WESTMINSTER SECURITIES CORPORATION
000 XXXX XXXXXX, 0XX XXXXX
XXX XXXX, XX 00000
(000) 000-0000
BY E-MAIL
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May 4, 2005
Xx. Xxxxxx Xxx
Chief Executive Officer
STEM CELL THERAPY INTERNATIONAL, CORPORATION
0000 Xxxxx Xxxx Xxx, 0xx Xxxxx
Xxxxx, Xxxxxxx 00000
RE: ENGAGEMENT LETTER EFFECTIVE MAY 3, 2005
Dear Xx. Xxx:
We are pleased to submit this Engagement Letter (also referred to as the
"Agreement") that sets forth the terms and conditions under which Westminster
Securities Corporation ("Westminster") and Stem Cell Therapy International,
Corporation (together with its affiliates and/or successors, collectively
referred to as "Stem Cell") have agreed to work. The terms of Agreement are as
follows:
1 SERVICES: Westminster will: (a) assist Stem Cell
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in its endeavor to locate and merge with a public blank check/blind pool entity
("Shell") or other suitable public company; and (b) use its best efforts to
secure equity-based and/or debt-based funding and/or lines of credit for Stem
Cell in amounts and upon terms acceptable to Stem Cell. Westminster may also
undertake such other activities as the parties may from time-to-time mutually
deem appropriate.
2. INITIAL AND MONTHLY RETAINER: Stem Cell shall
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pay Westminster the sum of Twenty Thousand Dollars ($20,000) upon execution of
this Agreement ("Retainer"). The Retainer shall be credited against any cash
fee to which Westminster shall be entitled under this Agreement. Westminster
hereby waives its monthly retainer.
3. CONTINGENT CASH FEE: Westminster
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shall be entitled to receive and Stem Cell shall pay to Westminster a commission
("Contingent Cash Fee"), calculated as a percentage of the amount raised. Each
such commission will be paid at each closing, per the following schedule
dependent upon the type of financing raised:
Equity-Based Funding ("Equity-Fee"): Ten Percent (10%) of any such equity-based
funding.
Debt-Based Funding Convertible Into Equity (Convertible Fee"): Eight Percent
(8%) of any such debt-based convertible funding.
Non-convertible Debt ("Debt Fee"): Five Percent (5%) of any such nonconvertible
debt-based funding.
4. CONTINGENT WARRANT FEE: At any
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closing in which Stem Cell receives funding hereunder, Westminster or its
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assignees shall, in addition to any Contingent Cash Fee, be entitled to receive
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from Stem Cell, and Stem Cell shall issue to Westminster, warrants equal to Ten
Percent (10%) of the number of shares issued or issuable in connection with such
funding, exercisable on the same terms and at the same price paid by the
investor(s).
5. MERGER OR ACQUISITION FEE ("MERGER FEE"): (a) Non-operating
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Publicly Traded Company ("Public
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Shell"): In the event that Stem Cell requests Westminster's assistance
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with finding, qualifying, and merging with a Public Shell, Westminster shall be
entitled to receive compensation for its services, and Stem Cell shall: (a) pay
to Westminster a cash fee of Fifty Thousand Dollars ($50,000); and, (b) issue to
Westminster a number of common shares equal to One percent (1%) of the
outstanding stock of the combined entity as merged.
(b) Operating Company: In the event Stem Cell requests
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Westminster's assistance with regard to a merger with, acquisition of, or
acquisition by another entity, either public or private, ("Transaction") Stem
Cell will pay Westminster a cash fee equal to Five percent (5%) of the total
transaction value which includes (i) cash, notes, securities and other property
of value; (ii) liabilities (x) repaid or retired in connection with or in
anticipation of a Transaction and/or (y) existing on Stem Cell's balance sheet
at the time the Transaction is consummated (if such Transaction takes the form
of a sale of assets); (iii) payments to be made in installments; (iv) amounts
paid or payable under consulting, supply, service, distribution, licensing or
lease agreements not to compete or similar arrangements (including such payments
to engagement; and, (v) contingent payments (whether or not related to future
earnings or operations).
6. EXCLUSIVITY/AUTHORITY: Upon execution hereof, Westminster
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shall become Stem Cell's exclusive financial advisor for all equity, debt,
equity-linked or debt-linked placements for a period commencing on May 3, 2005
and ending on April 30, 2006 ("Initial Term") unless otherwise extended upon the
mutual consent of the parties.
Westminster shall have the non-exclusive right to offer strategic alliances and
merger and/or acquisition opportunities to Stem Cell, subject to mutually agreed
upon terms and conditions.
