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EXHIBIT 10.3
December 28, 1999
Xxxxx Xxxxxx
Industrialex Manufacturing LLC
00 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Dear Ahmad:
We write to record our agreement (the "Agreement") with respect to the matters
described herein. Bolder Venture Partners, LLC ("BVP") has reviewed Industrialex
Manufacturing LLC ("Industrialex") and its conformal coating operation
contemplated in its roll up. BVP wishes to pursue the opportunity presented by
Industrialex and to play a significant role in aiding Industrialex in its future
growth and Industrialex wishes to engage BVP for that purpose. Accordingly, BVP
and Industrialex agree as follows:
1. BVP will lead a complete financing plan which will include the following:
(a) an initial U.S.$1,000,000 private placement (the "Initial Placement")
to close within 30 days after the later of (i) the signing of this
Agreement, and (ii) the corporate continuance of Industrialex into the
State of Delaware, subject to the completion, prior to the Initial
Placement, of a capital reorganization which will result in
Industrialex having a fully-diluted capital structure consisting of
8.05 million shares;
(b) immediately upon completion of the Initial Private Placement, BVP will
lead and direct an initial public offering (the "IPO") to raise
approximately US $2.0 million in a common stock and convertible
debenture, depending on market conditions, and listing of Industrialex
shares on the Vancouver Stock Exchange (the "VSE"); and
(c) following the IPO, BVP will assist with a placement which will qualify
Industrialex to list its shares on the Nasdaq Small Cap Market Place
at a fee to be determined.
In addition, Industrialex will pay BVP a success fee of U.S. $50,000, on
closing of the Initial Placement. The time horizon from the Initial
Placement through the IPO and to completion of the Follow-On Placement
which will be in the range of 18 - 24 months. BVP is prepared to fund, if
required, as agent and as principal, not less than 40% of each tranche.
Industrialex management will provide BVP with a "President's List" of close
personal friends, relatives and business associates who have expressed
interest in participating in financings carried out by Industrialex and
BVP. Industrialex management and BVP will agree on the approximate number
of Industrialex shares to be reserved for subscribers from the President's
List. BVP will have the right, but not the obligation, to accept
subscriptions from the President's List, in the denominations and to the
persons set out therein. BVP may include one or more a sub-agent in the
financing process, if required. The sub-agents shall consist of firms
suggested by either Industrialex
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or BVP. Sub-agents shall receive a percentage of any fees paid to BVP, in
an amount to be determined by BVP, for any portion of a financing raised by
them.
2. Subject to an approved capital reorganization of Industrialex, BVP proposes
that: (i) the Initial Placement consist of 2,000,000 shares at a price of
US $0.50 per share (US $1,000,000); (ii) the IPO consist of approximately
1,000,000 shares at approximately US $1.00 per share (US $1,000,000) and
$1,000,000 Convertible Debenture 10% coupon convertible at US $1.25; and
(iii) the Follow-On Placement will raise an amount and at a price to be
determined with reference to market conditions at the time.
3. In partial consideration of BVP's services, Industrialex will issue BVP
warrants (the "Warrants") to purchase 805,000 shares exercisable for a
period of five years from the date hereof, which will vest in three
tranches, subject to performance by BVP, as follows:
400,000 of the Warrants will be exercisable upon execution by
Industrialex of this Agreement, at a price of U.S.$0.25 per share;
205,000 of the Warrants will be exercisable upon completion of the
Initial Placement, at a price per share equal to the private placement
price (estimated to be US $0.50 per share);
200,000 of the Warrants will be exercisable upon completion of the
IPO, at a price per Share equal to the IPO price (estimated to be US
$1. 00 per share);
The Warrants and any shares issued upon their exercise will have the
customary anti-dilution protection and demand and piggyback registration
rights, which will be set out in the Warrant certificates. If all of the
Shares of Industrialex are purchased by a third party, unaffiliated to
Industrialex, its shareholders, officers or directors, prior to the vesting
of all of the Warrants in accordance with the foregoing schedule, BVP will
have no entitlement to exercise any Warrants which have not vested at the
time of completion of that transaction.
4. The proposed capital structure, depending on market conditions, for this
project is as follows:
Share Type No. of shares Debt Price
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Founders 4,250,000
Private Placement 2,000,000 $ .50
Initial Public Offering
Common Stock 1,000,000 $ 1.00
Convertible Debenture $1,000,000 10% coupon, convertible @ $1.25
5. Industrialex will pay BVP's reasonable out-of-pocket expenses up to $3,000
per month. Expenses exceeding US $3,000 per month will require prior
approval from Industrialex management in order to qualify for
reimbursement.
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6. BVP will also serve as corporate development and financial advisor to
Industrialex for a period of 12 months, and in that capacity will advise
and assist with respect to matters including, but not limited to: (i)
strategic planning; (ii) the recruitment of senior management, employees
and directors; (iii) the financings described above, culminating in the
securing of a NASDAQ listing with sponsorship from a US investment banking
firm. This engagement will commence effective December 1, 1999 and will
continue to have effect until November 30, 2000. In consideration of BVP's
services in this advisory capacity, Industrialex will pay BVP a monthly fee
of U.S. $4,500 on the first business day of each month throughout the
engagement period.
BVP looks forward to aiding current management in developing Industrialex into a
major provider of conformal coating. We believe that the combination of current
management's skills and the experience BVP brings, from a financial markets
perspective, will successfully drive the growth of Industrialex. Throughout the
term of this agreement, BVP will report directly to you on all financing and/ or
operational issues concerning Industrialex.
Please confirm our agreement, set forth above by executing, in the space
indicated below, and returning to us the enclosed copy of this letter.
Sincerely yours,
BOLDER VENTURE PARTNERS, LLC
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
General Partner
Accepted and agreed to as per the terms set forth above, this ___ day of
December 1999.
Industrialex Manufacturing LLC.
By: /s/ Xxxxx Xxxxxx
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President
