CONSULTING AGREEMENT
Exhibit 10.6
This Consulting Agreement (the “Agreement”), effective as of September 1, 2006 , is entered into
by and between, International Stem Cell, Inc., (herein referred to as the “Company”) and
CAPITAL GROUP COMMUNICATIONS, INC., a California corporation (herein referred to as the
“Consultant”).
RECITALS
WHEREAS, Company is; and
WHEREAS, Company desires to engage the services of Consultant to represent the company in
investors’ communications and public relations with existing shareholders, brokers, dealers and
other investment professionals as to the Company’s current and proposed activities, and to consult
with management concerning such Company activities;
NOW THEREFORE, in consideration of the promises and the mutual covenants and agreements hereinafter
set forth, the parties hereto covenant and agree as follows:
| 1) | Term of Consultancy. Company hereby agrees to retain the Consultant to act in a
consulting capacity to the Company, and the Consultant hereby agrees to provide services to
the Company commencing once this contract has been executed and ending 12 month thereafter. |
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| 2) | Duties of Consultant. The Consultant agrees that it will generally provide the
following specified consulting services: |
| a) | Assist the Company in raising capital through introductions. (It is understood CGC is
not an “investment banking” firm); |
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| b) | Consult and assist the Company in developing and implementing appropriate plans and
means for presenting the Company and its business plans, strategy and personnel to the
financial community, establishing an image for the Company in the financial community, and
creating the foundation for subsequent financial public relations efforts; |
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| c) | Introduce the Company to the financial community; |
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| d) | With the cooperation of the Company, maintain an awareness during the term of this
Agreement of the Company’s plans, strategy and personnel, as they may evolve during such
period, and consult and assist the Company in communicating appropriate information
regarding such plans, strategy and personnel to the financial community; |
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| e) | Assist and consult the Company with respect to its (i) relations with stockholders,
(ii) relations with brokers, dealers, analysts and other investment professionals, and
(iii) financial public relations generally; |
1.
| f) | Upon the Company’s direction and approval, disseminate information regarding the
Company to shareholders, brokers, dealers, other investment community professionals and the
general investing public; |
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| g) | Upon the Company’s approval, conduct meetings, in person or by telephone, with brokers,
dealers, analysts and other investment professionals to communicate with them regarding the
Company’s plans, goals and activities |
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| h) | At the Company’s request, review business plans, strategies, mission statements
budgets, proposed transactions and other plans for the purpose of advising the Company of
the public relations implications thereof; and, |
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| i) | Work and contract with other consultants/ companies to perform additional Investor
Relations services |
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| j) | Otherwise perform as the Company’s consultant to disseminate information and relations
with financial professionals and potential shareholders. |
| 3) | Allocation of Time and Energies. The Consultant hereby promises to perform and
discharge faithfully the responsibilities which may be assigned to the Consultant from time to
time by the officers and duly authorized representatives of the Company in connection with the
conduct of its financial and public relations and communications activities, so long as such
activities are in compliance with applicable securities laws and regulations. Consultant and
staff shall diligently and thoroughly provide the consulting services required hereunder.
Although no specific hours-per-day requirement will be required, Consultant and the Company
agree that Consultant will perform the duties set forth herein above in a diligent and
professional manner. The parties acknowledge and agree that a disproportionately large amount
of the effort to be expended and the costs to be incurred by the Consultant and the benefits
to be received by the Company are expected to occur within or shortly after the first two
months of the effectiveness of this Agreement. It is explicitly understood that Consultant’s
performance of its duties hereunder will in no way be measured by the price of the Company’s
common stock, nor the trading volume of the Company’s common stock. It is also understood
that the Company is entering into this Agreement with Capital Group Communications, Inc.
