AMERICAN CAPITAL FINANCIAL SERVICES, INC.
AGREEMENT
FOR
BUSINESS CONSULTING SERVICES
This Agreement ("Agreement") is entered into in Costa Mesa, California, by and
between American Capital Financial Service, Inc. a Wyoming Corporation
("American"), and Advanced Medical Systems, Inc, a Nevada corporation, the
("Corporation"). American and the Corporation may be referred to in the singular
as "Party" and collectively as "Parties". On the date of signing by both
parties, this Agreement relates to the following facts:
The Corporation has expressed a desire to enter into this Agreement with
American for American to provide business consulting services which will assist
the Corporation in its desire to become a "public" Corporation through a Private
Placement (if applicable) and an SB-2 Offering of up to $10 million
("Offering"). The Private Placement will be for $ 5 million. American is in the
business of providing such services and will do so on behalf of the Corporation.
American will be responsible for collecting Due Diligence materials and drafting
the Private Placement Memorandum. American will also be responsible for drafting
the initial SB-2 Offering of up to $10 million. The Corporation will pay all
legal and accounting costs as well as filing fees for any private placements (if
applicable), the initial SB-2 filing, and any required subsequent filings.
RECITALS:
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Representation by American. American has represented itself to the Corporation
as having the experience, technical staff, business connections, and expertise
in arranging such filings and it is upon such representation the Corporation is
entering into this Agreement.
In consideration of the promises hereinafter set forth, the parties agree as
follows:
1. PRELIMINARY SERVICES BY AMERICAN
1.1. Duties of American and the Corporation. American and the Corporation
agree to perform the following:
1.1. American agrees to prepare all documents pertaining to the
Private Placement (if applicable) and the SB-2 draft for the
Corporation and the Corporation agrees to cooperate fully with
American in providing such financial, business, and other material
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3001 Redhill, Building 6, Suite 107, Costa Mesa, CA 92626
o (714) 556-3115 o FAX (714) 556-6180
http://www.allamericancapital.com
information about the Corporation, its products, services, contracts,
litigation, patents, trademarks, and such other matters which may be
requested by American to include in the Private Placement Memorandum
and/or SB-2 filing. The Corporation agrees it shall have its own
accountants and attorneys review the PPM (if applicable) and SB-2
document.
1.1.2. It is understood that all documents to be prepared by American
shall be prepared to supply information to the Securities Exchange
Commission ("SEC"), legal and accounting firms, investors, state and
federal governments and other interested persons.
1.1.3. The Corporation agrees to supply complete and accurate
information to American in order that the Private Placement Memorandum
(if applicable) and the SB-2 filing is true and correct in all aspects
and fully complies with all Full Disclosure Requirements of both
Federal and State Regulatory Agencies. Should legal proceedings be
brought against American, its agents and/or employees by State or
Federal Regulators or by any third party as a result of incomplete or
inaccurate information disseminated by the Corporation, the
Corporation shall hold American harmless from any liability in this
regard, whatsoever, and shall defend and indemnify American, its
agents and/or employees in any litigation or administration
proceeding.
1.1.4. In furtherance of the Corporation's obligations under paragraph
1.1.1, the Corporation shall, within thirty (30) business days from
the date of this Agreement, supply to American: (i) all documents
requested in the Legal Due Diligence Analysis document form attached
hereto; and (ii) copies of the Corporation's financial statements for
the last three (3) years or from its inception date, whichever is
less.
1.1.5. American shall provide assistance through its staff to the
Corporation in preparation of the financial forecasts and will offer
assistance on any letters of intent, acquisitions, mergers and private
placement agreements. The Corporation, however, shall primarily rely
on the advice of its own retained attorneys and accountants in all
matters relating to this Agreement. American shall provide
business-consulting services for one year following the effectiveness
of the SB-2.
