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EXHIBIT 10.1
 
[logo.jpg]
 
Mr. Sam Jankovich
Chairman & CEO
EnterConnect, Inc.
100 Century Center Court
Suite 650
San Jose, California 95112
March 5, 2009
 
FINANCING & STRATEGIC ADVISORY AGREEMENT
 
Pursuant to our recent discussions, regarding possible financing and strategic
transactions, please find below a Financing & Strategic Advisory Agreement (the
“Agreement”) by and between EnterConnect Inc., a Nevada Corporation (the
“Company”), and John Thomas Financial, Inc. (“the “Advisor”). The term Company
is understood to include any entity in which the Company has an ownership,
profits or similar interest, including any entity formed for the purpose of
facilitating a transaction, as well as any successor company.
 
Section 1.        Engagement of Advisor.  The Company hereby engages the Advisor
on a non-exclusive basis to provide general investment banking and management
consulting services. The Company hereby engages the Advisor to provide
investment banking services, for the term of this Agreement, and the Advisor
hereby agrees, to advise, consult with, and assist the Company with the
identification and/or consummation of several types of transactions, including
but not limited to: (1) a transaction with an acquiror, acquisition target
company or merger partner, which is referred to as a “Merger Transaction”; (2) a
joint venture, corporate alliance, or licensing transaction to or from the
Company, which is referred to as a “Corporate Partnering Transaction” (a Merger
Transaction and a Corporate Partnering Transaction are sometimes defined herein,
and referred to for reasons of clarity, collectively as a “Strategic
Transaction”); (3) a sale of equity, equity-related or debt securities, which is
referred to as a “Financing Transaction”; and (4) a review of the Company’s
business, properties, operations and financial condition, including advising on
capitalization and recapitalization structures.

 

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Section 2.  Compensation.  As compensation for services rendered to the Company
under this Agreement, the Company shall pay to the Advisor the following
compensation:

Section 2.1.       Retainer Fees.  Retainer fees shall be payable to the Advisor
by the Company as follows:

(a) To compensate the Advisor for general management consulting for the Company
which may include assistance in building and developing the Company in
anticipation of investment banking transactions, advising in matters related to
share price appreciation, assisting in the Company’s start-up activities,
consulting on the Company’s strategy and business development, leveraging the
industry contacts and network of the Advisor for the benefit of the Company,
assisting in the identification and recruiting of key personnel for the Company,
reviewing the Company’s scientific and technical matters, assisting in the
development of the Company’s business plan and forecasts, recommending Board
member candidates for the Company, recommending vendors and service companies,
and other non-investment banking activities:

(1)  a general management consulting fee of $5,000 shall be payable in cash
within 10 business days following the signing of this Agreement and shall be
received by the Advisor free of any wire transfer or other bank charges,

(2)  a general management consulting fee of 100,000 shares of the common stock
of the Company will be issued by the Company to the Advisor within 10 business
days following the signing of this Agreement. The common shares will be
transferable to directors, officers, independent contractors and employees of
the Advisor. The Advisor will have piggyback registration rights equal to the
piggyback registration rights granted to any other person in connection with any
of the transactions contemplated by this Agreement.

(b) To compensate the Advisor for guidance with respect to Financing and
Strategic Transactions as required, at monthly intervals, a retainer payment of
$15,000 per month, during the term of this Agreement, each such payment being
referred to as an "Advisory Fee", will be owed by the Company, to be paid to the
Advisor and will accrue, on the 20th day of the month in each month for which
the Advisory Fee is due, as short term debt. This fee is only payable if the
Advisor is requested in writing to raise additional capital the Company. The
Advisory Fee will bear interest at the rate of 10% per annum, and each month’s
Advisory Fee shall be represented by a promissory note (each, a “Fee Note”).
Each Fee Note will be due and payable as to principal and accrued and unpaid
interest upon the earlier of (i) six months from the issuance of the respective
Fee Note or (ii) the consummation of the Financing and/or Strategic Transaction.
 
All of the Fee Notes shall be repayable in cash and shall the proceeds therefrom
shall be received by the Advisor free of any wire transfer or other bank
charges. These payments are independent of and in addition to any payments due
under any other section in this Agreement.
 