(“CGC”), a corporation and not any individual member of CGC, as such, Consultant will not be
deemed to have breached this Agreement if any member, officer or director of CGC leaves the
firm or dies or becomes physically unable to perform any meaningful activities during the term
of the Agreement, provided the Consultant otherwise performs its obligations under this
Agreement. |
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| 4) | Remuneration. As full and complete compensation for services described in this
Agreement, the Company shall compensate CGC as follows: |
| a) | For undertaking this engagement and for other good and valuable consideration, the
Company agrees to issue and deliver to the Consultants a “Commencement Bonus” payable
in the form of 1,000,000 shares the Company’s Common Stock (“Common Stock”). This
Commencement Bonus shall be issued to the Consultant immediately following execution
of this Agreement and shall, when issued and delivered to Consultant, be fully paid
and non-assessable. The Company understands and agrees that Consultant has foregone
significant opportunities to accept this engagement and that the Company derives
substantial benefit from the execution of this Agreement and the ability to announce
its relationship with Consultant. The shares of Common Stock issued as a
Commencement Bonus, therefore, constitute payment for Consultant’s agreement to
consult to the |
2.
Company and are a nonrefundable, non-apportionable, and non-ratable
retainer; such shares of common stock are not a prepayment for future services. If the
Company decides to terminate this Agreement prior to end date for any reason
whatsoever, it is agreed and understood that Consultant will not be requested or
demanded by the Company to return any of the shares of Common Stock paid to it as
Commencement Bonus hereunder. Further, if and in the event the Company is acquired in
whole or in part, during the term of this agreement, it is agreed and understood
Consultant will not be requested or demanded by the Company to return any of the
shares of Common stock paid to it hereunder. It is further agreed that if at any time
during the term of this agreement, the Company or substantially all of the Company’s
assets are merged with or acquired by another entity, or some other change occurs in
the legal entity that constitutes the Company, the Consultant shall retain and will not
be requested by the Company to return any of the shares. The Company further agrees
that all shares issued to Consultant hereunder shall carry “piggyback registration
rights” whereby such shares will be included in the next registration statement filed
by the company after the first registration other than a registration on Form S-8 with
respect to the Company’s Stock Option or Equity Participation Plan. |
| b) | With each transfer of shares of Common Stock to be issued pursuant to this Agreement
(collectively, the “Shares”), Company shall cause to be issued a certificate representing
the Common Stock and a written opinion of counsel for the Company stating that said shares
are validly issued, fully paid and non-assessable and that the issuance and eventual
transfer of them to Consultant has been duly authorized by the Company. Company warrants
that all Shares issued to Consultant pursuant to this Agreement shall have been validly
issued, fully paid and non-assessable and that the issuance and any transfer of them to
Consultant shall have been duly authorized by the Company’s board of directors. |
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| c) | Consultant acknowledges that the shares of Common Stock to be issued pursuant to this
Agreement (collectively, the “Shares”) have not been registered under the Securities Act of
1933, and accordingly are “restricted securities” within the meaning of Rule 144 of the
Act. As such, the Shares may not be resold or transferred unless the Company has received
an opinion of counsel reasonably satisfactory to the Company that such resale or transfer
is exempt from the registration requirements of that Act. |
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| d) | In connection with the acquisition of Shares hereunder, the Consultant represents and
warrants to the Company, to the best of its/his knowledge, as follows: |
| i) | Consultant acknowledges that the Consultant has been afforded the opportunity
to ask questions of and receive answers from duly authorized officers or other
representatives of the Company concerning an investment in the Shares, and any
additional information which the Consultant has requested. |
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| ii) | Consultant has had experience in investments in restricted and publicly traded
securities, and Consultant has had experience in investments in speculative securities
and other investments which involve the risk of loss of investment. Consultant
acknowledges that an investment in the Shares is speculative and involves the risk of
loss. Consultant has the requisite knowledge to assess the relative merits and a of
this investment without the necessity of relying upon other advisors, and Consultant
can afford the risk of loss of his entire investment in the Shares. |
3.
