Exhibit 10.4
______________Hallmark Investments, Inc._______________
420 Lexington Avenue, 8th Floor, New York, NY 10170
Tel: (212) 661-2277   (866) 542-5562    Fax: 212 661-2055
 

 
June 5, 2009 
 

Ms. Kathleen T. Karloff, CEO
INVO Bioscience, Inc.
100 Cummings Center, suite 421E
Beverly MA 01915
 
Dear Ms. Karloff:
 
This letter agreement (this “Agreement”) confirms our understanding that INVO
Bioscience, Inc., a Nevada corporation, and its affiliates, (the “Company”),
have engaged Hallmark Investments, Inc., (the “Placement Agent”) to act as a
Placement Agent on an exclusive basis in connection with a private placement by
the Company or its affiliates of debt and/or equity securities (the
“Securities”) on a “best efforts” basis of up to an aggregate offering of
approximately Five Hundred Thousand Dollars ($500,000.00) (the “Private
Placement”). This Agreement shall be effective for a period commencing June 1,
2009 and ending on August 31, 2009.

 
Section 1.                           Appointment and Acceptance.
 
The Company hereby appoints the Placement Agent Placement Agent on an exclusive
basis in connection with the Private Placement of the Securities.  The Placement
Agent accepts such appointment, subject to the terms and conditions of this
letter agreement.
 
The Placement Agent agrees that in its capacity hereunder it will use
commercially reasonable efforts to arrange the Private Placement. In no event
shall the Placement Agent be obligated to purchase the Securities for its own
account or for the accounts of its customers.

Section 2.                           The Transaction
 
The parties contemplate that an initial offering of a maximum of approximately
$500,000.00 of debt and /or equity  securities will be offered in the Private
Placement. Upon commencement, the Private Placement shall continue through
August 31, 2009.

The Placement Agent envisions the following terms:
 
A 10% Senior Secured Convertible Note, (“the Note” or “the Notes”), with
detachable Common Stock Purchase Warrants.  Interest on the Notes will be paid
in Shares of Common Stock.  Each Note entitles the Note holder to convert the
Notes into Common Stock of the Company at  of $.10 per Share The Notes mature
upon the earlier of one (1) year or the completion of a follow-on-financing by
the Company of a minimum of $2,500,000 dollars.  The warrants are exercisable at
a 100% premium to the conversion pricing of the Notes at 100% coverage.
 
The Placement Agent will assist in negotiating the terms and conditions for a
successful completion of the Private Placement; provided, however, that the
Company, in its sole discretion, must approve any such terms and conditions. To
facilitate the Private Placement, the Company shall prepare and deliver to the
Placement Agent any offering documents or other information to be used in the
Private Placement.

 

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Section 3.                           Fees and Expenses.
 
As compensation to the Placement Agent for its services hereunder, the Company
agrees that the Company and the Placement Agent shall determine whether more
than one closing shall be necessary. If there is more than one closing, at each
closing the Gross proceeds shall be paid into an escrow account (the Escrow
Account). The Company agrees that immediately upon the closing of a sale of the
Securities the Escrow Agent shall make disbursements from the Escrow Account as
follows:
 
  (i)
  to the Placement Agent a placement fee consisting of the following: a cash
payment equal to ten percent (10%) of the gross proceeds raised (as defined
below), in a sale of equity securities, and  

 
  (ii)
  As part of the Placement Agent’s compensation hereunder, the Company shall
issue to the Placement Agent, at each closing hereunder, five (5) year Common
Stock Purchase Warrants equal to ten percent (10%) of the number of shares of
common stock underlying any debt and/or equity securities sold by the Placement
Agent, as more fully described in the Offering Document. The Common Stock
Purchase Warrants shall be exercisable at the same price as the shares of common
stock underlying the debt and/or equity securities sold by the Placement Agent.
And, The Common Stock Purchase Warrants will have features identical to the
shares of common stock underlying the debt and/or equity securities sold by the
Placement Agent. The Placement Agent may designate that the Placement Agent’s
Common Stock or Preferred Stock be issued in varying amounts to its officers,
agents, consultants and affiliates and not to the Placement Agent. 

 
The amounts payable or securities deliverable pursuant to subparts (i), and (ii)
above shall be referred to as the “Placement Fee.”
 
