Exhibit 10.1

 
[sequence_logo.jpg]
 
November 20, 2006

Seawright Holdings, Inc. 600 Cameron Street
Alexandria, VA 22134 Attn: Joel P. Sens, CEO

Re: Engagement Letter
 
Dear Joel;

This engagement letter (the “Agreement”) is made and entered into as of the date
above (the “Effective Date”), by and between Sequence Investment Partners, LLC,
a South Carolina limited liability company (“Sequence”) and Seawright Holdings,
Inc., a Delaware corporation, and its subsidiaries and affiliates (collectively
hereinafter the “Company”), for the purpose of defining and acknowledging the
terms of this Agreement.

1. Engagement. The Company hereby engages Sequence on an exclusive basis for the
term specified in Section 5 hereof to render services to the Company as its
corporate finance consultant and investment banker upon the terms and conditions
set forth herein.

2. Services to be Provided.

a. During the Term of this Agreement, Sequence shall provide the Company with
such regular and customary consulting advice as is reasonably requested by the
Company, provided that Sequence shall not be required to undertake duties not
reasonably within the scope of the investment banking services contemplated by
this Agreement. It is understood and acknowledged by the parties that the value
of Sequence’s advice is not readily quantifiable, and that Sequence shall be
obligated to render advice upon the request of the Company, in good faith.

b. Sequence’s duties may include, but will not necessarily be limited to,
providing recommendations and assisting in the following:

(i) rendering advice with regard to corporate finance matters, including changes
in the capitalization of the Company, changes in the Company's corporate
structure, redistribution of shareholdings of the Company's stock, sales of
securities in private transactions, alternative uses of corporate assets, and
structure and use of debt;

(ii) rendering advice, assistance and introduction to third parties with regard
to merger, acquisition, joint venture or strategic alliance activities,
including the acquisition and/or merger of or with other companies, joint
ventures or strategic alliances with other companies, divestiture or any other
similar transaction, and the sale of the Company itself (or any significant
percentage, assets, subsidiaries or affiliates thereof);
 
 
192 East Bay Street, Suite 300, Charleston, SC 29401
(V) 843-853-8222 (F) 843-278-0097
www.seqinv.com

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(iii) rendering advice and/or assistance with regard to capital raising
activities, including bank financing or any other financing from financial
institutions or individuals (including but not limited to revolving credit
facilities, lines of credit, term loans, credit facilities, senior and junior
loans, whether secured or unsecured); and

(iv) subject to the limitations herein, act as placement agent for any private
offering of the Company's securities and act as underwriter in any public
offering of the Company's securities.

c. Sequence shall conduct its due diligence with respect to the Company and the
foregoing services. To perform such services, Sequence shall require that the
Company:

(i) furnish to Sequence any and all information and data concerning the Company
and its affiliates which Sequence deems appropriate;

(ii) provide Sequence and its representatives with reasonable access during
normal business hours to the Company’s officers, directors, employees,
appraisers, independent accountants, legal counsel and other consultants and
advisors; and

(iii) take such commercially reasonable actions as may be reasonably requested
by Sequence to effect the purposes of this Agreement.

d. This Agreement does not constitute an expressed or implied commitment or
undertaking on Sequence’s part to provide any part of any financing and does not
ensure the successful arrangement or completion of any financing or other
transaction contemplated hereby. Unless waived by Sequence after the date
hereof, Sequence’s willingness to underwrite any public offering or to arrange
any private placement or other exempt offering of the Company’s securities or
otherwise to effect any financing is subject to the execution of a final,
definitive underwriting agreement or placement agent agreement, as the case may
be, in Sequence’s standard form, containing customary representations,
warranties, covenants, indemnification provisions and closing conditions, and
the satisfaction of such conditions, as well as the absence of any events set
forth therein which would permit Sequence to terminate such agreement.

e. The Company represents and warrants to Sequence that (i) the Company is not
subject to any agreement or arrangement with any investment banker or finder or
similar person providing services substantially the same as the services to be
provided by Sequence herein, and (ii) the Company is not obligated to pay, or
may become obligated to pay, under any agreement or arrangement, any person any
fee substantially similar to any of the fees which may be payable to Sequence
herein, except as such agreement or arrangement has been previously disclosed to
Sequence in writing.

