ZANN CORP.
PLACEMENT AGENT AGREEMENT
Dated as of: December 8, 2005
Monitor Capital, Inc.
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RE: Placement Agent Agreement (the "Agreement")
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Ladies and Gentlemen:
The undersigned, Zann Corp., a Nevada corporation (the "Company"), hereby
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agrees with Monitor Capital, Inc. (the "Placement Agent") as follows:
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1. Offering. The Company hereby engages the Placement Agent to act as
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its exclusive placement agent in connection with the Standby Equity Distribution
Agreement dated the date hereof between the Company and Cornell Capital
Partners, LP (the "Investor") (the "Standby Equity Distribution Agreement"),
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pursuant to which the Company shall issue and sell to the Investor, from time to
time, and the Investor shall purchase from the Company (the "Offering") up to
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Five Million Dollars ($5,000,000) (the "Commitment Amount") of the Company's
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common stock, par value $0.001 per share (the "Common Stock"), at price per
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share equal to the Purchase Price, as that term is defined in the Standby Equity
Distribution Agreement. The Placement Agent services shall consist of reviewing
the terms of the Standby Equity Distribution Agreement and advising the Company
with respect to those terms.
All capitalized terms used herein and not otherwise defined herein shall
have the same meaning ascribed to them as in the Standby Equity Distribution
Agreement. The Investor will be granted certain registration rights with
respect to the Common Stock as more fully set forth in the Registration Rights
Agreement between the Company and the Investor dated the date hereof (the
"Registration Rights Agreement"). The documents to be executed and delivered in
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connection with the Offering, including, but not limited, to the Company's
latest Quarterly Report on Form 10-QSB as filed with the United States
Securities and Exchange Commission, this Agreement, the Standby Equity
Distribution Agreement, and the Registration Rights Agreement are referred to
sometimes hereinafter collectively as the "Offering Materials." The Company's
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Common Stock purchased by the Investor under the Standby Equity Distribution
Agreement is sometimes referred to hereinafter as the "Securities." The
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Placement Agent shall not be obligated to sell any Securities.
2. Compensation.
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A. Upon the execution of this Agreement, the Company shall issue
to the Placement Agent or its designee shares of the Company's Common Stock in
an amount equal to Ten Thousand Dollars ($10,000) divided by the closing bid
price of the Common Stock, as quoted by Bloomberg, LP, on the date hereof (the
"Placement Agent's Shares"). The Placement
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Agent shall be entitled to "piggy-back" registration rights with respect to the
Placement Agent's Shares, which shall be triggered upon registration of any
shares of Common Stock by the Company pursuant to the Registration Rights
Agreement dated the date hereof.
3. Representations, Warranties and Covenants of the Placement Agent.
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A. The Placement Agent represents, warrants and covenants as
follows:
(i) The Placement Agent has the necessary power to enter
into this Agreement and to consummate the transactions contemplated hereby.
(ii) The execution and delivery by the Placement Agent
of this Agreement and the consummation of the transactions contemplated herein
will not result in any violation of, or be in conflict with, or constitute a
default under, any agreement or instrument to which the Placement Agent is a
party or by which the Placement Agent or its properties are bound, or any
judgment, decree, order or, to the Placement Agent's knowledge, any statute,
rule or regulation applicable to the Placement Agent. This Agreement when
executed and delivered by the Placement Agent, will constitute the legal, valid
and binding obligations of the Placement Agent, enforceable in accordance with
their respective terms, except to the extent that (a) the enforceability hereof
or thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect and affecting the rights of
creditors generally, (b) the enforceability hereof or thereof is subject to
general principles of equity, or (c) the indemnification provisions hereof or
thereof may be held to be in violation of public policy.
(iii) Upon receipt and execution of this Agreement, the
Placement Agent will promptly forward copies of this Agreement to the Company or
its counsel and the Investor or its counsel.
(iv) The Placement Agent will not intentionally take any
action that it reasonably believes would cause the Offering to violate the
provisions of the Securities Act of 1933, as amended (the "1933 Act"), the
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Securities Exchange Act of 1934 (the "1934 Act"), the respective rules and
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regulations promulgated thereunder (the "Rules and Regulations") or applicable
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"Blue Sky" laws of any state or jurisdiction.