For the avoidance of doubt, the terms pursuant to which the Advisor shall raise
additional funds for the Company shall be governed by the Advisors customary
Placement Agreement, a form of which will be provided to the Company upon
request.
 
 
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Section 2.2.  Success Fee.

(a)  The Company agrees to pay the Advisor a fee upon the completion of any
Financing Transaction as set forth in Exhibit A hereto. The fee for any
subsequent Financing Transaction shall be determined as set forth in Exhibit A
hereto.
 
(b)      The Company agrees to pay the Advisor a fee upon the completion of any
Strategic Transaction as set forth in Exhibit B hereto. The fee for any
subsequent Strategic Transaction shall be determined as set forth in Exhibit B
hereto.
 
Section 2.3.      Written Opinions.  In the event that the Company desires to
have the Advisor furnish any formal written opinion as to the financial aspects
of any transaction, such as a fairness opinion or valuation, then such
transactions will be subject to a separate engagement.
 
Section 2.4.     Expenses.  The Company will pay or reimburse the Advisor for
all reasonable out-of-pocket costs and expenses incurred by the Advisor (any
individual expense not to exceed $2,500 without prior written approval,
including by email, from the Company) solely in performing its obligations under
this Agreement, which costs and expenses shall include, but not be limited to,
patent opinion by outside counsel, if deemed necessary by the Advisor in its
reasonable judgment (the Company will directly engage and pay patent counsel for
a second patent opinion), travel expenses incurred in performing its duties,
including due diligence, in connection with this Agreement and possible
transactions, legal fees and expenses, costs of supplies, telecommunications and
information expenses, copying and mailing and all other expenses reasonably
incurred by the Advisor in performing its obligations under this Agreement.
Reimbursable expenses shall be payable in cash within 10 business days of the
date of the invoice, and shall be received by the Advisor free of any wire
transfer or other bank charges.
 
Section 2.5.      Right of First Refusal.  The Advisor shall have a right of
first refusal to act as exclusive advisor for any Strategic Transaction
conducted during the first 12 months following the closing of any Financing,
provided such Strategic Transaction is introduced to the Company by the Advisor.
The fee for any subsequent Strategic Transactions shall be determined as set
forth in Section 2.2.
 
Section 2.6.     Fee Tail.  Advisor shall be entitled to the fees described
herein, including warrants, calculated in the manner provided herein with
respect to any subsequent Financing Transaction or Strategic Transaction of any
kind (each, a “Subsequent Transaction”) to the extent that such Subsequent
Transaction is between the Company, or any affiliate of the Company, and any
“Commissionable Party”, as defined below, if such Subsequent Financing is
consummated at any time within the 18-month period following the expiration or
termination of this Agreement (the “Tail Period”).

The term “Commissionable Party” means (i) a natural person or an entity (each, a
“party”), with whom the Advisor has been in contact, has been introduced through
the efforts of the Advisor, or introduced through the use of any work products
or materials produced by the Advisor, directly or indirectly, during the term of
this Agreement or (ii) a party or parties, obtained by the Company during the
term of this Agreement who have been furnished any work products or materials
produced by the Advisor. If the Financing or Strategic Transaction has not been
consummated prior to the termination or expiration of this Agreement, the
Advisor and the Company shall prepare and deliver a mutually agreed upon list of
Commissionable Parties. Notwithstanding the foregoing, any list of
Commissionable Parties sent by the Advisor to the Company, if not objected to by
the Company in writing within 10 days after the receipt thereof, shall be deemed
to be mutually agreed upon.

 
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Section 3.         Information.  In connection with a transaction contemplated
by this Agreement, the Company will cooperate with the Advisor and will furnish
the Advisor with all information and data concerning the Company, the
transaction and such other information which the Advisor and the Company deem
appropriate (the “Information”) and will provide the Advisor and any prospective
counter party or investor with access to the Company’s officers, directors,
independent accountants and legal counsel. The Company warrants and represents
that, to the best of the Company’s knowledge, all Information (a) provided or
otherwise made available to the Advisor by or on behalf of the Company or (b)
contained in any information memorandum, presentations, or business plans
prepared by the Company with respect to the proposed transaction will, at all
times during the period of the engagement of the Advisor hereunder, be correct
in all material respects and will not contain any untrue statement of a material
fact or omit a material fact necessary in order to make the statements therein
not misleading in light of the circumstances under which such statements are
made. The Advisor acknowledges that all of such Information is proprietary to
the Company and agrees to keep such Information confidential and not to disclose
any of such Information to any third party, except for third parties to whom the
Advisor shall present such Information for purposes of evaluation of a
transaction pursuant to this Agreement and to its financial and legal advisors.
 
