Exhibit 10.2
CirTran Corporation
Form 10-KSB
Cogent Capital Corp.
00000 Xxxxx 0000 Xxxx
Xxxxx, XX 00000
May 12,1999
PRIVATE AND CONFIDENTIAL
Xxxxx Xxxxxxxx, President
Circuit Technology, Inc.
0000 X. 0000 X.
Xxxx Xxxxxx Xxxx, Xxxx 00000
Dear Xx. Xxxxxxxx:
This letter agreement (the "Agreement") confirms our
understanding that Circuit Technology, Inc. (the "Company") has
engaged Cogent Capital Corp., a Utah corporation ("Cogent"), to
act as a financial advisor to the Company for a period of one (1)
year (the "Term") in connection with any proposed Business
Combination involving the Company and another party or entity
introduced to the Company by Cogent (a "Third Party").
As used in this Agreement-the term "Business Combination"
means, whether effected in one or a series of transactions, (a)
any merger, consolidation, reorganization, or other business
combination (including asset acquisitions or dispositions, in
whole or part) pursuant to which the business, in whole or part,
of the Company is combined with that of one or more Third Parties
or one or more persons formed by or affiliated with a Third Party,
(b) the acquisition, directly or indirectly, by one or more Third
Parties of all or substantially all of the assets of, or any right
to all or substantially all of the revenues or income of, the
Company by way of a negotiated purchase, lease, license, exchange,
joint venture or other Means, or (c) the acquisition directly or
indirectly, by one or more Third Parties of control of the Company
through a proxy contest or other capital stock transaction.
1. Financial Advisory Services. In the capacity of a financial
advisor for the Company, Cogent will, in consultation with the
Company, assist the Company in analyzing, structuring, negotiating
and effecting proposed Business Combinations on the terms and
conditions provided herein. In this regard, we propose to
undertake certain activities on the Company's behalf, as
appropriate, including the following:
1.1 Submit a list to the Company of prospective Third
Parties;
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Xxxxx Xxxxxxxx, President
May 12,1999
Page 2
1.2 Advise the Company regarding financing alternatives and
Business Combinations which have the potential to
enhance values to be realized by the Company or
further the Company's objectives;
1.3 If the Company and Cogent deem it advisable, assist the
Company in preparing a brochure or other document to be
utilized in discussions with prospective Third Parties
which will describe the Company in such detail as may be
appropriate under the circumstances;
1.4 Assist the Company in its determination of appropriate
and desirable values to be realized in a Business
Combination;
1.5 Recommend procedures through which the Company could
explore the terms and conditions under which the Company
could be acquired by, or effect some other form of
Business Combination with a Third Party and, in that
connection, provide advice regarding the identity of
potential Third Parties, assist in the preparation of
any required documentation and, in the event
negotiations are held, or an agreement in principle is
reached, with a Third Party relating to any potential
Business Combination, assist the Company in such
negotiations, including assisting in negotiating the
definitive Business Combination documents;
1.6 Recommend procedures through which the Company could
explore the terms and conditions under which certain
assets of the Company, including divisions, subsidiaries
and other significant assets could be sold, financed or
refinanced; and in this connection Cogent will provide
advice regarding the identity of potential Third Parties
or other financing sources of such assets and will
assist the Company in negotiations with such Third
Parties or financial institutions;
1.7 Advise and assist the Company's management in making
presentations to the Company's Board of Directors about
proposed Business Combinations;
1.8 If requested by the Company, render an opinion as to
whether or not the consideration to be paid in a
proposed Business Combination is fair to the Company and
the shareholders of the Company from a financial point
of view; and
1.9 Render such other financial advisory and investment
banking services as may from time to time be agreed upon
by the Company and Cogent, including but not limited to,
evaluating the Company's capital requirements, review
financing and refinancing alternatives for meeting such
requirements, and
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Xxxxx Xxxxxxxx, President
May 12,1999
Page 3
recommend to the Company specific financing and
refinancing structures, and the procedures through which
the Company will execute potential financing strategies.
2. Financial Advisory Services Fee. Cogent's total compensation
from the Company for all of its efforts and services hereunder
shall be as set forth below in this Section 2.
2.1 If, during the Term hereof or within six (6) months
after the expiration of the Term, (a) a Business
Combination is consummated by the Company or (b) the
Company enters into a written agreement which
subsequently results in a Business Combination, then
Cogent's total compensation (the "Advisory Fee") shall
be as follows:
2.1.1 If the Company's value as established in the
Business Combination is set at less than Eight
Million Dollars ($8,000,000), then Cogent will be
paid an Advisory Fee of eight-percent (8%) of the
Business Combination Value (as defined below); or
2.1.2 If the Company's value as established in the
Business Combination is valued at Eight Million
Dollars ($8,000,000) or more, but less that Ten
Million Dollars ($10,000,000), then Cogent will be
paid an Advisory Fee of ten percent (10%) of the
Business Combination Value (as defined below); or
2.1.3 If the Company's value as established in the
Business Combination is valued at Ten Million
Dollars ($10,00,000) or more, then Cogent will be
paid an Advisory Fee of twelve percent (12%) of
the Business Combination Value (as defined below).
