Exhibit 10.1

 

[image_001.jpg]

 

INVESTMENT BANKING ENGAGEMENT AGREEMENT

 

February 29, 2016

 

Vaughan P. Dugan

Randy Romano

PF Hospitality Group, Inc.

399 NW 2nd Avenue

Suite 216

Boca Raton, FL 33432

 

Dear Sirs:

 

Newbridge Securities Corporation (“Newbridge”) is pleased to provide investment
banking and financial advisory services to PF Hospitality Group, Inc., a Nevada
corporation, (the “Company) with respect to identifying, analyzing, structuring,
negotiating and consummating one or several Transactions or Financings (as
defined in Section 16 below) which are introduced to the company by Newbridge on
the terms and conditions in this letter agreement (the “Agreement”).

 

1. Engagement; Nature of Services.

 

(a) The Company engages Newbridge as the Company’s exclusive financial advisor
to render such financial and other advice as an investment banker, as the
Company may reasonably request and Newbridge deems necessary or appropriate in
connection with a the Company’s Strategic Business Plan, Transaction or
Financing. The decision to consummate a Transaction or Financing shall be in the
Company’s sole and absolute discretion.

 

(b) Newbridge shall render such other investment banking or financial advisory
services as may from time to time be agreed upon by Newbridge and the Company
(e.g., fairness opinions, business plans). The fees payable for any such other
services shall be customary investment banking or financial advisory fees to be
mutually agreed upon based upon the nature and type of the services to be
rendered.

 

(c) Newbridge shall not be required to undertake duties not reasonably within
the scope of the investment banking or financial advisory services contemplated
by this Agreement or to spend any minimum amount of time in providing such
services. Newbridge does not provide tax, accounting or legal advice. Any public
offerings shall be subject to a separate agreement and are expressly not
addressed in this Agreement.

 

 1 

 

 

2. Information.

 

The Company will furnish, and will request the other parties to a Transaction to
furnish, to Newbridge such information as Newbridge reasonably requests in
connection with performing its services. In performing its services, Newbridge
will use and rely upon the information furnished by the Company and the other
parties to a Transaction as well as publicly available information regarding the
Company and the other parties to a Transaction. Accordingly, Newbridge shall be
entitled to assume and rely upon the accuracy and completeness of all such
information and is not required to independently verify any information, whether
publicly available or otherwise furnished to it, including any financial
information, forecasts or projections. For any financial forecasts and
projections made available to Newbridge by the Company or the other parties to a
Transaction, Newbridge may assume that the forecasts and projections have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of management of the Company or the other parties to a
Transaction. If, in Newbridge’s opinion after completing its due diligence
process, the condition or prospects of the Company, financial or otherwise, are
not substantially as represented or do not fulfill Newbridge’s expectations,
Newbridge shall have the sole discretion to determine whether to continue to
participate in any proposed Financing or Transaction.

 

3. Fees.

 

For the services to be rendered by Newbridge, the Company shall pay to Newbridge
a Retainer Fee, a Continuing Retainer Fee, Transaction Fees, Financing Fees and
Financing and Transactions Warrants, as set forth below.

 

(a) Retainer Fee and Continuing Retainer Fee: Upon execution of this Agreement,
the Company shall pay to Newbridge an advance fee (“Retainer Fee”) in an amount
equal to 600,000 restricted common shares of the Company. The Retainer Fee shall
be non-refundable and shall not exceed 600,000 restricted common shares, in
total.

 

(b) Transaction Fees: At the closing of a Transaction introduced to the Company
by Newbridge, the Company shall pay to Newbridge at the closing of a Transaction
introduced to the Company by Newbridge a fee (each a “Transaction Fee”) in
immediately available funds or in registered Company securities, as the case may
be, equal to the applicable percentage as described herein below of, and in the
same proportion and form of, the “Aggregate Consideration” (as defined in
Section 16) exchanged or received in connection with such Transaction. However,
to the extent all or part of a Transaction Fee due to Newbridge results from
consideration that is contingent upon the occurrence of some future event (e.g.,
an earnout or the realization of sales or earnings projections), the part of the
Transaction Fee related to the contingent consideration shall be payable at the
earlier of: (i) the receipt of such consideration, or (ii) when the amount of
consideration can be determined. If, in connection with a Transaction that is
not completed, the Company receives a break-up fee, topping fee or other
termination fee (collectively, a “Termination Fee”), the Company will pay
Newbridge a fee equal to 25% of the Termination Fee when the Termination Fee is
received by the Company.