The Company further warrants and represents that any projections approved or
provided by it to the Advisor or contained in the information memorandum,
presentations, or business plans will have been prepared in good faith and will
be based upon assumptions which, in light of the circumstances under which they
are made, are reasonable. The Company acknowledges and agrees that in rendering
services hereunder, the Advisor will be using and relying upon the Information
(and information available from public sources and other sources deemed reliable
by the Advisor) without independent verification thereof by the Advisor or
independent appraisal by the Advisor of any of the Company’s assets.
 
Section 4.         Business Practice.  The Company recognizes that the Advisor
is in the business of advising and consulting with other businesses, some of
which businesses may be in competition with the Company. The Company
acknowledges and agrees that the Advisor may advise and consult with other
businesses, including those which may be in competition with the Company, and
shall not be required to devote its full time and resources to performing
services on behalf of the Company under this Agreement. The Advisor shall only
be required to expend such time and resources as are reasonably appropriate to
advise and assist the Company as provided for herein.
 
Section 5.         Indemnification.  (a) The Company agrees to indemnify and
hold harmless the Advisor and its affiliates, agents, independent contractors
and advisors, and their respective directors, officers, employees, agents and
controlling persons (each such person is hereinafter referred to as an “JTF
Indemnified Party”), from and against any and all losses, claims, damages,
liabilities and expenses whatsoever, joint or several, to which any such JTF
Indemnified Party may become subject under any applicable federal or state law
of the United States of America or otherwise, caused by, relating to or arising
out of the engagement evidenced hereby. The Company will reimburse any JTF
Indemnified Party for any expenses (including reasonable attorney fees and
expenses) as they are incurred by an JTF Indemnified Party in connection with
the investigation of, preparation for or defense of any pending or threatened
claim or any action or proceeding arising therefrom, whether or not resulting in
liability; provided, however, that at the time of such reimbursement the JTF
Indemnified Party shall have entered into an agreement with the Company whereby
the JTF Indemnified Party agrees to repay all such reimbursed amounts if it is
determined in a final, non-appealable judgment by a court of competent
jurisdiction that the JTF Indemnified Party is not entitled to indemnity from
the Company. Notwithstanding the foregoing, the Company shall not be liable to
any JTF Indemnified Party under the this Section 5(a) to the extent that (a) any
loss, claim, damage, liability or expense is determined in a final,
non-appealable judgment by a court of competent jurisdiction to result directly
from any such JTF Indemnified Party's willful misconduct or gross negligence or
(b) to the extent that the Advisor is required to indemnify the Company pursuant
to Section 5(b) hereof.
 
 
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(b)     The Advisor agrees to indemnify and hold harmless the Company, and their
affiliates, agents, and advisors, and their respective directors, officers,
employees, agents and controlling persons (each individually a "Company
Indemnified Party"), from and against any and all losses, claims, damages,
liabilities and expenses whatsoever, joint or several, to which any such Company
Indemnified Party may become subject under any applicable federal or state law
of the United States of America or otherwise, caused by, relating to or arising
out of the Advisor's breach of a representation, warranty or covenant herein.
The Advisor will reimburse any Company Indemnified Party for all expenses
(including reasonable attorney fees and expenses) as they are incurred by such
Company Indemnified Party in connection with the investigation of, preparation
for or defense of any pending or threatened claim or any action or proceeding
arising therefrom, whether or not resulting in liability; provided, however,
that at the time of such reimbursement the Company Indemnified Party shall have
entered into an agreement with the Advisor whereby the Company Indemnified Party
agrees to repay all such reimbursed amounts if it is determined in a final,
non-appealable judgment by a court of competent jurisdiction that the Company
Indemnified Party is not entitled to indemnity from the Advisor. Notwithstanding
the foregoing, the Advisor shall not be liable to any Company Indemnified Party
under this section 5(b) to the extent that (a) any loss, claim, damage,
liability or expense is determined by a court of competent jurisdiction in a
final, non-appealable judgment to result directly from any such Company
Indemnified Party's willful misconduct or gross negligence, or (b) to the extent
the Company is required to indemnify the Advisor therefore pursuant to section
5(a) hereof.
 
