PLACEMENT AGENT AND ADVISORY SERVICES AGREEMENT
Exhibit
10.3
PLACEMENT
AGENT AND ADVISORY
SERVICES
AGREEMENT
This
Placement Agent and Advisory Services Agreement (this "Agreement") is
made as of May 11, 2007 (the “Effective Date”), by and between Monarch
Staffing, Inc., a Nevada corporation (together with its subsidiaries, the
"Company"), and Monarch Bay Associates, LLC, a California limited
liability company ("MBA"). MBA and the Company agree as
follows:
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1.
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Engagement
of MBA: The Company hereby engages MBA, and MBA
hereby accepts such engagement, to act
as:
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(a) the
Company's placement agent on an exclusive basis with respect to finding
investors (the “Investors”) for an offering of the Company’s capital stock
in a transaction or transactions exempt from registration under the
Securities Act of 1933, as amended, and in compliance with the applicable
laws and regulations of any jurisdiction in which securities are
sold
under this Agreement (a “Private Placement”);
and
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(b)
the Company’s advisor, on an exclusive basis, in identifying and
introducing prospective parties to an acquisition, merger, joint
venture
or any other similar transaction or relationship, directly or indirectly,
involving the Company (a
“Transaction”).
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The
Company acknowledges and agrees that MBA's obligations hereunder are on a
reasonable best efforts basis only and that the execution of this Agreement
does
not constitute a commitment by MBA to purchase the securities and does not
ensure the successful placement of the securities or any portion thereof or
the
success of MBA with respect to securing any other financing or a Transaction
on
behalf of the Company. MBA will act solely as a broker with respect
to identifying and negotiating with potential investors in securities that
may
be issued in the Private Placement and potential parties to a Transaction.
MBA
will not act as an underwriter in any Private Placement or
Transaction.
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2.
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MBA's
Compensation: The Company hereby agrees to pay MBA
fees in such amount and upon such terms and conditions contained
herein
upon the successful completion of a Private Placement as
follows:
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(a) Retainer. Upon
execution of this Agreement, the Company will issue to MBA 5,000
shares of
its Series A Preferred Stock, par value $.001 per share, as a
non-refundable retainer fee for the services provided by MBA
hereunder.
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(b)
Success Fees. The Company will pay MBA a
Success Fee, as described below, when the Company closes on a Private
Placement or a Transaction during the Term (as hereinafter defined)
of
this Agreement or during a one-year period thereafter, so long as
any
purchasers of the Company’s capital stock or parties to a Transaction were
identified by or introduced to the Company by MBA (or are affiliates
of
any person so identified or
introduced).
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Computation
and Payment of Success Fees.
(i) Private
Placements. For each Private Placement, the Success Fee will be
(x) a cash fee equal to 9% of gross proceeds raised in the Private Placement
(including, without limitation, upon exercise of any warrants issued in Private
Placement) and (y) warrants (the “MBA Warrants”) to purchase 9% of the
total number of shares of common stock issued and issuable by the Company to
Investors under and in connection with the Private Placement, including (without
limitation) shares issuable upon conversion or exercise of the securities sold
in the Private Placement, at an exercise price equal to the purchase price
of
the common stock sold in the Private Placement or, in the event that securities
convertible into common stock are sold in the Private Placement, the conversion
price of such securities.
The
cash
portion of the Success Fee will be due and payable upon the closing of each
Private Placement and will be payable directly to MBA from the escrow
established for such closing or in such other manner as may be acceptable to
MBA.
MBA
Warrants will have a five (5) year term (or such longer term as is provided
in
any warrants issued in the Private Placement) and will provide for cashless
exercise (even if the Investors do not have such a right). MBA
Warrants will have the benefit of full ratchet anti-dilution protection against
issuances of securities at prices (or with conversion or exercise prices, in
the
case of convertible securities, warrants, options or rights) below the exercise
price of MBA Warrants. MBA Warrants will not be callable or redeemable. The
shares underlying MBA Warrants will be included in the first registration
statement filed by the Company covering the securities issued in the Private
Placement (or securities issuable upon conversion or exercise
thereof). MBA Warrants will be transferable within MBA’s
organization, at MBA’s discretion. MBA Warrants will contain such
other terms and conditions no less favorable to MBA than the term and conditions
of any warrants issued to the Investors in the Private Placement.
