EXHIBIT 7.2
INVESTMENT BANKING AGREEMENT
AGREEMENT , made this 31 st day of October, 2006 by and between,
The Enlightened Gourmet, Inc., having its principal place of business at
000 Xxxxxxxxxxx, Xxxxxx, XX 00000 hereinafter the "Company" and Xxxxxxx
Xxxxxx Securities Inc., having its principal place of business at
000 Xxxx Xx., 00xx Xx, Xxx Xxxx, XX 00000, hereinafter the ("CMS").
WHEREAS , the Company desires to retain CMS for investment banking and
investment advisory services in connection with the Company's business
affairs, and CMS is willing to undertake to provide such services as
hereinafter fully set forth:
W I T N E S S E T H
NOW, THEREFORE , the parties agree as follows:
1. Term: Twelve (12) months from the date hereof. This contract is
binding on both parties.
2. Nature of Services: The Company hereby engages CMS to render the
services hereinafter described during the term hereof on a
non-exclusive basis (it being understood and agreed that CMS
is free to render the same or similar services to any other
entity selected by it). However, the Company will exclusively
use CMS's services during the term of this Agreement.
(a) CMS will continue to render all services set forth in the Investment
Advisory Agreement entered into between the parties.
(b) CMS will assist the Company in raising funding in accordance with the
Company's business plan. All efforts by CMS will be on a best efforts
basis only.
(c) CMS will provide advice regarding the sales of securities in private
transactions.
(d) CMS will conduct a initial Private Placement of Convertible Promissory
Notes for the Company in the amount of $1,500,000 upon terms and
conditions as set forth in the Promissory Note annexed hereto as
Exhibit A and on the terms and conditions set forth in the
Placement Agent Agreement annexed hereto as Exhibit B. This offering
will be commenced, on a best efforts basis, in or about October 2006.
Compensation will be as set forth below, and as referenced in the
Placement Agent Agreement.
(e) Upon satisfaction of the conditions set forth in the First Offering
(including the subsequent registration of the stock underlying the
Convertible Promissory Notes), CMS will conduct, and the Company will
undertake, an additional Private Placement of $1.5 Million dollars
of convertible preferred stock for the Company on a best efforts basis
(with an over-allotment of up to an additional $300,000 upon the mutual
consent of the Company and CMS).
(f) It is anticipated that this Second Offering will take place in or about
the period between November 2006 and January 2007.
This offering will be on one of the following two terms and conditions:
i. The Second offering will offer preferred stock convertible into
25% of the Company's outstanding shares (based upon the number
of outstanding shares of the Company after full conversion of
all preferred shares). (Of the Convertible Preferred Stock
to be offered, 60% will be offered to investors in exchange
for the 1.5 Million offering price; while 40% will be paid to
CMS as a fee). In connection with the Offering structure,
the founders will exchange their 66,000,000 shares of common
stock for a new class of preferred stock convertible into 54.3%
of the total outstanding shares at the time of conversion
(the non-dilution to be effective for up to 2 years after the
date of issuance of the preferred stock). In the event of
this exchange, all common stock shares underlying the
conversion rights will be subject to a lock-up for 2 years
from the date of issuance of the preferred stock). This will
be the terms of the Second Offering provided that at least a
majority of the founders representing no less than 55% of the
66 million founder shares agree to the lock up; or
ii. If an adequate number of insiders do not elect to accept the above,
then the Phase II offering will be a straight $1.5 Million in
exchange for 32 million shares of common stock (of which 12.8
million shares would go to CMS as an investment banking fee--
these shares to CMS will not have registration rights and will
be restricted from resale for a period of no
less than one year).
3. Responsibilities of the Company: The Company shall provide CMS
with all financial and business information about the Company
as requested by CMS in a timely manner. In addition, executive
officers and directors of the Company shall make themselves
available for personal consultations with CMS and/or third
party designees, subject to reasonable prior notice, pursuant
to the request of CMS.
The Company agrees to honor all restrictions on its use of proceeds
raised in these offerings. With regard to the initial $1,500,000,
the Company agrees to use these funds as set forth on Schedule A
annexed hereto. The balance of funds from the initial offering shall
be used for business operations and expansion.