| 5) | Financing “Finder’s Fee”. It is understood that in the event Consultant introduces
Company, or its nominees, to a lender or equity purchaser, not already having a preexisting
relationship with the Company, with whom Company, or its nominees, ultimately finances or
causes the completion of such financing, Company agrees to compensate Consultant for such
services with a “finder’s fee” in the amount of 5.0% of total gross funding provided by such
lender or equity purchaser, such fee to be payable in cash. This 5.0% will be in addition to
any fees payable by Company to any other intermediary, if any, which shall be the subject of
separate agreements, negotiated between Company and such other intermediary. It is also
understood that in the event Consultant introduces Company, or its nominees, to an acquisition
candidate not already having a preexisting relationship with the Company, which Company, or
its nominees, ultimately acquires or causes the completion of such acquisition, Company agrees
to compensate Consultant for such services with a “finder’s fee” in the amount of 5% of total
gross consideration provided by such acquisition, such fee to be payable in cash. This 5%
will be in addition to any fees payable by Company to any other intermediary. It is
specifically understood that Consultant is not and does not hold itself out be a
Broker/Dealer, but is rather merely a “Finder” in reference to the Company procuring financing
sources and acquisition candidates. Any obligation to pay a “Finder’s Fee” hereunder shall
survive the merging, acquisition, or other change in the form of entity of the Company and to
the extent it remains unfulfilled shall be assigned and transferred to any successor to the
Company. |
| a) | It is further understood that Company, and not Consultant, is responsible to perform
any and all due diligence on such lender, equity purchaser or acquisition candidate
introduced to it by Consultant under this Agreement, prior to Company receiving funds or
closing on any acquisition. However, Consultant will not introduce any parties to Company
about which Consultant has any prior knowledge of questionable, unethical or illicit
activities. |
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| b) | Company agrees that said compensation to Consultant shall be paid in full at the time
said financing or acquisition is closed, such compensation to be transferred by Company to
Consultant within seven (7) business days of the execution of the financing of acquisition
closing document. Payment of said compensation, shall be a condition precedent to the
closing of such financing or acquisition, and Company shall execute any and all documents
necessary to effect said compensation. |
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| c) | As further consideration to Consultant, Company, or its nominees, agrees to pay with
respect to any financing or acquisition candidate provided directly or indirectly to the
Company by any lender or equity purchaser covered by this Section 5 during the period of
one year from the close of the term of this Agreement, a fee to Consultant equal to that
outlined in Section 5 herein; provided, however, that this subsection shall not restrict
the Company from hiring an investment banker or broker to obtain financing for the Company,
and no fee shall be payable if such banker or broker should independently obtain financing
from a financing source previously introduced by Consultant. |
4.
| d) | Consultant will notify Company of introductions it makes for potential sources of
financing or acquisitions in a timely manner (within approximately 3 days of introduction)
via facsimile memo. If Company has a preexisting relationship with such nominee and
believes such party should be excluded from this Agreement, then Company will notify
Consultant immediately within twenty-four (24) hours of Consultant’s facsimile to Company
of such circumstance via facsimile memo. To avoid inadvertent interference with the
Company’s own joint venture development efforts, Consultant will not contact any
pharmaceutical companies, cell biology companies or other companies in the Company’s market
arena without prior approval by the Company. |
| 6) | Non-Assignability of Services. Consultant’s services under this contract are offered
to Company only and may not be assigned by Company to any entity with which Company merges or
which acquires the Company or substantially all of its assets. In the event of such merger or
acquisition, all compensation to Consultant herein under the schedules set forth herein shall
remain due and payable, and any compensation received by the Consultant may be retained in the
entirety by Consultant, all without any reduction or pro-rating and shall be considered and
remain fully paid and non-assessable. Notwithstanding the non-assignability of Consultant’s
services, Company shall assure that in the event of any merger, acquisition, or similar change
of form of entity, that its successor entity shall agree to complete all obligations to
Consultant, including the provision and transfer of all compensation herein, and the
preservation of the value thereof consistent with the rights granted to Consultant by the
Company herein, and to Shareholders. |
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| 7) | Expenses. Consultant agrees to pay for all its expenses (phone, mailing, labor,
etc.), other than extraordinary items (travel required by/or specifically requested by the
Company, luncheons or dinners to large groups of investment professionals, mass faxing to a
sizable percentage of the Company’s constituents, investor conference calls, print
advertisements in publications, etc.) approved by the Company prior to its incurring an
obligation for reimbursement. |
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| 8) | Indemnification. The Company warrants and represents that all oral communications,
written documents or materials furnished to Consultant by the Company with respect to
financial affairs, operations, profitability and strategic planning of the Company are
accurate and Consultant may rely upon the accuracy thereof without independent investigation.
