ZANN CORP.
PLACEMENT AGENT AGREEMENT
Dated as of: December 8, 2005
Monitor Capital, Inc.
9171 Towne Centre Drive, Suite 465
San Diego, CA 92122
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