(ii) Transactions. For
each Transaction, the Success Fee will be a cash fee equal to 3% of the Total
Consideration (as defined below) with respect to such Transaction. As
used herein. “Total Consideration" means, with respect to any
Transaction, the total value of all cash, securities, or other property paid
or
received, directly or indirectly, by the Company or its owners (at closing
or in
the future) in connection with such Transaction, including (without limitation)
in respect of (i) the assumption (by contract, operation of law or otherwise)
of
any indebtedness or (ii) consulting, non-compete or similar
agreements.
The
Success Fee will be due and payable upon the closing of each Transaction and
will be payable directly to MBA from the escrow established for such closing
or
in such other manner as may be acceptable to MBA; provided that in the
case of any installment or contingent payment made in respect of the
Transaction, the Success Fee in respect of such installment or contingent
payment shall be due and payable on the date such payment is made.
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3.
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Certain
Matters Relating to MBA’s
Duties:
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(a)
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MBA
shall (i) assist the Company in the preparation
of information documents to be shared with potential
Investors and parties to Transactions (ii) identify and screen potential
Investors and parties to Transactions, and (iii) perform other related
duties.
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(b)
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MBA
shall perform its duties under this Agreement in a manner consistent
with
the instructions of the Company. Such performance shall include the
delivery of information to potential interested parties, conducting
due
diligence, and leading discussions with potential Investors and parties
to
Transactions.
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(c)
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MBA
shall not engage in any form of general solicitation or advertising
in
performing its duties under this Agreement. This prohibition includes,
but
is not limited to, any mass mailing, any advertisement, article or
notice
published in any magazine, newspaper or newsletter and any seminar
or
meeting where the attendees have been invited by any mass mailing,
general
solicitation or advertising.
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(d)
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MBA
is and will hereafter act as an independent contractor and not as
an
employee of the Company and nothing in this Agreement shall be interpreted
or construed to create any employment, partnership, joint venture,
or
other relationship between MBA and the Company. MBA will not hold
itself
out as having, and will not state to any person that MBA has, any
relationship with the Company other than as an independent contractor.
MBA
shall have no right or power to find or create any liability or obligation
for or in the name of the Company or to sign any documents on behalf
of
the Company.
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4.
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Certain
Matters Relating to Company’s
Duties:
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(a)
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The
Company shall promptly provide MBA with all relevant information
about the
Company (to the extent available to the Company in the case of parties
other than the Company) that shall be reasonably requested or required
by
MBA, which information shall be complete and accurate in all material
respects at the time furnished.
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(b)
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The
Company recognizes that in order for MBA to perform properly its
obligations in a professional manner, it is necessary that MBA be
informed
of and, to the extent practicable, participate in meetings and discussions
between the Company and any third party, including, without limitation,
any prospective purchaser of the Company’s securities, relating to the
matters covered by the terms of MBA's
engagement.
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(c)
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The
Company agrees that any report or opinion, oral or written, delivered
to
it by MBA is prepared solely for its confidential use and shall not
be
reproduced, summarized, or referred to in any public document or
given or
otherwise divulged to any other person without MBA's prior written
consent, except as may be required by applicable law or
regulation.
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(d)
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The
Company represents and warrants that: (i) it has full right, power
and
authority to enter into this Agreement and to perform all of its
obligations hereunder; (ii) this Agreement has been duly authorized
and
executed by and constitutes a valid and binding agreement of the
Company
enforceable in accordance with its terms; and (iii) the execution
and
delivery of this Agreement and the consummation of the transactions
contemplated hereby do not conflict with or result in a breach of
the
Company's certificate of incorporation or by-laws. Further, this
Agreement
and the transactions contemplated herein shall not conflict with
or result
in the breach of any agreement to which the Company is a party at
the time
the transactions contemplated herein are
consummated.
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5.