(c)                       If for any reason (other than a final non-appealable
judgment finding any JTF Indemnified Party or the Company or Company Indemnified
Party (any such party, an “Indemnified Party”) liable for losses, claims,
damages, liabilities or expenses for its gross negligence or willful misconduct)
the foregoing indemnity is unavailable to an Indemnified Party or insufficient
to hold an Indemnified Party harmless, then the other party shall contribute to
the amount paid or payable by an Indemnified Party as a result of such loss,
claim, damage, liability or expense in such proportion as is appropriate to
reflect not only the relative benefits received by the Company on the one hand
and the Advisor on the other, but also the relative fault by the Company, the
Advisor and each Indemnified Party, as well as any relevant equitable
considerations, subject to the limitation that in no event shall the total
contribution of all JTF Indemnified Parties to all such losses, claims, damages,
liabilities or expenses exceed the amount of fees actually received and retained
by the Advisor hereunder.
 
Section 6.         Term of Agreement.  This Agreement shall terminate one (1)
year after the date hereof unless extended by mutual agreement. After the
completion of the first three (3) months of this Agreement, the Company may
elect to terminate this Agreement upon written 30 days advance notice to the
Advisor. After the completion of the first three (3) months of this Agreement,
the Advisor may elect to terminate this Agreement upon written 30 days advance
notice to the Company. Upon termination of this Agreement, neither party shall
have any further rights or obligations to the other, except that (i) the Company
shall be obligated to pay any unpaid fees under Section 2.1 hereof, (ii) the
Company shall continue to be bound by the provisions of Section 2.6 hereof,
(iii) the Company shall be obligated to reimburse expenses under Section 2.4
incurred by the Advisor during the period prior to termination of this Agreement
or related to transactions continuing beyond termination of the Agreement, and
(iv) the Advisor and the Company shall continue to be bound by the provisions of
Section 5 hereof.
 
 
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Section 7.          Relationship of Parties.  The parties agree that their
relationship under this Agreement is an advisory relationship only, and nothing
herein shall cause the Advisor to be partners, agents or fiduciaries of, or
joint venturers with, the Company or with each other.
 
Section 8.         Notices.  All notices required or permitted herein must be in
writing and shall be deemed to have been duly given the first business day
following the date of service if served personally, on the first business day
following the date of actual receipt if delivered by telecopier, telex or other
similar communication to the party or parties to whom notice is to be given, or
on the third business day after mailing if mailed to the party or parties to
whom notice is to be given by registered or certified mail, return receipt
requested, postage prepaid, as follows:
 
If to the Advisor:
 
John Thomas Financial, Inc.
14 Wall Street, 5th Floor
New York, New York 10005
Attention: Michael Molinaro,
Director of Compliance
Telefax number (212) 618 1644
 
With a copy to:
 
Meister Seelig & Fein LLP
Two Grand Central Tower
140 East 45th Street, 19th Floor
New York, New York 10017
Attention: Mitchell Schuster, Esq.
Telefax number (212) 655-3535
 
If to the Company:
 
EnterConnect, Inc.
100 Century Center Court
Suite 650
San Jose, California 95112
Attention: Mr. Sam Jankovich, Chairman and CEO
Telefax number: [insert]

With a copy to:

Taylor English Duma LLP
1600 Parkwood Circle
Suite 400
Atlanta, Georgia 30339
Attn:  Bruce S. Richards, Esq.
Telefax Number: (770) 434-7376

 
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or to such other individuals and addresses as either party hereto may designate
to the other by notice from time to time for this purpose.
 
Section 9.          Parties.  This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns.
 
