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Exhibit 10.2

[visualant_logo.gif]
 
February 14, 2012

Javelin LLC
1005 NE Boat St. #3
Seattle WA 98105

Re:           Letter of Intent

Dear Sirs:

The following represents a summary of the terms of our proposal regarding
certain Equity Investments by Visualant, Inc. (“Visualant” or “Company”) of the
stock (on a fully-diluted basis) of Javelin LLC (“Javelin”), a Washington
limited liability corporation and certain licensing matters.  This Letter of
Intent ("Letter of Intent") sets forth the agreement of the parties to proceed
promptly and in good faith to complete the terms of, and to execute, deliver and
perform a Definitive Agreement (the “Definitive Agreement”).

This Letter of Intent shall expire on March 31, 2012 or until the parties enter
into the Definitive Agreement, whichever occurs first, with an outside
anticipated closing date of the transaction no later than thirty (30) days from
the date the Definitive Agreement is executed by all parties or such other date
for closing as is set forth in said Agreement.  Upon written request to Javelin,
Visualant shall be entitled to a 30-day extension of the expiration date of this
Letter of Intent should any extension be necessary due to delays in completing
the due diligence review pursuant to Section 5 below or in satisfying any of the
conditions precedent in Section 4.

The transaction will be structured as follows:

Equity Investment for Common Stock and First Right

 
1.           Equity Investment of Stock and First Right.  Visualant will acquire
from Javelin and/or its shareholders (collectively, the “Seller”) ten percent
(10%), on a fully-diluted basis, of all of the issued and outstanding shares of
all classes of stock (the “Shares”) of Javelin (the “Equity Investment”). In
addition, Visualant shall obtain an acquisition right of first negotiation
agreement with Seller for the duration of the now existing license agreement
 
2.           Consideration.  As consideration for the Shares, Visualant will pay
Seller a total of 860,000 shares of restricted Visualant Common Stock The
foregoing consideration shall be structured in the definitive agreement to
provide favorable tax consequences for both parties.  A portion of the total
consideration may be allocated to the first right set forth above.

 
 

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Conditional Equity Investment for Cash
 
3.           Conditional Equity Investment for Cash.  Visualant may invest, at
its option, between $100,000 and $120,000 in Javelin for 10% to 12% of Javelin's
fully diluted units.  This investment is conditioned upon an Equity Investment
in Visualant by a strategic or financial investor which investment shall be at
least $3 Million.
 
Conditional Licensing Terms
 
4.           Conditional Licensing Terms.  Javelin, in consideration of the
equity investments set forth above, will enter into licensing agreements with
strategic or financial investors and/or Visualant KK in a form identical to the
licensing agreements entered into by Visualant with these same entities.
 
5.           Consideration.  Javelin shall receive consideration for its
licenses in the form of royalties which is equivalent to the consideration
received by Visualant.  In the event there is cash consideration in the form of
upfront royalty payments, Javelin shall receive an amount equal to 5% of the
royalties received by Visualant.
 
Other Conditions and Details of the Transaction
 
6.           Conditions Precedent.  As conditions precedent to the closing of
the Equity Investment, the following events must first have occurred or be
satisfied:

(a)             Consent of Directors and Shareholders.  The Board of Directors
and the shareholders of Visualant and Javelin shall have approved and agreed to
the Equity Investment of the Shares of Javelin by Visualant.

(b)           Third-Party Consents.  To the extent required under the terms of
any existing contracts, all third-party approvals and consents shall have been
obtained to the sale of the Shares and the sale of an  interest in Javelin to
Visualant.

(c)           Due Diligence Review.  Visualant and its legal counsel shall have
completed, to their satisfaction in their sole discretion, their due diligence
review of Javelin and all of its properties and assets.

(d)           Third Party Investment.   With regard to the licensing and cash
investment components of this LOI, third party investment and license
negotiations shall have been consummated.

7.           Due Diligence.  Javelin and its shareholders agree to honor all
reasonable requests of Visualant, its legal counsel, accountants and other
agents, for information, materials and documents that relate to Javelin, its
properties and assets.  Visualant and its agents and representatives agree to
preserve the confidentiality of all information, materials and documents
provided to them.  In that regard, Javelin and its shareholders agree that
Visualant shall have full and complete access to the books, records, financial
statements and other documents (including without limitation, articles of
incorporation, bylaws, minutes, stock transfer books, material contracts, and
tax returns) of Javelin as Visualant, its legal counsel and accountants, may
deem reasonable or necessary to conduct an adequate due diligence investigation
and review.