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Term;
Termination of Agreement. The term of this Agreement shall
commence on the Effective Date and shall expire one year thereafter
unless
terminated earlier pursuant to the terms of this paragraph (the
“Term”). Either party may terminate this Agreement prior to its
expiration by notifying the other party in writing upon a material
breach
by that other party, unless such breach is curable and is in fact
cured
within fifteen (15) days after such
notice. Notwithstanding the foregoing, all
provisions of this Agreement (including Exhibit A hereto) other than
Sections 1, 3 and 4 (a) and (b) shall survive the termination or
expiration of this Agreement. MBA shall be entitled to
compensation under Section 2 (and payment for non-accountable expenses
under Section 12) based on the completion of a Private Placement
or a
Transaction prior to the termination or expiration of this Agreement
or
during the period one year following termination so long as any Investors
or party to a Transaction, as the case may be, (or any affiliate
of any
such person or entity) were identified by or introduced to the Company
by
MBA. MBA will provide to the Company within ten business days
after the expiration or termination of this Agreement a list of all
persons or entities identified by or introduced to the Company by
MBA
pursuant to this Agreement (the “Introduction List”). Within
five business day following the delivery of the Introduction List
to the
Company, the Company will provide MBA with written notice of any
objections to the inclusion of any person or entity in the Introduction
List and state the basis for each objection in reasonable
detail. The inclusion of a person or entity in the
Introduction List shall be deemed conclusive in making a later
determination as to whether a Success Fee is payable hereunder, unless
the
Company shall have made a timely and proper objection. The
parties will cooperate to resolve the status of any person or entity
as to
which the Company shall have made a timely and proper
objection.
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Except
as
otherwise specifically provided for herein, the Company shall have no liability
to MBA should the Company terminate this Agreement prior to the completion
of a
Private Placement or a Transaction.
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6.
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Indemnification. The
indemnification provisions set forth in Exhibit A hereto are incorporated
by reference and are a part of this
Agreement.
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7.
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Notices.
Any notice, consent, authorization or other communication to be given
hereunder shall be in writing and shall be deemed duly given and
received
when delivered personally, when transmitted by fax during the normal
business hours of the party receiving such notice so long a copy
of that
notice is also send by certified mail, return receipt requested at
the
time it is transmitted by fax, five business days
after being mailed by certified mail, return receipt requested or
one
business day after being sent by a nationally recognized overnight
delivery service, charges and postage prepaid, properly addressed
to the
party to receive such notice, at the following address or fax number
for
such party (or at such other address or fax number as shall hereafter
be
specified by such party by like
notice):
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(a) If
to the Company, to:
ATTN:
Chief Executive Officer
00000
Xxxxxx Xxxxx Xx #000
Xxx
Xxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Telephone
Number:
Fax
Number:
E-mail:
(b) If
to MBA, to:
Xxxxx
Xxxxxxx, Managing Director
Monarch
Bay Associates, LLC
00000
Xxxxxx Xxxxx Xx #000
Xxx
Xxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Telephone
Number: (000)
000-0000
Fax
Number: (000)
000-0000
E-mail:
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8.
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Company
to Control Transactions. The
terms and conditions under which the Company would enter into a Private
Placement or a Transaction shall be at the sole discretion of the
Company. Nothing in this Agreement shall obligate the Company
to actually consummate a Private Placement or a
Transaction. The Company may terminate any negotiations or
discussions at any time and reserves the right not to proceed with
a
Private Placement or a Transaction.
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9.
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Confidentiality
of Company Information. MBA, and its officers, directors,
employees and agents shall maintain in strict confidence and not
copy,
disclose or transfer to any other party (1) all confidential business
and
financial information regarding the Company and its affiliates, including
without limitation, projections, business plans, marketing plans,
product
development plans, pricing, costs, customer, vendor and supplier
lists and
identification, channels of distribution, and terms of identification
of
proposed or actual contracts and (2) all confidential technology
of the
Company. In furtherance of the foregoing, MBA agrees that it shall
not
transfer, transmit, distribute, download or communicate, in any
electronic, digitized or other form or media, any of the confidential
technology of the Company. The foregoing is not intended to preclude
MBA
from utilizing, subject to the terms and conditions of this Agreement,
the
Private Placement or Offering Memorandum and/or other documents prepared
or approved by the Company. Further, the Company must approve
the Private Placement or Offering Memorandum, being prepared by MBA,
before it is mailed to prospective Investors or parties to a
Transaction.
