**SourceCapital Group, Inc.**

 

 

January21, 2004

 

 

Mr.Stephen Carnes

President& CEO

FortisEnterprises

LakeMary, FL

 

DearMr. Carnes:

 

Thepurpose of this letter is to confirm the understanding and agreement (the"Agreement") between Source Capital Group, Inc, ("SCG") andFortis Enterprises, a Nevada corporation (the "Company"), regardingthe retention of SCG by the Company as its exclusive (for three weeks) financialadvisor for the purposes set forth herein.

 

Underthis Agreement, SCG will provide financial advisory services to the Company asfollows:

-  Raising    of Capital. SCG shall use its best efforts to provide an equity    financing for the Company.Fees,    Commissions & Expenses. The Company agrees to pay the following fees    to SCG for its services.-  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.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.
 

 
-  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.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
-  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 assignmentConfidentiality.    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.
 

 
-  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.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."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.

 

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

 

ThisAgreement sets forth the entire agreement with respect to the engagement of SCGby the Company, including the fees and warrants payable as a result of suchengagement.

 

 

Pleaseconfirm that the foregoing correctly sets forth our agreement by signing andreturning to SCG the duplicate copy of this Agreement.

 

 

 

By: /S/ToddCoffin                           

W. ToddCoffin, Managing Director

SourceCapital Group, Inc.

 

 

By: /S/StephenW.Carnes               

StephenCarnes - President & CEO

FortisEnterprises, Inc.