any
party for punitive or similar damages. The parties agree that any
award or decision by the AAA shall be final and binding upon the
parties and a judgment may be entered in a court of competent
jurisdiction upon such award or decision. The parties agree that the
situs of any arbitration or legal proceedings hereunder shall be the
City of New York.
6.2. This Agreement may not be amended or modified except in writing signed
by both parties to the Agreement.
6.3. All notices and other communications hereunder shall be deemed given
upon (a) the sender's confirmation of receipt of a facsimile
transmission to the recipient's facsimile number set forth below, (b)
confirmed delivery by a standard overnight carrier to the recipient's
address set forth below, or (c) delivery by hand to the recipient's
address set forth below (or, in each case, to or at such other
facsimile number or address for a party as such party may specify by
notice given in accordance with this Section 6.3):
If to the Company, to:
PocketSpec Technologies, Inc.
0000 X. 0xx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, Chief Executive Officer and President
Fax: 000.000.0000
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If to SSC, to:
Xxxxx X. Xxxxxxxx
Xxxxx Securities Corp.
Xxx Xxxxxxxxx Xxxxx
Xxxx Xxx, XX 00000
Fax: (000) 000-0000
6.4. SSC shall perform its services hereunder as an independent contractor
and not as an employee of the Company or an affiliate thereof. It is
expressly understood and agreed to by the parties hereto that SSC
shall have no authority to act for, represent or bind the Company or
any affiliate thereof in any manner, except as may be agreed to
expressly by the Company in writing from time to time.
6.5. The Company hereby represents that it is a sophisticated business
enterprise that has retained SSC for the limited purposes set forth in
this letter, and the parties acknowledge and agree that their
respective rights and obligations are contractual in nature. Each
party disclaims an intention to impose fiduciary obligations on the
other by virtue of the engagement contemplated by this letter.
6.6. Neither the execution and delivery of this Agreement by the Company
nor the consummation of the transactions contemplated hereby will,
directly or indirectly, with or without the giving of notice or lapse
of time, or both: (i) violate any provisions of the Certificate of
Incorporation or By-laws of the Company; or (ii) violate, or be in
conflict with, or constitute default under, any agreement, lease,
mortgage, debt or obligation of the Company or require the payment,
any pre-payment or other penalty with respect thereto. The Company has
all requisite power and authority to enter into and perform its
obligations under this Agreement. This Agreement has been duly
executed and delivered and constitutes valid and binding obligations
of the Company , enforceable against the Company in accordance with
their respective terms.
6.7. In the event that other services are required and/or transactions
which are the result of SSC's efforts that are not as contemplated
herein, the parties hereto shall negotiate in good faith to determine
a mutually acceptable level of compensation in such an eventuality.
6.8. With regard to compensation for a pending company Target - bio-tech
company it is agreed that fees to SSC shall be equal to 20% of the
receipts PocketSpec's present shareholders receive in the form of
stock in the new company, with not less than 10% being free trading.
No credit or fees will be generated for the "spin off" of the asset
owned by PocketSpec, specifically Color-Spec Technologies Inc. SSC has
had the opportunity to investigate this assets in a recent SEC filing.
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If the foregoing is acceptable to you, please sign and return the enclosed copy
of this letter to my attention.
Very truly yours,
XXXXX SECURITIES CORP.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx
Chief Executive Officer and President
AGREED AND ACCEPTED THIS
10th DAY OF DECEMBER, 2004:
POCKETSPEC TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx
Chief Executive Officer and President
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Schedule A
Xxxxx X. Xxxxxxxx
Xxxxx Securities Corp.
Xxx Xxxxxxxxx Xxxxx
Xxxx Xxx, XX 00000
Fax: (000)000-0000
Ladies and Gentlemen:
In connection with our engagement of Xxxxx Securities Corp. ("SSC") as
Investment Bankers, we hereby agree to indemnify and hold harmless SSC and its
affiliates, and the respective directors, officers, shareholders, agents and
employees of SSC (collectively the "Indemnified Persons"), from and against any
and all claims, actions, suits, proceedings (including those of shareholders),
damages, liabilities and expenses as incurred by any of them (including the
reasonable fees and expenses of counsel) which (A) relate to or arise out of (i)
any actions taken or omitted to be taken (including any untrue statements made
to any Indemnified Person) in connection with our engagement of SSC, or (B)
otherwise relate to or arise out of SSC's activities on our behalf under SSC's
engagement, and we shall reimburse any Indemnified Person for all expenses
(including the reasonable fees and expenses of counsel) as incurred by such
Indemnified Person in connection with investigating, preparing or defending any
such claim, action , suit or proceeding (collectively a "Claim"), in connection
with pending or threatened litigation in which any Indemnified Person is a
party. We will not, however, be responsible for any Claim which is finally
judicially determined to have resulted exclusively from the gross negligence or
willful misconduct of any person seeking indemnification hereunder. We further
agree that no Indemnified Person shall have any liability to us for or in
connection with our engagement of SSC except for any Claim incurred by us solely
as a direct result of any Indemnified Person's gross negligence or willful
misconduct.