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All
communications regarding any possible transactions, requests for due diligence
or other information, requests for facility tours, product demonstrations or
management meetings, will be submitted or directed to the Company, and MBA
shall
not contact any employees, customers, suppliers or contractors of the Company
or
its affiliates without express permission. Nothing in this Agreement
shall constitute a grant of authority to MBA or any representatives thereof
to
remove, examine or copy any particular document or types of information
regarding the Company, and the Company shall retain control over the particular
documents or items to be provided, examined or copied. If a Private Placement
or
a Transaction is not consummated, or if at any time the Company so requests,
MBA
and its representatives will return to the Company all copies of information
regarding the Company in their possession.
The
provisions of this Section shall survive any termination of this
Agreement.
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10.
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Press
Releases, Etc. The Company shall control all press
releases or announcements to the public, the media or the industry
regarding any Private Placement, Transaction or business relationship
involving the Company or its affiliates. Except for
communication to Investors in furtherance of this Agreement, MBA
will not
disclose the fact that discussions or negotiations are taking place
concerning a possible Private Placement or a Transaction involving
the
Company, or the status or terms and conditions
thereof.
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11.
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Due
Diligence: Neither the Company, nor any of
its directors, officers or stockholders, should, in any way rely
on MBA to
perform any due diligence with respect to the Company. It is
expressly understood and agreed that the Investors and parties to
any
Transaction will conduct their own due diligence on the Company and
the
opportunity.
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12.
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Expenses,
Etc. The Company will pay to MBA a non-accountable expense
fee equal to 2% of gross proceeds raised in each Private Placement
(the
“Non-Accountable Fee”), which will be used to pay MBA’s travel and other
expenses. The Non-Accountable Fee will be paid in the same time
and manner as the Success Fee. The Company will pay
all other costs and expenses incident to the issuance, offer, sale
and
delivery of each Private Placement, including but are not limited
to state
“Blue Sky” fees, legal fees, printing costs, travel costs, mailing,
couriers, and personal background
checks.
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13.
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Compliance
with Laws. MBA represents and warrants that it
shall conduct itself in compliance with applicable federal and state
laws. MBA represents that it is not a party to any other
Agreement, which would conflict with or interfere with the terms
and
conditions of this Agreement.
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14.
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Assignment
Permissable. MBA reserves the right to assign a
portion of this Agreement to one or more sub-agents with respect
to any
Private Placement or Transaction, subject to the prior written consent
of
the Company. Any approved sub-agent shall be paid a portion of
Success Fees as may be determined by MBA. The
Company does acknowledge that MBA may pay other consultants or agents
in
connection with the Private Placement(s) and
Transaction(s).
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15.
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Amendments. Neither
party may amend this Agreement or rescind any of its existing provisions
without the prior written consent of the other
party.
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16.
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Governing
Law; Dispute Resolution. This Agreement shall be
deemed to have been made in the State of California and shall be
construed, and the rights and liabilities determined, in accordance
with
the law of the State of California, without regard to the conflicts
of
laws rules of such jurisdiction. Any controversy or claim relating
to or
arising from this Agreement (an "Arbitrable Dispute") shall be settled
by
arbitration in accordance with the Commercial Arbitration Rules of
the
American Arbitration Association (the "AAA") as such rules may be
modified
herein or as otherwise agreed by the parties in controversy. The
forum for
arbitration shall be Orange County, California. Following thirty
(30) days
notice by any party of intention to invoke arbitration, any Arbitrable
Dispute arising under this Agreement and not mutually resolved within
such
thirty (30) day period shall be determined by a single arbitrator
upon
which the parties agree.
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17.
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Waiver. Neither
MBA’s nor the Company’s failure to insist at any time upon strict
compliance with this Agreement or any of its terms nor any continued
course of such conduct on their part shall constitute or be considered
a
waiver by MBA or the Company of any of their respective rights or
privileges under this Agreement.
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18.
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Severability.
If any provision herein is or should become inconsistent with any
present
or future law, rule or regulation of any sovereign government or
regulatory body having jurisdiction over the subject matter of this
Agreement, such provision shall be deemed to be rescinded or modified
in
accordance with such law, rule or regulation. In all other
respects, this Agreement shall continue to remain in full force and
effect.
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19.
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Counterparts.
This Agreement may be executed in two or more counterparts, each
of which
shall be deemed an original, and will become effective and binding
upon
the parties at such time as all of the signatories hereto have signed
a
counterpart of this Agreement. All counterparts so executed
shall constitute one Agreement binding on all of the parties hereto,
notwithstanding that all of the parties are not signatory to the
same
counterpart. Each of the parties hereto shall sign a sufficient
number of counterparts so that each party will receive a fully executed
original of this Agreement.