3. Compensation. In consideration for the services rendered by Sequence to the
Company pursuant to this Agreement (and in addition to the expenses provided for
in Section 11 hereof), the Company shall compensate Sequence as follows:

a. Merger and Acquisition, Joint Venture, Strategic Alliance Transactions. If
any Transaction (as hereinafter defined) is consummated during the Term of this

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Agreement or within one (1) year thereafter with any party introduced to the
Company by Sequence during the Term, except for those companies named on the
schedule annexed hereto, the Company shall pay at the closing of or as received
on each such Transaction a cash fee equal to the sum of:

(i) five percent (5%) of the first five million dollars of the Aggregate
Consideration (as herein after defined) of a Transaction;

(ii) four percent (4%) of the second five million dollars of the Aggregate
Consideration of a Transaction;

(iii) three percent (3%) of the third five million dollars of the Aggregate
Consideration of a Transaction; and

(iv) two percent (2%) of the Aggregate Consideration over fifteen million
dollars.

b. Aggregate Consideration. Aggregate Consideration is defined and computed as
follows:

(i) The total sale proceeds and other consideration received (which shall be
deemed to include amounts paid into escrow) by the Company and/or its
shareholders or by a target and/or its shareholders upon the consummation of the
Transaction (including payments made in installments), inclusive of cash,
securities, notes, consulting agreements and agreements not to compete, plus the
total value of liabilities assumed.

(ii) If a portion of such consideration includes contingency payments (whether
or not related to future earnings or operations), Aggregate
Consideration will include the face value of such payments without regard to
whether the conditions for the payment of such contingent amounts have been or
may be satisfied.

(iii) If the Aggregate Consideration for the Transaction consists in whole or in
part of securities, for the purposes of calculating the amount of Aggregate
Consideration, the value of such securities will be the value thereof on the day
preceding the consummation of the Transaction as the Company and Sequence agree;
provided, however, that in the case of securities for which there is a public
trading market, the value will be determined by the average last sales price for
such securities for the last twenty (20) days prior to such consummation as
determined by Sequence and communicated by Sequence to the Company. If there is
no public trading market for such securities but securities have been sold in a
private placement within the past twenty-four (24) months, the fair market value
shall be based upon the gross sales price in the last such private placement.

(iv) For other property received or receivable as a part of the Aggregate
Consideration and the parties are unable to agree, then each of Sequence and the
Company will select an investment banking firm respected in the merger and
acquisition field to determine a value and the midpoint between the two values
established by the two independent experts will be the fair market value for the
purpose hereof.
 

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c. Transactions. For the purposes of this Agreement, any of the following
transactions shall constitute a “Transaction”:

(i) the sale, outside of the ordinary course of business, of the Company or a
material portion of its assets, securities, or business by means of a merger,
consolidation, joint venture, exchange offer, licensing or purchase or sale of
stock or assets, or any transaction resulting in any change of control of the
Company or its assets or business; or

(ii) the purchase by the Company, outside of the ordinary course of business, of
another company or a material portion of its assets, securities or business by
means of a merger, consolidation, joint venture, exchange offer, licensing or
purchase or sale of stock or assets.

