Source Capital Group, Inc.

 

 

January 21, 2004

 

 

Mr. Stephen Carnes

President & CEO

Fortis Enterprises

Lake Mary, FL

 

Dear Mr. Carnes:

 

The purpose of this letter is to confirm the understanding and agreement (the
"Agreement") between Source Capital Group, Inc, ("SCG") and Fortis Enterprises,
a Nevada corporation (the "Company"), regarding the retention of SCG by the
Company as its exclusive (for three weeks) financial advisor for the purposes
set forth herein.

 

Under this Agreement, SCG will provide financial advisory services to the
Company as follows:

 A. Raising of Capital. SCG shall use its best efforts to provide an equity
    financing for the Company.

 B. Fees, Commissions & Expenses. The Company agrees to pay the following fees
    to SCG for its services.

>  1. SCG will be compensated 8% cash and 8% ("warrant") coverage on any funds
>     raised during this engagement on investors. The exercise price of the
>     warrants shall be equal to the price of the stock at the time of the sale
>     to an equity investor introduced to the Company by SCG and will be subject
>     to adjustment in accordance with the terms of any adjustment provided for
>     in the formal definitive Financing document. Said warrants shall be
>     exercisable for five (5) years from the date of issuance. The terms of
>     said warrants shall include such piggyback registration rights,
>     anti-dilution rights, and "cashless.
> 
>  2. SCG will not receive a retainer upon signing of this agreement. All
>     compensation payable to SCG, other than pre-approved expenses as per
>     Paragraph 3 below, performance based as defined in Paragraph 1 above.

 

 

>  3. Expenses. In addition to any fees that may be payable to SCG under this
>     Agreement, the Company, upon written pre-approval of all expenses over
>     $500, agrees to reimburse SCG for its reasonable out-of-pocket expenses
>     incurred in connection with the services rendered by SCG hereunder
>     (including, without limitation, travel and lodging, data and word
>     processing, graphics and communication charges, research costs, and
>     courier services and fees). SCG will, on a monthly basis, provide the
>     Company with reasonable report regarding the expenses incurred.
>     Compensation for any additional professional services (e.g. legal or
>     consulting) contracted for by SCG, to be performed for the benefit of the
>     Company by outside parties, is the responsibility of the Company and will
>     be paid directly by the Company to such party. SCG will not contract for
>     such services without the prior written approval of the Company with
>     regard to both the nature of the service and a reasonable estimate of the
>     cost of such service.
> 
>  4. All cash payments under this Agreement shall be made in U.S. dollars and
>     without withholding or deduction of any tax, assessment or other
>     governmental charges unless required by law. Fees and retainers should be
>     made payable and wired to:
> 
> > Source Capital Group Inc.
> > 
> > Fleet Bank
> > 
> > ABA# 011900571
> > 
> > Acct.# 9361882644

 C. Information. The Company will furnish or cause to be furnished to SCG, such
    information, as SCG believes appropriate to its assignment (all such
    information so furnished being the "Information"). The Company recognizes
    and confirms that SCG (a) will use and rely primarily on the Information and
    on information available from generally recognized public sources in
    performing the services contemplated by this Agreement without having
    independently verified the same, (b) does not assume responsibility for the
    accuracy or completeness of the Information and such other information,
    (c) is entitled to rely upon the Information without independent
    verification and (d) will not make an appraisal of any assets in connection
    with its assignment

 D. Confidentiality. Except as contemplated by the terms hereof or as required
    by applicable law or legal process, SCG shall keep confidential all
    non-public information provided to it by or at the request of the Company,
    and shall not disclose such information to any third party or to any of its
    employees or advisors except to those persons who have a need to know such
    information in connection with SCG's performance of its responsibilities
    hereunder. The Company understands that any documents, presentations or
    analyses prepared by SCG are proprietary and SCG is under no obligation to
    provide (by e-mail, floppy disk or otherwise) either the Company or its
    assigns with the computer files of such work product. Except as required by
    applicable law, any advice to be provided by SCG under this Agreement shall
    not be disclosed publicly or made available to third parties without the
    prior written consent of SCG, unless required by Federal Securities Laws. In
    addition, SCG may not be otherwise publicly referred to without its prior
    written consent. All services, advice and information and reports provided
    by SCG to the Company in connection with this assignment shall be for the
    sole benefit of the Company and shall not be relied upon by any other
    person.

