Exhibit 10.2
Engagement Agreement
Between Merchant Capital Corp.
&
Panama Industries, Inc.
This Engagement Agreement (herein the "Agreement") is entered into this
1st day of September 2001 by and between Panama Industries, Inc. (herein the
"Company") and Merchant Capital Corp. (herein the "Consultant" or
"Consultants").
RECITALS
The Consultants, through considerable experience, time and effort, have
created and developed, a system for providing financial consultancy services
(the "Services") to private and public companies.
The Company desires to obtain the services of the Consultants and on
the basis of previous telephone conversations and meetings between the Company
and the Consultants as well as other discussions, preliminary financial
statements, initial reports submitted by the Company, and the representations
that the Company has made to the Consultants describing the Company and its
principals, the present and proposed business activities of the Company, its
operations, financial condition and capital structure, and various agreements
and documents related thereto, the Consultants are willing to provide such
services to the Company.
Now, Therefore, in consideration of the mutual covenants and promises
contained herein, the sufficiency of which is hereby acknowledged by each of the
parties, the Company and the Consultants hereby agree as follows:
I. ENGAGEMENT
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The Company hereby engages and retains the Consultants as Business
Consultants/ Financial Advisors for and on behalf of the Company to perform the
Services (as that term is hereinafter defined) and the Consultants hereby
accepts such appointment on the terms and subject to the conditions hereinafter
set forth and agree to use their best efforts in providing such Services.
II. INDEPENDENT CONTRACTOR
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A. The Consultants are, and in all respects are deemed to be,
independent contractors in the performance of their duties
hereunder, any law of any jurisdiction to the contrary
notwithstanding.
B. The Consultants will not, by reason of this Agreement or the
performance of the Services, be or be deemed to be, an
employee, agent, partner, co-venture or controlling person of
the Company, and the Consultants will have no power to enter
into any agreement on behalf of or otherwise bind the Company.
C. The Consultants will not have or be deemed to have, fiduciary
obligations or duties to the Company and will be free to
pursue, conduct and carry on for its own account (or for the
account of others) such activities, employments, ventures,
businesses and other pursuits as the Consultants in its sole,
absolute and unfettered discretion, may elect. The Consultant
is a registered broker/dealer and associated person of such,
and is purporting to act in all capacities requiring
registration as a broker/dealer or associated person.
D. Notwithstanding the above, no activity, employment, venture,
business or other pursuit of the Consultants during the term
of this agreement will conflict with the Consultants
obligations under this Agreement or be adverse to the
Company's interests during the term of this Agreement.
III. SERVICES
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The Consultants agree to provide the following, hereafter collectively
referred to as the "Services":
A. Advise the Company in its efforts in obtaining capital in any
form or structure acceptable to the Company with "Best
Efforts" terms from accepted prospective investors, investor
groups or their agents. The Consultant will act as
non-exclusive agent to identifying suitable prospective
investors, investor groups or their agents.
B. Best Efforts. The Consultants will devote such time and best
effort to the affairs of the Company as is reasonable and
adequate to render the consulting services contemplated by
this agreement.
C. The Consultants are not responsible for the performance of any
services which may be rendered hereunder without the Company
providing the necessary information in writing prior thereto,
nor will the Consultants include any services that constitute
the rendering of any legal opinions or performance of work
that is in the ordinary purview of a Certified Public
Accountant. The Consultants cannot guarantee results on behalf
of the Company, but will pursue all 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,
the Consultants will notify the Company and advise it as to
the source of such interest and any terms and conditions of
such interest. The acceptance and consummation of any
transaction is subject to acceptance of the terms and
conditions by the Company.
D. In conjunction with the Services, the Consultants agrees to:
1. Make itself available to the officers of the Company
at such mutually agreed upon place during normal
business hours for reasonable periods of time,
subject to reasonable advance notice and mutually
convenient scheduling, for the purpose of advising
the Company in the preparation of such reports,
executive summaries, corporate and/or transaction
profiles, due diligence packages and/or other
material and documentation ("Documentation") as will
be necessary, in the opinion of the Consultants, to
properly present the Company to other entities and
individuals that could be of benefit to the Company.
2. Make itself available for telephone conferences with
the principal financial sales and/or operating
officer(s) of the Company during normal business
hours.
3. Advise the Company's management in corporate finance,
structuring the nature, extent and other parameters
of any private or public offer(s) to be made to
prospective investors, investor groups or their
agents.
4. Advise the Company's management in evaluating
proposals and participating in negotiations with
prospective investors, investor groups or their
agents.
5. Advise the Company regarding company operations,
staffing, strategy, and other issues related to
building shareholder value as is may reasonably
request, consistent with the provisions of this
Agreement.