Section 10.       Arbitration, Choice of Law; Costs.  This Agreement shall be
governed and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed within such State, without
regard to principles of conflict of laws. Any disputes, controversies or claims
(“Disputes”) arising out of or relating to this Agreement, or the breach
thereof, shall be referred to a sole arbitrator selected in accordance with the
rules of the American Arbitration Association (“AAA”) sitting in New York, New
York and enforcement of and/or challenges to any determination made by such
arbitrators shall be determined in accordance with the laws of the State of New
York. Any award issued by the AAA shall be final and binding, and judgment upon
the award rendered may be entered in any court having jurisdiction. Neither
party may seek punitive damages and any and all requests for supporting
documentation or depositions may only be granted upon determination of the
arbitrator.  Such arbitration shall be the exclusive method of resolving
Disputes. Without limiting the generality of the foregoing, the parties
expressly waive resort to any judicial or other mechanism for the enforcement of
any rights and remedies under this Agreement, except to the extent that judicial
relief may be sought solely to compel a party to this Agreement to abide by the
exclusive means of dispute resolution set forth herein. Notwithstanding the
foregoing, the parties agree that to the extent that actions or inactions by
either party may expose either party to irreparable harm, that either party
shall be allowed to protect its rights through application to appropriate State
and/or Federal courts for Temporary Restraining Orders pending arbitration
resolution.  Each party shall be liable for their own costs and expenses related
to the arbitration, including attorneys’ fees.
 
Section 11.       Entire Agreement, Waiver.  This Agreement constitutes the
entire Agreement between the parties hereto and supersedes all prior Agreements
relating to the subject matter hereof. This Agreement may not be amended or
modified in any way except by subsequent Agreement executed in writing. Either
the Company or the Advisor may waive in writing any term, condition, or
requirement under this Agreement which is intended for its own benefit, and
written waiver of any breach of such term or condition of this Agreement shall
not operate as a waiver of any other breach of such term or condition, nor shall
any failure to enforce any provision hereof operate as a waiver of such
provision or of any other provision hereof.
 
Section 12.       Public Announcements.  If the Company completes a Strategic
Transaction and/or Financing Transaction in any form, the Company and the
Advisor shall mutually agree as to suitable wording that describes the advisory
role played by the Advisor, for inclusion in the Advisor’s and/or Company’s
press releases concerning the Strategic Transaction and/or Financing
Transaction.
 
 
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Section 13.       Execution in Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall constitute one and the same agreement (and all signatures
need not appear on anyone counterpart). In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or e-mail signature page were an original thereof. This Agreement
shall become effective when one or more counterparts has been signed and
delivered by each of the parties hereto.

Section 14.       Severability.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future laws, such
provision shall be fully severable. This Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of each such illegal, invalid or unenforceable
provision there shall be deemed added automatically as a part of this Agreement
a provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible to cause such provision to be legal, valid and
enforceable.
 
Section 15.       Interpretation.  The parties hereto have participated jointly
in the negotiating and drafting of this Agreement. If an ambiguity or a question
of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
 
Section 16.        Headings.  The captions and headings used in this Agreement
are for convenience only and do not in any way affect, limit, amplify or modify
the terms and provisions of this Agreement.
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

John Thomas Financial, Inc. (“Advisor”)

By:  /s/ Thomas Belesis

Name: Thomas Belesis
Title: Chief Executive Officer

 
EnterConnect, Inc. (“Company”)

