KATALYST SECURITIES LLC
KATALYST SECURITIES LLC
000
XXXXX XXXXXX, 0XX XXXXX
XXX
XXXX, XX 00000
TEL:
000-000-0000 FAX: 000-000-0000
Member:
FINRA & SIPC
Exhibit
10.2
June
12, 2019
STRICTLY CONFIDENTIAL
Mr.
Xxxxx Xxxxxx
Chief
Financial Officer
0000
Xxxxxxx Xxxxxx, Xxxxx X
Xxx
Xxxxx, XX 00000
Dear
Xx. Xxxxxx:
This
letter (the “Agreement”) constitutes our
understanding with respect to the engagement of (i) Dinosaur
Financial Group, LLC (“Dinosaur”), a registered broker
dealer and member of the Financial Industry Regulatory Authority
(“FINRA”) and SIPC, by Wrap Technologies,
Inc., a publicly traded corporation duly organized under the laws
of the State of Delaware (the “Company”), to act as the
exclusive placement agent and (ii) Katalyst Securities LLC
(“Katalyst”), a
registered broker dealer and member of the FINRA and SIPC, by the Company to act
as financial advisor (Dinosaur together with Katalyst,
collectively, the “Agents”) in connection with a
public offering of the Company’s equity securities (the
“Securities”)
(the “Offering”). The full terms of the Offering, which
is anticipated to be completed on or before August 1, 2019, will be
agreed to by the Company. Nothing herein implies that the Agents
would have the power or authority to bind the Company or an
obligation of the Company to issue any Securities or proceed with
any proposed transaction. The closing of any Offering will occur at
such time and place as mutually agreed to by the Company and the
Agents.
A. Appointment
of Agents.
During
the Term (as defined below), the Company hereby engages Dinosaur,
as exclusive placement agent, and Katalyst as financial advisor in
connection with the Offering. The Agents hereby accept such
appointment and agree to perform the services hereunder diligently
and in good faith and in a professional and businesslike manner and
in compliance with applicable law and to use its reasonable best
efforts to assist the Company in completing the
Offering.
The
Company acknowledges and agrees that the Agents’ engagement
hereunder is not an agreement or commitment, express or implied, by
the Agents or any of their affiliates to underwrite or purchase any
securities or otherwise provide financing. Agents may offer the Securities through
other broker-dealers who are FINRA members (collectively, the
“Sub Agents”)
and may reallow all or a portion of the Broker Fees (as defined in
Section B(a) and 3(b) below) they receives to such other Sub Agents
or pay a finders or consultant fee as allowed by applicable law.
Purchases of Securities may be made by the Agents and their
respective officers, directors, employees and affiliates and by the
officers, directors, employees and affiliates of the Company
(collectively, the “Affiliates”) for the Offering and
such purchases will be made by the Affiliates based solely upon the
same information that is provided to the investors in the
Offering.
-1-
B. Fees
& Expenses.
(a) Cash
Portion. The Company
hereby agrees to pay the Agents (or the designees authorized by
such Agents), as a condition to the applicable Closing(s) of the
Offering, as compensation for their services hereunder, a cash fee
equal to Eight Percent (8%) of the gross proceeds from any sale of
Securities in the Offering sold to investors (the
“Agents Cash
Fee”). The Agents Cash Fee shall be paid to Katalyst,
who shall allocate such fee as agreed to by Katalyst and Dinosaur.
To the extent there is more than one Closing, payment of the
applicable Agents Cash Fee will be made at each Closing and paid by
the Company to and in the name provided to the Company by the
Agents at the time of each Closing.
(b) Warrant
Portion. At the Closing of an
Offering, the Company will issue to the Agents (or the designees
authorized by such Agents), as compensation for its services
hereunder, warrants to purchase shares of the Company’s
common stock equal to Eight Percent (8%) of the number of
Securities sold in the Offering to investors (the
“Broker
Warrants”). The Broker Warrants shall be issued to
Katalyst, who shall allocate such warrants as agreed to by Katalyst
and Dinosaur. If the Securities included in an Offering are
convertible, the number of shares of common stock issuable upon
exercise of the Broker Warrants shall be determined by dividing the
gross proceeds raised in such Offering divided by the Offering
Price (as defined hereunder). The Broker Warrants shall have the
same terms as any warrants issued to investors in the applicable
Offering, except that such Broker Warrants shall have an exercise
price equal to 125% of the offering price per share (or unit, if
applicable) in the applicable Offering and if such offering price
is not available, the closing price of the Company’s common
stock as reported in the Nasdaq Capital Market on the date an
Offering is commenced (such price, the “Offering Price”). If no warrants
are issued to investors in an Offering, the Broker Warrants shall
be in a customary form reasonably acceptable to the Agents, and
shall have: (i) a term of three (3) years; (ii) an exercise price
equal to 125% of the Offering Price; (iii) shall include cashless
exercise provisions if there is no effective registration statement
covering the Broker Warrants and piggyback registration rights; and
(iv) include customary anti-dilution provisions covering stock
splits, dividends, mergers and similar transactions. The Agents
Cash Fee and the Broker Warrants are sometimes referred to
collectively as the “Broker
Fees”). The
Broker Warrants may be issued directly to the Agents’
employees and affiliates at the Agents’ written request and
will be issued within the (10) calendar days from the Final Close
(as defined below).