The Company shall have the option, in its sole
discretion, to pay the Advisory Fee in either: (i) cash; or (ii)
the Company's voting capital stock, or (iii) securities or other
consideration paid by the Third Party in the Business Combination;
or (iv) a combination of the foregoing. The Advisory Fee shall be
paid only if and when a Business Combination is consummated by the
Company and a Third Party and the Closing (as defined below) for
such Business Combination has occurred, provided that, the
Advisory Fee shall be paid at or simultaneously with, the Closing
of any Business Combination. Payment of the Advisory Fee shall be
the obligation of the Company regardless of the form or structure
of the Business Combination.
For purposes of this Agreement, the term "Business
Combination Value" means the amount equal to the sum of the
aggregate fair market value of any securities, issued or received
by the Company or its shareholders, and any other non-cash
consideration conveyed to the Company or its
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Xxxxx Xxxxxxxx, President
May 12,1999
Page 4
shareholders (including, without limitation, any collaboration or
joint venture interests delivered or retained by, the Company) and
any cash consideration paid, to the Company or its shareholders in
connection with a Business Combination and the amount of all
indebtedness of the Company, including any affiliate of the
Company, which is assumed or acquired by a Third Party or retired
or deceased in connection with such Business Combination. The fair
market value of any securities issued by the Company, or received
from a Third Party by the Company or its shareholders, and any
other non-cash consideration either received or delivered by the
Company or its shareholders, will be the value determined by the
Company and the Third Party immediately prior to the Closing of
the Business Combination.
The "Closing" shall be deemed to take place at the time when
any consideration or Business Combination Value to be paid in
connection with the Business Combination has been transferred, or
the evidence of ownership or title delivered, to the party or
parties entitled thereto under the applicable Business Combination
documents.
3. Registration Rights. In the event that all or any part of
the Advisory Fee is paid to Cogent in equity securities of a Third
Party, then the Company hereby undertakes to use its best efforts
to negotiate with such Third Party prior to the Closing of a
Business Combination in which the Company or its shareholders is
or are receiving equity securities of the Third Party together
with registration rights, for such Third Party to provide
registration rights to Cogent. As a condition to receiving
registration rights under this -Section 3, Cogent agrees that the
equity securities, if any, received by it will be subject to
certain restrictions on transfer, rights of repurchase, and other
terms and conditions deemed mutually agreeable by Cogent and the
Company.
4. Miscellaneous. This Agreement shall be governed in all
respects, whether as to validity, construction, capacity,
performance or otherwise, by the internal laws of the State of
Utah. Any dispute, controversy, claim and other matters in
question between the parties hereto arising out of or relating to
this Agreement, or the breach, termination or invalidity hereof,
shall be settled by arbitration in accordance with the rules of
the American Arbitration Association, unless the parties hereto
mutually agree otherwise. There shall be one (1) arbitrator and
the appointing authority shall be the American Arbitration
Association. The place of arbitration shall be Salt Lake City,
Utah. The award by the arbitrator shall be final and binding and
judgment may be entered upon such award in accordance with
applicable law in any court having jurisdiction thereof. The
parties hereby waive any rights to appeal any arbitration award
to, or to seek a determination of a preliminary point of law by,
any State or Federal court. The arbitrator shall award to the
prevailing party, if any, as determined by the arbitrator, all of
its Costs and Fees (as hereinafter defined). "Costs and Fees"
means all reasonable pre-award expenses of the arbitration,
including the arbitrator's fees, administrative fees, travel
expenses, out-of-pocket expenses, such as copying and telephone,
witness
fees and attorneys' fees, as well as interest on the award.
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Xxxxx Xxxxxxxx, President
May 12,1999
Page 5
This Agreement supersedes all prior agreements and
understandings between the Company and Cogent, and can only be
amended or modified in a writing signed by the parties hereto.
This Agreement shall be binding upon all successors and assigns as
their interest shall appear.
If any term, provision, covenant or restriction contained in
this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its
regulatory policy, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.
After reviewing this Agreement, please confirm that the
foregoing is in accordance with your understanding by signing and
returning to me the duplicate of this Agreement attached hereto,
whereupon it shall be our binding agreement.
Very truly yours,
COGENT CAPITAL CORP., a Utah corporation
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Its: President
ACCEPTED AND AGREED TO:
July 13, 1999
CIRCUIT TECHNOLOGY, INC.,
a Utah corporation
By: /s/ Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
Its: President and Director
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