JAS Financial Services, LLC Laguna Beach, CA 92651
XXX
Financial Services, LLC
000
Xxxxxxx Xxxxxxx
Xxxxxx
Xxxxx, XX 00000
September
8, 2005
Xxxx
X.
Xxxxx, Esq.
Chairman
of the Board of Directors
M-Wave,
Inc.
000
Xxxxxxxxxx Xxxxx
Xxxx
Xxxxxxx, XX 00000
Dear
Xxxx:
As
we
have discussed and as contemplated in Section 6 of the Settlement Agreement
dated August 19, 2006 among M-Wave, Inc. (“M-Wave”), the members of its Board of
Directors and other parties, XXX
Financial Services, LLC ("XXX") hereby agrees to provide the Board of Directors
of M-Wave
with
financial advisory services on
the
terms and conditions set forth herein.
XXX
will
perform such services and as requested and directed by the Board of Directors
of
M-Wave from time to time. Such advisory services shall be limited, solely to,
the following:
|
1.
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Assist
in the development of strategic alternatives to maximize the shareholder
value of M-Wave;
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2.
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Assist
in the evaluation, identification and execution of appropriate sale,
merger or financing transaction strategies for
M-Wave;
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3.
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Actively
assist and participate in the valuation, structuring, and negotiation
of
terms and conditions and closing of such M-Wave transactions and
related
financings, excluding Xxxxx Fargo Business Credit and Mercator, which
XXX
will participate in only as requested by M-Wave’s CEO or by such investor
or potential investor; and
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4.
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Coordinate
all such activities and provide any other related services at the
request
and direction of the Board of Directors of
M-Wave.
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XXX
will
not be involved in matters of M-Wave’s corporate governance, SEC or NASDAQ
compliance or investor relations, except (a) to the extent specifically asked
to
do so by M-Wave’s Board of Directors or (b) to the extent directly related to
the advisory services described above.
XXX
Compensation
In
consideration for performing its services hereunder, M-Wave will compensate
XXX
as follows:
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1.
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A
lump sum non-refundable retainer payment of $25,000, payable upon
execution of this Agreement. A monthly retainer payment of $15,000
per
month, payable in arrears on the 15th of each month beginning September
15, 2005 through December 15, 2005, plus a half-month retainer of
$7,500
payable in arrears on December 31, 2005. One-half (1/2) of such retainer
payments shall be applied against any transaction success fees earned
pursuant to Sections 3 described below.
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2.
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Upon
execution of this Agreement, XXX shall receive a five year warrant
for
50,000 shares of MWAV common stock, priced at the lower of the market
on
the date of execution of this Agreement or the 5 day average preceding
the
date of the Agreement.
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3.
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A
transaction success fee, payable upon the closing of any such transaction,
as follows:
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a.
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Two
percent (2%) of any new debt placement (excluding Xxxxx Fargo Business
Credit Inc. and Mercator), including, senior secured debt, subordinated
debt, mezzanine debt or “Tranche B”
debt.
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b.
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Four
percent (4%) of any private placement of shares of M-Wave’s stock (either
common or preferred), excluding
Mercator.
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c.
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Three
percent (3%) of the gross enterprise value or total consideration
received
with respect to any merger of M-Wave with any other entity or acquisition
of M-Wave by any other entity.
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4.
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In
the event that XXX, in its sole discretion, engages the services
of a
third party for the purpose of assisting XXX with its services or
duties
hereunder, the compensation of such third party retained by XXX will
be
the sole responsibility of XXX.
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5.
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In
the event that XXX presents a bona fide offer for any of the transactions
described above that is accepted by a majority of the Board of Directors
of M-Wave, but that is not closed as a result of subsequent actions
or
failure to take action by M-Wave or its stockholders, then XXX shall
be
entitled to a lump-sum success fee of $50,000 upon the termination
of this
Agreement.
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6.
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In
the event that XXX presents a bona fide offer for any of the transactions
described above that is accepted by all members of the Board of Directors
of M-Wave or all the members other than Xxxxxx X. Xxxxx, but that is
not closed as a result of the failure of the stockholders to vote in
favor of the transaction (including a failure of Xxxxxx X. Xxxxx
to vote
in favor of such transaction), then XXX shall be entitled to a lump-sum
success fee of $150,000 upon the termination of this Agreement; provided
that if XXX is entitled to the $150,000 success fee pursuant to this
Section 6, he shall not be entitled to any fee pursuant to Section
5.
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7.
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For
transactions completed during the term of this Agreement, or any
extension
thereof, or within one year after the termination of the Agreement,
XXX
shall be entitled to receive the transaction success fees described
above
for those transactions with which XXX was involved at the request
and
direction of the Board of Directors of M-Wave.
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8.
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M-Wave
shall reimburse XXX for reasonable out-of-pocket expenses, as requested
and approved by M-Wave, upon the presentation of an expense invoice
and
appropriate back-up documentation.