 

Applicable Percentage:

 

(a)10.0% of the Aggregate Consideration of any Transaction.

 

For example, if the Aggregate consideration is comprised solely of $8 Million
representing 2.5 million shares of Company registered securities, then Newbridge
shall be paid by the Company an amount equal to 10% of the total registered
Company securities representing such $8 Million in Aggregate Consideration, or
250,000 shares of Company registered securities.)

 

 2 

 

 

(b) Financing Fees:

 

At each closing under each Financing introduced to the Company by Newbridge, the
Company shall pay to Newbridge a fee (each a “Financing Fee”) in immediately
available funds equal to the sum of:

 

  i. four percent (4.0%) of all debt funds raised; plus         ii. eight
percent 8.0% of all equity funds raised in the public or private markets.

 

For calculating any Financing Fee, convertible securities shall be treated as
equity. The Financing Fee shall be calculated on the gross total credit facility
before any deductions, including fees, deposits, transaction expenses, reserves,
insurance or other amounts withheld or paid by the financing source. If the
funds raised by the Company in a Financing are to be received in whole or in
part in installments, the installments shall be valued on a discounted present
value basis using a discount rate of eight percent (8%) annually. To the extent
these future payments are not currently ascertainable or relate to the exercise
of options, warrants or similar securities, the part of the Financing Fee
relating to them shall be payable at the earlier of (i) the receipt of the
contingent payments, or (ii) when the amount of the contingent payments can be
determined.

 

(c)Financing and Transaction Warrants:

 

Additionally, at the closing of a Transaction or a Financing, the Company shall
issue to Newbridge warrants (the “Transaction and Financing Warrants”) to
purchase the number of shares of the common stock of the Company equal to the
sum of:

 

  i. four percent (4.0%) of the aggregate number of shares issued to a debt
lender, as if the aggregate debt was an equity financing; plus         ii. eight
percent (8.0%) of the aggregate number of fully diluted shares of common stock
as shall have been purchased by the financing sources, plus         iii. eight
percent (8.0%) of the total number of underlying shares of common stock into
which any convertible securities that shall have been purchased by financing
sources may be converted (after giving effect to any increase in shares under a
ratchet or similar provision that results in the later increase of the number of
shares initially purchased).

 

The Transaction and Financing Warrants shall be exercisable for five (5) years
from the date of issuance on the same terms and conditions applicable to, and
with an exercise price per share equal to the effective per share price paid by,
financing sources for a share of common stock of the Company. The terms of the
Transaction Financing Warrants shall be set forth in an agreement (the
“Transaction and Financing Warrant Agreement”). The Transaction and Financing
Warrant Agreement shall contain customary terms, including provisions for
“cashless” exercise, change of control, price based anti-dilution, and customary
demand or piggyback registration rights, and that shall otherwise be in form and
substance reasonably satisfactory to the Company and Newbridge.

 

4. Expenses:

 

In addition to any fees, disbursements and expenses customarily incurred by an
underwriter during the registration process incurred by us, that may be payable
to Newbridge and regardless of whether any Transaction or Financing is proposed
or closed, upon prior written approval by the Company. the Company agrees, from
time to time upon written request, to reimburse Newbridge for: (a) all
reasonable fees and disbursements of its legal counsel (such legal expenses are
to be mutually determined, capped and agreed upon based on the offering
structure), (b) all reasonable travel and related expenses arising out of this
engagement including, without limitation, our due diligence ( including travel
expenses incurred in connection with due diligence), road show and (c) all other
reasonable out-of-pocket expenses incurred in connection with any actual or
proposed Transaction or Financing or otherwise arising out of this agreement.
The Company shall reimburse Newbridge for all such prior approved expenses due
to it within 15 days of written receipt.

