Exhibit 10.2

 

FINDER AGREEMENT

 

This Finder Agreement (“Agreement”) is effective as of the date set forth on the
signature page below and establishes the terms and conditions under which Akesis
Pharmaceuticals, Inc., a Nevada corporation (the “Company”), agrees to engage
                                (“Finder”), to assist the Company in obtaining
financing through a private placement of the Company’s common stock (the “Equity
Financing”). The Company and Finder hereby agree as follows:

 

1. Statement of Services

 

(a) Finder shall identify and introduce to the Company potential investors in
the Equity Financing, each of which shall be an “accredited investor” (as
defined under Regulation D of the Securities Act) and each of which shall be set
forth on Exhibit A attached hereto (each, a “Qualified Investor”). Finder shall
notify the Company in writing, and shall obtain the Company’s written approval,
prior to approaching any other potential investor. Subject to the Company’s
written approval, Exhibit A will be amended from time to time during the term of
this Agreement to add the names of additional Qualified Investors first
identified by Finder.

 

(b) Finder acknowledges that (i) the Company is free to contact potential
accredited investors directly and engage other finders, (ii) the Company may
determine, in its sole discretion, whether a potential investor identified by
Finder shall constitute a Qualified Investor, (iii) the Company may determine,
in its sole discretion, whether to offer an investment, or accept an offered
investment, by a Qualified Investor and (iv) the Company is not obligated to
compensate Finder for investments offered to the Company that the Company does
not accept.

 

2. Compensation

 

(a) The Company shall, as compensation for the services provided by Finder
hereunder, (i) pay Finder a cash fee (the “Equity Cash Fee”) equal to one
percent (1%) of all funds invested by Qualified Investors in the Equity
Financing (excluding any funds paid or payable by such Qualified Investors upon
exercise of any warrants), and (ii) issue Finder a Warrant to purchase such
number of shares of the Company’s Common Stock (the “Warrants Fee,” and together
with the Equity Cash Fee, the “Finder’s Fee”) calculated as follows:

 

X = 0.11 * (A/B) Where: X =    the Warrants Fee; A =    all funds invested by
Qualified Investors in the Equity Financing on or before February 15, 2006
(excluding any funds paid or payable by such Qualified Investors upon exercise
of any warrants); and B =    the price per share at which the Company issues
shares of the Company’s common stock in the Equity Financing.

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    The Warrant shall be prepared by counsel for the Company and shall, among
other things, be exercisable for 5 years from the date of issuance, and have an
exercise price per share equal to $2.00. The issuance of the Warrant shall be
subject to the Finder’s representation, and the Company’s confirmation, that the
Finder is an “accredited investor” (as defined under Regulation D of the
Securities Act).

 

In the event of such Equity Financing, Finder will only be entitled to the
Finder’s Fee with respect to funds actually received and accepted by the Company
from Qualified Investors set forth on Exhibit A hereto in accordance with
Section 1 hereof.

 

(b) In the event that the Company receives equity investments in one or more
installments, any amounts earned by Finder will be paid within thirty (30) days
on a pro rata basis when, as and if the Company actually receives the various
installments of the investment giving rise to the Finder’s Fee.

 

(c) Finder acknowledges it has no right to compensation, whether equity, cash or
otherwise, other than as set forth in this Section 2. In addition, the Company
and Finder agree that no compensation will be earned by Finder in connection
with any purchase by a Qualified Investor of any shares of the capital stock of
the Company that are purchased from a party other than the Company.

 

3. Representations, Warranties and Covenants

 

(a) Finder represents that finding investors for companies is not part of
Finder’s ordinary business activities, that it is not a registered broker-dealer
and that it will limit its services to introducing the Company to the Qualified
Investors set forth on Exhibit A only. Each party hereby acknowledges that:
(i) all negotiations concerning the terms of the Equity Financing (including
price, percentage ownership and other terms) will take place directly between
the Company and the Qualified Investors; and (ii) Finder is not acting as agent
or principal in the Equity Financing negotiations or transactions.