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Term
This
Agreement will have an initial term through December 31, 2005. The Agreement
may
be extended by mutual agreement beyond January 1, 2005 on a month-to-month
basis. In the event of any termination of this Agreement, M-Wave shall continue
to be obligated to pay to XXX (a) any compensation earned by XXX through the
date of termination, plus any amounts earned under Sections 5, 6 and 7 above,
and for a period of one year thereafter, as described in this Agreement, and
(b)
any reasonable out-of-pocket expenses incurred by XXX prior to termination
in
connection with this Agreement.
The
confidentiality and indemnity provisions of this Agreement shall remain
operative and in full force and effect regardless of any such
termination.
XXX
will
provide M-Wave with a list of prospects and status of discussions from time
to
time as reasonably requested by the Board of Directors, and upon termination,
if
requested by M-Wave, a list of all prospects with whom XXX was working at or
prior to termination.
No
Guarantee Of Success
XXX
cannot guarantee the successful completion of any transactions for M-Wave and
makes no such guarantee herein, or as the basis for any component of our
compensation.
Confidentiality
XXX
agrees to maintain the confidentiality of any information it learns during
the
course of this engagement except as is necessary to fulfill the functions
described in the engagement letter and such confidentiality obligation shall
continue for a period of one year after termination of this Agreement; except
where information is part of the public domain prior to the date of this
Agreement; or such information becomes part of the public domain not due to
some
unauthorized act or omission of XXX after this Agreement is executed; or XXX
can
demonstrate that it had independently developed knowledge of such information
prior to the date of this Agreement; or such information is disclosed to XXX
by
a third party who has the right to make such disclosure; or permission to
disclose said information or to make use thereof is obtained by XXX from
M-Wave.
Indemnification
M-Wave
agrees to indemnify, defend and hold XXX harmless against any loss, liability,
claim or expense, including reasonable attorneys’ fees, that XXX might incur
arising in any manner out of or in connection with:
(a)
the
rendering of services by XXX hereunder or
(b)
any
untrue, incorrect, or incomplete information provided to XXX or placed in the
public domain by M-Wave,
except
to
the extent that such loss, liability, claim or expense are determined in
judicial rulings to have resulted from the gross negligence or willful
misconduct of XXX. If XXX believes it is entitled to indemnity hereunder XXX
shall notify M-Wave of the possible claim with reasonable promptness, and M-Wave
shall not be liable to the extent that any losses, liabilities, claims or
expenses that may arise are due to a delay in the notice given by
XXX.
XXX
agrees to indemnify, defend and hold M-Wave harmless against any loss,
liability, claim or expense, including reasonable attorneys’ fees, that M-Wave
might incur arising in any manner out of or in connection with the willful
or
grossly negligent dissemination by XXX of information that is inconsistent
with
the information provided to XXX by M-Wave, except to the extent that such loss,
liability, claim or expense are determined in judicial rulings to have resulted
from the gross negligence or willful misconduct of M-Wave. If M-Wave believes
it
is entitled to indemnity hereunder M-Wave shall notify XXX of the possible
claim
with reasonable promptness, and XXX shall not be liable to the extent that
any
losses, liabilities, claims or expenses that may arise are due to a delay in
the
notice given by M-Wave.
Independent
Contractor
XXX
is an
independent contractor. XXX is not M-Wave’s employee, partner, joint venturer or
other affiliate. XXX is not authorized to contractually bind M-Wave in any
matter, without prior written authorization.
Governing
Law; Jurisdiction
(a) This
Agreement shall be governed by and interpreted under the laws of the State
of
Illinois.
(b) The
Parties agree that any and all disputes arising out of or relating in any way
to
this Agreement shall be litigated only in state court or federal court situated
in Chicago, Illinois, and waive all objections based on personal jurisdiction
or
forum
non-conveniens.
This
Agreement is the entire agreement between the parties relating to the subject
matter hereof, and supersedes all prior understandings, agreements and
documentation. Any modifications to or waivers of provisions of this Agreement
must be in writing and signed by both parties. If any provision in this
Agreement is held by a court of competent jurisdiction to be invalid, void
or
unenforceable, such provision shall be enforced to the full extent it could
lawfully be enforced, and the remaining provisions will continue in full effect.
This Agreement is not assignable by either party without the prior written
consent of the other. Without limiting the survival of other appropriate
provisions, the agreements of confidentiality and indemnity shall survive the
termination of this Agreement. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original for all
purposes.
Sincerely
yours,
XXX
Financial Services, LLC
Xxxxx
X.
Xxxxxxx
Managing
Member
Agreed
& Accepted:
M-Wave,
Inc.
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By:
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______________________
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By:
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______________________
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Xxxx
X. Xxxxx
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Xxx
Xxxxx
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|||
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Chairman
of the Board
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Chief
Executive Officer
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Date:
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September
8, 2005
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