 

 3 

 

 

5. Scope of Responsibility.

 

Newbridge shall not be liable to the Company, or to any other person claiming
through the Company, for any claim, loss, damage, liability, or expense suffered
by the Company or any such other person arising out of or related to Newbridge’s
engagement except for any claim, loss, damage, liability or expense that arises
out of, or is based upon, any action or failure to act by Newbridge that
constitutes bad faith, willful misconduct or gross negligence.

 

6. Indemnification; Contribution.

 

(a) The Company agrees to indemnify and hold harmless Newbridge and its
officers, directors, shareholders, employees, affiliates, agents and each person
who controls Newbridge (and any of its affiliates) within the meaning of Section
15 of the Securities Act of 1933, as amended or Section 20 of the Securities
Exchange Act of 1934, as amended (each an “Indemnified Person”), to the fullest
extent lawful, against any and all claims, losses, damages, liabilities, and
expenses (including all fees and disbursements of counsel and other expenses
reasonably incurred in connection with the investigation of, preparation for and
defense of any pending or threatened claim, action, proceeding, inquiry,
investigation or litigation, to which an Indemnified Person may become subject)
(collectively, “Damages”) incurred that arise out of or are related to any
actual or proposed Transaction or Financing or Newbridge ’s engagement under
this Agreement. However, this indemnification shall not include any Damages that
are found in a final judgment by a court of competent jurisdiction to have
resulted from the bad faith, willful misconduct or gross negligence of
Newbridge.

 

(b) If the indemnity above is unavailable or insufficient to hold harmless an
Indemnified Person, then the Company shall contribute to amounts paid or payable
by an Indemnified Person for Damages in such proportion as appropriately
reflects the relative benefits received by the Company on the one hand and
Newbridge on the other. If applicable law does not permit allocation solely on
the basis of benefits, then such contribution shall be made in such proportion
as appropriately reflects both the relative benefits and relative fault of the
parties and other relevant equitable considerations. However, in no event shall
Newbridge’s aggregate contributions for Damages exceed the amount of fees
actually received by Newbridge under this Agreement. The relative benefits to
the Company and Newbridge of a Transaction or Financing shall be deemed to be in
the same proportion that the total value paid or received or contemplated to be
paid or received by the Company or its security holders in connection with the
Transaction or Financing bears to the fees paid to Newbridge for the Transaction
or Financing.

 

(c) Promptly after receipt by Newbridge of notice of any claim or the
commencement of any action for which an Indemnified Person may be entitled to
indemnity, Newbridge shall promptly notify the Company of such claim or the
commencement of such against the Indemnified Person that would give rise to
indemnification. However, any delay or failure to notify the Company will not
relieve the Company of its indemnity obligation except to the extent it is
materially prejudiced by such delay or failure. The Company may participate in
the defense of the claim and shall assume the defense of the claim and shall pay
as incurred the fees and disbursements of counsel for the proceeding. In any
proceeding where the Company declines to assume the defense or the Company’s
counsel is deemed to have a conflict of interest, the Indemnified Person shall
have the right to retain its own counsel which shall be reasonably satisfactory
to Newbridge. The Company shall pay the fees and expenses of such counsel as
incurred. However, the Company shall not be responsible for the fees and
expenses of more than one counsel (other than counsel of record) for all
Indemnified Persons.

 

 4 

 

 

(d) The Company will not enter into any waiver, release or settlement for any
threatened or pending claim, action, proceeding or investigation or settle any
related litigation for which indemnification may be sought under this Agreement
(whether or not Indemnified Persons are a formal party to the litigation),
unless the waiver, release or settlement includes an unconditional release of
each Indemnified Person from any and all liability arising out of the threatened
or pending claim, action, proceeding, investigation or litigation.