(iii) The entering into of any joint venture or strategic alliance for sales of
or development of markets for the company’s products or services. The
transaction value to be calculated as the gross amount of related transactions
realized as a direct result of such joint venture or strategic alliance.

d. Third-Party Debt Placements. In the event the Company obtains a debt
facility, inclusive of revolving credit facilities, lines of credit, term loans,
credit facilities, senior and junior loans, whether secured or unsecured, (a
“Credit Facility”) during the Term of this Agreement or within one (1) year
thereafter with a bank or other institutional lender (the “Lending Source”)
introduced to the Company by Sequence during the Term, the Company will pay
Sequence a fee of two percent (2%) of the maximum amount of the Credit Facility.
In the event Sequence is involved during the Term of this Agreement in arranging
an increase in any existing Credit Facility during the Term of this Agreement or
within one (1) year thereafter, the Company will pay Sequence a fee of two
percent (2%) of the increase from the maximum amount of the existing Credit
Facility to the maximum amount of the new Credit Facility.

e. Sales. In the event the Company obtains during the Term of this Agreement or
within one (1) year thereafter a customer or a client introduced to the Company
by Sequence during the Term, the Company will pay Sequence a fee of ten percent
(10%) of the gross revenue derived from such customer or client or its
affiliates for two (2) years after such origination. In the event Sequence is
involved during the Term of this Agreement in arranging an increase in gross
revenues derived from any customer or client of the Company, the Company will
pay Sequence a fee of five percent (5%) of the increase in gross revenue derived
from such customer or client or its affiliates for two (2) years after such
origination. The Company shall pay such amounts within five (5) business days of
the earlier of (i) when such gross revenue is received in cash or other property
or services, or (ii) when the gross revenue is recognized by the Company for
financial accounting purposes.

f. Equity Placements and Underwritings (“Equity Financing Transaction”). The
Company hereby grants Sequence a right of first refusal (i) to act as placement
agent for any private offering of the Company's equity and equity derivative
securities for the account of the Company or any affiliate of the Company, and
(ii) to act as underwriter in any public offering of the Company's equity and
equity derivative securities for the account of the Company or any affiliate of
the Company. In addition, in

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the event the Company or any affiliate of the Company sells in any public or
private offering of the Company’s equity or equity derivative securities during
the Term of this Agreement or within one (1) year thereafter to any purchaser
introduced to the Company by Sequence during the Term, the Company will pay
Sequence a fee as set forth in this Section 3(f). A fee with respect to any sale
or distribution of securities arising from this engagement will be paid as
follows:
 

 
(i)      Private Placement
             
Placement Agent Fee
 
Eight percent (8%) of gross proceeds
         
Warrant Coverage
 
Amount equal to twenty percent (20%) of gross proceeds
         
Non-Accountable Expense Allowance
 
Two percent (2%) of gross proceeds
                 
(ii)      Public Offering
             
Transaction Fee
 
Eight percent (8%) of gross proceeds
         
Warrant Coverage
 
Amount equal to twenty percent (20%) of gross proceeds
         
Non-Accountable Expense Allowance
 
Two percent (2%) of gross proceeds

 
(iii) All Warrants shall expire five (5) years from the date of issuance and
shall have “piggy back” registration rights, cashless exercise rights, customary
anti-dilution provisions on any stock splits and dividends and weighted average
adjustments for issuances below the exercise price, reasonably acceptable to
Sequence. The determination of value shall be made by agreement between Sequence
and the Company, but, failing such agreement, by reference to the offering price
of the Company’s securities being offered.

g. Fairness Opinions, Valuations and Other Services. Fees and expenses payable
to Sequence with regard to fairness opinions, valuations and services not
specifically set forth herein will be determined by mutual agreement in writing
at such time as the nature and terms of such transactions are determined.

h. Payment of Fees. All fees to be paid pursuant to this Agreement are due and
payable to Sequence in cash. The Company hereby agrees to, and hereby does,
irrevocably authorize and instruct third-party funding sources, including
Lending Sources and private equity groups, and counter parties to any
Transaction under Section 3(a) or any customer or client under Section 3(e) (the
“Counter Parties”), to pay directly to Sequence cash sums provided for in
Section 3 or 4. The Company authorizes Sequence to notify the Counter Parties of
this provision and the terms of this Agreement for purposes of this provision
and payment of the sums due under Section 3 or 4 of this
 

