Exhibit
10.4
______________Hallmark Investments, Inc._______________
420 Lexington Avenue, 8
th 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.
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:
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(i)
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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
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(ii)
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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.
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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.
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(i)
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the
preparation and printing of the Offering Documents, and any
supplements or amendments thereto, including the cost of all copies
thereof;
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(ii)
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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;
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(iii)
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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
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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:
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(i)
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a cash
fee of eight percent (8%) of the amount of capital raised, invested
or committed; and
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(ii)
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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 an