The Company hereby agrees to complete the following and pay the expenses
associated therewith, in addition to a non-refundable retainer of fifteen
thousand dollars ($15,000.00), which, at this time, the Company does not have
and where there is little or no prospect that the Company will have the retainer
amount available until such time as the Placement Agent raises this amount, and
more, from its investor clients. It is therefore expressly agreed that the
retainer amount of $15,000.00 will be paid to the Placement Agent by the Company
from the first monies raised by the Placement Agent but that such payment will
in no way diminish or be credited to the Company against the 10% commission fee
for which the Company is obligated to the Placement Agent. The
$15,000.00  retainer fee will be paid by the Company as soon as that amount is
raised by the Placement Agent.
 
  (i)
  the preparation and printing of the Offering Documents, and any supplements or
amendments thereto, including the cost of all copies thereof;

 
  (ii)
  the issuance, sale, transfer and delivery of the Securities, including any
transfer or other taxes payable thereon and the fees of any transfer agent or
registrar;

 
  (iii)
  the registration or qualification of the Securities or the securing of an
exemption therefrom under state or foreign "blue sky" or securities laws,
including without limitation, filing fees payable in the jurisdictions in which
such registration or qualification or exemption therefrom is sought and
disbursements in connection

 
Such Placement Fee will be payable in the respect of each sale of Securities
only if such sale has been arranged by the Placement Agent or its Co-Placement
Agents or Selected Dealers. Gross proceeds raised shall include only cash
consideration received by the Company for the purchase of the Securities and
shall not include the cash received by the Company upon the exercise of warrants
or other convertible securities, if any.  In no event shall the Company be
obligated to issue and sell any Securities unless the Company shall have
executed and delivered an investor subscription agreement pertaining to such
sale setting forth the terms of such sale of Securities and (ii) the aggregate
gross proceeds raised in connection with the Private Placement exceeds any
minimum set forth in the Offering.  Additionally, the Company shall have
complete and absolute discretion in determining the terms of the Private
Placement and whether or not to sell Securities to any potential purchaser
presented by the Placement Agent.
 
Gross proceeds shall include only cash consideration received by the Company for
the purchase of the Securities and shall not include the cash received by the
Company upon the exercise of warrants or other convertible securities, if any.
 
The Company and the Placement Agent acknowledge and agree that, in the course of
performing services hereunder, the Placement Agent may introduce the Company to
third parties who may, directly or indirectly through other third parties, be
interested in providing debt or equity financing to the Company (a “Financing”)
in addition to the Private Placement.
 
The Company agrees that if during the terms of this agreement or within eighteen
(18) months year from the effective date of the termination of this Agreement,
the Company or any party to whom the Company was introduced by the Placement
Agent  in connection with its services for the Company hereunder proposes a
Financing involving the Company and the Placement Agent is not engaged as the
Company’s financial advisor, agent, and/or investment banker in connection with
such Financing, then, if any such Financing is consummated, the Company shall
pay to the Placement Agent the following fees:
 
  (i)
  a cash fee of eight percent (8%) of the amount of capital raised, invested or
committed; and

 
  (ii)
  issue to the Placement Agent, at each closing hereunder, five year Common
Stock Purchase Warrants equal to eight percent (8%) of the number of shares of
common stock underlying any debt and/or equity securities issued the amount of
capital raised, invested or committed The Placement Agent may designate that the
Placement Agent’s Common Stock or Preferred Stock be issued in varying amounts
to its officers and agents and not to the Placement Agent. 

 

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Such fees shall be payable to the Placement Agent in cash immediately at the
closing or closings of the Financing to which it relates.  Any Financing to be
provided to the Company by the Placement Agent or underwriter shall be provided
pursuant to a separate agency or underwriting agreement between the Company and
the Placement Agent which agreement shall contain the terms set forth in Section
3 hereof and such other customary terms, conditions, agreements, covenants,
representations and warrants as the parties may agree upon.
 
All cash fees and expenses paid by the Company to the Placement Agent in Section
3 above shall be in United States currency. 

 
Section 4.                            Information
 
In connection with the Placement Agent’s engagement, the Company will furnish
the Placement Agent with all information concerning the Company as the Company
and the Placement Agent may reasonably agree and will provide the Placement
Agent with reasonable access to the company’s officers, directors, employees,
accountants, counsel and other representatives.  The Company acknowledges and
confirms that the Placement Agent (I) will rely solely on such information in
the performance of the services contemplated by this engagement without assuming
any responsibility for independent investigation or verification thereof, (ii)
assumes no responsibility for the accuracy or completeness of such information
or any other information regarding the Company and (iii) will not make any
appraisal of any assets of the Company.
 