1.1.6. American shall provide as needed the following services for the
Corporation: Due Diligence, Private Placement documentation, Personnel
assistance, Payroll administration assistance, investor introductions,
draft SB-2, preparation of state filings, recommend attorneys if
needed, recommend accounting services, office space if needed, phone
service if needed, enhancement of Board or Advisory Board members,
assist in training of personnel of all levels, assist in
incorporating, arrange for printing, act as public relations arm, and
other services as requested.
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1.1.7. American shall provide assistance in the location of an
underwriter for a contemplated IP0 or secondary offering. American is
responsible to locate, interview and assist in the direction and
decision on which brokerage house and syndications to be used. The
Corporation has the last right of approval as to which underwriter
will be selected.
1.2. Payment for American's Services. The Corporation shall pay American
the sum of $100,000 as a fee for its business consulting services payable
as follows: (1) On October 23, 1997, Corporation paid an initial payment to
American of twelve thousand five hundred dollars ($12,500). (2) Upon
execution of this Agreement, the Corporation shall pay American an
additional non-accountable, non-refundable payment of twelve thousand five
hundred dollars ($12,500). The next payment toward the $100,000 will be
$25,000 which will be paid upon the first funds sold, from the Private
Placement Offering or upon termination of the Private Placement Offering by
the Corporation if it elects to cancel early. The Corporation shall pay
American the balance of the $100,000 ($50,000) in 12 equal monthly
installments commencing on the date of completion of the Public Offering.
1.2.1 Due Diligence. The Corporation agrees to cooperate fully with
American to provide all Due Diligence material requested to support
all assertions represented by the Corporation. Should the Corporation
fail to supply American with the requested Due Diligence, American
reserves the right to terminate services to be rendered to the
Corporation and will be entitled to retain the initial
non-accountable, non-refundable paid to American by the Corporation.
1.3. Expenses. The Corporation, in addition to the fee described in
paragraph 1.2. above, shall also pay to American all of its costs and
expenses for travel, hotel accommodations, meals and miscellaneous costs
and expenses incurred by American in performing the services described in
paragraph 1.1 above. The Corporation shall pay additional costs and
expenses over and above the expected costs as described in Exhibit 1
(attached hereto and incorporated herein by this reference) as they become
due. For purposes of this paragraph, the costs and expenses of American's
overhead and employees' salaries or wages are not to be construed as costs
and expenses. Costs and expenses are instead to be construed as the payment
of any item or the incurring of a debt by American in connection with the
performance of its services under paragraph 1.1 above which are not normal
monthly overhead, labor or salary costs of American. The Corporation will
not be billed for trivial expenses (under $100). All paid expenses, if any,
will be pre-approved by the Corporation. American will provide the
Corporation with advanced notice of any mentioned expenses and will not
incur such expenses until receiving the Corporation's approval.
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2. FILING TO SEC
2.1. Delivery of the SB-2 Filing. American shall deliver the SB-2 draft it
prepares under paragraph 1.1 of this Agreement to the attorneys,
accountants, underwriters and SEC personnel as selected by American, with
approval by the Corporation.
2.2. Exclusive Decision-Maker. The Corporation shall be the exclusive
decision-maker on whether to go forward with the public offering and the
final terms thereof. However, if the Corporation enters into any agreement
for a public offering within one (1) year from the date of this Agreement,
the Corporation shall be obligated to pay the Payments, Fees and
distribution of securities described in paragraph 1.2. and all its
subparagraphs.
2.3. Finder's Fee to American. At the time of the execution of this
Agreement, the Corporation shall transfer to American 4.9% of the common
shares of the Corporation from the Corporation's "founder's stock"
("Founder's Stock") and an additional amount equaling the dilution from the
IPO shall be rendered to American to maintain the 4.9% ownership after the
IPO.
2.3.1. This Fee shall be treated and construed as a Finder's Fee for
American's services to the Corporation and will not be construed as
any form of underwriter's compensation.
2.3.2. The Corporation shall refrain from engaging in any activity,
scheme or plan to circumvent, prevent or refuse to pay this Finder's
Fee directly to American.