(v) The Placement Agent is a member of the National
Association of Securities Dealers, Inc., and is a broker-dealer registered as
such under the 1934 Act and under the securities laws of the states in which the
Securities will be offered or sold by the Placement Agent unless an exemption
for such state registration is available to the Placement Agent. The Placement
Agent is in material compliance with the rules and regulations applicable to the
Placement Agent generally and applicable to the Placement Agent's participation
in the Offering.
B. Trading Activities and Restrictions. The Placement Agent
covenants that neither the Placement Agent, nor any entity managed or controlled
by the Placement Agent, nor any of their respective affiliates, will, or cause
or assist any Person to enter into or execute any "short sale" (including,
without limitation, as such term is defined in Rule 200 of Regulation
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SHO promulgated by the SEC under the Securities Exchange Act of 1934, as
amended) with respect to any securities of the Company or any similar
transaction with similar effect.
4. Representations and Warranties of the Company.
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A. The Company represents and warrants, except as set forth in the
Schedule of Exceptions delivered in connection with the Standby Equity
Distribution Agreement, as follows:
(i) The Company has the requisite corporate power and
authority to enter into and perform each of the Transaction Documents to which
it is a party, in accordance with the terms thereof, (ii) the execution and
delivery of each such Transaction Document by the Company and the consummation
by it of the transactions contemplated therein, have been duly authorized by the
Company's Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors or its stockholders, (iii) each such
Transaction Document has been duly executed and delivered by the Company, (iv)
assuming the execution and delivery thereof and acceptance by the Investor each
such Transaction Document and any related agreements constitute a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, securities insolvency, or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies or indemnification
or by other equitable principles of general application.
(ii) The Company has a duly authorized, issued and
outstanding capitalization as set forth herein and in the Standby Equity
Distribution Agreement. All of such outstanding shares have been validly issued
and are fully paid and nonassessable. Except as contemplated in the Transaction
Documents or disclosed in the SEC Documents, as of the date hereof, no shares of
Common Stock are subject to preemptive rights or any other similar rights or any
liens or encumbrances suffered or permitted by the Company. Except as
contemplated in the Transaction Documents or as disclosed in the SEC Documents,
as of the date hereof, (i) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities (iii) there are no outstanding registration statements other than on
Form S-8 and (iv) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the Securities Act.
(iii) The Common Stock to be issued in accordance with
this Agreement and the Standby Equity Distribution Agreement have been duly
authorized and, when issued and paid for in accordance with this Agreement, the
Standby Equity Distribution Agreement and the certificates/instruments
representing such Common Stock will be validly issued, fully-paid and
non-assessable.
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(iv) Except as set forth in the SEC Documents, the
Company has good and marketable title to its properties and material assets
owned by it, free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest other than such as are not material to the business
of the Company. Any real property and facilities held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries.
(v) Except as set forth in the SEC Documents, there is
no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
against or affecting the Company, the Common Stock or any of the Company's
subsidiaries, wherein an unfavorable decision, ruling or finding would have a
Material Adverse Effect.
(vi) The Company is duly incorporated or organized and
validly existing in the jurisdiction of its incorporation or organization and
has all requisite corporate power to own its properties and to carry on its
business as now being conducted. Each of the Company and its subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect on the
Company and its subsidiaries taken as a whole.
(vii) Except as set forth in the SEC Documents, neither
the Company nor any of its subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation
which in the judgment of the Company's officers has or is expected in the future
to have a Material Adverse Effect on the business, properties, operations,
financial condition, results of operations or prospects of the Company or its
subsidiaries. Except as set forth in the SEC Documents, neither the Company nor
any of its subsidiaries is in breach of any contract or agreement which breach,
in the judgment of the Company's officers, has or is expected to have a Material
Adverse Effect on the business, properties, operations, financial condition,
results of operations or prospects of the Company or its subsidiaries.
