Confidential Page 1 11/3/20065/19/2008
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Dr.
Xxxxxx Xxxxxxx DVM, Ph.D.
Chief
Executive Officer
0000
Xxxxxxxx Xxxx Xxxxx
Amarillo,
TX 79110-4225
RE: Private
Placement of Securities of
Amarillo
Biosciences, Inc.
Xx.
Xxxxxxx,
This
letter (the “Engagement Letter” or the “Agreement”) confirms our understanding
that Amarillo
Biosciences, Inc. (AMAR) (Together
with its affiliates and subsidiaries, if any, "AMAR" or the "Company") has
engaged MidSouth Capital, Inc. and or Growth Capital Partners, LLC (together
the
“Agent”) to act, on a non-exclusive
basis,
as a
placement agent ("Placement Agent") of the Company in connection with a best
efforts private placement offering of the Company's Preferred or Common Stock
(the "Placement" or “Offering”). This letter will confirm our acceptance and set
forth the terms of the engagement agreed to between Agent and the Company.
Agent
represents and agrees that in presenting the Company to potential investors,
Agent will use only the Information available from generally recognized public
sources, and such other written documents or disclosures as may be re-approved
by the Company in writing.
1.
Information. In connection with the Placement Agent’s activities hereunder, the
Company will furnish Agent with all material and information regarding the
business and financial condition of the Company (the "Information"). The
Company
represents and warrants that all Information, including but not limited to
the
Company’s financial statements, will be complete and correct in all material
respects and will not contain any untrue statement of a material fact or
omit to
state a material fact necessary in order to make the statements therein not
misleading. The Company recognizes and confirms that the Placement Agent:
(i)
will use and rely primarily on the Information and on information available
from
generally recognized public sources in performing the services contemplated
by
this letter without having independently verified the same; (ii) is authorized
as the Company's financial advisor and placement agent to transmit to any
prospective investor a copy or copies, forms of purchase agreements and any
other legal documentation supplied to the Placement Agent for transmission
to
any prospective investor by or on behalf of the Company or by any of the
Company's officers, representatives or agents, in connection with the
performance of the Placement Agent’s services hereunder or any transaction
contemplated hereby; (iii) does not assume responsibility for the accuracy
or
completeness of the Information and such other information; (iv) will not
make
an appraisal of any assets of the Company; and (v) retains the right to continue
to perform due diligence during the course of the engagement. The Placement
Agent agrees to keep the Information confidential and will not make use thereof,
except in connection with services hereunder for the Company, unless; (i)
disclosure is required by law or requested by any government, regulatory
or
self-regulatory agency or body in which event the Placement Agent will provide
the Company with reasonable advance notice of such proposed disclosure; (ii)
any
Information is or becomes generally available to the public; or (iii) any
Information was or becomes available to the Placement Agent on a
non-confidential basis from a source other than the Company or any of its
representatives.
2.
Fees
and Compensation. As compensation for services rendered and to be rendered
hereunder by Agent, the Company agrees to pay Agent as follows:
An
amount
in cash equal to:
a.)
Seven
percent (7%) of the principal amount sold to any investors identified or
introduced by Placement Agent, with all such sums payable at the time of
each
closing of the Placement ("Placement Fee").
0000
Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx XX 00000
Fax:
000-000-0000 Phone: Xxxxx Xxxxxx at 000-000-0000 Xxxxxx Xxxxxxxxxx
at
000-000-0000
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b.)
The
Company will issue to Agent a warrant (the “Warrant”) to purchase shares of the
Company's Common Stock equal to Seven percent (7%) of the number of common
shares ("Shares") to be issued on an as converted basis in the Placement.