 

7. Term; Termination of Engagement.

 

The term of this engagement shall be for twelve (12) months from the date of
this Agreement. But if at the end of such period negotiations or discussions are
in progress for a Transaction or Financing, then the term of this engagement
shall be automatically extended on a month-to-month basis until all negotiations
or discussions cease. Nevertheless, Newbridge’s engagement may be terminated by
either the Company or Newbridge at any time upon written notice to that effect
to the other party. Upon expiration or termination of this Agreement, Newbridge
shall provide the Company with a written list of parties with whom it has had
discussions in connection with any proposed Transaction or Financing. After this
Agreement expires or if the Company terminates this Agreement without Cause (as
defined below), Newbridge shall be paid its full fee under Section 3 if (a) at
any time within twelve (12) months after termination of this Agreement, a
Transaction or Financing is consummated with a party identified to the Company
by Newbridge on the list, or (b) the Company enters into an agreement during the
term of this Agreement or during the following 12 months contemplating a
Transaction or Financing and the Transaction or Financing is ultimately
consummated with a party identified on the list. “Cause” means a material breach
of this Agreement by Newbridge, which breach shall not have been cured within a
reasonable period following written notice of the breach to Newbridge by the
Company.

 

The provisions of this Section 7 and of Sections 4, 5 and 6 of this Agreement
shall survive termination.

 

8. Representations and Warranties; Covenants.

 

The Company represents, warrants and covenants as follows:

 

(a) All information provided by the Company will be accurate and complete in all
material respects and will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein not misleading in light of the circumstances under which such statements
are made.

 

(b) During the term of this Agreement, the Company will (a) promptly notify
Newbridge of any material development in the operations, financial condition or
prospects of the Company or its assets, whether or not in the ordinary course of
business, (b) provide copies of its annual reports and other financial reports
at the earliest time the Company makes them available to others, and (c) provide
such other information concerning the business and financial condition of the
Company and its assets as Newbridge may from time to time reasonably request.

 

(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement have been duly
authorized by all necessary corporate action and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company pursuant to, any contract, indenture, mortgage, loan agreement, note
lease or other instrument to which the Company is bound, or to which any
property or assets of the Company are subject.

 

 5 

 

 

9. Reliance on Others. The Company confirms that it will rely on its own counsel
and accountants for legal, tax and accounting advice.

 

10. No Rights in Shareholders, etc. Newbridge has been engaged only by the
Company, and this engagement is not deemed to be on behalf of and is not
intended to confer rights upon any shareholder, partner or other owner of the
Company or any other person not a party to this Agreement as against Newbridge.
Unless otherwise expressly agreed, no one other than the Company is authorized
to rely upon this engagement of Newbridge or to rely upon any statements,
advice, opinions or conduct by Newbridge.

 

11. Independent Contractor; No Fiduciary Duty; Non-Exclusive Services:
Newbridge’s role is that of an independent contractor and nothing in this
Agreement is intended to create or shall be construed as creating a fiduciary
relationship between the Company and Newbridge. Newbridge and its affiliates
provide financial advisory services, investment banking services, and consulting
advice to others. Nothing in this Agreement shall limit or restrict Newbridge in
providing services to others, except as such services may relate to matters
concerning the Company’s business and properties.

 

12. Public Disclosure: The Company agrees to distribute at its expense any
pre-approved press release via Businesswire National Circuit or a similar news
service concerning the Company and its business, as Newbridge may reasonably
request.

 

13. Advertising. Newbridge may, at its option and expense: (a) place
advertisements in financial and other newspapers and journals (including
electronic versions) describing its services to the Company and (b) use the
Company’s corporate logo in such advertising or related promotional materials
(including electronic versions) concerning Newbridge’s services to the Company.
If requested by Newbridge, the Company shall include a mutually acceptable
reference to Newbridge in any press release or other public announcement made by
the Company regarding a Transaction or Financing.