IV. RETAINER FEE
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The Company agrees that:
A. The Consultant shall receive an option contract as a retainer
fee for its initial professional time, due diligence expenses
and mobilization costs. These retainer options will be issued
immediately upon execution of this agreement as follows:
|_| 50,000 shares @ $.75
|_| 50,000 shares @ $1.25
|_| 50,000 shares @ $1.75
|_| 50,000 shares @ $2.25
|_| 50,000 shares @ $2.75
These options are to be delivered in fully accountable and
non-assessable form. The underlying stock to these options
will be registered in the next SB-2 registration statement
filed by the Company. (See attached "Exhibit A")
V. COMPENSATION
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If, at any time during the term of this Agreement and for a period of
three years following the termination of this agreement, the Company completes
any transaction which includes, but is not limited to; any equity or debt
financing, merges with or acquires assets involving either public or private
companies or any other property from any of the entities, affiliations or
persons, its employees or former employees, agents, representatives, advisors,
or consultants introduced to the Company by the Consultant, the Company agrees
to:
Mergers & Acquisitions
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A. During the period of this agreement the consultant will
represent the Company in any negotiations or renegotiations
pursuant to any merger or acquisition of a public or private
company introduced by the Consultant. In the event of a
successful merger, the Company agrees to pay the consultant
fees (cash or common stock at the option on the Consultant)
calculated on a formula below based on the market
capitalization of the surviving entity. The market
capitalization is defined as the average trading price for the
common stock for the five days immediately after the closing
of the merger. The formulas for making the fee calculations
are as follows:
|_| Five (5%) percent of the first $1 million or any
portion thereof;
|_| Four (4%) percent of the second $1 million or any
portion thereof;
|_| Three (3%) percent of the third $1 million or any
portion thereof;
|_| Two (2%) percent of the fourth $1 million or any
portion thereof;
|_| One (1%) percent of any balance thereof; and
Equity Placement(s)
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A. A "transaction fee" equal to ten (10%) percent in cash, upon
closing, based on any and all proceeds from any and all
transaction referred to in this agreement, for all forms of
equity financing; and
B. Issue to the Consultant three (3) year warrants to purchase a
total of ten (10%) percent of the total number of shares
purchased by the investor or investor group. The Consultant
may exercise these warrants at a price equal to one (100%)
percent of the offering price (the price paid by the investor
or investor group). These warrants are to be delivered in
cashless exercise, fully accountable and non-assessable form.
The Consultant's warrants will carry unlimited "piggyback"
registration rights to any subsequent registration by the
Company.
Debt Placement(s)
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A. The cash "transaction fees" are equal to three (3%) percent
computed on the gross amount of any and debt infusions or
agreements, credit facilities, credit lines, and any other
form of debt financing accepted by the Company. These fees are
due and payable upon closing of any and all transactions,
introduced by the Consultant, contemplated and completed under
this agreement.
This schedule of fees listed above is subject to the terms and
conditions listed below. These terms and conditions are applicable to any and
all transactions contemplated and or completed under this agreement.
A. The Company agrees that any and all transactions will be
conducted through an escrow account to be established with the
consent of the Consultant. The Company further agrees that any
and all legal fees associated with the escrow will be deducted
from the proceeds on any and all transactions. These legal
fees are subject to the Company's advance written approval and
consent.
B. The Company further agrees to execute any and all documents or
instruction's necessary directing the funding source(s) to pay
the Consultant's fee(s) directly from the proceeds of any and
all funding(s) directly from any and all escrow accounts.
C. If required by applicable law, or at the election of the
Consultant, the fees deemed to have been earned by the
Consultant will be paid to any and all placement agent(s)
selected exclusively by the Consultant.
The various transactions contemplated in this agreement or to be
considered independent transactions and the fees described above shall be
considered earned on a transaction-by-transaction basis. These transactions are
in no way contingent upon one another. Obligations, transactions, introductions
and sales agreements/contracts that have been consummated will continue for the
duration of their respective contract, etc.
VI. REPRESENTATIONS, WARRANTIES AND COVENANTS
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A. Execution. The execution, delivery and performance of this
Agreement, in the time and manner herein specified, will not
conflict with, result in a breach of, or constitute a default
under any existing agreement, indenture, or other instrument
to which either the Company or the Consultants is a party or
by which either entity may be bound or affected.
B. Non-Circumvention. The Company hereby irrevocably agrees not
to circumvent, avoid, bypass, or obviate, directly or
indirectly, the intent of this Agreement, to avoid payment of
fees in any transaction with any corporation, partnership or
individual, introduced by the Consultants to the Company, in
connection with any project, any loans or collateral, or other
transaction involving any products, transfers or services, or
any addition, renewal extension, rollover, amendment,
renegotiations, new contracts, parallel contracts/agreements,
or third party assignments thereof. The Company understands
and acknowledges that its obligations under this
Non-Circumvention Agreement are for the benefit of the
Consultant and its successors and assigns, and that the
Consultant's failure or delay in exercising any right, power
and privilege hereunder shall not operate as a waiver thereof,
nor shall any single or partial exercise thereof or the
exercise of any other right, power or privilege hereunder
operate as a waiver.
