Broker-Dealer Agreement
Exhibit 1(a)
This
agreement (together with exhibits and schedules, the
“Agreement”) is entered
into by and between Phoenix Capital Group Holdings, LLC
(“Client”), a Delaware
Limited Liability Company, and Dalmore Group, LLC., a New York
Limited Liability Company (“Dalmore”). Client and
Dalmore agree to be bound by the terms of this Agreement, effective
as of June 14, 2021 (the “Effective
Date”):
Whereas, Dalmore is a registered
broker-dealer providing services in the equity and debt securities
market, including offerings conducted via SEC approved exemptions
such as Reg D 506(b), 506(c), Regulation A+, Reg CF and
others;
Whereas, Client is offering securities
directly to the public in an offering exempt from registration
under Regulation A (the “Offering”);
and
Whereas, Client recognizes the benefit
of having Dalmore as a service provider for investors who
participate in the Offering (“Investors”).
Now, Therefore, in consideration of the
mutual promises and covenants contained herein and for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
1. Appointment,
Term, and Termination
a. Client hereby
engages and retains Dalmore to provide operations and compliance
services at Client’s discretion.
b. The Agreement will commence on the
Effective Date and will remain in effect for a period of twelve
(12) months and will renew automatically for successive renewal
terms of twelve (12) months each unless any party provides notice
to the other party of non-renewal at least sixty (60) days prior to
the expiration of the current term. If Client defaults in
performing the obligations under this Agreement, the Agreement may
be terminated (i) upon sixty (60) days written notice if
Client
fails to perform or observe
any material term, covenant or condition to be performed or
observed by it under this Agreement and such failure continues to
be unremedied, (ii) upon written notice, if any material
representation or warranty made by either Provider or Client proves
to be incorrect at any time in any material respect, (iii) in order
to comply with a Legal Requirement, if compliance cannot be timely
achieved using commercially reasonable efforts, after providing as
much notice as practicable, or (iv) upon thirty (30)
days’ written notice if Client or Dalmore commences a
voluntary proceeding seeking liquidation, reorganization or other
relief, or is adjudged bankrupt or insolvent or has entered against
it a final and unappeable order for relief, under any bankruptcy,
insolvency or other similar law, or either party executes and
delivers a general assignment for the benefit of its
creditors. The
description in this section of specific remedies will not exclude
the availability of any other remedies. Any delay or failure by
Client to exercise any right, power, remedy or privilege will not
be construed to be a waiver of such right, power, remedy or
privilege or to limit the exercise of such right, power, remedy or
privilege. No single, partial or other exercise of any such right,
power, remedy or privilege will preclude the further exercise
thereof or the exercise of any other right, power, remedy or
privilege. All terms of the Agreement, which should
reasonably survive termination, shall so survive, including,
without limitation, limitations of liability and indemnities, and
the obligation to pay Fees relating to Services provided prior to
termination.
2. Services.
Dalmore will perform the
services listed on Exhibit A
attached hereto and made a
part hereof, in connection with the Offering (the
“Services”).
Unless otherwise agreed to in writing
by the parties.
3. Compensation. As compensation for the
Services, Client shall pay to Dalmore a fee equal to one hundred
(100) basis points on the aggregate amount raised by the Client.
This will only start after FINRA Corporate Finance issues a No
Objection Letter for the offering. Client authorizes Dalmore to
deduct the fee directly from the Client’s third party escrow
or payment account.
There will also be a one time due diligence payment for out of
pocket expenses of $5,000. Payment is due and payable upon
execution of this agreement. The advance payment will
cover expenses
anticipated to be incurred by the
firm such a preparing the FINRA filing, due diligence expenses,
working with the Client’s SEC counsel in providing
information to the extent necessary, and any other services
necessary and required prior to the approval of the
offering. The firm will refund a
portion of the payment related to the advance to the extent it was
not used, incurred or provided to the Client.
The Client shall also engage Dalmore as a consultant to provide
ongoing general consulting services relating to the Offering such
as coordination with third party vendors and general guidance with
respect to the Offering. The Client will pay a one time Consulting
Fee of $20,000 which will be due and payable immediately after
FINRA issues a No Objection Letter.
4. Regulatory
Compliance
a. Client
and all its third party providers shall at all times (i) comply
with direct requests of Dalmore; (ii) maintain all required
registrations and licenses, including foreign qualification, if
necessary; and (iii) pay all related fees and expenses (including
the FINRA Corporate Filing Fee), in each case that are necessary or
appropriate to perform their respective obligations under this
Agreement. Client shall comply with and adhere to all Dalmore
policies and procedures.