(c) Multiple
Closings. To the extent there is more than one Closing,
payment of the applicable Agents Cash Fee and the issuance of the
applicable Broker Warrants will be made at each Closing. All Agents
Cash Fees under this Agreement shall be paid by the Company out of
the Escrow Fund to and in the name provided to the Company by the
Agents at the time of each Closing.
(d) Tail
Provisions. The Company shall also pay to the Agents the
Agents Cash Fee and the Broker Warrants calculated in the manner
provided in Sections B(a) and (b) above with respect to any
subsequent public or private offering or other financing or
capital-raising transaction of any kind (“Subsequent Financing”) to the
extent that such financing or capital is provided the Company, or
to any Affiliate of the Company, by investors whom the Agents
received Broker Fees as set forth above, if such Subsequent
Financing is consummated at any time within the twelve (12) month
period following the earlier of the expiration or termination of
this Agreement or the closing of the Offering (the
“Tail Period”).
An “Affiliate” of an entity shall mean any individual
or entity controlling, controlled by or under common control with
such entity and any officer, director, employee, stockholder,
partner, member or agent of such entity.
-2-
(e) Expenses. In
addition to the Broker Fees payable pursuant to Sections B(a) and
(b), the Company hereby agrees to pay Katalyst’s legal fees
with the engagement hereunder in the amount up to Fifty Thousand
Dollars ($50,000) (the “Katalyst Legal Fee”) paid
directly by the Company or from any escrow account established by
the Agents and the Company at the time of the first Closing from
the gross proceeds. The Katalyst Legal Fee is separate and apart
from the Agents Cash Fee and is in addition to the reimbursement of
fees and expenses set forth in Appendix I relating to
indemnification and contribution.
C. Term
and Termination of Engagement.
Except
as set forth below, the term of this Agreement begins on the date
of this Agreement and shall end automatically upon the earlier to
occur of (i) final Closing of the Offering, (ii) the date of
termination of the Offering or (iii) August 1, 2019 (the
“Term”).
Notwithstanding the Term of this Agreement, this Agreement may be
earlier terminated immediately by the Company or the Agents in the
event of either the Company’s or the Agents’ failure to
perform any of its material obligations hereunder or fraud, illegal
or willful misconduct or gross negligence (the “Termination Date”).
Notwithstanding any such expiration or termination, the terms of
this Agreement other than Paragraphs A, D, and E shall all remain
in full force and effect and be binding on the parties hereto,
including the exculpation, indemnification and contribution
obligations of the Company, the confidentiality obligations, and
the right of the Agents to receive any earned but unpaid Agents
Cash Fees hereunder and the right of the Agents to receive
reimbursement for the Katalyst Legal Fee; provided, however, the Company’s
obligation to pay the Katalyst Legal Fee shall be contingent on a
closing of the Offering.
D. Subscription
and Closing Procedures.
(a) The
Company shall cause to be delivered to the Agents copies of any
offering documents (the “Offering Documents”) related to
the Offering and hereby consents to the use of such copies for the
purposes permitted by the Act and applicable securities laws and in
accordance with the terms and conditions of this Agreement, and
hereby authorizes the Agents and their agents and employees to use
the Offering Documents in connection with the sale of the
Securities until the earlier of (i) the Termination Date or (ii)
the final Closing, and no person or entity is or will be authorized
to give any information or make any representations other than
those contained in the Offering Documents or to use any offering
materials other than the Offering Documents in connection with the
sale of the Securities, unless the Company first provides the
Agents with notification of such information, representations or
offering materials.
(b) The
Company shall make available to the Agents and their
representatives such information, including, but not limited to,
financial information, and other information regarding the Company
(the “Information”), as may be
reasonably requested in making a reasonable investigation of the
Company and its affairs. The Company shall provide access to the
officers, directors, employees, independent accountants, legal
counsel and other advisors and consultants of the Company as shall
be reasonably requested by the Agents. The Company recognizes and
agrees that the Agents (i) will use and rely primarily on the
Information and generally available information from recognized
public sources in performing the services contemplated by this
Agreement without independently verifying the Information or such
other information, (ii) does not assume responsibility for the
accuracy of the Information or such other information, and (iii)
will not make an appraisal of any assets or liabilities owned or
controlled by the Company or its market competitors.