By: /s/ Sam Jankovich

Name: Sam Jankovich
Title: Chairman and Chief Executive Officer

 
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EXHIBIT A - FINANCING FEES
 
 
A. 1.
Fee for Equity or Equity Equivalent Financing (“Equity Financing”).

 
In the event the Company consummates any Equity Financing of its equity or
equity equivalent securities, pursuant to the terms of this Agreement,
regardless of the size of the transaction, the Company shall pay to the Advisor
a fee equal to (a) thirteen percent (13%) of the aggregate gross proceeds of
each Equity Financing. Any fee payable to the Advisor shall be paid in cash to
the Advisor by the Company at the closing of the transaction and shall be
received by the Advisor free of any wire transfer or other bank charges. At the
closing, the Advisor shall also be granted a five-year cashless warrant or
option for shares or an equivalent interest equal to fifteen percent (15%) of
the value of any Equity Financing at a price equal to the effective price of the
financing and will contain customary provisions, including those pertaining to
anti-dilution, demand and piggyback registration rights including: (i)
exercisable at any time before the fifth anniversary of the closing of a
Transaction, (ii) transferable to directors, officers, independent contractors
and employees of the Advisor, and (iii) grant the advisor registration rights
equal to the registration rights granted to investors in the Equity Financing.
For the avoidance of doubt, the number of warrants to be issued to the Advisor
by the Company will be determined by multiplying the warrant success fee, 15%,
times the aggregate gross proceeds of the Equity Financing divided by the per
share common stock equivalent price utilized for the Equity Financing. The
exercise price of each warrant granted to the Advisor shall be equal to 100% of
the per share common stock equivalent price used to calculate the number of
warrants as described above.
 
For the purposes of this Agreement, equity securities shall be deemed to include
any form of common or preferred stock or any security or instrument, including
debt, which is directly or through warrants, options, or similar instruments,
convertible into, or exchangeable for, equity securities of the Company.
 
In the event any consideration is agreed to be paid in connection with the
Equity Financing at closing and/or over a period of time following the closing,
the Advisor shall be paid its fee with respect to that future consideration as
and when it is paid to the Company, subject to the Company first meeting its
obligation to pay the full minimum fee to the Advisor at closing.
 
 
A.3
Fee for Public Offering

 
If the Company undertakes a public offering of its debt or equity securities
within the term of this agreement (12 months) the Advisor will serve as lead
manager and the Company shall pay to the Advisor (a) a fee equal to ten percent
(10%), and (b) a non-accountable expense allowance equal to three percent (3%),
each of the aggregate gross proceeds of each equity Financing Transaction. Any
fee and expense allowance payable to the Advisor shall be paid in cash to the
Advisor by the Company at the closing of the transaction and shall be received
by the Advisor free of any wire transfer or other bank charges. At the closing,
the Advisor shall also be granted a five-year cashless warrant or option for
shares or an equivalent interest equal to ten percent (15%) of the value of any
Private Equity Financing at a price equal to the effective price of the
Financing and will contain customary provisions, including those pertaining to
anti-dilution, demand and piggyback registration rights including: (i)
exercisable at any time before the fifth anniversary of the closing of a
Transaction, (ii) transferable to directors, officers, independent contractors
and employees of the Advisor, and (iii) grant the advisor piggyback registration
rights equal to the piggyback registration rights granted to investors in the
public offering.  For the avoidance of doubt, the number of warrants to be
issued to the Advisor by the Company will be determined by multiplying the
warrant success fee, 15%, times the aggregate gross proceeds of the Private
Equity Financing divided by the per share common stock equivalent price utilized
for the Private Equity Financing. The exercise price of each warrant granted to
the Advisor shall be equal to 100% of the per share common stock equivalent
price used to calculate the number of warrants as described above. Advisor may
reallocate its share the investment banking fees with a co-manager and to allow
the co-manager to receive a customary percentage of the fees. Such fees,
underwriting spreads, expense reimbursements and other transaction costs may
reflect negotiations with an underwriting group for which the Advisor will act
as lead manager.
 
 
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For the purposes of this Agreement, equity securities shall be deemed to include
any form of common or preferred stock or any security or instrument, including
debt, which is directly or through warrants, options, or similar instruments,
convertible into, or exchangeable for, equity securities of the Company.
 
In the event any consideration is agreed to be paid in connection with the
Equity Financing at closing and/or over a period of time following the closing,
the Advisor shall be paid its fee with respect to that future consideration as
and when it is paid to the Company, subject to the Company first meeting its
obligation to pay the full minimum fee to the Advisor at closing.
 
The full terms of the relationship between the Advisor and the Company in
connection with any such public offering shall be governed by the provisions of
an Underwriting Agreement containing terms customary to a transaction of this
type.
 
 
A.2.
Fee for Debt Financing (“Debt Financing”).