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Agreement. The Company agrees that Sequence is a direct beneficiary of any
eventual agreement between the Company and the Counter Parties, and that
Sequence is an intended third party beneficiary of any agreement between the
Company and any Counter Party. The Company hereby expressly agrees that in the
event any dispute or disagreement arises with respect to the payment to Sequence
of the sums due under Section 3 or 4 of this Agreement, including any dispute
regarding the amount due Sequence under this Agreement, that the Financing
Sources shall immediately place all disputed sums in an interest bearing escrow
account pending resolution of the dispute. The Company hereby irrevocably
authorizes and instructs the Counter Parties to escrow such disputed sums. The
Company further agrees that any sums due under this Agreement which are not in
dispute shall not be escrowed, but shall be paid upon closing to Sequence by the
Counter Parties as provided for under the terms of this Agreement.

4.     Exclusivity.

a. In the event that the Company engages in any Transaction during the
Exclusivity Period other than through Sequence, the Company shall pay Sequence,
as a reasonable estimate of the value of Sequence’s services under this
Agreement, two percent (2%) of the Aggregate Consideration from such
Transaction.

b. In the event that the Company obtains a Credit Facility during the
Exclusivity Period other than through Sequence, the Company shall pay Sequence,
as a reasonable estimate of the value of Sequence’s services under this
Agreement, one percent (1%) of the maximum amount of such Credit Facility.

c. In the event that the Company or any affiliate of the Company engages in any
Equity Financing Transaction during the Exclusivity Period other than through
Sequence, the Company shall pay Sequence, as a reasonable estimate of the value
of Sequence’s services under this Agreement, (i) three percent (3%) of the gross
proceeds raised in the placement or offering, and (ii) the Warrant Coverage as
defined in Section 3(f) as if Sequence had placed such Equity Financing
Transaction.

d. Sequence shall not be entitled to continue its right to exclusivity under
this Agreement if Sequence materially breaches this Agreement and fails to
reasonably cure such breach within sixty (60) days after written notice from the
Company to Sequence, which such notice shall specify such breach. Sequence shall
be entitled to any fee arising under this Section 4 for (i) any transaction that
closes prior to the end of such cure period or (ii) if it is finally judicially
determined that (A) Sequence did not materially breach this Agreement or (B)
Sequence reasonably cured within the requisite period.

5.  Term and Termination. This Agreement shall be effective for a period of one
(1) year (the “Exclusivity Period”), commencing upon the Effective Date of this
Agreement and may be extended as the parties shall mutually agree in writing
(the “Term”), subject to the establishment of arrangements for additional
compensation and other appropriate terms for such extension.

6.  Confidentiality. The Company acknowledges that all opinions and advice
(written or oral) given by Sequence to the Company in connection with Sequence’s
engagement are intended solely for the benefit and use of the Company in
considering the transaction to which they relate, and the Company agrees that no
person or entity other than the Company shall be

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entitled to make use of or rely upon the advice of Sequence to be given
hereunder, and no such opinion or advice shall be used for any other purpose or
reproduced, disseminated, quoted or referred to at any time, in any manner or
for any purpose, nor may the Company make any public references to Sequence, or
use Sequence’s name in any annual reports or any other reports or releases of
the Company without Sequence’s prior written consent.

7.  Independent Contractor; Conflicts. The Company acknowledges that Sequence is
in the business of providing investment banking services to others. Nothing
herein contained shall be construed to limit or restrict Sequence in conducting
such business with respect to others, or in rendering such advice to others.
Sequence shall perform its services hereunder as an independent contractor and
not as an employee of the Company or an affiliate thereof. It is expressly
understood and agreed to by the parties hereto that Sequence shall have no
authority to act for, represent or bind the Company or any affiliate thereof in
any manner, except as may be agreed to expressly by the Company in writing from
time to time. In no event shall Sequence be construed as a fiduciary of the
Company. In the course of Sequence’s activities, it or its affiliates may hold
long or short positions, and may trade or otherwise effect transactions for its
own account in debt or equity securities or senior loans of the Company.