Westminster shall have the right to associate itself with other members of the
National Association of Securities Dealers, Inc. ("NASD") and/or agents who will
share in compensation. The selection of other agents shall be mutually
agreeable between Stem Cell and Westminster, but their compensation shall be at
Westminster's sole discretion.
Westminster shall have the right to receive financial statements concurrently
with their filing by Stem Cell with the Securities and Exchange Commission on
the XXXXX System.
The twelve (12) month period immediately following the Initial Term of this
Agreement shall be referred to as the "Tail Period". During the Tail Period,
Westminster shall be entitled to receive, and Stem Cell shall be obligated to
pay to Westminster, the Contingent Cash Fee, Contingent Warrant Fee, and/or
Merger Fee as defined in this Agreement for any such transactions entered into
by Stem Cell with any entity introduced directly or indirectly to Stem Cell by
Westminster or with whom Xxxxxxxxxxx was working on behalf of Stem Cell at Stem
Cell's direction under this Agreement.
WESTMINSTER HEREBY ACKNOWLEDGES THAT STEM CELL IS UNDER NO OBLIGATION TO ACCEPT
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ANY DEBT OR EQUITY TRANSACTION PRESENTED BY WESTMINSTER.
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7. INDEMNIFICATION: Stem Cell agrees to indemnify
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Westminster to the extent of and in accordance with the provisions of the
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attached Schedule A which is incorporated by reference herein and made a part
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hereof, and to provide such other indemnifications, representations and
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warranties as Westminster may reasonably and from time-to-time request.
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8. DUE DILIGENCE: Stem Cell shall assist and take
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whatever actions necessary to facilitate Westminster's due diligence review of
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Stem Cell and its operation.
9. EXPENSES: Stem Cell shall, at its option, make
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arrangement for, pre-pay and/or reimburse Westminster for its travel,
entertainment, and other expenses and disbursements incurred by Westminster (and
as approved by Stem Cell) on Stem Cell's behalf in furtherance of the purpose of
this Agreement. Such expenses shall also include by way of example only: (i)
legal and/or accounting fees for advice if and as required under this Agreement;
(ii) costs associated with due diligence; (iii) escrow fees if required; and/or,
(iv) printing and mailing costs.
Stem Cell shall, at its option, prepay or reimburse Westminster upon
presentation for any costs incurred by Westminster for collection of any
Contingent Cash Fee, Contingent Warrant Fee, and/or Expenses hereunder,
including but not limited to reasonable attorney's' fees and court costs.
10. Neither party will make any public or other disclosures concerning the
Financing or Offering or a Transaction without the prior written consent of the
other party, subject to each party's legal obligations. Upon the completion of
any funding, merger and/or acquisition, Westminster may request, subject to
applicable rules and regulations, and Stem Cell shall agree to place, at Stem
Cell's expense, an appropriate notice (commonly referred to as a "Tombstone") in
the Wall Street Journal or other such publication as Westminster may reasonably
direct.
11. Westminster shall not be obligated to provide advice or perform services to
Stem Cell that are not specifically addressed in this Agreement. In connection
with Westminster providing the services described above, Stem Cell shall provide
Westminster with any information that Westminster reasonably requires. Stem Cell
hereby acknowledges that Westminster will be using and relying on said
information without independent verification and that Westminster assumes no
responsibility for the accuracy and completeness of any information provided to
it by Stem Cell.
12. The obligations of Westminster described in this Agreement consist solely
of best efforts services to Stem Cell. In no event shall Westminster be
required by this Agreement to act as the agent of Stem Cell or otherwise to
represent or make decisions for Stem Cell or to provide legal or accounting
services. All final decisions with respect to acts of Stem Cell or its
affiliates, whether or not made pursuant to or in reliance upon information or
advice furnished by Westminster hereunder, shall be those of Stem Cell or such
affiliates, and Westminster shall under no circumstances be liable for any
expense incurred or loss suffered by Stem Cell as a consequence of such
decisions.
13. Stem Cell hereby acknowledges that Westminster is not a fiduciary of Stem
Cell and that Westminster makes no representations or warranties regarding Stem
Cell's ability to secure financing, whether now or in the future.
14. This Agreement will be governed by and construed in accordance with the
laws of the State of New York, without giving effect to its conflict of laws
principles or rules. If a dispute or claim shall arise with respect to any of
the terms or provisions of this Agreement, or with respect to the performance by
any of the parties under this Agreement, then the parties agree to submit the
dispute to binding arbitration in a venue located in New York, NY in accordance
with the rules of the American Arbitration Association ("AAA"). The prevailing
party shall be reimbursed by the nonprevailing party for all reasonable
attorney's fees and costs (including all arbitration costs) incurred by the
prevailing party in resolving such dispute.