(viii) Since January 1, 2003, the Company has filed all
reports required to be filed by it with the SEC under the Exchange Act. The
Company has made available to the Placement Agent and the investors and its
representatives through the SEC's website at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇, true and
complete copies of the SEC Documents. As of their respective dates, to the
Company's Knowledge the Financial Statements complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. To the Company's Knowledge such
financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements) and, fairly
present in all material respects the financial position of the Company as of the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of
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unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Investor which is not
included in the SEC Documents contains any untrue statement of a material fact.
(ix) There are no claims for services in the nature of a
finder's or origination fee with respect to the sale of the Common Stock or any
other arrangements, agreements or understandings that may affect the Placement
Agent's compensation, as determined by the National Association of Securities
Dealers, Inc.
(x) The Company and its subsidiaries own or possess
adequate rights or licenses to use all material trademarks, trade names, service
marks, service ▇▇▇▇ registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted. Except as set forth in the Schedule of Exceptions, the Company and
its subsidiaries do not have any Knowledge of any infringement by the Company or
its subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service ▇▇▇▇
registrations, trade secret or other similar rights of others, and, to the
Knowledge of the Company, there is no claim, action or proceeding being made or
brought against, or to the Company's Knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service marks, service
▇▇▇▇ registrations, trade secret or other infringement; and the Company and its
subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.
(xi) Subject to the performance by the Placement Agent
of its obligations hereunder and subject to the representations and warranties
of the investors in the Offering, the offer and sale of the Securities will
comply, in all material respects with the requirements of Rule 506 of Regulation
D promulgated by the SEC pursuant to the 1933 Act and any other applicable
federal and state laws, rules, regulations and executive orders. Neither the
Offering Materials nor any amendment or supplement thereto nor any documents
prepared by the Company in connection with the Offering contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(xii) Except as disclosed in the SEC Documents, the
Company and each of its subsidiaries has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and (unless and only to the extent that the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
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(xiii) Except as set forth in the SEC Documents none of
the officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the Knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
5. Certain Covenants and Agreements of the Company.
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The Company covenants and agrees at its expense and without any expense to
the Placement Agent, as follows:
A. To advise the Placement Agent of any material adverse change in
the Company's financial condition, prospects or business or of any development
materially affecting the Company, or rendering untrue or misleading any material
statement in the Offering Materials at the time such statement was made, as soon
as the Company is either informed or becomes aware thereof.
B. To use its commercially reasonable efforts to cause the Common
Stock issuable in connection with the Standby Equity Distribution Agreement to
be qualified or registered for sale on terms consistent with those stated in the
Registration Rights Agreement and under the securities laws of such
jurisdictions as the Placement Agent shall reasonably request.
C. Upon written request, to provide and continue to provide the
Placement Agent copies of all quarterly financial statements and audited annual
financial statements prepared by or on behalf of the Company, other reports
prepared by or on behalf of the Company for public disclosure and all documents
delivered to the Company's stockholders.
D. To comply with the terms of the Offering Materials.
E. Upon the effectiveness of a registration statement covering the
Securities, the Company shall include the Placement Agent as a selling
shareholder on any opinion provided to the Transfer Agent.
F. At or prior to the Closing, the Company shall have been
furnished such documents and certificates as it may reasonably require for the
purpose of enabling the Placement Agent to review or pass upon the matters
referred to in this Agreement and the Offering Materials, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
6. Indemnification and Limitation of Liability.
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A. In consideration of the Placement Agent's execution and
delivery of this Agreement, the Company shall defend, protect, indemnify and
hold harmless the Placement Agent, and all of its officers, directors, partners,
employees and agents (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement)
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(collectively, the "Placement Agent Indemnitees") from and against any and all
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actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Placement Agent Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified Liabilities"), incurred by the Placement
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Agent Indemnitees or any of them as a result of, or arising out of, or relating
to (a) any material misrepresentation or breach of any material representation
or warranty made by the Company in this Agreement or the Transaction Documents,
(b) any material breach of any covenant, agreement or obligation of the Company
contained in the this Agreement and Transaction Documents other than any breach
resulting from any action or inaction on the part of any Placement Agent
Indemnitee, or (c) any cause of action, suit or claim brought or made against
such Placement Agent Indemnitee not arising out of any action or inaction of an
Placement Agent Indemnitee, and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement by any of the Placement
Agent Indemnitees; provided, that (i) to the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities, which is permissible under applicable law, and (ii)
the Company's liability for any and all such indemnification or contribution
obligations shall not exceed the compensation received by the Placement Agent
pursuant to Section 2 hereof.