8.  Reliance. The Company recognizes and confirms that, in advising the Company
and in fulfilling its engagement hereunder, Sequence will use and rely on data,
material and other information furnished to Sequence by the Company and that
Sequence may rely upon the data, material and other information supplied by the
Company without independently verifying the accuracy, completeness or veracity
of same.

9.  Notices. Any notice or communication permitted or required hereunder shall
be in writing and shall be deemed sufficiently given if hand-delivered or sent
(i) postage prepaid by registered mail, return receipt requested, or (ii) by
nationally-recognized overnight courier, or (iii) by facsimile, to the
respective parties as set forth below, or to such other address as either party
may notify the other of in writing:
 
If to the Company, to:
 
If to Sequence, to:
 
Seawright Holdings, Inc.
Sequence Investment Partners, LLC
600 Cameron Street
192 East Bay Street, Suite 300
Alexandria, VA 22134
Charleston, SC 29401
Attention: Joel P. Sens
Attn: Kevin High
Title: CEO
Title: Managing Director
Fax:
Fax:
 

 
10. Indemnification.

a. The Company agrees to indemnify and hold harmless Sequence and its
affiliates, the respective managers, directors, officers, partners, agents and
employees of Sequence and its affiliates, and each other person, if any,
controlling Sequence or any of its affiliates (collectively, “Indemnified
Persons”), from and against, and the Company agrees that no Indemnified Person
shall have any liability to the Company or its owners, parents, affiliates,
security holders or creditors for, any losses, claims, damages or liabilities
(including actions or proceedings in respect thereof) (collectively “Losses”)
(i) related to or arising out of (A) the Company’s actions or failures to act
(including statements or omissions made, or information provided, by the Company
or its agents) or

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November 20, 2006
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(B) actions or failures to act by an Indemnified Person with the Company’s
consent or in reliance on the Company’s actions or failures to act, or (ii)
otherwise related to or arising out of the Agreement or Sequence’s performance
thereof, except that this clause (ii) shall not apply to the extent that any
Losses resulted from Sequence’s intentional misconduct
or gross negligence. If such indemnification is for any reason not available or
is insufficient to hold Sequence harmless, the Company agrees to contribute to
the Losses involved in such proportion as is appropriate to reflect the relative
benefits received (or anticipated to be received) by Sequence and by the Company
with respect to this Agreement or, if such allocation is judicially determined
unavailable, in such proportion as is appropriate to reflect other equitable
considerations such as the relative fault of Sequence on the one hand and of the
Company on the other hand; provided, however, that, to the extent permitted by
applicable law, the Indemnified Persons shall not be allocated relative fault
which in the aggregate is in excess of the amount of all fees actually received
by Sequence in connection with this Agreement. Relative benefits to Sequence, on
the one hand, and the Company, on the other hand, shall be deemed to be in the
same proportion as (i) the total value paid or proposed to be paid or received
or proposed to be received by the Company or its security holders, as the case
may be, pursuant to the transaction(s), whether or not consummated, contemplated
by this Agreement bears to (ii) all fees paid to Sequence in connection with
this Agreement.

b. The Company will advance each Indemnified Person all expenses (including
reasonable fees and disbursements of counsel) as they are incurred by such
Indemnified Person in connection with investigating, preparing for or defending
any action, claim, investigation, inquiry, arbitration or other proceeding
(“Action”) arising out of a third party claim. The Company further agrees that
the Company will not settle or compromise or consent to the entry of any
judgment in any pending or threatened Action in respect of which indemnification
may be sought hereunder (whether or not an Indemnified Person is a party
therein) unless the Company has given Sequence reasonable prior written notice
thereof and used all reasonable efforts, after consultation with Sequence, to
obtain an unconditional release of each Indemnified Person from all liability
arising therefrom. In the event the Company is considering entering into one or
a series of transactions involving a merger or other business combination or a
dissolution or liquidation of all or a significant portion of the Company’s
assets, the Company shall promptly notify Sequence in writing. If requested by
Sequence, the Company shall then establish alternative means of providing for
the Company’s obligations set forth herein on terms and conditions reasonably
satisfactory to Sequence.