FINRA
Corporate Filing Fee for this $40,000,000 best efforts offering
will be $6,500 and will be a pass-through fee payable to Dalmore,
from the Client, who will then forward it to FINRA as payment for
the filing. This fee is due and payable prior to any submission by
Dalmore to FINRA.
b. Client
and Dalmore will have the shared responsibility for the review of
all documentation related to the Transaction but the ultimate
discretion about accepting a client will be the sole decision of
the Client. Each Investor will be considered to be that of the
Client’s and NOT Dalmore.
c. Client
and Dalmore will each be responsible for supervising the activities
and training of their respective sales employees, as well as all of
their other respective employees in the performance of functions
specifically allocated to them pursuant to the terms of this
Agreement.
d. Client and Dalmore
agree to promptly notify the other concerning any material
communications from or with any Governmental Authority or Self
Regulatory Organization with respect to this Agreement or the
performance of its obligations, unless such notification is
expressly prohibited by the applicable Governmental
Authority.
5. Role of
Dalmore. Client
acknowledges and agrees that Client will rely on Client’s own
judgment in using Dalmore’ Services. Dalmore (i) makes no
representations with respect to the quality of any investment
opportunity or of any issuer; (ii) does not guarantee the
performance to and of any Investor; (iii) will make commercially
reasonable efforts to perform the Services in accordance with its
specifications; (iv) does not guarantee the performance of any
party or facility which provides connectivity to Dalmore; and (v)
is not an investment adviser, does not provide investment advice
and does not recommend securities transactions and any display of
data or other information about an investment opportunity, does not
constitute a recommendation as to the appropriateness, suitability,
legality, validity or profitability of any transaction. Nothing in
this Agreement should be construed to create a partnership, joint
venture, or employer-employee relationship of any
kind.
6. Indemnification.
a. Indemnification by Client.
Client shall indemnify and hold Dalmore, its affiliates and their
representatives and agents harmless from, any and all actual or
direct losses, liabilities, judgments, arbitration awards,
settlements, damages and costs (collectively, “Losses”), resulting from
or arising out of any third party suits, actions, claims, demands
or similar proceedings (collectively, “Proceedings”) to the
extent they are based upon (i) a breach of this Agreement by
Client, (ii) the wrongful acts or omissions of Client, or (iii) the
Offering.
b. Indemnification by Dalmore.
Dalmore shall indemnify and hold Client, Client’s affiliates
and Client’s representatives and agents harmless from any
Losses resulting from or arising out of Proceedings to the extent
they are based upon (i) a breach of this Agreement by Dalmore or
(ii) the wrongful acts or omissions of Dalmore or
its failure to comply with any applicable federal, state, or local
laws, regulations, or codes in the performance of its obligations
under this Agreement.
c. Indemnification Procedure. If
any Proceeding is commenced against a party entitled to
indemnification under this section, prompt notice of the Proceeding
shall be given to the party obligated to provide such
indemnification. The indemnifying party shall be entitled to take
control of the defense, investigation or settlement of the
Proceeding and the indemnified party agrees to reasonably
cooperate, at the indemnifying party's cost in the ensuing
investigations, defense or settlement.
7. Notices. Any
notices required by this Agreement shall be in writing and shall be
addressed, and delivered or mailed postage prepaid, or faxed or
emailed to the other parties hereto at such addresses as such other
parties may designate from time to time for the receipt of such
notices. Until further notice, the address of each party to this
Agreement for this purpose shall be the following:
If to the Client:
0000
Xxxxxxx Xxxxx Xxxxxxx, Xxxxx 0
Xxxxxxx
Xxxxx, XX 00000
Attn:
Xxxxxxx Xxxxxx, Manager
Tel:
000-000-0000
Email:
XX@xxxxxxxxxxxxxxx.xxx
If to Dalmore:
Dalmore Group, LLC.
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx, Chairman
Tel: 000-000-0000
xxxx@xxxxxxxxx.xxx
8. Confidentiality
and Mutual Non-Disclosure:
a. Confidentiality.
i. Included
Information. For purposes of this Agreement, the term
“Confidential Information” means all confidential and
proprietary information of a party, including but not limited to
(i) financial information, (ii) business and marketing plans, (iii)
the names of employees and owners, (iv) the names and other
personally-identifiable information of users of the third-party
provided online fundraising platform, (v) security codes, and (vi)
all documentation provided by Client or Investor.
ii. Excluded Information. For purposes of
this Agreement, the term “confidential and proprietary
information” shall not include (i) information already known
or independently developed by the recipient without the use of any
confidential and proprietary information, or (ii) information known
to the public through no wrongful act of the
recipient.