3. REPRESENTATIONS
3.1. Representations by the Corporation. The Corporation represents,
warrants and covenants the following:
3.1.1. The Corporation will cooperate fully with American by supplying
to American fully complete and accurate information to American so
that American may perform its services under this Agreement.
3.1.2. The Corporation will not circumvent this Agreement either
directly or indirectly nor will it interfere with, impair, delay or
cause American to perform work not described in this Agreement.
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3.1.3. The Corporation and each of its subsidiaries is a corporation
duly organized and existing under the laws of its state of
incorporation and is in good standing with the jurisdiction of its
incorporation in each state where it is required to be qualified to do
business.
3.1.4. In each state where the Corporation currently does business, it
has fully complied with each state's Rules and Regulations pertaining
thereto.
3.1.5. The Corporation's Articles of Incorporation and Bylaws
delivered pursuant to paragraph 1.1.4. are true and complete copies of
same and have been duly adopted.
3.1.6. The Corporation will disclose to American all material facts
and circumstances which may in any way affect the Private Placement
(if applicable) and the SB-2 filing. The Corporation will be wholly
responsible for the accuracy of the Private Placement Memorandum and
the SB-2 filing and/or any other related or subsequent filings.
3.1.7. The Corporation will complete all questionnaire forms by the
time required by American in full and complete detail.
3.1.8. The Corporation represents to American that no person has acted
as a finder or investment adviser in connection with the transactions
contemplated in this Agreement. The Corporation will indemnify
American with respect to any claim for a Finder's Fee in connection
with this Agreement. The Corporation represents that no officer,
director or stockholder of the Corporation is a member of the National
Association of Securities Dealers ("NASD"), an employee or associated
member of the NASD, or an employee, associated person or member of the
NASD. The Corporation represents that it will disclose to American all
potential conflicts of interest involving officers, directors,
principal stockholders and/or employees forthwith.
3.1.9. The Corporation has received and understands the letter
entitled "Do's and Don'ts of Going Public" previously supplied to the
Corporation by American. A copy of "Do's and Don'ts of Going Public"
is attached hereto and is fully incorporated into this Agreement.
3.1.10. The Corporation is bound by this Agreement to advise American
of all letters of intent, merger or acquisition documents and such
mergers or acquisitions will not be completed until American has been
made aware of and assented to these documents during and until the
initial SB-2 filing.
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3.1.11. The shareholders of Corporation shall place one individual on
the Board of Directors of the Corporation as recommended by American
for a minimum time period of one year.
3.2. Representations by American.
3.2.1. American will devote its Best Efforts toward the completion of
the Private Placement (if applicable) and the filing of the SB-2
documentation for the Corporation's Public Offering as contemplated in
this Agreement.
3.2.2. American represents it is a corporation duly organized and
existing under the laws of Wyoming and is in good standing with the
jurisdiction of its incorporation, and all jurisdictions in which it
does business.
3.2.3. American will disclose to the Corporation all material facts
and circumstances which may affect its ability to perform its
undertaking herein.
3.2.4. American will cooperate in a prompt and professional manner
with the Corporation, its attorneys, accountants and agents in the
performance of this Agreement.
3.2.5. American is not a broker dealer or member of any stock
exchange.
4. CONFIDENTIALITY
American agrees that all information received from the Corporation shall be
treated as confidential information. American shall not share such
information with any other person or entity, except the SEC, attorneys,
investors and accountants, without the express written consent of the
Corporation.
4.1. Non-Circumvention. The Corporation agrees not to divulge any named
sources (lending institutions, investors, individuals etc.) which have been
introduced to it by American. Furthermore, both parties agree not to
circumvent, either directly or indirectly, the relationships each party has
with their respective sources. Furthermore, this non-circumvention
agreement will stay in force for one (1) year from the date of this
document.