C. Timely Appraisals. The Company shall keep the Consultants up
to date and appraised of all business market and legal
developments related to the Company and its operations and
management.
1. Accordingly, the Company shall use its best efforts
to provide the Consultants with copies of all
amendments, revisions and changes to its business and
marketing plans, by-laws, articles of incorporation,
private placement memoranda, key contracts,
employment and consulting agreements and other
operational agreements.
2. The Company shall use its best efforts to promptly
notify the Consultants of the threat or filing of any
suit, arbitration or administrative action,
injunction, lien, claim or complaint and promptly
forward a copy of all related documentation directly
to the Consultants or at the Consultants option to
the Consultants counsel.
3. The Company shall use its best efforts to also
provide directly to the Consultants current financial
statements, including balance sheets, income
statements, cash flows and all other documents
provided or generated by the Company in the normal
course of its business and requested by the
Consultants from time to time.
4. The Consultants shall use its best efforts to keep
all documents and information confidential as
described in the section below titled, "CONFIDENTIAL
DATA".
D. Corporate Authority. Both the Company and the Consultants have
full legal authority to enter into this Agreement and to
perform the same in the time and manner contemplated.
E. The individuals whose signatures appear below are authorized
to sign this Agreement on behalf of their respective
corporations.
F. The Company will cooperate with the Consultants, and will
promptly provide the Consultants with all pertinent materials
and requested information in order for the Consultants to
perform its Services pursuant to this Agreement.
G. When issued, the Shares of the Company's Common Stock shall be
duly and validly issued, fully paid and non-assessable.
H. The Company hereby agrees to enter into an escrow agreement
with an escrow agent selected with the consent of the
Consultant (the "Escrow Agent"), and agrees to abide by the
terms of the escrow agreement set forth by the Escrow Agent
and the Consultants on such terms as may be acceptable to the
Company and the Consultants.
I. The Company also agrees to enter into such additional
agreements, sign such additional documents, and provide such
additional certifications and documentation as may be
requested by the Escrow Agent, the Consultant, or such other
parties related to the obtaining of capital for the Company on
such terms as may be acceptable to the Company and the
Consultants.
J. Until termination of the engagement, the Company will notify
the Consultants promptly of the occurrence of any event, which
might materially affect the condition (financial or
otherwise), or prospects of the Company.
VII. TERM AND TERMINATION
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A. This Agreement shall be effective upon its execution and shall
remain in effect for six (6) months.
B. In no event shall any termination be effective until the
expiration of at least ninety (90) days after the signing of
this agreement.
C. After ninety (90) days from the date hereof, the Company or
the Consultants shall have the right to request the
termination of this engagement by furnishing the other party
with written notice requesting such termination. However, no
termination of this Agreement by either party shall be in full
force or affect without the express written consent of both
parties. Termination of this agreement shall not, in any way
affect the right of the Consultant to receive, as a result of
its services rendered, transactions consummated and
introductions made; its fees, securities or warrants on any
and all transactions which result in the Company receiving
financing or other benefits hereunder.
VIII. CONFIDENTIAL DATA
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A. The Consultants shall not divulge to others, any trade secret
or confidential information, knowledge, or data concerning or
pertaining to the business and affairs of the Company,
obtained by the Consultants as a result of its engagement
hereunder, unless authorized, in writing by the Company.
B. The Company shall not divulge to others, any trade secret or
confidential information, knowledge, or data concerning or
pertaining to the business and affairs of the Consultants,
obtained by the Company as a result of its engagement
hereunder, unless authorized, in writing, by the Consultants.
C. The Consultants shall not be required in the performance of
its duties to divulge to the Company or any officer, director,
agent or employee of the Company, any secret or confidential
information, knowledge, or data concerning any other person,
firm or entity (including, but not limited to, any such
persons, firm or entity which may be a competitor or potential
competitor of the Company) which the Consultants may have or
be able to obtain otherwise than as a result of the
relationship established by this Agreement.
IX. OTHER MATERIAL TERMS AND CONDITIONS:
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A. Indemnity. The Company agrees to indemnify and hold harmless
the Consultant and its affiliates against any legal action
arising from written warranties and representations provided
by the Company. Such indemnification shall include payment of
judgments, if any, and costs of legal representation and court
costs, if any.
B. Additional Instruments. Each of the parties shall from time to
time, at the request of others, execute, acknowledge and
deliver to the other party any and all further instruments
that may be reasonably required to give full effect and force
to the provisions of this Agreement.