-3-
(c) If
applicable, each prospective investor will be required to complete
and execute the Offering Documents, which may include, but not be
limited to, the Anti-Money Laundering Form, Accredited Investor
Certification and other documents which will be forwarded or
delivered to the address identified in the Offering
Documents.
(d) Simultaneously
with the delivery to the Agents of the Offering Documents, if
applicable in connection with a private offering of Securities, the
investor’s check or other good funds will be forwarded
directly by the investor to the escrow agent and deposited into a
non interest bearing escrow account (the “Escrow Account”) established for
such purpose with Delaware Trust Company (the “Escrow Agent”). All such funds
for subscriptions will be held in the Escrow Account pursuant to
the terms of the escrow agreement among the Company, the Agents and
Delaware Trust Company (the “Escrow Agreement”). The Company shall pay all fees
related to the establishment and maintenance of the Escrow Account.
Subject to the receipt of subscriptions for the amount for Closing,
the Company will either accept or reject, for any or no reason, the
Offering Documents in a timely fashion and at each Closing, if
applicable, will countersign the Offering Documents and provide
duplicate copies of such documents to the Agents. The Company will
forward directly to the investors the documents countersigned by
the Company. The Company will give notice to the Agents of its
acceptance of each subscription. The Company, or the Agents on the
Company’s behalf, will promptly return to investors
incomplete, improperly completed, improperly executed and rejected
subscriptions and give written notice thereof to the Agents upon
such return.
E.
Representations,
Warranties and Covenants. The Company represents and
warrants to, and agrees with, the Agents that:
(a) The
Company represents and warrants that it has all requisite power and
authority to enter into and carry out the terms and provisions of
this Agreement. The execution, delivery and performance of
this Agreement and the Offering of Securities will not violate or
conflict with any provision of the charter or bylaws of the Company
or, except as would not have a material adverse effect, any
agreement or other instrument to which the Company is a party or by
which it or any of its properties is bound. Any necessary
approvals, governmental and private, will be obtained by the
Company prior to any Closing, except as may be waived or obtained
or filed following any Closing and except where the failure to
obtain any such approval would not have a material adverse
effect.
(b) The
Securities will be offered and sold by the Company in compliance
with the requirements of the Securities Act of 1933, as amended
(including any applicable exemption therefrom, if applicable to the
Offering), and with all other securities laws and regulations. The
Company will file appropriate notices or other regulatory filings
with the Securities and Exchange Commission and with other
applicable securities authorities.
(c) The
information in any investor presentation materials, memorandum or
other offering documents furnished to investors in the Offering by
the Company is true and correct in all material respects and does
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated or necessary to make
the statements therein not misleading.
(d)
The Company hereby
permits the Agents to rely on the representations and warranties
made or given by the Company to any acquirer of Securities in any
agreement, certificate or otherwise in connection with the
Offering.
F.
Indemnification and
Contribution. The Company agrees to indemnify the Agents and
its controlling persons, representatives and agents in accordance
with the indemnification provisions set forth in Appendix I. These provisions
will apply regardless of whether any Offering is
consummated.
-4-
G. Limitation
of Engagement to the Company. The Company acknowledges that the Agents have been
retained only by the Company, that the Agents are providing services hereunder as
independent contractors (and not in any fiduciary or agency
capacity) and that the Company’s engagement of the Agents is
not deemed to be on behalf of, and is not intended to confer rights
upon, any shareholder, owner or partner of the Company or any other
person not a party hereto as against the Agents or any of its
respective affiliates, or any of their respective officers,
directors, controlling persons (within the meaning of Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the “Exchange
Act”), employees or
agents. Unless otherwise expressly agreed in writing by the Agents,
no one other than the Company is authorized to rely upon this
Agreement or any other statements or conduct of the Agents, and no
one other than the Company is intended to be a beneficiary of this
Agreement. The Company acknowledges that any recommendation or
advice, written or oral, given by the Agents to the Company in
connection with the Agents’ engagement is intended solely for
the benefit and use of the Company’s management and directors
in considering a possible Offering, and any such recommendation or
advice is not on behalf of, and shall not confer any rights or
remedies upon, any other person or be used or relied upon for any
other purpose. The Agents shall not have the authority to make any
commitment binding on the Company. The Company, in its sole
discretion, shall have the right to reject any investor introduced
to it by the Agents, or its respective designees or
affiliates.
H. Limitation
of Agents’ Liability to the Company. The Agents shall not have any liability to the
Company for any Losses attributable to the gross negligence,
intentional misrepresentation or willful misconduct of other
broker-dealers who are not acting as a
Sub Agent pursuant to this Agreement.