The Company will be solely responsible for the contents of the offering
documents (subject to review by counsel to the Placement Agent) or other
offering document used in connection with the Private Placement (as such private
placement memorandum or other
document may be amended or supplemented and including any information
incorporated herein by reference, the “Private Placement Memorandum”) and any
and all other written communications provided by the Company to any actual or
prospective purchaser of the Securities.

The Placement Agent shall not make any changes to the offering documents, and
except in connection with performing the services contemplated by and with the
consent of the Company, the Placement Agent shall keep the offering documents
confidential and shall not distribute it or any other materials related to
Private Placement.
 
 
The Company represents and warrants that the Offering Memorandum and such other
communications will not, as of the date of any delivery by the Placement Agent
to a perspective purchaser and as of the time of sale of any Securities pursuant
to the Private Placement contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading.  If at any time prior to the completion of the offer and
sale of the Securities or the closing date of any such sale an event occurs as a
result of which the Offering Memorandum (as then supplemented or amended) would
include any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Company, will
promptly notify the Placement Agent of such event and the Placement Agent will
promptly suspend solicitations of prospective purchasers of the Securities and
distribution of the Offering Memorandum until such time as the Company shall
prepare (and the Company agrees that, if it shall have notified the Placement
Agent to suspend solicitations after the Company has accepted orders from
prospective purchasers, it will promptly prepare) a supplement or amendment to
the Offering Memorandum which corrects such statement(s) or omission(s).  Each
party hereto shall be responsible for violations of their respective agents and
advisors of the obligations set forth in this agreement.

 
Section 5.
Exemption from Registration; Restrictions on Offer and Sale of Same or Similar
Securities

 
It is understood that the offer and sale of the Securities will be exempt from
the registration requirements of The Securities Act of 1933, as amended (the
“Act”).  The Company will not, directly or indirectly, makes any offer or sale
of Securities or of securities of the same or of similar class as the Securities
if as a result the offer and sale of Securities contemplated hereby would fail
to be entitled to the exemption from the registration requirements of the Act.
 
The Placement Agent will not, directly or indirectly, make any offer of
Securities, if as a result the offer of Securities contemplated hereby would
fail to be entitled to the exemption from the registration requirements of the
Act.  In addition, the Placement Agent will solicit offers only for the
Securities and will not, directly or indirectly make any offer of securities of
the same or similar class of the securities.
 
A.  
Additional Restrictions on the Company and the Placement Agent

 

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In connection with all offers and sales of the securities:
 
  (a)
  The Company will not offer or sell the Securities by means of any form of
general solicitation or general advertising.  The Placement Agent will not offer
the Securities by means of any form of general solicitations or general
advertising.

 
(b)
  The Company will not offer or sell the Securities to any person who is not an
“accredited investor” as the term is defined in Section 501(a) or Regulation D
of the Securities Act of 1933, as amended (“Regulation D”).  The Placement Agent
will not offer the Securities to any person who is not a “qualified client” as
defined in Regulation D.

(c)
  The Company will exercise reasonable care to ensure that purchasers of the
Securities are not underwriters within the meaning of Section 2(11) of the Act
and, without limiting the foregoing, that such purchases will comply with Rule
502(d) under the Act.

B.  
Compliance With Securities Laws, Broker/Dealer Regulations And Relevant
Self-Regulation Organizations.

The company will make such notice filings and pay such fees under the securities
laws of such jurisdictions in the United States as the Company may reasonably
determine, in each case to the extent required under Section 18( c ) (2) of the
Act, and in such other jurisdictions as required by applicable law
 
The Placement Agent hereby represents and warrants that it is (1) registered as
a broker or dealer as required under Section 15(a)(1) of the Securities and
Exchange Act of 1934, (the “Exchange Act”), (2) it is a (a) associated with a
broker/dealer, which is a person other than a natural person, and (b) registered
with the National Association of Securities Dealers as a registered
representative or (3) exempt from the regulation requirement of Section 15(a)(1)
of the Exchange Act and applicable state laws.

 
Section 6.                           Term and Termination.
 
 This Agreement shall be effective for the period commencing June 1, 2009 and
ending August 31, 2009.
  
No termination of the Placement Agent’s engagement hereunder shall affect (I)
the Company’s obligation to reimburse the Placement Agent for expenses as
provided herein or (ii) the provisions of Sections 3 and 9 of this letter
agreement.