C. Entire Agreement. Each of the parties hereby covenants that
this Agreement is intended to and does contain and embody
herein all of the understandings and Agreements, both written
or oral, of the parties hereby with respect to the subject
matter of this Agreement, and that there exists no oral
agreement or understanding expressed or implied liability,
whereby the absolute, final and unconditional character and
nature of this Agreement shall be in any way invalidated,
empowered or affected. There are no representations,
warranties or covenants other than those set forth herein.
D. Laws of the State of New York. This Agreement shall be deemed
to be made in, governed by and interpreted under and construed
in all respects in accordance with the laws of the State of
New York, irrespective of the country or place of domicile or
residence of either party. In the event of controversy arising
out of the interpretation, construction, performance or breach
of this Agreement, the parties hereby agree and consent to the
jurisdiction and venue of the District or County Court of New
York County, New York; or the United States District Court for
the District of New York, New York, and further agree and
consent that personal service or process in any such action or
proceeding outside of the State of New York and New York
County shall be tantamount to service in person within New
York County, New York and shall confer personal jurisdiction
and venue upon either of said Courts.
E. Assignments. The benefits of the Agreement shall inure to the
respective successors and assigns of the parties hereto and of
the indemnified parties hereunder and their successors and
assigns and representatives, and the obligations and
liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns;
provided that the rights and obligations of the Company under
this Agreement may not be assigned or delegated without the
prior written consent of the Consultants, and any such
purported assignment shall be null and void. Notwithstanding
the foregoing, the Consultants may not assign or delegate its
obligations and rights under this Agreement without consent of
the Company, in the Company's sole discretion.
F. Originals. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed an
original and constitute one and the same agreement. Facsimile
copies with signatures shall be given the same legal effect as
an original.
G. Addresses of Parties. Each party shall at all times keep the
other informed of its principal place of business if different
from that stated herein, and shall promptly notify the other
of any change, giving the address of the new place of business
or residence.
H. Notices. All notices that are required to be or may be sent
pursuant to the provision of this Agreement shall be sent by
certified mail, return receipt requested, or by overnight
package delivery service to each of the parties at the address
appearing herein, and shall count from the date of mailing or
the validated air ▇▇▇▇.
I. Modification and Waiver. A modification or waiver of any of
the provisions of this Agreement shall be effective only if
made in writing and executed with the same formality as this
Agreement. The failure of any party to insist upon strict
performance of any of the provisions of this Agreement shall
not be construed as a waiver of any subsequent default of the
same or similar nature or of any other nature.
J. Injunctive Relief. Solely by virtue of their respective
execution of this Agreement and in consideration for the
mutual covenants of each other, the Company and the
Consultants hereby agree, consent and acknowledge that, in the
event of the failure by the Company to pay the consideration
to the Consultants or in the event of a breach of any other
material term, the Consultants will be without adequate
remedy-at-law and shall therefore, be entitled to immediately
redress any material breach of this Agreement by temporary or
permanent injunctive or mandatory relief obtained in an action
or proceeding instituted in the District or County Court of
New York County, State of New York or the United States
District Court for the District of New York without the
necessity of proving damages and without prejudice to any
other remedies which the Consultants may have at law or in
equity. For the purposes of this Agreement, the Company hereby
agrees and consents that upon a material breach of this
Agreement (as determined by a Court of Competent Jurisdiction)
as aforesaid, in addition to any other legal and/or equitable
remedies the Consultants may present a conformed copy of this
Agreement to the aforesaid courts and shall thereby be able to
motion the court obtain a permanent injunction enforcing this
Agreement or barring enjoining or otherwise prohibiting the
Company from circumventing the express written intent of the
parties as enumerated in this Agreement.
K. Attorneys Fees. If any arbitration, litigation, action, suit,
or other proceeding is instituted to remedy, prevent or obtain
relief from a breach of this Agreement, in relation to a
breach of this Agreement or pertaining to a declaration of
rights under this Agreement, the prevailing party will recover
all such parties attorneys fees incurred in each and every
such action, suit or other proceeding, including any and all
appeals or petitions there from. As used in this Agreement,
attorney's fees will be deemed to be the full and actual cost
of any legal services actually performed in connection with
the matters involved, including those related to any appeal or
the enforcement of any judgment calculated on the basis of the
usual fee charged by attorneys performing such services.
L. Public Notices. Any public notice, press release or any type
of dissemination of information regarding the Closing of any
transaction covered in this agreement shall include a
statement to the effect that "Merchant Capital Corp." acted as
a consultant in the matter referenced.
APPROVED AND AGREED:
Panama Industries, Inc.
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Merchant Capital Corp.
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President