4. Compensation: For services to be provided hereunder, CMS will
be entitled to compensation and other consideration during the
term of the agreement as provided below:
a. In connection with the first offering to be conducted by
CMS for the Company, the Company shall pay to CMS
(to be paid directly from the escrowed funds raised) a
commission (the "Cash Commission") equal to ten percent
(10%) of the aggregate purchase price of the securities
sold to any investor, plus an additional three percent
(3%) of the purchase price for non-accountable expenses
("Non-Accountable Expense Fee").
b. In connection with CMS's initial offering (the placement of
up to $1.5 Million of convertible promissory notes),
in addition to the Cash Commission and the
Non-Accountable Expense Fee, CMS shall receive
placement agent warrants equivalent to 10% of the
common shares needed to be issued by the Company to
cover the full conversion of the promissory notes to
common stock. These warrants shall be exercisable at
6 cents ($0.06) per share. If at the time of the
exercise of the warrants, there is not an effective
registration statement covering resale of the shares
being received upon exercise, then such stock
certificate or certificates shall bear an appropriate
legend referring to the registration requirements of
the Securities Act of 1933; however, in such event,
the Company shall prepare and file with the Securities
and Exchange Commission within 90 days after
Conversion, a registration statement on Form SB-2 or
S-1 or such other form as is appropriate in order to
register the Converted Shares. In the event that the
Company fails to file a registration statement within
90 days as set forth above; or fails to prosecute such
registration in good faith, the Company shall be
obligated to pay to CMS that number of additional
placement agent warrants equal to 2,180,750 multiplied
by (the dollar value of the Notes sold in the offering
divided by $1,500,000).
c. In connection with CMS's second contemplated offering
(the placement of $1.5 million of convertible preferred
stock--plus any over-allotment), in addition to the
Cash Commission, CMS shall be paid the number of
shares of convertible preferred stock which would
convert into 10% of the Company's outstanding shares
(calculated based upon the number of outstanding shares
of Common Stock which would exist after full
conversion of all convertible securities of the
Company, including but not limited to Promissory Notes
and Convertible Preferred Shares). [Thus it is
contemplated that of the Convertible Preferred Stock
to be offered, 60% (representing 15% of the Company)
will be offered to investors in exchange for the $1.5
Million (or $1.8 Million with over-allotment) offering
price; while 40% will be paid to CMS as a fee.].
See also Section 2(f)(ii) for alternative calculation
of Common Stock to CMS based upon an alternative deal
structure.
5. Expenses : In addition to fees payable hereunder, and without
regard to whether any transaction set forth above is
consummated, the Company shall reimburse CMS for actual
out-of pocket expenses incurred by CMS. CMS shall obtain
prior approval of the Company for any expenses to be incurred
in excess of $1,500 and may request that the Company pay for
any direct costs such as printing, photocopying, etc. The
Company shall also reimburse the CMS for the costs of all
travel and related expenses incurred by the CMS in connection
with the performance of its services hereunder. Expenses shall
be due and payable when billed and after they have been
incurred. The Company shall reimburse CMS for all fees and
disbursements of CMS's counsel, which, among other things,
shall include, $15,000 for services provided to date in the
preparation and negotiation of the transaction documents and
for counsel's appointment as the Stock Escrow Agent. The
Company shall also pay all expenses in connection with
qualifying the securities for sale to the Investors under
applicable securities or blue sky laws of the states of the
United States (or in obtaining an exemption from such
qualification).
6. Indemnification : The Company agrees to save, defend, indemnify
and hold harmless the CMS from any kind of liabilities, of
every kind, nature and description, fixed or contingent
(including, without limitations, reasonable counsel fees and
expenses in connection with any action, claim or proceeding
relating to such liabilities) arising out of the services
provided hereunder, including but not limited to, by any
reason of any breach or failure of observance or performance
or untrue or incorrect statement of any term, commitment,
representation, warranty, covenant or agreement made by the
Company; or by any reason of negligence of the Company
regarding or in accordance with any duty, document,
obligation, responsibility, or other performance of service
arising out of this transaction. In the event that CMS
requests indemnification hereunder (the "Indemnified Party"),
CMS agrees to notify the Company (the "Indemnifying Party")
with reasonable promptness of any claim asserted against it
in respect to which any Indemnifying Party may be liable under
this Agreement, which notification shall be accompanied by a
written statement setting forth the basis of such claim and
the manner of calculation thereof. The Indemnifying Party
shall defend any such claims, threatened or asserted, at its
sole expense. The Indemnified Party shall be permitted to
choose the legal counsel of its choice to defend any such
threatened or asserted claim. The Company shall agree to
sign CMS's standard Indemnity Agreement in connection with
each transaction undertaken (see form of indemnity agreement
attached to Placement Agent Agreement).