 
In the event the Company consummates any Debt Financing of its debt securities,
pursuant to the terms of this Agreement, regardless of the size of the
transaction, the Company shall pay to the Advisor a fee equal to (a) eight
percent (8%) of the aggregate gross proceeds of each Debt Financing if the
aggregate gross proceeds are less than or equal to $10 million, provided that
the minimum fee for such debt financing be $250,000; (b) six and one-half
percent (6.5 %) of the aggregate gross proceeds of each Debt Financing if the
aggregate gross proceeds are greater than $10 million but less than or equal to
$15 million; and (c) five percent (5%) of the aggregate gross proceeds of each
Debt Financing if the aggregate gross proceeds are greater than $15 million. Any
fee payable to the Advisor shall be payable in cash to the Advisor by the
Company at the closing of the transaction and shall be received by the Advisor
free of any wire transfer or other bank charges.
 
In the event any consideration is agreed to be paid in connection with the Debt
Financing at closing and/or over a period of time following the closing, the
Advisor shall be paid its fee with respect to that future consideration as and
when it is paid to the Company, subject to the Company first meeting its
obligation to pay the full minimum fee to the Advisor at closing.
 
 
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EXHIBIT B - STRATEGIC TRANSACTION FEES
 
In the event the Company consummates any Strategic Transaction (except with
respect to a Merger Transaction or a Corporate Partnering Transaction, as
further set forth below) involving the Company and a counter party, regardless
of the size of the transaction, the Company shall pay to the Advisor a fee with
respect to such transaction equal to a percentage amount of the Transaction
Value (as defined below) paid or received by the Company in the transaction,
which percentage amount shall be 5% of the first $7.5 million or portion thereof
of the Transaction Value, 4% of the next $7.5 million or portion thereof of the
Transaction Value, 3% of the next $10 million or portion thereof of the
Transaction Value, and 2% of the balance of the Transaction Value, provided that
the minimum fee for each transaction will be: (a) $350,000 for a Merger
Transaction, (b) $200,000 for a Corporate Partnering Transaction.
 
As used herein, “Transaction Value” shall include (i) cash paid in the
transaction, (ii) the fair market value of any securities issued, as shall be
mutually agreed upon at the closing of the Transaction, (iii) the fair market
value of any other property transferred in connection with the transaction, as
mutually determined by the parties. If the parties cannot come to such mutual
determination, the fair market value described above shall be determined by
arbitration, (iv) balance sheet indebtedness assumed in connection with the
transaction, (v) cash or the fair market and/or net present value of property
paid to any officers, directors, employees or affiliates as consideration for
any covenant not to compete or similar agreement related to the transaction
(excluding options issued to management as part of ongoing employment or
consulting arrangements), as mutually determined by the parties. If the parties
cannot come to such mutual determination, the fair market and/or net present
value described above shall be determined by arbitration, and (vi) the fair
market and/or net present value of all technology access/license fees, R&D
support payments and science/ regulatory/clinical development or
commercialization milestone bonus payments to the Company by a counter party or
the converse, as mutually determined by the parties. If the parties cannot come
to such mutual determination, the fair market and/or net present value described
above shall be determined by arbitration.
 
In the event any contingent consideration is agreed to be paid in connection
with the Strategic Transaction (such as, for example, consideration payable upon
the fulfillment of some condition or event which may or may not occur in the
future), then such contingent consideration shall be included in the Transaction
Value, and the Advisor shall be paid its fee with respect to that contingent
consideration as and when it is paid, subject to the Company first meeting its
obligation to pay the full minimum fee to the Advisor at closing.
 
For the avoidance of doubt, if the upfront Transaction Value (as defined by the
total of the upfront components, (i) through (vi), of Transaction Value)
available to the Company at the closing of a transaction trigger a minimum fee
(i.e., $350,000 for a Merger Transaction and $200,000 for a Corporate Partnering
Transaction), the minimum fee will paid to the Advisor at closing. Any
subsequent proceeds to the Company will not trigger additional success fee
payments to the Advisor until the cumulative Transaction Value multiplied by the
applicable success fees exceeds the minimum fee already paid, after which the
success fees of any incremental proceeds received by the Company will be paid to
the Advisor when received by the Company.
 
 
Initials
 
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