Such
Warrant will be issued pursuant to a Warrant Agreement to be signed by Agent
and
the Company, which agreement shall provide, among other things, that the
Warrant
shall be exercisable at an exercise price equal to 110% of the price at which
the Shares are sold to investors in the Placement or in the case of a
convertible structure shall be determined by the closing price at the time
of
closing, to be defined as the 10 day VWAP for the company’s common stock on the
day prior to closing, but in either case, no less than the price of the common
stock on the day prior to closing date; shall expire five (5 ) years from
the
date of issuance, include registration rights at the time that all shares
issued
in this Placement are registered, and provisions for cashless exercise and
such
other terms as are normal and customary for warrants of this type. Should
a
registration statement covering the common shares underlying the Warrants
described herein be effective at time of exercise, then Warrants shall be
exercised according to the Cash provision contained in the Warrant.
c.)
N/A.
d)
Notwithstanding any termination of this Engagement Letter pursuant to the
terms
hereof or otherwise, the obligation to pay the Fees and Compensation described
in Section 2, if any, shall survive any termination or expiration of the
Agreement. It is expressly understood and agreed by the parties hereto that
any
private financing of equity or debt or other capital raising activity of
the
Company within Twenty Four (24) months of the termination or expiration of
the
Agreement, with any investors or lenders to whom the Company was introduced
by
the Agent or who was contacted by the Agent while the Agreement was in effect
and disclosed to the Company in writing (such list to be communicated to
the
Company each time 15 new Investors have been contacted) shall result in such
fees and compensation due and payable by the Company to Agent under the same
terms of Section 2 above. Written Company approval is required for Agent
to
contact more than 45 investors and lenders. Any investors or lenders previously
contacted by other Finders or Agents of the Company are excluded from the
provisions of this agreement and the company shall provide a list of such
investors or lenders upon execution of this document. Upon completion of
the
Offering, any future renegotiation, restructuring, revision or other amendment
of such Offering by and between the Company and the investors in such Offering
within Twenty Four (24) months which results in the receipt of any net new
funds
by the Company from such investor(s) shall be deemed to be a new financing
and
shall result in additional fees and compensation due and payable by the Company
to Agent under the terms of Section 2 above
3.
Certain Placement Procedures. The Company and the Placement Agent each
represents to the other that it has not taken, and the Company and the Placement
Agent each agrees with the other that it will not take any action, directly
or
indirectly, so as to cause the Placement to fail to be entitled to rely upon
the
exemption from registration afforded by Section 4(2) of the Securities Act
of
1933, as amended (the "Act") or other appropriate exemption. In effecting
the
Placement, the Company and the Placement Agent each agrees to comply in all
material respects with applicable provisions of the Act and any regulations
there under and any applicable state laws and requirements. The Company agrees
that any representations and warranties made by it to any investor in the
Placement shall be deemed also to be made to the Placement Agent for its
benefit. The Company agrees that it shall cause any opinion of its counsel
delivered to any investors in the Placement also to be addressed and delivered
to the Placement Agent, or to cause such counsel to deliver to the Placement
Agent a letter authorizing it to rely upon such opinion. Upon completion
of the
Placement, all shares placed by the Placement Agent will be deposited into
an
Agent client account for the benefit of each investor.
4.
Indemnification. The Company agrees to indemnify Agent and related persons
in
accordance with the following: The provisions of which are incorporated herein
in their entirety. In consideration of your agreement to act on our behalf
in
connection with such matters, we agree to indemnify and hold harmless you
and
your affiliates and you and their respective officers, directors, employees
and
agents and each other person, if any, controlling you or any of your affiliates
(you and each such other person being an "Indemnified Person") from and against
any losses, claims, damages or liabilities related to, arising out of or
in
connection with the engagement (the "Engagement") under the Engagement Letter,
and will reimburse each Indemnified Person for all expenses (including
reasonable fees and expenses of counsel) as they are incurred in connection
with
investigating, preparing, pursuing or defending any action, claim, suit,
investigation or proceeding related to, arising out of or in connection with
the
Engagement, whether or not pending or threatened and whether or not any
Indemnified Person is a party. We will not, however, be responsible for any
losses, claims, damages or liabilities (or expenses relating thereto) that
are
finally judicially determined to have resulted from the bad faith or gross
negligence of any Indemnified Person. We also agree that no Indemnified Person
shall have any liability (whether direct or indirect, in contract or tort
or
otherwise) to us for or in connection with the Engagement except for any
such
liability for losses, claims, damages or liabilities incurred by us that
are
finally judicially determined to have resulted from the bad faith or gross
negligence of such Indemnified Person.