c. If multiple claims are brought against Sequence in any Action with respect to
at least one of which indemnification is permitted under applicable law and
provided for under this Agreement, the Company agrees that any judgment,
arbitration award or other monetary award shall be conclusively deemed to be
based on claims as to which indemnification is permitted and provided. The
Company’s obligations hereunder shall be in addition to any rights that any
Indemnified Person may have at common law or otherwise. Solely for the purpose
of enforcing this Section 10, the Company hereby consents to personal
jurisdiction and to service and venue in any court in which any claim which is
subject to this Agreement is brought by or against any Indemnified Person.

d. The provisions of this Section 10 shall apply to the Agreement (including
related activities prior to the date hereof) and any modification thereof and
shall remain in full force and effect regardless of the completion or
termination of the Agreement.
 
 

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November 20, 2006
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        11.  Expenses.

a. All costs and expenses incident to the performance by the Company of its
obligations hereunder shall be paid by the Company. All costs and expenses
incident to the performance by the Company of its obligations hereunder and paid
by Sequence shall be reimbursed to Sequence by the Company and shall be due upon
request.

b. All out-of-pocket costs and expenses of Sequence incident to the performance
by Sequence of its obligations hereunder, including fees and expenses of counsel
for Sequence, shall, upon submission of reasonable documentation therefore to
the Company, be reimbursed by the Company, up to an aggregate amount of $15,000,
unless otherwise agreed in writing by the Company. As an advance against the
expenses expected to be incurred by Sequence under this Agreement, the Company
will, upon execution of this Agreement, pay Sequence $10,000. Any amounts owing
to Sequence in excess of this amount shall be due upon request.

12.  Publicity. Following consummation of any financing and during the Term,
consistent with applicable securities laws, Sequence shall have the right to
place advertisements in financial and other newspapers and journals, at
Sequence’s own expense, describing its services to the Company hereunder and, in
that regard, shall have the right to include therein the name and corporate logo
of the Company.

13.  Counterparts. This Agreement may be executed in any number of counterparts,
each of which together shall constitute one and the same original document.

14.  Assignability and Modification. This Agreement is not assignable and cannot
be modified or changed, nor can any of its provisions be waived, except by the
mutual agreement in writing of all parties.

15.  Choice of Law; Venue; Jury Trial. The laws of the State of South Carolina
shall govern the validity of this Agreement, the construction of its terms, and
the interpretation of the rights and duties arising hereunder. Any legal action
shall be brought in federal or state court located in the City of Charleston,
State of South Carolina. The parties hereto irrevocably waive to the extent
permitted by law, all rights to trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement.

16.  Severability. Each section, paragraph, term or provision of this Agreement
shall be considered severable and if, for any reason, any paragraph, term or
provision is determined to be invalid or contrary to any existing or future law
or regulation, such will not impair the operation, or affect the remaining
portions, of this Agreement.

If you are in agreement with the foregoing, please execute and return the
enclosed copy of this letter to the undersigned no later than 5:00 p.m. (Eastern
time) on Wednesday, November 22, 2006, after which time this letter will expire
if not so accepted. We are delighted to be working with you and look forward to
a successful outcome.
 

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November 20, 2006
Page 10

Very truly yours,
 

 

            SEQUENCE INVESTMENT PARTNERS, LLC f'
 
            By: [high_sig.jpg]
   

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            Kevin J. High
        Managing Director
 

Agreed and accepted:

SEAWRIGHT HOLDINGS, INC.

By: ____________________________
Name: Joel P. Sens
Title: CEO
Date:
 

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November 20, 2006
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Section 3(a) List
 
[to be provided by Company]