I. Governing
Law. This Agreement shall be
deemed to have been made and delivered in New York City and shall
be governed as to validity, interpretation, construction, effect
and in all other respects by the internal laws of the State of New
York applicable to contracts to be wholly performed in said
state.
J. Information;
Reliance. The Company shall furnish, or cause to be
furnished, to the Agents all information reasonably requested by
the Agents for the purpose of rendering services hereunder and
shall further make available to the Agents all such information to
the same extent and on the same terms as such information is
available to the Company and potential lenders and investors (all
such information being the “Information”). The Company shall
notify the Agents if it becomes aware of any material adverse
change, or development that may lead to a material adverse change,
in the business, properties, operations or financial condition or
prospects of the Company or any other material Information to the
extent needed to allow the Company and the Agents to assess whether
any disclosure to investors, a delay of the date of any Closing, or
other any other appropriate step is required. In addition, the
Company agrees to make available to the Agents upon request from
time to time the officers, directors, accountants, counsel and
other advisors of the Company. The Company recognizes and confirms
that the Agents (a) will use and rely on the Information and
Offering Documents and on information available from generally
recognized public sources in performing the services contemplated
by this Agreement without having independently verified the same;
(b) will not assume responsibility for the accuracy or completeness
of the Offering Documents or the Information and such other
information, except for any written information furnished to the
Company by the Agents specifically for inclusion in the Offering
Documents; and (c) will not make an appraisal of any of the assets
or liabilities of the Company. Upon reasonable request, the Company
will meet with the Agents or their representatives to discuss all
information relevant for disclosure in the Offering Documents and
will cooperate in any investigation undertaken by the Agents
thereof, including any document included therein. At each Closing,
at the request of the Agents, the Company shall deliver copies of
such officer’s certificates, in form and substance reasonably
satisfactory to the Agents and their counsel as is customary for
such Offering.
-5-
K. Use
of Information. The Company authorizes the Agents to
transmit to the prospective investors of Securities the
Company’s power point presentation prepared by the Company
and private placement memorandum (if any, and if prepared by the
Company) (the “Presentation
Materials”). The Company represents and warrants that
the Presentation Materials (i) will be prepared by the management
of the Company; and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. The Company will advise the Agents promptly if it
becomes aware of the occurrence of any event or any other change
known to the Company which results in the Presentation Materials
containing an untrue statement of a material fact or omitting to
state a material fact required to be stated therein or necessary to
make the statements therein or previously made, in light of the
circumstances under which they were made, not misleading.
Notwithstanding the foregoing, if the Agents or any Sub Agent
elects to not transmit Presentation Materials to prospective
investors, the Agents or such Sub Agent shall direct qualified
prospective investors to an electronic data room in which the
Company makes available the Presentation Materials for review by
qualified prospective investors.
L. Announcement
of Transaction. The Company and the Agents acknowledge and
agree that the Agents may, subsequent to the Closing of the
Offering and to the extent the Agents receives an Agents Cash Fee
for Securities sold in the Offering, make public their involvement
with the Company provided that any such public announcement or
other public disclosure (other than customary tombstone
presentations or other investment banking presentation materials
containing only publicly available information) shall be approved
by the Company, which approval shall not be unreasonably
withheld.
M. Advice
to the Board. The Company acknowledges that any advice given
by the Agents to the Company is solely for the benefit and use of
the Company’s board of directors and officers, who will make
all decisions regarding whether and how to pursue any opportunity
or transaction. The Company’s board of directors and senior
management may consider the Agents’ advice but will base
their decisions on the advice of legal, tax and other business
advisors and other factors which they consider appropriate.
Accordingly, as independent contractors, the Agents will not assume
the responsibilities of a fiduciary to the Company or its
stockholders in connection with the performance of its services.
Any advice provided may not be used, reproduced, disseminated,
quoted or referred to without the Agents’ prior written
consent. The Agents do not provide accounting, tax, or legal
advice. The Agents are not responsible for the success of any
Offering. The Company is a sophisticated business enterprise that
has retained the Agents for the limited purposes set forth in this
Agreement. The parties acknowledge and agree that their respective
rights and obligations are contractual in nature. Each party
disclaims an intention to impose fiduciary obligations on the other
by virtue of the engagement contemplated by this
Agreement.
N. Entire
Agreement. This Agreement was drafted by the Company and the
Agents’ respective counsels and constitutes the entire
Agreement between the parties and supersedes and cancels any and
all prior or contemporaneous arrangements, understandings and
agreements, written or oral, between them relating to the subject
matter hereof, including the Engagement Letter dated September 13,
2018, as amended October 23, 2018. The Agents are due no Broker Fee
or compensation for the exercise of currently outstanding equity
securities (warrants) of the Company.
O. Amendment.
This Agreement may not be modified except in writing signed by each
of the parties hereto.