B. In consideration of the Company's execution and delivery of
this Agreement and the Transaction Documents to which the Company is a party,
the Placement Agent shall defend, protect, indemnify and hold harmless the
Company and all of its officers, directors, shareholders, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Company
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Indemnitees") from and against any and all Indemnified Liabilities incurred by
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the Company Indemnitees or any of them as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Placement Agent in this Agreement, (b) any breach of any
covenant, agreement or obligation of the Placement Agent contained in this
Agreement, or (c) any cause of action, suit or claim brought or made against
such Company Indemnitee based on omissions or misrepresentations made or caused
by any Placement Agent Indemnitee or due to a breach by any Placement Agent
Indemnitee and arising out of or resulting from the execution, delivery,
performance or enforcement of the Transaction Documents to which the Company is
a party (including without limitation any false or misleading information
provided to the Company in writing by any Placement Agent Indemnitee
specifically for inclusion in the Offering Materials). To the extent that the
foregoing undertaking by the Placement Agent may be unenforceable for any
reason, the Placement Agent shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities, which is permissible
under applicable law.
C. The obligations of the parties to indemnify under this Section
6 shall survive termination.
D. Notwithstanding anything to the contrary contained herein, the
aggregate liability of the Placement Agent and each officer, director,
shareholder, employee or representative of the Placement Agent and each person
controlling, controlled by or under common control with the Placement Agent
within the meaning of Section 15 of the 1933 Act or
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Section 20 of the 1934 Act or the Rules and Regulations shall not exceed the
compensation received by the Placement Agent pursuant to Section 2 hereof. This
limitation of liability shall apply regardless of the cause of action, whether
contract, tort (including, without limitation, negligence) or breach of statute
or any other legal or equitable obligation.
7. Payment of Expenses.
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The Company hereby agrees to bear all of the expenses in connection with
the Offering, including, but not limited to the following: filing fees, printing
and duplicating costs, advertisements, postage and mailing expenses with respect
to the transmission of Offering Materials, registrar and transfer agent fees,
escrow agent fees and expenses, fees of the Company's counsel and accountants,
issue and transfer taxes, if any.
8. Termination.
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This Agreement shall terminate upon the expiration of the Commitment
Period.
9. Miscellaneous.
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A. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all which shall be deemed
to be one and the same instrument.
B. Any notice required or permitted to be given hereunder shall be
given in writing and shall be deemed effective when deposited in the United
States mail, postage prepaid, or when received if personally delivered or faxed
(upon confirmation of receipt received by the sending party), addressed as
follows to such other address of which written notice is given to the others):
If to Placement Agent, to: Monitor Capital, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Hsiao-▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to: Zann Corp.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
C. This Agreement shall be governed by and construed in all
respects under the laws of the State of New Jersey, without reference to its
conflict of laws rules or principles. Any suit, action, proceeding or
litigation arising out of or relating to this Agreement shall be brought and
prosecuted in such federal or state court or courts located within the State of
New Jersey as provided by law. The parties hereby irrevocably and
unconditionally consent to the jurisdiction of each such court or courts located
within the State of New Jersey and to service of process by registered or
certified mail, return receipt requested, or by any other manner provided by
applicable law, and hereby irrevocably and unconditionally waive any right to
claim that any suit, action, proceeding or litigation so commenced has been
commenced in an inconvenient forum.
D. This Agreement and the other agreements referenced herein
contain the entire understanding between the parties hereto and may not be
modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
E. If any provision of this Agreement shall be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Placement Agent
Agreement as of the date first written above.
ZANN CORP.
By:
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
MONITOR CAPITAL, INC.
By:
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Name: Hsiao-▇▇▇ ▇▇▇
Title: President
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