 

 

 E. Indemnity. The Company acknowledges and agrees that SCG has been retained to
    act solely as financial advisor to the Company. In such capacity, SCG shall
    act as an independent contractor, and any duties of SCG arising out of its
    engagement pursuant to this Agreement shall be owed solely to the Company.

 F. Arbitration. Any and all disputes, demands, claims or controversies hereto
    arising out of or relating to this agreement or the breach thereof, shall be
    settled by binding arbitration in accordance with the rules of the American
    Arbitration Association ("AAA"). The arbitration shall be conducted in New
    York City under the rules of the AAA. Any judgment upon the award rendered
    by the arbitrator may be entered into any court or administrative tribunal
    having jurisdiction thereof. Costs associated with the arbitration,
    including reasonable attorney's fees, shall be borne by whichever parties
    the arbitrators shall deem just and fair."

 G. Term & Termination. The term of SCG's engagement hereunder shall extend from
    the date hereof through April (the "Expiration Date") and will be
    automatically renewed on a monthly basis until canceled in writing by either
    party. The exclusive nature of SCG's engagement shall expire on February 15,
    2004, unless extended by the Company by written agreement or an amendment to
    this Agreement. SCG's engagement hereunder may be terminated upon 10 days
    written notice without cause by either the Company or SCG at any time before
    the Expiration Date. Notwithstanding the foregoing, the provisions relating
    to the payment of fees and expenses accrued through the date of termination,
    the status of SCG as an independent contractor and the limitation on to whom
    SCG shall owe any duties will survive any such termination, and any such
    termination shall not affect the Company's obligations under the
    indemnification agreement.

> SCG will be entitled to the fees set forth above in the event that at any time
> prior to the earlier of the termination of this letter and the expiration of
> SCG's engagement hereunder a Financing is consummated and the investor is on a
> list, to be attached hereto as Exhibit B, of potential investors provided to
> the Company by SCG at the time of termination or expiration and SCG had made
> efforts that led to an investment on behalf of the Company with respect to
> such investor(s) prior to termination or expiration, as appropriate. Further,
> in the event that a Financing or M&A transaction is completed with an
> investor, on the list of bonafide introductees attached as Exhibit B, with
> respect to which SCG had made efforts that led directly to an investment or
> other substantive effort before such termination or expiration, whichever is
> earlier, SCG will be entitled to fees on those investors (but only for the
> amount purchased by such investors) for a period of 18 months after the
> termination or expiration date, as applicable, calculated in accordance with
> Section B of this Agreement. On the termination or expiration date, as
> applicable, SCG will provide the Company an updated Exhibit B for purposes of
> this paragraph.

 

 

 H. Advertisements. The Company acknowledges that SCG may, at its option and
    expense, place an announcement in such newspapers and periodicals as it may
    choose, stating that SCG has acted as the financial advisor to the Company.
    SCG agrees that the Company will have the right to pre-approve the form,
    content and timing of release of such announcement.

 I. Market Trading. During the Term of this Agreement, SCG, nor its affiliates,
    shall trade in the Company's securities. SCG expressly covenants that it
    shall not short or otherwise attempt to cause a decline in the Company's
    trading price as quoted on the Over-the-Counter Bulletin Board. The effect
    of such short or negative impact in the Company's trading price shall result
    in the immediate termination of this agreement and void any payment of
    compensation set forth herein.

This Agreement (including the attached indemnification) embodies the entire
agreement and understanding between the parties hereto and supersedes all prior
agreements and understandings relating to the subject matter hereof. If any
provision of this Agreement is determined to be invalid or unenforceable in any
respect, such determination will not affect such provision in any other respect,
which will remain in full force and effect. No waiver, amendment or other
modification of this Agreement shall be effective unless in writing and signed
by each party to be bound thereby. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that state.

 

This Agreement sets forth the entire agreement with respect to the engagement of
SCG by the Company, including the fees and warrants payable as a result of such
engagement.

 

 

Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to SCG the duplicate copy of this Agreement.

 

 

 

By: /S/Todd Coffin                           

W. Todd Coffin, Managing Director

Source Capital Group, Inc.

 

 

By: /S/Stephen W. Carnes               

Stephen Carnes - President & CEO

Fortis Enterprises, Inc.