Section 7.                           General.

In connection with this engagement, the Placement Agent is acting as an
independent contractor and not in any other capacity, with duties owing solely
to the Company.  All aspects of the relationship created by this agreement shall
be governed by and construed in accordance with the laws of the state of New
York, applicable to contracts made and to be performed therein.  Each of the
Placement Agent and the Company waives all right to trial by jury in any action,
suit proceeding or counter claim (whether based upon contract tort or otherwise)
relating to or arising out of the engagement of the Placement Agent pursuant to,
or the performance by the Placement Agent of the services contemplated by, this
agreement.  All actions and proceedings arising out of or relating to this
letter agreement shall be heard and determined exclusively in any New York State
court or federal court sitting in the state of New York to whose jurisdiction
the company and the Placement Agent hereby irrevocably submit.  The Company and
the Placement Agent irrevocably waive any defense or objection to the New York
forum designated above.
 
This letter agreement contains the entire agreement of the parties with respect
to the subject matter hereof and supersedes and takes precedence over all prior
agreements or understandings, whether oral or written, between the Placement
Agent and the Company.  The invalidity or enforceability of any provision of the
letter agreement shall not affect the validity or enforceability of any other
provisions of this agreement, which shall remain in full force and effect.
 
We are delighted that you have accepted this engagement and look forward to
working with you on this assignment. Please confirm that the foregoing is in
accordance with your understanding by signing and returning to us the enclosed
duplicate of this agreement.
 

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Section 8.                           Governing Law; Jurisdiction; Waiver of Jury
Trail.
 
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York applicable to agreements made and to be fully performed
therein, with disregard to conflicts of law principles.  The Company irrevocably
submits to the exclusive jurisdiction of any court of the State of New York or
the United States District Court for the Southern District of the State of New
York for the purpose of any suit, action or other proceeding arising out of this
Agreement, or any of the agreements or transactions contemplated hereby, which
is brought by or against the Company.  All notices provided hereunder shall be
given in writing and either delivered personally or by overnight courier service
or sent by certified mail, return receipt requested, or by facsimile
transmission, if to Hallmark Investments, Inc., 420 Lexington Avenue, New York,
NY 10170, Attn: Edward Taylor, Managing Partner, Fax No.: (212) 661-2055, and if
to the Company, to the address, set forth on the first page of this Agreement:
Ms. Kathleen T. Karloff, CEO, INVO Bioscience, Inc., 100 Cummings Center, suite
E421, Beverly, MA 01915: Fax No.: (978) 878-9505. The parties hereby expressly
waive all right to trail by jury in any suit, action or proceeding arising under
this Agreement.
 
Section 9.                            Indemnification Provisions
 
The Company agrees to indemnify and hold harmless the Placement Agent and any
indemnified parties identified herein from and against any and all losses,
claims, damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses and disbursements, and any and all actions, suits, proceedings and
investigations in respect thereof and any and all legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise (including, without limitation, the costs,
expenses and disbursements, as and when incurred, of investigating, preparing,
pursing or defending any such action, suit, proceeding or investigation (whether
or not in connection with litigation in which any Indemnified Party is a
party))(collectively, “Losses”), directly or indirectly, caused by, relating to,
based upon, arising out of, or in connection with, the Placement Agent acting
for the Company, including, without limitation, any act or omission by the
Placement Agent in connection with its acceptance of or the performance or
non-performance of its obligations under the Agreement between the Company and
the Placement Agent to which these indemnification provisions are attached and
form a part (the “Agreement”), any breach by the Company of any representation,
warranty, covenant or agreement contained in the Agreement (or in any
instrument, document or agreement relating thereto, including any Agency
Agreement), or the enforcement by Placement Agent of its rights under the
Agreement or these indemnification provisions, except to the extent that and
such Losses are found in a final judgment by a court of competent jurisdiction
(not subject to further appeal) to have resulted primarily and directly from the
gross negligence or willful misconduct of the Indemnified Party seeking
indemnification hereunder.  The Company also agrees that no Indemnified Party
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company for its connection with the engagement of the
Placement Agent by the Company or for any other
reason, except to the extent that any such liability is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal) to
have resulted primarily and directly from such Indemnified Party’s gross
negligence or willful misconduct.
 
