EXHIBIT 10.50
MONARCH BAY ASSOCIATES, LLC
December 4, 2008
Mr. Ryan Vice
Chief Financial Officer
American TonerServ Corp.
420 Aviation Boulevard, Suite 103
Santa Rosa, CA 95403
RE: Engagement Letter for American TonerServ Corp.
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Dear Mr. Vice;
We are pleased to submit to you this
binding Engagement Letter (the
"Agreement") that sets forth the arrangement whereby Monarch Bay
Associates, LLC
("MBA") will act as placement agent to American TonerServ Corp.
(the "Company"),
and provide other investment banking services intended to
facilitate the growth
of the Company.
We propose to offer the following
services, as may be appropriate:
o Secure an initial financing of $500,000
for the Company and a
subsequent financing of no less than $4,000,000 in debt,
common stock or other equity-linked securities, or such other
instruments and quantities as mutually agreed, in one or more
financings (each, and collectively, the "Financing").
o Assist the management team in preparing
investment materials.
o On an as needed basis, advise the Company
on mergers,
acquisitions, or strategic partnerships and render such other
financial advisory and investment banking services as may be
agreed upon by MBA and the Company.
o General capital markets advisory services
on behalf of the
Company.
o Render such other financial advisory and
investment banking
services as may from time to time be necessary or appropriate
to accomplish the Company's objectives, as may be agreed upon
by MBA and the Company.
Our proposed services under this
Agreement are subject to the following
conditions (all cash consideration payable in US Dollars unless
otherwise
agreed):
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1. Retainer Consideration:
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a. Cash Retainer:
A non-refundable cash retainer of $10,000 per month
is due monthly upon the signing of this Agreement and for the
next
three months thereafter. The Cash Retainer will be applied
against
any fees owed to MBA as a result of a successful Financing.
b. Stock Retainer:
A non-refundable common stock retainer of 750,000
restricted Company shares shall be issued and vest as follows:
o 25% upon the closing of the initial financing of at
least
$350,000 by January 15, 2009,
o 25% upon the closing of the subsequent financing of
no less
than $2,000,000, and
o 25% upon the closing of and an additional
subsequent
financing of no less than $2,000,000.
Notwithstanding the above, all 750,000 shares will be vested if
MBA
closes financing of no less than $4,000,000 by the end of the
term
of this Agreement. The Stock Retainer will not be applied
against
any fees owed to MBA as a result of a successful Financing. The
Company agrees to include the Stock Retainer in the Company's
next
registration statement.
2. Cash Consideration: At each closing of Financing,
the Company shall pay to
MBA a cash commission from the gross
proceeds of each such closing per the
following schedule dependent upon the type
of financing raised:
o
Equity-Based and Debt-Based Convertible into Equity Funding:
Eight
and One Half Percent (8.5%) of any such equity based funding.
o
Non-Convertible Debt: Three Percent (3%) of any such
nonconvertible
debt based funding.
The cash commission will be reduced by any
fees paid to Merriman Curhan
Ford Co. or Dinosaur Securities, LLC for
investment from certain persons as
identified on Exhibit A attached.
The cash commission will be reduced by 50%
for investments from certain
persons as identified on Exhibit B, as
amended from time to time. No cash
commissions will be owed for investments
that result from the conversions
of existing debt into the Financing.
The cash commission will be 2% for any
investment from VSpring received
within two (2) months from the signing of
this Agreement, after such sixty
(60) day period, the cash commission will
be reduced by 50% for any
investment from VSpring.
3. Warrant Consideration: Promptly following the final
closing in an offering
of Financing, the Company shall issue to
MBA or its designees warrants
("Agent Warrants") to purchase ten percent
(10%) of the total common stock
issued and issuable from the Financing
(including common stock underlying
warrants and convertible securities). The
Agent Warrants shall be
exercisable at the lowest of the purchase,
conversion, or exercise price
per share of any securities issued to
investors in such Financing and shall
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be exercisable until the latest of (i)
five years from the date of the
final closing if such offering of
Financing or (ii) the last expiration
date of any of the warrants issued in such
Financing. The Agent Warrants
will provide for cashless exercise (even
if the warrants issued to
investors do not have such a right) and
will have the benefit of
anti-dilution protection against issuances
of securities at prices below
the exercise price of the Agent Warrants.
The Agent Warrants will not be
callable or redeemable and will be
transferable within MBA's organization,
at MBA's discretion. The Agent Warrants
shall have registration and other
rights under the same terms as any
warrants issued to investors in such
Financing, and otherwise under customary,
mutually agreeable terms.
4. Exclusivity/MBA Rights: Upon execution hereof, the
Company grants MBA the
following rights:
a. MBA shall
become the Company's exclusive agent for all equity or
equity-linked financings, including convertible debt financings,
for
a period of four (4) months from the signing of this Agreement.
b. Upon closing of
a minimum of $1,000,000 in Financing within four
months from the signing of this Agreement, MBA shall remain the
exclusive agent for all equity or equity-linked financings,
including convertible debt financings for a period of eight
months
(8) months from the signing of this Agreement. Upon closing of
a
minimum of $2,000,000 in Financing within eight months from the
signing of this Agreement, MBA shall remain the exclusive agent
for
all equity or equity-linked financings, including convertible
debt
financings for a period of twelve months (12) months from the
signing of this Agreement.
c. MBA shall have
the non-exclusive right to offer strategic alliances
and merger and/or acquisition
opportunities to the Company, subject
to mutually agreed upon terms and conditions.
d. In connection
with the Financing, MBA shall have the right to
associate itself with other members of the Financial Industry
Regulatory Authority, Inc. ("FINRA") and/or agents who will share
in
compensation and who shall be afforded indemnification as agents
of
MBA pursuant to Section 6 below and Schedule A incorporated
therein.
The selection of other agents and their compensation shall be
at
MBA's sole discretion and expense.
e. Until the later
of (i) two (2) years from the date of this Agreement
or (ii) one (1) year following termination of this Agreement,
MBA
shall be entitled to receive, and the Company shall be obligated
to
pay to MBA, the fees set forth in Paragraphs 1, 2, and 3 herein
with
respect to any such transactions entered into by the Company
with
any financing individual or entity ("person") that makes a
financial
investment in or lends money to the Company that was first
introduced directly or indirectly to the Company by MBA
(including,
but not
limited to, any persons who previously invested in a
Financing and for which MBA was compensated).
5. Term: The initial term of this Agreement shall be
from the date first
written above through the first four
months thereof (the "Initial Term").
After the Initial Term, the term of this
Agreement will automatically be
extended for additional successive six
month periods unless either party
provides written notice to the other party
of its intent not to so extend
the term at least 30 days before the
expiration of the then current term.
<PAGE>
6. Indemnification: The Company agrees to indemnify MBA
to the extent of and
in accordance with the provisions of
Schedule A hereto, which is
incorporated by re