The Company will protect, indemnify and hold harmless Consultant against any claims or
litigation including any damages, liability, cost and reasonable attorney’s fees as incurred
with respect thereto resulting from Consultant’s communication or dissemination of any said
information, documents or materials. |
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| 9) | Representations. Consultant represents that it is not required to maintain any
licenses and registrations under federal or any state regulations necessary to perform the
services set forth herein. Consultant acknowledges that, to the best of its knowledge, the
performance of the services set forth under this Agreement will not violate any rule or
provision of any regulatory agency having jurisdiction over Consultant. Consultant
acknowledges that, to the best of its knowledge, Consultant and its officers and directors are
not the subject of any investigation, claim, decree or judgment involving any violation of the
SEC or securities laws. Consultant further acknowledges that it is not a securities Broker
Dealer or a registered investment advisor. Company acknowledges that, to the best of its
knowledge, that it has not violated any rule or provision of any regulatory agency having
jurisdiction over the Company. Company
acknowledges that, to the best of its knowledge, Company is not the subject of any
investigation, claim, decree or judgment involving any violation of the SEC or securities laws. |
5.
| 10) | Legal Representation. The Company acknowledges that it has been represented by
independent legal counsel in the preparation of this Agreement. Consultant represents that it
has consulted with independent legal counsel and/or tax, financial and business advisors, to
the extent the Consultant deemed necessary. |
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| 11) | Status as Independent Contractor. Consultant’s engagement pursuant to this Agreement
shall be as independent contractor, and not as an employee, officer or other agent of the
Company. Neither party to this Agreement shall represent or hold itself out to be the
employer or employee of the other. Consultant further acknowledges the consideration provided
hereinabove is a gross amount of consideration and that the Company will not withhold from
such consideration any amounts as to income taxes, social security payments or any other
payroll taxes. All such income taxes and other such payment shall be made or provided for by
Consultant and the Company shall have no responsibility or duties regarding such matters.
Neither the Company nor the Consultant possesses the authority to bind each other in any
agreements without the express written consent of the entity to be bound. |
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| 12) | Attorney’s Fee. If any legal action or any arbitration or other proceeding is
brought for the enforcement or interpretation of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with or related to this Agreement,
the successful or prevailing party shall be entitled to recover reasonable attorneys’ fees and
other costs in connection with that action or proceeding, in addition to any other relief to
which it or they may be entitled. |
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| 13) | Waiver. The waiver by either party of a breach of any provision of this Agreement by
the other party shall not operate or be construed as a waiver of any subsequent breach by such
other party. |
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| 14) | Choice of Law, Jurisdiction and Venue. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of California. The parties
agree that San Francisco County, CA. will be the venue of any dispute and will have
jurisdiction over all parties. |
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| 15) | Arbitration. Any controversy or claim arising out of or relating to this Agreement,
or the alleged breach thereof, or relating to Consultant’s activities or remuneration under
this Agreement, shall be settled by binding arbitration in California, in accordance with the
applicable rules of JAMS Endispute, San Francisco, California, and judgment on the award
rendered by the arbitrator(s) shall be binding on the parties and may be entered in any court
having jurisdiction as provided by Paragraph 14 herein. The provisions of Title 9 of Part 3
of the California Code of Civil Procedure, including section 1283.05, and successor statutes,
permitting expanded discovery proceedings shall be applicable to all disputes that are
arbitrated under this paragraph. |
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| 16) | Complete Agreement. This Agreement contains the entire agreement of the parties
relating to the subject matter hereof. This Agreement and its terms may not be changed orally
but only by an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought. |
6.
AGREED TO:
| “Company” | International Stem Cell, | |||
Date:
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By: | /S/ XXXXXXX X. XXXXXXX | ||
| Xxxxxxx X. Xxxxxxx, Chairman | ||||
| “Consultant” | CAPITAL GROUP COMMUNICATIONS, INC. | |||
Date:
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By: | /S/ XXXXX XXXXX | ||
| Xxxxx Xxxxx, President | ||||
7.