7. Complete Agreement: This Agreement contains the entire Agreement
between the parties with respect to the contents hereof and
supersedes all prior agreements and understandings between the
parties with respect to such matters, whether written or oral.
Neither this agreement, nor any term or provision hereof may
be changed, waived, discharged or amended in any manner other
than by any instrument in writing, signed by the party against
which the enforcement of the change, waiver, discharge or
amendment is sought.
8 . Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be an original but all of
which shall constitute but one Agreement. Facsimile
signatures shall be agreed to be as originals and shall be
binding with the full force and effect as if they were
original signatures.
9. Jurisdiction/Venue/Choice of Law . This Agreement shall be
construed in accordance with and governed by the laws of the
State of New York, without giving effect to conflict of law
principles. The parties hereby agree that any dispute which
may arise between them arising out of or in connection with
this Agreement shall be adjudicated exclusively before a court
located in New York City, and they hereby submit to the
exclusive jurisdiction of the courts of the State of New York
located in New York, New York and of the federal courts in the
Southern District of New York with respect to any action or
legal proceeding commenced by any party, and irrevocably waive
any objection they now or hereafter may have respecting the
venue of any such action or proceeding brought in such a court
or respecting the fact that such court is an inconvenient
forum, relating to or arising out of this Agreement, and
consent to the service of process in any such action or legal
proceeding by means of registered or certified mail, return
receipt requested.
10. Disclosure: Any financial or other advice rendered by the CMS
pursuant to this Agreement may not be disclosed publicly in
any manner without the prior written approval of the CMS
unless required by any court, government, or regulatory agency.
All non-public information given to the CMS by the Company will
be treated by the CMS as confidential information, and the CMS
agrees not to make use of such information other than in
connection with its performance of this Agreement, provided,
however, that any such information may be disclosed if
required by any court or governmental or regulatory authority,
board or agency. "Non-public information" shall not include
any information which (i) is or becomes generally available to
the public other than as a result of a disclosure by the CMS;
(ii) was available to CMS prior to its disclosure to the CMS
by the Company, provided that such information is not known by
CMS to be subject to another confidentiality agreement with
another party; or (iii) becomes available to CMS on a
non-confidential basis from a source other than the Company,
provided that such source is not bound by a confidentiality
agreement with the Company.
11. Severability : Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be
effective and valid under applicable law. If any provision
of this agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule,
such invalidity, illegality or unenforceability will not
effect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
12. Notification and Approval : Prior to the consummation of the
transactions contemplated by this agreement, the Company
agrees not to issue any additional class of stock, option,
warrant or convertible security without prior written
notification and authorization of CMS.
13. Miscellaneous :
(a) Neither the CMS nor its affiliates, or their respective
officers, directors, employees, agents or controlling
persons shall be liable, responsible or accountable in
damages or otherwise to the Company or its affiliates,
or their respective officers, directors, employees,
agents or controlling persons for any act or omission
performed or omitted by CMS with respect to the
services provided pursuant to, arising out of or
relating to this Agreement.
(b) All final decisions with respect to consultation, advice
and services rendered by the CMS to the Company shall
rest exclusively with the Company, and CMS shall not
have any right or authority to bind the Company to any
obligation or commitment.
Agreed and Accepted on the date first written above, by and between:
XXXXXXX XXXXXX SECURITIES, INC
By: /s/ XXXX X. XXXXXXX
Xxxx X. Xxxxxxx
President/ CEO
THE ENLIGHTENED GOURMET, INC
By: /s/ XXXXXXXXX X. XXXXX, III
Xxxxxxxxx X. Xxxxx III
President and Chairman