15. In the event that any provision of this Agreement shall be held to be
invalid, illegal, or unenforceable in any circumstances, the remaining
provisions shall nevertheless remain in full force and effect and shall be
construed as if the unenforceable portion or portions were deleted.
16. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and authorized assigns. Any attempt by
either party to assign any rights, duties, or obligations which may arise under
this Agreement without the prior written consent of the other party shall be
void.
17. This document contains the entire agreement between the parties with
respect to the subject matter hereof, and neither party is relying on any
agreement, representation, warranty, or other understanding not expressly stated
herein.
18. The parties acknowledge that certain provisions of this Agreement must
survive any termination or expiration thereof in order to be fair and equitable
to the party to whom any promise or duty to perform is owed under such provision
prior to such termination or expiration of the Agreement. Therefore, the
parties agree that the provisions of paragraphs 2, 3, 4, 5, 6, 7, 8, 9, 10, 11,
12, 13, 14, 15, 16, 17, 18, and 19 shall survive the termination or expiration
of this Agreement for the period required to meet and satisfy any obligations
and promises arising therein and thereunder.
19. This agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together will constitute one and the same
instrument.
If the foregoing correctly sets forth the understanding between Stem Cell and
Westminster, please sign below where indicated.
Very truly yours,
WESTMINSTER SECURITIES CORPORATION
By:
Xxxx X'Xxxx, President
ACCEPTED AND AGREED TO AS OF THE 4th Day of May, 2005.
STEM CELL THERAPY INTERNATIONAL CORPORATION
By: ___________________
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Xxxxxx Xxx, Chief Executive Officer
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SCHEDULE A - INDEMNIFICATION
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Stem Cell agrees to indemnify Westminster, its employees, directors, officers,
agents, affiliates, and each person, if any, who controls it within the meaning
of either Section 20 of the Securities Exchange Act of 1934 or Section 15 of the
Securities Act of 1933 (each such person, including Westminster, is referred to
as an "Indemnified Party") from and against any losses, claims, damages and
liabilities, joint or several (including, all legal to other expenses reasonably
incurred by an Indemnified Party in connection with the preparation for or
defense of any threatened or pending claim, action or proceeding, whether or not
resulting in any liability) ("Damages"), to which such Indemnified Party in
connection with its services or arising out of its engagement hereunder, may
become subject under any applicable Federal or state law or otherwise, including
but not limited to, liability (i) caused by or arising out of an untrue
statement or an alleged untrue statement of a material fact or the omission or
the alleged omission to state a material fact necessary in order to make the
statement not misleading in light of the circumstances under which it was made,
(ii) caused by or arising out of any act, or (iii) arising out of Westminster's
engagement or the rendering by any Indemnified Party of its services under this
Agreement; provided, however, that Stem Cell will not be liable to the
Indemnified Party hereunder to the extent that any damages are found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence, bad faith or willful misconduct of the Indemnified
Party seeking indemnification hereunder.
These indemnification provisions shall be in addition to any other liability,
which Stem Cell may otherwise have to any Indemnified Party.
If for any reason other than a final non-appealable judgment finding any
Indemnified Party liable for Damages for its gross negligence, bad faith or
willful misconduct the foregoing indemnity is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless, then Stem Cell
shall contribute to the amount paid or payable by an Indemnified Party as a
result of such Damages in such proportion as is appropriate to reflect not only
the relative benefits received by Stem Cell and its shareholders on the one hand
and Westminster on the other, but also the relative fault of Stem Cell and the
Indemnified Party as well as any relevant equitable considerations, subject to
the limitation that in no event shall the total contribution of all Indemnified
Parties to all such Damages exceed the amount of fees actually received by
Westminster hereunder.
Promptly after receipt by the Indemnified Party of notice of any claim or of the
commencement of any action in respect of which indemnity may be sought, the
Indemnified Party will promptly notify Stem Cell in writing of the receipt or
commencement thereof; however Stem Cell shall not have the right to assume the
defense of such claim or action (including the employment of counsel). The
Indemnified Party shall have the right to retain counsel reasonably satisfactory
to Stem Cell, at Stem Cell's expense, to represent the Indemnified Party in any
claim or action in respect of which indemnity may be sought and agrees to
cooperate with Stem Cell and Stem Cell's counsel in the defense of such claim or
action. The omission by an Indemnified Party to promptly notify Stem Cell of
the receipt or commencement of any claim or action in respect of which indemnity
may be sought will relieve Stem Cell from any liability Stem Cell may have to
such Indemnified Party only to the extent that such a delay in notification
materially prejudices Stem Cell's ability to defend such claim or action. Stem
Cell shall not be liable for any settlement of any such claim or action effected
without its prior written consent, which shall not be unreasonably withheld or
delayed.
Initials _________ Initials __________