-6-
P. No
Partnership. The Company is a sophisticated business
enterprise that has retained the Agents for the limited purposes
set forth in this Agreement. The parties acknowledge and agree that
their respective rights and obligations are contractual in nature.
Each party disclaims an intention to impose fiduciary obligations
on the other by virtue of the engagement contemplated by this
Agreement.
Q. Notice.
All notices and other communications required hereunder shall be in
writing and shall be deemed effectively given to a party by (a)
personal delivery; (b) upon deposit with the United States Post
Office, by certified mail, return receipt requested, first-class
mail, postage prepaid; (c) delivered by hand or by messenger or
overnight courier, addressee signature required, to the addresses
below or at such other address and/or to such other persons as
shall have been furnished by the parties;
If to the
Company:
Mr.
Xxxxx Xxxxxx, CFO
0000
Xxxxxxx Xxxxxx, Xxxxx X
Xxx
Xxxxx, XX 00000
Email:
xxx@xxxxxxxxxxxxxxxx.xxx
With a copy
to:
Disclosure Law
Group, APC
(which shall
not constitute
notice)
000 Xxxx Xxxxxxxx,
Xxxxx 000
Xxx
Xxxxx, XX 00000
Attention: Xxxxxx
X. Xxxxxx, Esq.
Email:
xxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
If to Dinosaur
Financial Group,
LLC.
Dinosaur Financial Group, LLC
000
Xxxx Xxxxxx X, #0xx Xxxxx
Xxx
Xxxx, XX 00000
Attention: Xxxxxxx
X. Xxxxx
Chief
Compliance Officer
If to Katalyst
Securities
LLC.
Katalyst Securities, LLC
000
Xxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx, XX 00000
Attention: Xxxxxxx
Xxxxxxxxx
Managing
Director
With a
copy
to:
Xxxxxxx X. Glenns, Esq.
(which
shall not constitute
notice)
Law Office of Xxxxxxx X. Glenns, Esq.
00
Xxxxxxxxx Xxxxx, Xxxxx 0
Xxx
Xxxx, XX 00000
R. Severability. If
any term, provision, covenant or restriction herein is held by a
court of competent jurisdiction to be invalid, void or
unenforceable or against public policy, the remainder of the terms,
provisions and restrictions contained herein will remain in full
force and effect and will in no way be affected, impaired or
invalidated.
-7-
S. Governing
Law and Jurisdiction. This Agreement shall be deemed to have
been made and delivered in New York City and shall be governed as
to validity, interpretation, construction, effect and in all other
respects by the internal laws of the State of New York without
regard to principles of conflicts of law thereof.
THE PARTIES HERETO AGREE TO SUBMIT ALL CONTROVERSIES TO THE
EXCLUSIVE JURISDICTION OF FINRA ARBITRATION IN ACCORDANCE WITH THE
PROVISIONS SET FORTH BELOW AND UNDERSTAND THAT (A) ARBITRATION IS
FINAL AND BINDING ON THE PARTIES, (B) THE PARTIES ARE WAIVING THEIR
RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO A JURY
TRIAL, (C) PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND
DIFFERENT FROM COURT PROCEEDINGS, (D) THE ARBITRATOR’S AWARD
IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND
ANY PARTY’S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULES
BY ARBITRATORS IS STRICTLY LIMITED, (E) THE PANEL OF FINRA
ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO
WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY, AND (F) ALL
CONTROVERSIES WHICH MAY ARISE BETWEEN THE PARTIES CONCERNING THIS
AGREEMENT SHALL BE DETERMINED BY ARBITRATION PURSUANT TO THE RULES
THEN PERTAINING TO FINRA. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. JUDGMENT ON ANY
AWARD OF ANY SUCH ARBITRATION MAY BE ENTERED IN THE SUPREME COURT
OF THE STATE OF NEW YORK OR IN ANY OTHER COURT HAVING JURISDICTION
OVER THE PERSON OR PERSONS AGAINST WHOM SUCH AWARD IS RENDERED. THE
PARTIES AGREE THAT THE DETERMINATION OF THE ARBITRATORS SHALL BE
BINDING AND CONCLUSIVE UPON THEM. THE PREVAILING PARTY, AS
DETERMINED BY SUCH ARBITRATORS, IN A LEGAL PROCEEDING SHALL BE
ENTITLED TO COLLECT ANY COSTS, DISBURSEMENTS AND REASONABLE
ATTORNEY’S FEES FROM THE OTHER PARTY. PRIOR TO FILING
AN ARBITRATION, THE PARTIES HEREBY AGREE THAT THEY WILL ATTEMPT TO
RESOLVE THEIR DIFFERENCES FIRST BY SUBMITTING THE MATTER FOR
RESOLUTION TO A MEDIATOR, ACCEPTABLE TO ALL PARTIES, AND WHOSE
EXPENSES WILL BE BORNE EQUALLY BY ALL PARTIES. THE MEDIATION WILL
BE HELD IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, ON AN
EXPEDITED BASIS. IF THE PARTIES CANNOT SUCCESSFULLY RESOLVE THEIR
DIFFERENCES THROUGH MEDIATION, THE MATTER WILL BE RESOLVED BY
ARBITRATION. THE ARBITRATION SHALL TAKE PLACE IN THE COUNTY OF NEW
YORK, THE STATE OF NEW YORK, ON AN EXPEDITED BASIS.