 

(b) Finder hereby covenants that it will not, either alone or through its
agents: (i) hold any funds or securities in connection with the Equity
Financing; (ii) make any offers to sell equity, debt or assets of the Company;
(iii) make any representations respecting the business or affairs of the Company
to any Qualified Investor or person or entity, whether in connection with the
Equity Financing or otherwise, unless such representation has been previously
and expressly authorized by the Company in writing; (iv) make or engage in any
general solicitation or otherwise act in any manner that would make unavailable
to the Company an exemption under Rule 506 of Regulation D of the Securities Act
of 1933, as amended (the “Securities Act”), for the issuance of the Company’s
securities in connection with the Equity Financing, if any; or (v) take any
action that would not comply with the applicable laws and regulations relating
to the services to be rendered to the Company, including without limitation the
Securities Act and Regulation S thereunder and the broker-dealer provisions of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

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(c) Finder represents and warrants to the Company that it has the full legal
right to enter into and perform this Agreement and that its entry into and
performance of this Agreement does not and will not violate any fiduciary or
other duty it may have to any other person.

 

(d) Finder acknowledges that it is responsible for its own compliance with state
and federal securities laws including the Securities Act, the Exchange Act and
all rules promulgated thereunder.

 

(e) Finder will contact only potential investors with whom it has a substantial
preexisting relationship that evidences that such potential investors are
sophisticated or otherwise accredited investors (as defined under Regulation D
of the Securities Act). In furtherance thereof, Finder shall obtain from each
potential investor an accredited investor questionnaire in a form approved by
the Company.

 

(f) Finder agrees to only furnish information and materials to the Qualified
Investors that are provided or approved by the Company, and Finder agrees to not
misrepresent the Company’s business and prospects in discussions with Qualified
Investors.

 

4. Indemnification.

 

(a) Finder agrees to indemnify and hold harmless the Company, its officers,
directors, employees, legal counsel and its affiliates (each, a “Company
Indemnified Party”) against any and all losses, claims, damages and liabilities,
joint or several, and expenses (including all legal or other expenses reasonably
incurred by the Company) caused by or arising out of (i) any misrepresentation
or untrue statement or alleged misrepresentation or untrue statement of a
material fact made by Finder to the Qualified Investors, or the omission or the
alleged omission to state to the Qualified Investors a material fact necessary
in order to make statements made not misleading in light of the circumstances
under which they were made (except to the extent such misrepresentations, untrue
statements or omissions are based on information provided to Finder by the
Company), (ii) any misrepresentation or untrue statement or alleged
misrepresentation or untrue statement of a material fact contained in any
document furnished to the Qualified Investors, or the omission or the alleged
omission to state in the documents furnished to the Qualified Investors a
material fact necessary in order to make the statements therein not misleading
in light of the circumstances under which they were made, to the extent such
misstatements or omissions are made in reliance upon and in conformity with
written information furnished by Finder for use in the documents furnished to
the Qualified Investors, (iii) any breach or alleged breach of any
representation, warranty or covenant made by Finder in this Agreement, or
(iv) Finder’s bad faith, gross negligence or willful misconduct in performing
the services described herein. Finder agrees to reimburse the Company
Indemnified Party for any reasonable expense (including reasonable fees and
expenses of counsel) incurred as a result of producing documents, presenting
testimony or evidence, or preparing to present testimony or evidence (based upon
time expended by the Company Indemnified Party at its then current time charges
or if such person shall have no established time charges, then based upon
reasonable charges), in connection with any court or administrative proceeding
(including any investigation which may be preliminary thereto) arising out of or
relating to the performance by the Company Indemnified Party of any obligation
hereunder.

 