0000
Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx XX 00000
Fax:
000-000-0000 Phone: Xxxxx Xxxxxx at 000-000-0000 Xxxxxx Xxxxxxxxxx
at
000-000-0000
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We
will
not, without your prior written consent, settle, compromise, consent to the
entry of any judgment in or otherwise seek to terminate any action, claim,
suit
or proceeding in respect of which indemnification may be sought hereunder
(whether or not any Indemnified Person is a party thereto) unless such
settlement, compromise, consent or termination includes a release of each
Indemnified Person from any liabilities without payment by such person arising
out of such action, claim, suit or proceeding. No Indemnified Person seeking
indemnification, reimbursement or contribution under this agreement will,
without our prior written consent, settle, compromise, consent to the entry
of
any judgment in or otherwise seek to terminate any action, claim, suit,
investigation or proceeding referred to in the preceding paragraph.
If
the
indemnification provided for in the paragraph 4 of this Engagement Letter
is
judicially determined to be unavailable (other than in accordance with the
third
sentence of the first paragraph hereof of paragraph 4) to an Indemnified
person
in respect of any losses, claims, damages or liabilities referred to herein,
then, in lieu of indemnifying such Indemnified Person hereunder, we shall
contribute to the amount paid or payable by such Indemnified Person as a
result
of such losses, claims, damages or liabilities (and expense relating thereto)
(i) in such proportion as is appropriate to reflect the relative benefits
to
you, on the one hand, and us, on the other hand, of the Engagement or (ii)
if
the allocation provided by clause (i) above is not available, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
such
clause (i) but also the relative fault of each of you and us, as well as
any
other relevant equitable considerations; provided, however, in no event shall
your aggregate contribution to the amount paid or payable exceed the aggregate
amount of fees actually received by you under the Engagement Letter. For
the
purposes of this agreement, the relative benefits to us and you of the
Engagement shall be deemed to be in the same proportion as (a) the total
value
paid or contemplated to be paid or received or contemplated to be received
by us
or our shareholders, as the case may be, in the transaction or transactions
that
are the subject of, whether or not any such transaction is consummated, bears
to
(b) the fees paid to you in connection with the Placement.
5.
Termination; Survival of Provisions. This Agreement may be terminated by
the
Placement Agent or the Company at any time upon thirty (30) days prior written
notice to the other party, provided, however, that: (a) any termination or
completion of the Agents engagement hereunder shall not affect the Company's
obligation to indemnify Agent as provided in the indemnification section
referred to above and (b) any termination by the Company of Agent's engagement
hereunder shall not affect the Company's obligation to pay fees to the extent
provided for in Section 2 herein; and (c) any termination by Agent of Agents
engagement hereunder shall not affect the Company's obligation to pay fees
and
reimburse the expenses accruing prior to such termination to the extent provided
for herein. All such fees and reimbursements due the Placement Agent, shall
be
paid to the Placement Agent on or before the Termination Date (in the event
such
fees and reimbursements are earned or owed as of the Termination Date) or
upon
the closing of the Placement or any applicable portion thereof (in the event
such fees are due pursuant to the terms of Section 2 hereof).
6.
Governing Law; Amendment; Headings. This Agreement and all controversies
arising
from and relating to performance under this agreement shall be governed by
and
construed in accordance with the laws of the State of Georgia, without giving
effect to such state's rules concerning conflicts of laws. This Agreement
may
not be modified or amended except in writing duly executed by the parties
hereto. The section headings in this Agreement have been inserted as a matter
of
convenience of reference and are not part of this Agreement.
7.