T. Other
Investment Banking Services. The Company acknowledges that
the Agents and their affiliates are securities firms engaged in
securities trading and brokerage activities and providing
investment banking and financial advisory services. In the ordinary
course of business, the Agents and their affiliates, registered
representatives and employees may at any time hold long or short
positions, and may trade or otherwise effect transactions, for
their own account or the accounts of customers, in the
Company’s debt or equity securities, the Company’s
affiliates or other entities that may be involved in the
transactions contemplated by this Agreement. In addition, the
Agents and their affiliates may from time to time perform various
investment banking and financial advisory services for other
clients and customers who may have conflicting interests with
respect to the Company or an Offering. The Company also
acknowledges that the Agents and their affiliates have no
obligation to use in connection with this engagement or to furnish
to the Company, confidential information obtained from other
companies. Furthermore, the Company acknowledges the Agents may
have fiduciary or other relationships whereby the Agents or their
affiliates may exercise voting power over securities of various
persons, which securities may from time to time include securities
of the Company or others with interests in respect of any Offering.
The Company acknowledges that the Agents or such affiliates may
exercise such powers and otherwise perform their functions in
connection with such fiduciary or other relationships without
regard to the defined relationship to the Company
hereunder.
-8-
U. Miscellaneous.
(a) This
Agreement shall be binding upon and inure to the benefit of the
Agents and the Company and their respective assigns, successors,
and legal representatives.
(b) This
Agreement may be executed in counterparts (including facsimile or
in pdf format counterparts), each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.
(c) Notwithstanding
anything herein to the contrary, in the event that the Agents
determine that any of the terms provided for hereunder shall not
comply with a FINRA rule, including but not limited to FINRA Rule
5110, then the Company shall agree to amend this Agreement in
writing upon the request of the Agents to comply with any such
rules; provided that any such amendments shall not provide for
terms that are less favorable to the Company.
V. Confidentiality.
(a) The
Agents will maintain the confidentiality of the Information and,
unless and until such Information shall have been made publicly
available by the Company or by others without breach of a
confidentiality agreement, shall disclose the Information only as
provided for herein, authorized by the Company or as required by
law or by request of a governmental authority, FINRA or court of
competent jurisdiction. In the event the Agents is legally required
to make disclosure of any of the Information, the Agents will give
prompt notice to the Company prior to such disclosure, to the
extent the Agents can practically do so.
(b)
The
foregoing paragraph shall not apply to information
that:
(i)
at the time of disclosure by the Company, is or thereafter becomes,
generally available to the public or within the industries in which
the Company conducts business, other than as a result of a breach
by the Agents of their obligations under this Agreement;
or
(ii)
prior to or at the time of disclosure by the Company, was already
in the possession of, the Agents or any of their affiliates, or
could have been developed by them from information then lawfully in
their possession, by the application of other information or
techniques in their possession, generally available to the public;
at the time of disclosure by the Company thereafter, is obtained by
the Agents or any of their affiliates from a third party who the
Agents reasonably believe to be in possession of the information
not in violation of any contractual, legal or fiduciary obligation
to the Company with respect to that information; or is
independently developed by the Agents or their
affiliates.
The
exclusions set forth in sub-section (b) above shall not apply to
pro forma financial information of the Company, which pro forma
Information shall in all events be subject to sub- section (a)
above.
(c)
Nothing in this Agreement shall be construed to limit the ability
of the Agents or their affiliates to pursue, investigate, analyze,
invest in, or engage in investment banking, financial advisory or
any other business relationship with entities other than the
Company, notwithstanding that such entities may be engaged in a
business which is similar to or competitive with the business of
the Company, and notwithstanding that such entities may have actual
or potential operations, products, services, plans, ideas,
customers or supplies similar or identical to the Company’s,
or may have been identified by the Company as potential merger or
acquisition targets or potential candidates for some other business
combination, cooperation or relationship. The Company expressly
acknowledges and agrees that it does not claim any proprietary
interest in the identity of any other entity in its industry or
otherwise, and that the identity of any such entity is not
confidential information.
-9-
W.
No Disqualification
Events.