 

14. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in all respects under the laws of the State of Florida, without
reference to its conflict of laws provisions. Any right to trial by jury for any
claim, action, proceeding or litigation arising out of this Agreement or any of
the matters contemplated in this Agreement is waived by the Company and the
Placement Agent. The parties hereby irrevocably and unconditionally: submit to
the jurisdiction of the federal and state courts located in Palm Beach County,
Florida, for any dispute related to this Agreement or any of the matters
contemplated hereby; consent to service of process by registered or certified
mail return receipt requested or by any other manner provided by applicable law;
and waive any right to claim that any action, proceeding or litigation so
commenced has been commenced in an inconvenient forum.

 

15. Miscellaneous. Nothing in this Agreement is intended to obligate Newbridge
to provide any services other than as set forth above. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but which
together shall be considered a single instrument. This Agreement constitutes the
entire agreement between the parties, and supersedes all prior agreements and
understandings (both written and oral) of the parties with respect to the
subject matter of this Agreement. This Agreement cannot be amended or otherwise
modified except in writing signed by the parties. The provisions of this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company and Newbridge.

 

 6 

 

 

16. Definitions:

 

(a) “Aggregate Consideration” shall mean the total consideration (i.e., stock,
cash, assets and all other property (real or personal, tangible or intangible)
plus any debt assumed), that is exchanged or received, or to be exchanged or
received directly or indirectly by the Company or any of its security holders or
subsidiaries or affiliates in connection with a Transaction, including any
amounts paid or received, or to be paid or received under any employment
agreement (to the extent the amounts in the employment agreement exceed
reasonable and customary compensation for actual services to be rendered),
consulting agreement, covenant not to compete, earn-out or contingent payment
right or similar arrangement, agreement or understanding, whether oral or
written, associated with a Transaction. Consideration paid or to be paid other
than in cash shall be valued at fair market value, except that liabilities
assumed and notes issued will be valued at their face amount. The fair market
value of consideration paid in securities for which there is a recognized
trading market shall be based on the closing “offer” price of the securities on
the day immediately preceding the closing of the Transaction and shall be
computed as if the securities were freely tradable.

 

If the value of any portion of the consideration is not readily determinable as
of the applicable closing, then the Company and Newbridge will determine a
dollar equivalent by agreement before such closing based on the fair value as
defined under US GAAP. Similarly, any amounts to be paid contingent upon future
events shall be estimated on the same basis in a manner mutually agreeable to
the Company and Newbridge, and that all amounts shall be deemed eligible and
paid when the amount is payable or when the amount is released from escrow.

 

(b) “Financing” shall mean any debt financing or equity investment in the
Company in which funds are received or to be received by the Company, including
any lease financing, vendor financing, and government sponsored financing or any
similar transaction or combination of transactions. The amount of funds raised
under a Financing shall be deemed to include the total value of “securities”
sold directly or indirectly, in connection with the Financing, including any
proceeds received by the Company upon the exercise of any options, warrants or
similar securities, any amounts paid into escrow, and any amounts payable in the
future whether or not subject to a contingency.

 

(c) “Transaction” shall mean any business combination through purchase, sale,
merger, joint venture or otherwise in one or more transactions through the
purchase of an organization’s equity, debt securities or assets, or by means of
a merger, consolidation, reorganization, spin-off, joint venture, partnership,
tender offer, exchange offer, purchase, lease, franchising arrangement,
licensing arrangement, royalty arrangement, strategic alliance, or any other
similar transaction, regardless of form.

 

THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK

 

 7 

 

 

If the foregoing correctly sets forth the understanding between NSC and the
Company, please so indicate in the space provided below for that purpose within
five (5) business days of the date hereof or this Agreement shall be withdrawn
and become null and void. The undersigned parties hereto have caused this
Agreement to be duly executed by their authorized representatives, pursuant to
corporate board approval and intend to be legally bound.

 

Sincerely,         Newbridge Securities Corporation         By: /s/ Bruce Jordan
    Bruce Jordan     Managing Director – Investment Banking  

 

ACCEPTED AND AGREED:         PF Hospitality Group, Inc.         By: /s/ Randy
Romano   Name: Randy Romano   Title: President  

 

 8