Xxxxxxx Xxxxx & Xxxxxx LLC
Investment Banking Consultants
February 6, 2002
Re: Letter Agreement for Investment Banking Services
This letter (the "Letter Agreement") sets forth the arrangements previously
discussed whereby Chapman, Spira, & Xxxxxx LLC "CSC" would act as an exclusive
investment banker to Sanguine Corporation and its affiliates or successor
corporations or partnerships (collectively referred to as "SANGUINE" or the
"Company") and endeavor to secure financing to facilitate the Company's
growth.
This letter Agreement will confirm CSC's engagement by SANGUINE on the
following terms and conditions:
1. Services
CSC will undertake to secure for the Company financing via a private placement
of debt and/or equity securities or for that matter any alternative form of
financing that the company shall deem acceptable.
2. Consideration and Term of Engagement
A. For the purposes of this letter Agreement, a "Source" shall include any
and all investors, agents, investment bankers, brokers/dealers, and
similar providers of capital including referrals by SANGUINE, but
excluding immediate family members of the Principal, whether or not
introduced to the Company directly by CSC or by the Company. All
contacts of CSC shall remain CSC'S possession and should any
transaction be consummated within 3 years with a CSC source, they shall
be paid as discussed below.
B. In consideration of the time and effort required on the part of CSC to
enter into the due diligence process and advise the Company and
the Principal in SANGUINE's corporate and capital structure, and to
assist in negotiations with sources, CSC shall have the exclusive right
to perform the above described services for the Company and the
Principal for a period of three (3) months from the date of the
execution of this Agreement, and for such additional period as the
Company may be involved in substantive negotiations with one or more
Sources procured by CSC.
3. Fees
Sanguine shall pay CSC ten percent (10%) of the gross amount of capital
raised. Sanguine will issue to CSC a five-year "cashless" warrant (the
"Warrant") to purchase 300,000 shares of stock which will be priced at the
"median" price determined by the value at the close of market on the day of
execution of this contract. The Warrant shall contain the terms set forth in
the form of Warrant annexed hereto as Exhibit A. The 300,000 shares issuable
upon exercise of the Warrant shall hereinafter be referred to as the "Shares."
Of these shares, CSC will receive 100,000 Warrants upon the signing of this
document and remainder upon the acceptance of any funds from a CSC source. In
spite of the fact that these Warrants will be issued to CSC in two tranches,
all of these Warrants will conform with the terms and conditions of Exhibit A.
The exercise price of the warrant will be twelve and a half cents per share
($.125) the closing bid price on the day this contract was agreed to, February
6, 2002.
4. Costs and Expenses
CSC shall be entitled to be reimbursed for all agreed-upon third-party
and out-of-pocket expenses that CSC may incur in the performance of services
under this Agreement. Such reimbursement shall be in addition to any fees
otherwise earned by CSC hereunder, and shall be paid by the Company within
(30) days of CSC's delivery of its statement of costs. Expenses to exceed
$500 will be pre-approved by SANGUINE.
5. Payment of Fees
In the instance of financings secured for SANGUINE, fees shall be paid
concurrently and proportionately as funds are received by SANGUINE.
The underlying capital stock to which the Option applies, or which shall be or
has been issued pursuant to this or any other subsequent agreement, shall have
anti-dilution, demand registration, piggyback registration, take-member-along
and preemptive provisions and rights as of the date of this Letter Agreement.
The Company will bear the costs of such registrations and rights and cause to
make effective in such states as are reasonably requested by CSC.
6. Indemnification
The Company hereby agrees that it will indemnify and hold harmless CSC and
each director, officer, shareholder, employee or representative from and
against any and all loss, claim, damage, liability, costs or expenses arising
out of or based upon: (i) any breach or inaccuracy of the representations of
SANGUINE contained in the Descriptive Memorandum, (ii) breach or inaccuracies
of the representation of SANGUINE contained in this Agreement, and/or the
definitive documentation with Sources that results from the Agreement, (iii)
any claims made by any finders, brokers, agents, advisors or other similar
party claiming compensation for the transactions described herein, and (iv)
any SANGUINE stockholder, creditor, option-holder and/or contingent or actual
investor claims as against CSC. Not withstanding the foregoing provisions of
this paragraph, any amount incurred or paid by SANGUINE which has been
determined by a court of competent jurisdiction to have been the direct result
of the gross negligence, bad faith, or willful misfeasance of CSC or any of
their direct employees will be reimbursed by CSC to SANGUINE immediately.