(a)
The Company
represents and warrants the following:
(i)
None of Company, any director, executive officer, other officer of
the Company participating in the Offering, any beneficial owner of
20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power, nor any
promoter (as that term is defined in Rule 405 under the Securities
Act) connected with the Company in any capacity at the time of sale
(each, an “Issuer Covered
Person” and, together, “Issuer Covered Persons”) is
subject to any Disqualification Event (as defined below), except
for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) or
has been involved in any matter which would be a Disqualification
Event except for the fact that it occurred before September 23,
2013. The Company has exercised reasonable care to determine
whether any Covered Person is subject to a Disqualification Event.
The Company has complied, to the extent applicable, with its
disclosure obligations under Rule 506(e), and has furnished to the
Agents a copy of any disclosures provided thereunder.
(ii)
The Company will promptly notify the Agents in writing if the
Company becomes aware of (A) any Disqualification Event relating to
any Issuer Covered Person and (B) any event that would, with the
passage of time, become a Disqualification Event relating to any
Issuer Covered Person.
(iii)
The Company is aware that other persons (other that any Issuer
Covered Persons and the Agents Covered Person (as defined below)
will be paid (directly or indirectly) remuneration for solicitation
of investors in connection with the sale of any
Securities.
(b) The
Agents represent and warrants the following:
(i) No
Disqualification Events. Neither they, nor to their knowledge any
of their directors, executive officers, general partners, managing
members or other officers participating in the Offering (each, an
“Agents Covered
Person” and, together, “Agents Covered Persons”), is
subject to any of the “Bad Actor” disqualifications
currently described in Rule 506(d)(1)(i) to (viii) under the
Securities Act (a “Disqualification Event”) or has
been involved in any matter which would be a Disqualification Event
except for the fact that it occurred before September 23,
2013.
(ii)
Other Covered Persons. The Agents are aware that other persons
(other than any Issuer Covered Person or Agents Covered Person)
will be paid (directly or indirectly) remuneration for solicitation
of investors in connection with the sale of any
Securities.
(iii)
Notice of Disqualification Events. The Agents will notify the
Company promptly in writing upon the Agents learning of (A) any
Disqualification Event relating to any Agents Covered Person not
previously disclosed to the Company in accordance with the
provisions of this Section and (B) any event that would, with the
passage of time, become a Disqualification Event relating to any
Agents Covered Person.
[Signature Page Follows]
-10-
In
acknowledgment that the foregoing correctly sets forth the
understanding reached by the Agents and the Company, please sign in
the space provided below, whereupon this letter shall constitute a
binding Agreement as of the date first indicated
above.
This Agreement contains a pre-dispute arbitration provision in
Paragraph S.
By:
/s/ Xxxxx
Xxxxxx
Xxxxx
Xxxxxx
CFO
DINOSAUR
FINANCIAL GROUP LLC
By:
/s/
Xxxxxxx X. Xxxxx
Xxxxxxx
X. Xxxxx
Chief Compliance Officer
KATALYST
SECURITIES LLC
By:
/s/
Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X.
Xxxxxxxxx
Managing Director
-11-
APPENDIX I
INDEMNIFICATION AND CONTRIBUTION
The
Company agrees to indemnify and hold harmless the Agents, their
affiliates, officers, directors, employees, agents and controlling
persons (each an “Indemnified Person”) from and
against any and all losses, claims, damages, liabilities and
expenses, to which any such Indemnified Person may become subject
arising out of or in connection with the transactions contemplated
in the Agreement to which this Appendix I is attached (the
“Agreement”),
insofar as such loss, claim, damage, liability or expense arises
out of or is based upon any untrue statement of a material fact or
omission to state a material fact in Offering Documents required to
be stated therein or necessary to make the statements therein not
misleading in any litigation, investigation or proceeding
(collectively, the “Proceedings”), regardless of
whether any of such Indemnified Person is a party to the Agreement,
and to reimburse such Indemnified Persons for any reasonable and
documented legal or other expenses as they are incurred in
connection with investigating, responding to or defending against
in any Proceeding, provided that the foregoing indemnification will
not, as to any Indemnified Person, apply to losses, claims,
damages, liabilities or expenses to the extent that they are
finally judicially determined to have resulted primarily and
directly from the fraud, gross negligence or willful misconduct of
an Indemnified Person; and provided, further, that the foregoing
indemnification will not apply to any loss, claim, damage,
liability or expense arising out of or based upon any written
information furnished to the Company by the Agents specifically for
inclusion in the Offering Documents; provided further that the
Company shall only have the obligation to reimburse an Indemnified
Person if such Indemnified Person provides to the Company a written
undertaking of such Indemnified Person to repay to the Company the
amount so advanced to the extent that any such reimbursement is so
held to have been improper in a final judgment by a court of
competent jurisdiction, and if the court of competent jurisdiction
holds that such reimbursement was improper, such Indemnified Person
shall promptly return any amount advanced to it by the Company. The
Company also agrees that no Indemnified Person shall have any
liability (whether direct or indirect, in contract, tort or
otherwise) to the Company its affiliates, officers, directors
employees, agents, creditors or stockholders, directly or
indirectly, for or in connection with the Agreement, any
transactions contemplated in the Agreement, or the Agents’
role or services in connection with the Agreement, except to the
extent that any liability for losses, claims, demands, damages,
liabilities or expenses incurred by the Company are finally
judicially determined to have resulted primarily from the fraud,
gross negligence or willful misconduct of such Indemnified Person
or have resulted from any written information furnished to the
Company by the Placements Agent specifically for inclusion in the
Offering Documents. The Company will be liable to pay the legal
fees, expenses and costs incurred by the Agents’ legal team
related to any lawsuit but will not be obligated to pay the legal
fees of a sub dealer brought in by the Agents if named in the
lawsuit, unless agree to by the Company. If the Company engages
additional Agents’ in addition to the Agents, then the
Company will be liable for those Agents’ legal fees, expenses
and costs separate and apart to the legal fees, expenses and costs
incurred by and due the Agents’ legal team.