Nondisclosure of Confidential Information. Agent and the Company mutually
agree
that they will not disclose any confidential information received from the
other
party to others except with the written permission of the other party or
as such
disclosure may be required by law. Agent has been retained under this agreement
as an independent contractor with duties owed solely to the Company. The
advice,
written or oral, rendered by Agent pursuant to this Agreement is intended
solely
for the benefit and use of the Company in considering the matters to which
this
agreement relates, and the Company agrees that such advice may not be relied
upon by any other person, used for any other purpose, reproduced, disseminated,
or referred to at any time, in any manner or for any purpose, nor shall any
public references to Agent be made by the Company, without the prior written
consent of Agent, which consent shall not be unreasonably withheld.
0000
Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx XX 00000
Fax:
000-000-0000 Phone: Xxxxx Xxxxxx at 000-000-0000 Xxxxxx Xxxxxxxxxx
at
000-000-0000
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8.
Successors and Assigns. The benefits of this Agreement shall inure to the
parties hereto, their respective successors and assigns and to the indemnified
parties hereunder and their respective successors and assigns, and the
obligations and liabilities assumed in this Agreement shall be binding upon
the
parties hereto and their respective successors and assigns. Notwithstanding
anything contained herein to the contrary, neither the Placement Agent nor
the
Company shall assign to an unaffiliated third party any of its obligations
hereunder.
9.
Press
Announcements. The Company agrees that the Agent shall, upon a successful
transaction, have the right to advertisements in financial and other newspapers
and journals at its own expense describing its services to the Company
hereunder, provided that Agent shall submit a copy of any such advertisement
to
the Company for its approval by the CEO, such approval not to be unreasonably
withheld.
10. Counterparts.
For the convenience of the parties, this Agreement may be executed in any
number
of counterparts, each of which shall be, and shall be deemed to be, an original
instrument, but all of which taken together shall constitute one and the
same
Agreement.
If
the
terms of our engagement as set forth in this letter are satisfactory to you,
please sign and date the enclosed copy of this letter and send back to us.
If
this agreement is not executed by both parties within ten (10) days from
its
date, it shall cease to be a valid offer to assist and represent the
Company.
2.
(d)
AMAR Investor and Lender List
Platinum
Partners
Chrisitis
Healthcare
Mountain
Capital
La
Joya
Cove
Tejas
Holdings
CCCM
Group
Stone
Investment Trust
A
Street
Capital
Fusion
Capital
Platinum
Partners
Trinity
Financing Investments
Xxxxxxx
Xxxxx
Golden
Gate Investors
La
Joya
Cove Investors
Dutchess
Advisors
Utek,
Inc.
Scarborough
Capital
Cornell
Capital
Century
Management
Amarillo
Bioscience, Inc. shareholders of record
0000
Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx XX 00000
Fax:
000-000-0000 Phone: Xxxxx Xxxxxx at 000-000-0000 Xxxxxx Xxxxxxxxxx
at
000-000-0000
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AMAR
may
add additional Investors or Lenders that have not been already contacted
by the
Agent to this list by written notification to Agent.
| Very truly yours, | ||
| MidSouth Capital, Inc. | ||
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| By: | /s/ Xxxxxxx Xxxxx | |
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Xxxxxxx
X. Xxxxx
Executive
Vice President
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ACCEPTED
AND AGREED TO:
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ACCEPTED
AND AGREED TO:
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as
of the date hereof
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as
of the date hereof
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Growth
Capital Partners, LLC
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By:
/s/
Xxxxxx X. Xxxxxxx
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By:
/s/
X. Xxxxx Xxxxxx
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Dr.
Xxxxxx Xxxxxxx
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X.
Xxxxx Xxxxxx or Xxxxxx X. Xxxxxxxxxx
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Chief
Executive Officer
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Managing
Director
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Dated:
3
Nov 06
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Dated:
3
Nov 06
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0000
Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx XX 00000
Fax:
000-000-0000 Phone: Xxxxx Xxxxxx at 000-000-0000 Xxxxxx Xxxxxxxxxx
at
000-000-0000