We further agree that we will not, without the prior written consent of
SSC, settle, compromise or consent to the entry of any judgment in any pending
or threatened Claim in respect of which indemnification may be reasonably sought
hereunder (whether or not any Indemnified Person is an actual or potential party
to such Claim), unless such settlement, compromise or consent includes an
unconditional, irrevocable release of each Indemnified Person against whom such
claim may be brought hereunder from any and all liability arising out of such
claim.
Promptly upon receipt by an Indemnified Person of notice of any complaint
or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
us in writing of such complaint or of such assertion or institution but failure
to do so notify us shall not relieve us from any obligations we may have
hereunder, unless and only to the extent such failure results in the forfeiture
by us of substantial rights and defenses, and will not in any event relieve us
from any other obligation or liability we may have to any Indemnified Person, we
will assume the defense of such Claim, including the employment of counsel
reasonably satisfactory to such Indemnified Person and the payment of reasonable
fees and expenses of such counsel. In the event, however, that such Indemnified
Person reasonably determines that having common counsel with the Company and/or
another Indemnified Person would present such counsel with a conflict of
interest or if the defendant in, or target of, any such Claim, includes an
Indemnified Person and us, and such Indemnified reasonably concludes that there
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may be legal defenses available to it or other Indemnified Persons different
from or in addition to those available to us, then such Indemnified Person may
employ its own separate counsel to represent or defend it in any such Claim and
we shall pay the reasonable fees and expenses of such counsel. Notwithstanding
anything herein to the contrary, if we fail timely or diligently to defend,
contest, or otherwise protect against any Claim, the relevant Indemnified Person
shall have the right, but not the obligation, to defend, contest, compromise,
settle, assert cross Claims, or counterclaims or otherwise protect against the
same, and shall be fully indemnified by us therefore, including without
limitation, for the reasonable fees and expenses of its counsel and all amounts
paid as a result of such Claim or the compromise or settlement thereof. In any
Claim in which we assume the defense, the Indemnified Person shall have the
right to participate in such Claim and to retain its own counsel therefore at
its own expense.
We agree that if any indemnity sought by an Indemnified Person hereunder is
held by a court to be unavailable for any reason, then (whether or not SSC is
the Indemnified Person), we and SSC shall contribute to the Claim for which such
indemnify is held unavailable in such proportion as is appropriate to reflect
the relative benefits to us, on the one hand, and SSC on the other, in
connection with SSC's engagement referred to above, and the relative fault, as
between us and the Indemnified Person in respect of the Claim, subject to the
limitation that in no event shall the amount of SSC's contribution to such Claim
exceed the amount of fees actually received by SSC from us pursuant to SSC's
engagement. We hereby agree that the relative benefits to us, on the one hand,
and SSC on the other, with respect to SSC's engagement shall be deemed to be in
the same proportion as (a) the total value paid or proposed to be paid or
received by us or our stockholders as the case may be, pursuant to the Financing
(whether or not consummated) for which SSC is engaged, to (b) the fee actually
paid to SSC in connection with such engagement; provided, however, that under no
circumstances whatsoever shall SSC be required to contribute to any such claim
any amount in excess of the fee actually paid in connection with such
engagement.
Our indemnity, reimbursement and contribution obligations under this
Agreement shall be in addition to, and shall in no way limit or otherwise
adversely affect, any rights that any Indemnified Party may have at law or at
equity.
Should SSC or its personnel be required or requested by us to provide
documentary evidence or testimony in connection with any proceeding arising form
or relating to SSC's engagement, we agree to pay all actual reasonable expenses
(including fees incurred for legal counsel) in complying therewith.
Any and all claims, disputes, or controversies arising out of this
Agreement will be resolved by arbitration before the American Arbitration
Association ("AAA") and that with respect to this Agreement, a party may seek
injunctive relief and ancillary damages before the AAA. Each party irrevocably
consents to subject matter jurisdiction before the AAA. The parties shall
restrict themselves to claims for compensatory damages and no claims shall be
made by any party for punitive or similar damages. The parties agree that any
award or decision by the AAA shall be final and binding upon the parties and a
judgment may be entered in a court of competent jurisdiction upon such award or
decision. The parties agree that the situs of any arbitration or legal
proceedings hereunder shall be the City of New York.
It is understood that, in connection with SSC's engagement, SSC may be
engaged to act in one or more additional capacities and that the terms of the
original engagement or any such additional engagement may be embodied in one or
more separate written agreements. The provisions of this Agreement shall apply
to the original engagement, any such additional engagement and any modifications
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of the original engagement or such additional engagement and shall remain in
full force and effect following the completion or termination of SSC's
engagement(s).
Very truly yours,
XXXXX SECURITIES CORP.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxxx
Chief Executive Officer and President
Confirmed and agreed to:
POCKETSPEC TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------------
Xxxxx Xxxxxx
Chief Executive Officer and President
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