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5. NOTICES
Any notice from either party to the other shall be deemed received on the
date such notice is personally delivered. Any notice sent by facsimile
transmission shall be deemed received by the other party on the day it has
been transmitted. Any notice sent by mail by either party to the other
shall be deemed received on the seventh (7th) business day after it has
been deposited at a United States Post Office. For purposes of delivering
or sending notice to the parties under this Agreement, such notices shall
be delivered or sent as follows:
5.1. Notice delivered to American:
American Capital Financial Service
3001 Red Hill Ave. Bldg. 6 Suite #107
Costa Mesa CA 92626
Telephone Number (714) 556-3115
Facsimile Number (714) 556-6180
5.2 Notice delivered to the Corporation:
Advanced Medical Systems, Inc,
2950 N. Glassell Street
Orange, CA 92865
Telephone Number (714) 283-5190
Facsimile Number (714) 283-5191
6. ENTIRE AGREEMENT
Neither party has made any representations to the other which are not
specifically set forth in this Agreement. There are no oral or other
agreements between the parties which have been entered into prior or
contemporaneously with the formation of this Agreement. All oral promises,
agreements, representations, statements and warranties hereinafter asserted
by one party against the other, shall be deemed to have been waived by such
party asserting they were made and this Agreement shall supersede all prior
negotiations, statements, representations, warranties and agreements made
or entered into between the parties to this Agreement.
7. NO ASSIGNMENT OR DELEGATION
Neither party may assign any benefit due or delegate performance under this
Agreement without the express written consent of the other party.
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8. CONSTRUCTION AND JURISDICTION
This Agreement shall be governed by the laws of the State of California. It
shall also be construed as if the Parties participated equally in its
negotiation and drafting. The Agreement shall not be construed against one
Party over another party.
9. WAIVER
The waiver, either express or implied, by any Party to this Agreement of
any term or condition of this Agreement, shall not constitute a
relinquishment by that Party of its right to enforce the term or condition
at any later date unless this Agreement is amended in writing and signed by
both Parties.
10. SEVERABILITY
If any provision of this Agreement or any subsequent modifications hereof
are found to be unenforceable by a court of competent jurisdiction, the
remaining provisions shall continue to remain in full force and effect.
11. NO MODIFICATION
No waiver, modification or amendment of any term, condition or provision of
this Agreement shall be valid or have any force or effect unless made in
writing and signed by all parties to this Agreement.
12. VOLUNTARY CONSENT
In entering into this Agreement, the parties represent and warrant that
they have done so freely and voluntarily and by each one on his or her own
accord without reliance on any inducement, promise or representation (a) by
the other Party, except as to those matters which are expressly set forth
in this Agreement or (b) by any other person.
13. NO REPRESENTATION, WARRANTY OR GUARANTEE OF SUCCESS
American provides no representation, warranty or guarantee of success in
the consummation of an SB-2 Offering or filing or of the "best efforts"
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private placement, if applicable. American has not represented itself as an
underwriter or Broker Dealer and makes no claim to be one.
14. NO PARTNERSHIP
This Agreement shall not be construed as a joint venture, partnership or
joint enterprise between the Parties, and neither Party shall be entitled
to act as agent for the other Party except as set forth herein.
15. AUTHORITY TO ENTER INTO AGREEMENT
The individuals signing this Agreement below represent that they have the
authority to legally bind the Corporation and American to the terms and
conditions of this Agreement. The individuals shall not, however, have
personal liability by executing this Agreement and sign this Agreement only
in their representative capacities as authorized officers of the
Corporation and American, respectively.
/s/ Philip Dave Thomas Dated: 5-4-00
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Philip Dave Thomas, President & CEO
American Financial Services, Inc
/s/ Peter George Dated: 5-4-00
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Peter George, Chief Executive Officer
Advanced Medical Systems, Inc.
/s/ Nicholas George Dated: 5-4-00
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Nicholas George, President
Advanced Medical Systems, Inc.
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