 
 

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8.           Good Faith Representation.  This Letter of Intent is intended to
set forth the basic terms and conditions of the parties with respect to the
matters discussed.  The parties agree that hereafter they shall promptly take
all steps necessary to have their respective legal counsel prepare the final
documentation necessary to effectuate their agreements.  To the extent that any
material issue is not resolved herein, the parties agree to promptly and in good
faith resolve the same.  Notwithstanding the lack of final documentation at this
time, the parties agree to proceed at all possible speed to satisfy any
conditions precedent to the completion of the intended Equity Investment to all
extents possible.

9.           Confidentiality.  The parties understand that it is possible
certain of the conditions precedent may fail and that the intended transaction
may not be completed, notwithstanding each party’s good faith best
efforts.  Therefore, the parties agree that any information obtained from any
other party pursuant to the negotiations leading to this Letter of Intent or
hereafter until closing shall be deemed by each to be confidential trade and
business secrets of each, and each party hereby warrants that it shall not
disclose the same to any other person without the express prior written consent
of the party from whom the information was obtained.

10.         Definitive Agreements.  The parties intend that a Definitive
Agreement and any other necessary ancillary agreements (collectively, the
“Definitive Agreement”), which will contain customary covenants, conditions,
representations and warranties made as of the date of execution and as of the
date of closing of the Equity Investment, will be completed and executed by the
parties at or prior to the time of closing.

11.         Lock-Up.  The provisions of this Section 8 shall not be binding on
Javelin until such time as the condition precedent set forth in Section 3(b)
above has been satisfied or expressly waived by Visualant.  Upon satisfaction or
waiver of the condition precedent set forth in Section 3(b), and in
consideration of the effort and expense to be incurred by Visualant in
connection with its due diligence review and the proposed Equity Investment,
Javelin, its directors, officers and shareholders, jointly and severally, agree
that for the period commencing on the date such condition precedent has been
satisfied or waived and ending on the later of: (a) December 31, 2011, or (b)
the date this Letter of Intent expires, including any extension hereof (the
“lock-up period”), each of you will not in any way seek, on your own behalf or
on behalf of others, to approach or involve other individuals or entities in
this Equity Investment except in cooperation and concert with the
undersigned.  Each of you further covenant and agree that during said lock-up
period, you will not, either on your own behalf or on behalf of Javelin or the
shareholders of Javelin:  (a) discuss, entertain, consider, solicit or initiate
any proposal (including any prior offer or solicitation) that contemplates the
sale of Javelin or any of its assets, including but not limited to its
intellectual property; or (b) negotiate or execute any contract, agreement or
undertaking with any third party or entity that contemplates or provides for,
either directly or indirectly, the sale of Javelin, or its assets; or (c) take
any action which would materially alter the nature or extent of its assets, or
otherwise render impossible the consummation of the transactions contemplated by
this Letter of Intent.

 
 

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12.         Conduct of Business.  Until the closing of the Equity Investment or
the termination of this Letter of Intent, Javelin will conduct its business and
operations in a manner consistent with past practices and will not engage in
transactions outside the ordinary course of business.

13.   Expenses.  Each party shall be responsible for paying its fees for legal
counsel and accountants. Javelin and/or its shareholders will be responsible for
any other expenses and any taxes due, if any, as a result of the stock sale
contemplated herein.

14.         Binding Nature.  Upon your approval and acceptance hereof, this
Letter of Intent shall constitute a binding agreement to enter into the
aforesaid Definitive Agreement.
 
If you accept and agree to this Letter of Intent, please sign and date a copy of
this letter and return it to the undersigned at 500 Union Street, Suite 406,
Seattle, WA 98101, facsimile number (206) 826-0451.
 
Sincerely yours,

Visualant, Inc.

/s/ Ron Erickson
Ron Erickson
Its:  Chief Executive Officer

Agreed to and accepted on February 14, 2012
 
Javelin, LLC

 
/s/ Peter Purdy
By: Peter Purdy
Title: Partner
 

 
/s/ Mathew Creedican
By: Mathew Creedican
Title: Partner
 
 

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