Promptly after receipt of notice by SANGUINE of the commencement of any claim
or action made against SANGUINE in which CSC or any of its employees been
named, SANGUINE shall notify CSC and SANGUINE shall assume the defense thereof
with counsel reasonably satisfactory to CSC. Notwithstanding the foregoing,
CSC shall have the exclusive right, if it shall reasonably conclude that there
may be one or more defenses available to it which are different or additional
to those available to and employed by SANGUINE, to appoint such other and
separate legal counsel as CSC deems appropriate and SANGUINE shall pay such
legal costs and expenses. XXXXXXXX further agrees that it will not, without
prior written notice, consent to settle, compromise or agree to the entry of
any judgment, unless such settlement, compromise or agreement includes an
unconditional, irrevocable release of CSC and each director, officer,
shareholder, employee or representative, from and against any and all
liability arising out of said legal action.
7. No Modifications
This agreement shall not be modified without the prior written consent of all
parties hereto.
8. Investment Representations
A. Access to Information. The Company represents and warrants that, on
a timely basis, it will provide CSC access to all information available to
the Company concerning its condition, financial and otherwise, its
management, its business and its prospects. The Company represents that
it will provide CSC with a copy of the Company's most recent Annual Report
on Form 10-KSB and any subsequent filings required or filed under the
rules and regulations promulgated under the Securities Act or the
Securities Exchange Act of 1934 as amended (the "Exchange Act"), if any
(the "Disclosure Documents"). The Company represents that it has provided
and will continue to provide CSC with any information or documentation
necessary to verify the accuracy of the information contained in the
Disclosure Documents and will promptly notify CSC upon the filing of any
registration statement or other periodic reporting documents filed
pursuant to the rules and regulations of the Securities Act or the
Exchange Act.
B. Issuance of Securities. The Company agrees that during the term of
this Agreement, without the prior written consent of CSC, which consent
shall not be unreasonably withheld, it will not issue any shares of its
common stock or other securities convertible into or exercisable into
shares of common stock; provided however, CSC hereby consents to the
issuance of not more than 50,000 shares of common stock per quarter to
their medical advisory board.
C. Current Filings. The Company represents and warrants that it has
filed all forms and reports required by the Securities Act or Exchange Act
during the past twelve-month period and will continue to do so during the
term of this Agreement.
9. Arbitration
In the event of a dispute, the parties agree that this Agreement shall be
resolved by arbitration in accordance with the requirements then obtaining of
the American Arbitration Association in New York City, New York, and judgment
upon the award rendered may be entered in any court having jurisdiction
thereof.
10. Best Efforts and Performance of Duties
This Letter Agreement shall not be construed to be a commitment of financing.
CSC shall use its best efforts only to secure financing for the Company. CSC
shall have the discretion to determine the amount of time necessary to perform
the services hereunder. CSC reserves the right to retain the services of a
third party in connection with the services to be rendered hereunder. Nothing
in this Agreement shall be construed to limit or restrict CSC in conducting
such business with respect to others, or in rendering such advice to others.
11. Overdue Payments
In the event that any payment due CSC under this Letter Agreement shall not be
made when due, interest shall accrue on the unpaid balance of such overdue
payments at the rate of 12% per annum until paid.
12. Standard of Care
CSC, including any person or entity working for or on behalf of CSC, shall not
be liable for any mistakes of fact, errors of judgment, for losses sustained
by the Company, or for any acts or omissions of any kind, unless caused by the
gross negligence or intentional misconduct of CSC or any person or entity
acting for or on behalf of CSC.
13. Acceptance
This offer to provide investment banking services shall be null and void if
not accepted in writing and returned to Chapman, Spira, & Xxxxxx, Inc. by
February 15th 2002. If the foregoing correctly sets forth the understanding
between SANGUINE, the Principal, and CSC and is the entire agreement between
the signatories and shall supersede any and all prior agreements whether
verbal or written, please sign in the spaces below, whereupon this Letter
Agreement shall constitute a binding agreement. We are very enthusiastic
about your Company and look forward to working with you towards your future
growth and success.
/s/ X. X. Xxxxxxxxxx
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Sanguine Corporation
READ AND AGREED TO AS OF 2/11, 2002
/s/ Xxxxxx X. Xxxxx
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Xxxxxxx Xxxxx and Xxxxxx LLC
