Investment Banking Service Agreement - Axm Pharma Inc. and Great Eastern Securities Inc.
GREAT EASTERN SECURITIES, INC. ------------------------------ 2 Seaview Blvd. Port Washington, NY 11050 1-866-258-5200 Tel: 516-484-5111 Fax: 516-484-5335 www.getrader.com December 18, 2003 Mr. Peter Cunningham President and CEO Axm Pharma, Inc. 4695 Macarthur Court, 11th Floor Newport Beach, California 92660 Dear Mr. Cunningham: This will confirm the arrangements, terms and conditions pursuant to which Great Eastern Securities Corporation ("Advisor") has been retained to serve as an investment banker to Axm Pharma, Inc.(the "Company") for a twelve (12) month period, with a mutual extension clause for an additional twelve (12) months, commencing on the date hereof, subject to the termination provisions set forth in Paragraph 2 hereof. For good and valuable consideration, the sufficiency of which is hereby acknowledged, the undersigned hereby agree to the following terms and conditions: 1. Duties of Advisor. Advisor shall, as more fully set forth below in this Paragraph 1, assist the Company in broker relations and distribution channels for the Company's stock, Advisor agrees to: (a) assist the Company in its presentation to the brokerage community and the introduction to security firms and brokers; (b) assist the Company in identifying analysts in the brokerage community to initiate coverage on the Company; (c) sponsor the Company to at least two small cap or investment conferences; 1 <PAGE> (d) coordinate a comprehensive Investor Relations campaign including featured profiles by several reputable groups, Internet advertising, lead generation, print advertising, among other activities; (e) be available on request, on appropriate notice, to meet with the Company's Management and/or Board of Directors for quarterly management meetings; and (f) market intelligence The services described in Paragraph 1 may be rendered by Advisor without any direct supervision by the Company and at such time and place in such manner (whether by conference, telephone, letter or otherwise) as Advisor may reasonably determine. 2. Term. The term of Advisor's engagement hereunder shall be for twelve (12) months and may be extended for an additional twelve (12) months upon mutual written consent, commencing on the date hereof (the "Term"). Notwithstanding the foregoing, however, this Agreement can be terminated by either party upon 45 days written notice. 3. Compensation and Expense Reimbursement. (a) $10,000.00 non-refundable retainer payable upon execution of this Agreement; (b) 50,000 Warrants, expiring 5 years from the date of this Agreement, with piggy-back registration rights exercisable at 120% of the closing bid price on the date of execution of this Agreement; and (c) 100,000 Restricted Shares that will vest in equal installments of 25,000 shares quarterly from the date of this Agreement Company will be responsible for any expenses incurred in connection with this Agreement, i.e. road shows, travel, marketing materials to name a few and shall promptly reimburse Advisor for all reasonable out-of-pocket expenses incurred in connection with its engagement hereunder. All expenses incurred by Advisor on behalf of Company over $500 shall be borne by the Company only after it has authorized such expenses in writing. 4. No Agency Authority. The Advisor shall not have and shall not hold itself out as having any authority to act as agent for the Company or bind it in any way. 5. Company's Responsibilities, Representations and Warranties. 2 <PAGE> In connection with Advisor's engagement, the Company will furnish Advisor with any information concerning the Company that Advisor deems reasonable and appropriate and will provide Advisor with access to the Company's officers, directors, accountants, counsel and other advisors. The Company represents and warrants to Advisor that all such information concerning the Company, does not and will not contain any untrue statement of a material fact or omit to state 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 Company represents and warrants to Advisor that any financial projections or forecasts provided to Advisor are "forward looking statements" as that term is used in Section 21E of the Securities Exchange Commission Act of 1934 and represent the best currently available estimates by the management of the Company of the future financial performance by the Company (or its business) and are based upon reasonable assumptions. The Company acknowledges and agrees that Advisor will be using and relying upon such information supplied by the Company and its officers, agents and others and upon any other publicly available information concerning the Company without any independent investigation or verification thereof or independent appraisal by Advisor of the Company or its business or assets; and 6. Available Time. Advisor shall make available such time as it, in its reasonable discretion, shall deem appropriate for the performance of its obligations under this Agreement. 7. Relationship. Nothing herein shall constitute Advisor as an employee or agent of the Company, except to such extent as might hereinafter be agreed upon in writing for a particular purpose. Except as might hereinafter be expressly agreed, Advisor shall not have the authority to obligate or commit the Company in any manner whatsoever. 8. Confidentiality Relating to this Agreement. Neither the Company nor Advisor shall disclose (except to its partners, accountants and attorneys), without specific consent from the other party, any information relating to this Agreement or any Transactions contemplated hereby, including without limitation, the existence of this Agreement. 9. Assignment. This Agreement shall not be assignable by any party except to successors to all or substantially all of the business of either party for any reason whatsoever without the prior written consent of the other party, which consent may not be unreasonably withheld by the party whose consent is required. 10. Amendment. This Agreement may not be amended or modified except in writing signed by both parties. 11. Governing Law. This Agreement shall be deemed to have been made and delivered in New York, and this Agreement shall be governed as to validity, interpretation, construction, effect, and in all other respects by the internal laws of the State of New York. 3 <PAGE> Advisor is delighted to accept this engagement and looks forward to working with you on this assignment. Please confirm that the foregoing correctly sets forth our agreement by signing this enclosed duplicate of this letter in the space provided and returning it, whereupon this letter shall constitute a binding agreement as of the date first above written. Very truly yours, GREAT EASTERN SECURITIES, INC. By: /s/ Jeffrey S. Ramson --------------------- Jeffrey S. Ramson CEO AGREED AND ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN: AXM PHARMA, INC. By: /s/ Peter Cunningham -------------------- Peter Cunningham President and CEO 4