These Indemnification Provisions shall extend to the following persons
(collectively, the “Indemnified Parties”):  the Placement Agent, its present and
former affiliated entities, managers, members, officers, employees, consultants,
advisors, legal counsel, agents and controlling persons (within the meaning of
the federal securities laws), and the officers, directors, partners
stockholders, members, managers, employees, legal counsel, agents and
controlling persons of any of them.  These indemnification provisions shall be
in addition to any liability, which the Company may otherwise have to any
Indemnified Party.  If any action, suit, proceeding or investigation is
commenced, as to which an Indemnified Party proposes to demand indemnification,
it shall notify the Company with reasonable promptness; provided, however, that
any failure by an Indemnified party to notify the Company shall not relieve the
Company from its obligations hereunder.  An Indemnified Party shall have the
right to retain counsel of its own choice to represent it, and the fees,
expenses and disbursements of such counsel shall be borne by the Company.  Any
such counsel shall, to the extent consistent with its professional
responsibilities, cooperate with the Company and any counsel designated by the
Company.  The Company shall be liable for any settlement of any claim against
any Indemnified Party made with the Company’s written consent.  The Company
shall not, without the prior written consent of the Placement Agent settle or
compromise any claim, or permit a default or consent to the entry of any
judgment in respect thereof, unless such settlement, compromise or consent (I)
includes, as an unconditional term thereof, the giving by the claimant to all of
the Indemnified Parties of an unconditional release from all liability in
respect of such claim, and (ii) does not contain any factual or legal admission
by or with respect to an Indemnified Party or an adverse statement with respect
to the character, professionalism, expertise of any of the Indemnified Party or
any action or inaction of any Indemnified Party. 
 
In order to provide for just and equitable contribution, if a claim or
indemnification pursuant to these indemnification provisions Is made but is
found in a final judgment by a court competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Company shall contribute to the Losses to which any Indemnified Party
may be subject to in accordance with the relative benefits received by the
Company and its stockholders, subsidiaries and affiliates, on the one hand, and
the Indemnified Party, on the other hand and (ii) if (and only if) the
allocation provided in clause (I) of this sentence is not permitted by
applicable law, in such proportion as to reflect not only the relative benefits,
but also the relative fault of the Company, on the one hand, and the Indemnified
Party, on the other hand, in connection with statements, acts or omissions which
results in such Losses as well as any relevant equitable considerations.  No
person found liable for a fraudulent misrepresentation shall be entitled to
contribution from any person who is not also found liable for fraudulent
misrepresentation.  The relative benefits received (or anticipated to be
received) by the Company and its stockholders, subsidiaries and affiliates shall
be deemed to be equal to the aggregate consideration payable or receivable by
such parties in connection with the transaction or transactions to which the
Agreement relates relative to the amount of fees actually received by the
Placement Agent in connection with such transaction or
transactions.  Notwithstanding the foregoing, in no event shall the amount
contributed by all Indemnified Parties exceed the amount of fees previously
received by Placement Agent pursuant to the Agreement.
 
Neither termination nor completion of the Agreement shall affect these
Indemnified Provisions which shall remain operative and in full force and
effect. The Indemnified Provisions shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of the Indemnified Parties
and their respective successors, assigns, heirs and personal representatives.

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Section 10.                         Notices
 
All notices provided hereunder shall be given in writing and either delivered
personally or by overnight courier service or sent by certified , return receipt
requested, or by facsimile transmission, if to Hallmark Investments, Inc., 420
Lexington Avenue, New York, NY 10170, Attn: Edward Taylor, Managing Partner, Fax
No.: (212) 661-2055, and if to the Company, to the address, set forth on the
first page of this Agreement: Ms. Kathleen T. Karloff, CEO, INVO Bioscience,
Inc., 100 Cummings Center, suite E421, Beverly, MA 01915: Fax No.: (978)
878-9505. -443-1989
 
Section 11.                         Invalidation of Prior Agreement

It is herby agreed by the parties hereto that the Agreement executed by the
Company and the Placement Agent dated June 1, 2009 is deemed as null and void.
 
 

    Very truly yours,               Hallmark Investments, Inc.  
 
By:
/s/ Edward Taylor                Edward Taylor                     Managing
Partner                  

 
ACCEPTED AND AGREED TO
AS OF THE DATE FIRST ABOVE WRITTEN
INVO Bioscience, Inc.
/s/ Kathleen Karloff       
By: Kathleen T. Karloff 
Title: CEO                        

 
 

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