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(b) The Company agrees to indemnify and hold harmless the Finder, its officers,
directors, employees, legal counsel and its affiliates (each, a “Finder
Indemnified Party”) against any and all losses, claims, damages and liabilities,
joint or several, and expenses (including all legal or other expenses reasonably
incurred by the Finder) caused by or arising out of (i) any misrepresentation or
untrue statement or alleged misrepresentation or untrue statement of a material
fact made by the Company to the Qualified Investors, or the omission or the
alleged omission by the Company to state to the Qualified Investors a material
fact necessary in order to make statements made not misleading in light of the
circumstances under which they were made (except to the extent such
misrepresentations, untrue statements or omissions are based on information
(A) provided to the Qualified Investors by the Finder and not provided to the
Finder by the Company, or (B) provided to the Company by the Finder), (ii) any
misrepresentation or untrue statement or alleged misrepresentation or untrue
statement of a material fact contained in any document furnished to the
Qualified Investors, or the omission or the alleged omission by the Company to
state in the documents furnished to the Qualified Investors a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which they were made, to the extent such misstatements or
omissions are made in reliance upon and in conformity with written information
furnished by the Company for use in the documents furnished to the Qualified
Investors, (iii) any breach or alleged breach of any representation, warranty or
covenant made by the Company in this Agreement, or (iv) the Company’s bad faith,
gross negligence or willful misconduct in performing its obligations herein. The
Company agrees to reimburse the Finder Indemnified Party for any reasonable
expense (including reasonable fees and expenses of counsel) incurred as a result
of producing documents, presenting testimony or evidence, or preparing to
present testimony or evidence (based upon time expended by the Finder
Indemnified Party at its then current time charges or if such person shall have
no established time charges, then based upon reasonable charges), in connection
with any court or administrative proceeding (including any investigation which
may be preliminary thereto) arising out of or relating to the performance by the
Finder Indemnified Party of any obligation for which it is indemnified
hereunder.

 

5. Confidentiality

 

(a) Finder will maintain in confidence and will not use for its own benefit or
other than for the performance of its obligations under this Agreement: (i) any
inventions, confidential know-how, trade secrets and other non-public
information and data disclosed to it by the Company; and (ii) all information
developed by Finder in performance of its services under this Agreement, and it
will not divulge the same to any other persons. Finder will use best efforts to
prevent any unauthorized disclosure of the information described in (i) and
(ii) above. It is understood that the obligations of this section will remain in
effect and shall be respected by Finder until such time as the information
becomes a matter of public knowledge, irrespective of the termination, for any
reason, of this Agreement.

 

(b) All notes, records and other documentation or tangible materials
(collectively, “Documentation”) made or kept by Finder in connection with the
services performed under this Agreement, or in connection with any inventions
made or conceived by Finder that belong to the Company pursuant to the terms of
this Agreement, will be and are the sole and exclusive property of the Company.
Upon the termination of this Agreement, Finder will place all such Documentation
in the Company’s possession and will not retain or take with it, without the
written consent of the Company, any Documentation relating or pertaining to
services performed by it under this

 

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Agreement or to any of the activities of the Company. Finder will respect any
obligation it may have arising out of this Agreement with respect to
confidential information and agrees not to use or divulge to the Company, or its
agents and employees, during the term of this Agreement any such information.

 

(c) Finder represents that it is not presently retained by any entity that
manufactures or sells products or services competitive with those of the Company
and agrees that it will not accept such retention during the term of this
Agreement or any renewal or extensions hereof, and for one year after the
termination of this Agreement, or any renewal or extensions hereof without prior
written approval of the Company.

 

6. Term and Termination

 

(a) Term. Unless and until terminated as set forth herein, this Agreement will
continue in full force and effect for an initial term expiring on February 15,
2006.

 

(b) Renewal. Upon expiration of this Agreement pursuant to Section 6(a)(i), the
Company may renew this Agreement on a month-to-month basis by notice to Finder
at least 10 days prior to such expiration.

 

(c) Termination. The Company may terminate this Agreement (i) immediately and
without notice in the event of breach by Finder of this Agreement and (ii) upon
10 days’ prior written notice for any reason other than breach by Finder of this
Agreement. In the event the Company terminates this Agreement pursuant to
Section 6(c)(i), Finder will not be entitled to any unpaid Finder’s Fee. In
addition, upon breach of this Agreement by Finder, the Company will be entitled
to all other remedies available under applicable law. In the event the Company
terminates this Agreement pursuant to Section 6(c)(ii), Finder will be entitled
to the Finder’s Fee with respect to approved Qualified Investors if the Equity
Financing closes within the 90-day period commencing on the date hereof.

 

(d) Surviving Provisions. Section 4 and Section 5 will survive indefinitely the
termination or expiration of this Agreement.

 

7. Expenses. Finder will be reimbursed for reasonable expenses that are approved
by the President of the Company in writing prior to the expense being incurred.
Notwithstanding the foregoing, expenses for the term of this Agreement will not
exceed $1,000.