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20.
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Entire
Agreement. This Agreement (together with Exhibit A
hereto) constitutes the entire agreement between the Company and
MBA. No
other agreements, covenants, representations or warranties, express
or implied, oral or written, have been made by any party hereto to
any
other party concerning the subject matter hereof. All prior and
contemporaneous conversations, negotiations, possible and alleged
agreements, representations, covenants and warranties concerning
the
subject matter hereof are merged herein and shall be of no further
force
or effect.
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Monarch
Bay Associates, LLC (the “MBA”)
By:
Xxxxx
Xxxxxxx
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Title:
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Managing
Director
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Monarch
Staffing, Inc. (the “Company”)
By:
Xxxx
Xxxxxxxx
Title: Chief
Executive Officer
EXHIBIT
A
Indemnification
The
Company agrees that it shall
indemnify and hold harmless, MBA, its stockholders, members directors, officers,
employees, agents, affiliates and controlling persons within the meaning of
Section 20 of the Securities Exchange Act of 1934 and Section 15 of the
Securities Act of 1933, each as amended (any and all of whom are referred to
as
an "Indemnified Party"), from and against any and all losses, claims, damages,
liabilities, or expenses, and all actions in respect thereof (including, but
not
limited to, all legal or other expenses reasonably incurred by an Indemnified
Party in connection with the investigation, preparation, defense or settlement
of any claim, action or proceeding, whether or not resulting in any liability),
incurred by an Indemnified Party with respect to, caused by, or otherwise
arising out of any transaction contemplated by this Agreement or MBA's
performing the services contemplated hereunder; provided, however, the Company
will not be liable to the extent, and only to the extent, that any loss, claim,
damage, liability or expense is finally judicially determined to have resulted
primarily from MBA's gross negligence or bad faith in performing such
services.
If
the indemnification provided for
herein is conclusively determined (by an entry of final judgment by a court
of
competent jurisdiction and the expiration of the time or denial of the right
to
appeal) to be unavailable or insufficient to hold any Indemnified Party harmless
in respect to any losses, claims, damages, liabilities or expenses referred
to
herein, then the Company shall contribute to the amounts paid or payable by
such
Indemnified Party in such proportion as is appropriate and equitable under
all
circumstances taking into account the relative benefits received by the Company
on the one hand and MBA on the other, from the transaction or proposed
transaction under the Agreement or, if allocation on that basis is not permitted
under applicable law, in such proportion as is appropriate to reflect not only
the relative benefits received by the Company on the one hand and MBA on the
other, but also the relative fault of the Company and MBA; provided, however,
in
no event shall the aggregate contribution of MBA and/or any Indemnified Party
be
in excess of the net compensation actually received by MBA and/or such
Indemnified Party pursuant to this Agreement.
The
Company shall not settle or compromise or consent to the entry of any judgment
in or otherwise seek to terminate any pending or threatened action, claim,
suit
or proceeding in which any Indemnified Party is or could be a party and as
to
which indemnification or contribution could have been sought by such Indemnified
Party hereunder (whether or not such Indemnified Party is a party thereto),
unless such consent or termination includes an express unconditional release
of
such Indemnified Party, reasonably satisfactory in form and substance to such
Indemnified Party, from all losses, claims, damages, liabilities or expenses
arising out of such action, claim, suit or proceeding.
In
the event any Indemnified Party shall incur any expenses covered by this Exhibit
A, the Company shall reimburse the Indemnified Party for such covered expenses
within ten (10) business days of the Indemnified Party's delivery to the Company
of an invoice therefor, with receipts attached. Such obligation of the Company
to so advance funds may be conditioned upon the Company's receipt of a written
undertaking from the Indemnified Party to repay such amounts within ten (10)
business days after a final, non-appealable judicial determination that such
Indemnified Party was not entitled to indemnification hereunder.
The
foregoing indemnification and contribution provisions are not in lieu of, but
in
addition to, any rights which any Indemnified Party may have at common law
hereunder or otherwise, and shall remain in full force and effect following
the
expiration or termination of MBA's engagement and shall be binding on any
successors or assigns of the Company and successors or assigns to all or
substantially all of the Company's business or assets.