If for
any reason the foregoing indemnification is unavailable to any
Indemnified Person or insufficient to hold it harmless, then the
Company and the Agents in accordance with the contributions
provisions herein, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such loss, claim, damage,
liability or expense in such proportion as is appropriate to
reflect not only the relative benefits received by the Company on
the one hand and the Agents on the other hand, but also the
relative fault of the Company and the Agents, as well as any
relevant equitable considerations; provided that, in no event, will
the aggregate contribution of the Agents hereunder exceed the
amount of fees actually received by the Agents pursuant to this
Agreement and in no event will the aggregate contribution of the
Company hereunder exceed the amount of proceeds received by the
Company through the sale of Securities in the Offering to investors
first contacted by the Agents. The indemnity, reimbursement and
contribution obligations of the Company under this Agreement will
bind and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company and any Indemnified
Person.
-12-
Promptly
after receipt by an Indemnified Person of notice of the
commencement of any Proceedings, that Indemnified Person will, if a
claim is to be made under this indemnity agreement against the
Company in respect of the Proceedings, notify the Company in
writing of the commencement of the Proceedings; provided that (i)
the omission so to notify the Company will not relieve the Company
from any liability that the Company may have under this indemnity
agreement except to the extent the Company has been materially
prejudiced by such omission, and (ii) the omission to so notify the
Company will not relieve the Company from any liability that the
Company may have to an Indemnified Person otherwise than on account
of this indemnity agreement. In case any Proceedings are brought
against any Indemnified Person and it notifies the Company of the
commencement of the Proceedings, the Company will be entitled to
participate in the Proceedings and, to the extent that it may elect
by written notice delivered to the Indemnified Person, to assume
the defense of the Proceedings with counsel reasonably satisfactory
to the Indemnified Person; provided that, if the defendants in any
Proceedings include both the Indemnified Person and the Company and
the Indemnified Person concludes that there may be legal defenses
available to the Indemnified Person that are different from or in
addition to those available to the Company, the Indemnified Person
has the right to select separate counsel to assert those legal
defenses and to otherwise participate in the defense of the
Proceedings on its behalf at its sole expense. Upon receipt of
notice from the Company to the Indemnified Person of its election
to assume the defense of the Proceedings, the Company will not be
liable to the Indemnified Person for expenses incurred by the
Indemnified Person in connection with the defense of the
Proceedings (other than reasonable costs of investigation) unless
the Company authorizes, in writing, the employment of counsel for
the Indemnified Person and expressly agrees in writing to be liable
for the reasonable expenses of such legal counsel.
The
Company will not be liable for any settlement of any Proceedings
effected without its written consent (which consent must not be
unreasonably withheld), but if settled with the Company’s
written consent or if a final judgment for the plaintiff in any
such Proceedings is delivered, the Company agrees to indemnify and
hold harmless each Indemnified Person from and against any and all
losses, claims, damages, liabilities and expenses by reason of such
settlement or judgment. The Company may not, without the prior
written consent of an Indemnified Person (which consent shall not
be unreasonably withheld), effect any settlement of any pending or
threatened Proceedings in respect of which indemnity could have
been sought under this indemnity agreement by such Indemnified
Person unless the settlement includes an unconditional release of
the Indemnified Person, in form and substance reasonably
satisfactory to the Indemnified Person, from all liability on
claims that are the subject matter of such
Proceedings.
The
Company’s reimbursement, indemnity and contribution
obligations hereunder will be in addition to any liability that it
may otherwise have.
Capitalized terms
used but not defined in this Appendix I have the meanings
assigned to such terms in the Agreement.
A-2