 

8. Independent Contractor. Finder will perform its services hereunder as an
independent contractor, and nothing in this Agreement will in any way be
construed to constitute Finder the agent, employee or representative of the
Company. Neither Finder nor any agent acting on behalf of Finder will enter into
any agreement or incur any obligations on the Company’s behalf or commit the
Company in any manner or make any representations, warranties or promises on the
Company’s behalf or hold itself (or allow itself to be held) as having any
authority whatsoever to bind the Company without the Company’s prior written
consent, or attempt to do any of the foregoing.

 

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9. Miscellaneous

 

(a) Arbitration. Except as otherwise provided by law, the parties hereto agree
that any dispute or controversy arising out of, relating to or concerning any
interpretation, construction, performance or breach of this Agreement, shall be
settled by arbitration to be held in San Diego County, California, in accordance
with the commercial dispute resolution rules then in effect of the American
Arbitration Association. The Arbitrator may grant injunctions or other relief in
such dispute or controversy. The decision of the arbitrator will be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator’s decision in any court having jurisdiction. The
parties shall each pay one-half of the costs and expenses of such arbitration,
and each shall separately pay its counsel fees and expenses.

 

(b) Covenant against Assignment. This Agreement is personal to the parties
hereto, and accordingly neither the Agreement nor any right hereunder or
interest herein may be assigned or transferred or charged or otherwise dealt
with by either party without the express written consent of the other.
Notwithstanding the foregoing, however, the Company will be entitled to assign
this Agreement and the Company’s rights hereunder to a successor to all or
substantially all of its assets, whether by sale, merger or otherwise.

 

(c) Entire Agreement; Amendment. This Agreement and the attached exhibits
constitute the entire contract between the parties with respect to the subject
matter hereof and supersede any prior agreements between the parties. This
Agreement may not be amended, nor any obligation hereunder waived, except by an
agreement in writing executed by, in the case of an amendment, each of the
parties hereto, and, in the case of a waiver, by the party waiving performance.

 

(d) No Waiver. The failure or delay by a party to enforce any provision of this
Agreement will not in any way be construed as a waiver of any such provision or
prevent that party from thereafter enforcing any other provision of this
Agreement. The rights granted both parties hereunder are cumulative and will not
constitute a waiver of either party’s right to assert any other legal remedy
available to it.

 

(e) Severability. Should any provision of this Agreement be found to be illegal
or unenforceable, the other provisions will nevertheless remain effective and
will remain enforceable to the greatest extent permitted by law.

 

(f) Notices. Any notice, demand, offer, request or other communication required
or permitted to be given by either the Company or Finder pursuant to the terms
of this Agreement must be in writing and will be deemed effectively given the
earlier of (i) when received, (ii) when delivered personally, (iii) one business
day after being delivered by facsimile (with receipt of appropriate
confirmation) to the number provided to the other party or such other number as
a party may request by notifying the other in writing, (iv) one business day
after being deposited with an overnight courier service or (v) four days after
being deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the party at the address previously provided to the other party or
such other address as a party may request by notifying the other in writing.

 

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(g) Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same agreement. Facsimile copies of signed signature
pages will be deemed binding originals.

 

(h) Governing Law. This Agreement is governed by the internal substantive laws,
but not the choice of law rules, of California.

 

[Signature page follows.]

 

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The parties have executed this Agreement as of January         , 2006.

 

AKESIS PHARMACEUTICALS, INC.

By:   

   

Name:

   

Title:

    FINDER

[_____________]

By:

   

Name:

   

Title:

   

Address:

 

AKESIS PHARMACEUTICALS, INC.

SIGNATURE PAGE TO FINDER AGREEMENT

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Exhibit A

 

QUALIFIED INVESTORS

 

Name and Address of Qualified Investor   

Company Initialed Approval

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1.    __________________________________________   

Approved ______

     __________________________________________          
__________________________________________      2.   
__________________________________________   

Approved ______

     __________________________________________          
__________________________________________      3.   
__________________________________________   

Approved ______

     __________________________________________          
__________________________________________      4.   
__________________________________________   

Approved ______

     __________________________________________          
__________________________________________      5.   
__________________________________________   

Approved ______

     __________________________________________          
__________________________________________