iii. Confidentiality
Obligations. During the Term and at all times thereafter, neither
party shall disclose Confidential Information of the other party or
use such Confidential Information for any purpose
without the prior written
consent of such other party. Without limiting the preceding
sentence, each party shall use at least the same degree of care in
safeguarding the other party’s Confidential Information as it
uses to safeguard its own Confidential Information. Notwithstanding
the foregoing, a party may disclose Confidential
Information (i) if required to do by order of a court of competent
jurisdiction,
provided that such party shall notify the other party
in writing promptly upon
receipt of knowledge of such order so that such other party may attempt to
prevent such disclosure or seek a protective order; or (ii) to any
applicable governmental authority as required by applicable law. Nothing contained herein shall be
construed to prohibit the SEC, FINRA, or other government official
or entities from obtaining, reviewing, and auditing any
information, records, or data. Issuer acknowledges that regulatory
record-keeping requirements, as well as securities industry best
practices, require Provider to maintain copies of practically all
data, including communications and materials, regardless of any
termination of this Agreement.
9. Miscellaneous.
a. ANY
DISPUTE OR CONTROVERSY BETWEEN THE CLIENT AND PROVIDER RELATING TO
OR ARISING OUT OF THIS AGREEMENT WILL BE SETTLED BY ARBITRATION
BEFORE AND UNDER THE RULES OF THE ARBITRATION COMMITIEE OF
FINRA.
b. This Agreement is
non-exclusive and shall not be construed to prevent either party
from engaging in any other business activities
c. This Agreement will be binding upon all
successors, assigns or transferees of Client. No assignment of this
Agreement by either party will be valid unless the other party
consents to such an assignment in writing. Either party may
freely assign this Agreement to any person or entity that acquires
all or substantially all of its business or assets. Any assignment by the either party to
any subsidiary that it may create or to a company affiliated with
or controlled directly or indirectly by it will be deemed valid and
enforceable in the absence of any consent from the other
party.
d. Neither
party will, without prior written approval of the other party,
place or agree to place any advertisement in any website,
newspaper, publication, periodical or any other media or
communicate with the public in any manner whatsoever if such
advertisement or communication in any manner makes reference to the
other party, to any person or entity that directly, or indirectly
through one or more intermediaries, controls or is controlled by,
or is under common control, with the other party and to the
clearing arrangements and/or any of the Services embodied in this
Agreement. Client and Dalmore will work together to authorize and
approve co-branded notifications and client facing communication
materials regarding the representations in this Agreement.
Notwithstanding any provisions to the contrary within, Client
agrees that Dalmore may make reference in marketing or other
materials to any transactions completed during the term of this
Agreement, provided no personal data or Confidential Information is
disclosed in such materials.
e. THE CONSTRUCTION AND EFFECT OF EVERY
PROVISION OF THIS AGREEMENT, THE RIGHTS OF THE PARTIES UNDER THIS
AGREEMENT AND ANY QUESTIONS ARISING OUT OF THE AGREEMENT, WILL BE
SUBJECT TO THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES. The language used in this
Agreement shall be deemed to be the language chosen by the parties
to express their mutual intent, and no rule of strict construction
will be applied against any party
f. If
any provision or condition of this Agreement will be held to be
invalid or unenforceable by any court, or regulatory or
self-regulatory agency or body, the validity of the remaining
provisions and conditions will not be affected and this Agreement
will be carried out as if any such invalid or unenforceable
provision or condition were not included in the
Agreement.
g. This Agreement sets
forth the entire agreement between the parties with respect to the
subject matter hereof and supersedes any prior agreement relating
to the subject matter herein. The Agreement may not be modified or
amended except by written agreement.
h. This Agreement may
be executed in multiple counterparts and by facsimile or electronic
means, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
[SIGNATURES
APPEAR ON FOLLOWING PAGE(S)]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
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By:
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/s/
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Name:
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Xxxxxxx
Xxxxxx
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Its:
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Manager |
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Dalmore Group, LLC: |
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By:
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/s/
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Name:
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Xxxx
Xxxxxx |
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Its:
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Chairman
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Exhibit
A
Services:
a.
Dalmore Responsibilities – Dalmore
agrees to:
i.
Review investor
information, including KYC (Know Your Customer) data, perform AML
(Anti-Money Laundering) and other compliance background checks, and
provide a recommendation to Client whether or not to accept
investor as a customer of the Client;
ii.
Review each
investors subscription agreement to confirm such Investors
participation in the offering, and provide a determination to
Client whether or not to accept the use of the subscription
agreement for the Investors participation;
iii.
Contact and/or
notify the issuer, if needed, to gather additional information or
clarification on an investor;
iv.
Not provide any
investment advice nor any investment recommendations to any
investor;
v.
Keep investor
details and data confidential and not disclose to any third-party
except as required by regulators or in our performance under this
Agreement (e.g. as needed for AML and background
checks);
vi.
Coordinate with
third party providers to ensure adequate review and
compliance.
