POSTING AGREEMENT
THIS POSTING AGREEMENT (the “Agreement”) is made as of this 14th day of November 2017, between StartEngine Crowdfunding, Inc. (“StartEngine”), a Delaware corporation, and PSI International, Inc., a Virginia corporation (the “Company”), to act as the Company’s online intermediary technology platform (the “Platform”) in connection with the Company’s proposed offering promulgated under Regulation A (“Reg A+”) under the Securities Act of 1933, as amended (the “Securities Act”), (the “Offering”) of common or preferred stock (the “Securities”).
WHEREAS, StartEngine operates the website xxx.xxxxxxxxxxx.xxx, an intermediary technology platform that permits issuers to independently connect with prospective Investors (as defined below) on the Platform.
WHEREAS, the Company and StartEngine wish to work cooperatively based upon the terms and conditions herein.
NOW, THEREFORE, the undersigned, in consideration of the foregoing and for other good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, intending to be legally bound, mutually hereby agree as follows:
1. Appointment. Subject to the terms and conditions of this Agreement, the Company hereby engages StartEngine, and StartEngine hereby agrees to provide, the services detailed herein as the Company’s intermediary funding platform in connection with the Offering. The Company will be permitted to make available certain offering documents to prospective Investors (as defined below) on the Platform. The Company acknowledges that StartEngine is not a registered broker-dealer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisors Act”), and that StartEngine will not perform any activities requiring registration with or membership of the Financial Industry Regulatory Authority (“FINRA”) or the Securities and Exchange Commission (the “SEC”).
2. Services. Subject to the terms of this Agreement, StartEngine agrees to permit the Company to post the Offering on the Platform, which can be utilized by the Company for “testing the waters” and the offering and sale of securities pursuant to Reg A+. The Company’s use of the Platform shall be subject to the terms of use and privacy policy, which may be amended from time to time, posted on the Platform. StartEngine grants the Company a limited and revocable license to use the Platform in accordance with the terms of this Agreement. The Company agrees to engage a securities attorney or securities compliance company for a review of any and all Test the Waters material appearing on the Platform prior to posting said material on the Platform and the Company shall provide all necessary information and fees to complete the Bad Actor Check for compliance with Reg A Rule 262 prior to appearing on the Platform. StartEngine reserves the right to terminate use of the Platform if it becomes aware of a violation of the requirements of this Agreement or any law. StartEngine also reserves the right to terminate this Agreement if the Company does not file Form 1-A with the SEC within 90 days of posting on the Platform. In the event the Offering is terminated, all funds held in escrow shall be promptly returned to Investors. Furthermore, if the Offering is terminated for any reason the campaign page will be promptly removed, the Company will not be entitled to any data that has accumulated or been collected by StartEngine, and the Company may not appear on a competitor’s platform for 30 days. StartEngine shall offer a Service Level Agreement (“SLA”) during the term of the Company’s campaign attached as Appendix C.
The Company agrees that it shall be required to engage an escrow agent under a separate agreement to provide escrow services for the Offering. The Company agrees to comply with the broker-dealer registration requirements of any state into which it offers or sells the Securities, including where necessary engaging a registered broker or making appropriate filings by the Company or its employees. The Company shall inform StartEngine with respect to any states that it is not making offerings in.
The Company further agrees to engage StartEngine Crowdfunding Inc. to provide this service through StartEngine Secure, which will renew annually. Please see Appendix D for the full agreement with StartEngine Secure. Company agrees to permit StartEngine Secondary to use the Company’s logo and trademarks for permitting secondary trading of the securities offered by the Company.
At the request of StartEngine, Company must offer a 10% discount on the price of securities, for a 24 hour period, to all active StartEngine investors and StartEngine owners.
3. Information and Offering Materials.
(a) The Company recognizes that, in completing its engagement hereunder, StartEngine may be using and relying on both publicly available information and principally on data, material and other information (including non-public information) furnished to StartEngine by the Company. The Company will furnish to prospective Investors any and all information and data concerning the Company, its business, financial condition and plans for the Offering that are required by state and Federal securities regulations (the “Information”), including any “test-the-waters” communications and materials which summarize the opportunity for potential investors to be used in connection with the Offering to the extent such material is made available (collectively, the “Offering Materials”). Any Information and Offering Materials forwarded to prospective investors or made available on the Platform will be in compliance with state and Federal securities laws, rules and regulations. StartEngine and its counsel will have the opportunity to review any offering related materials that name StartEngine and the Company agrees that it will make any changes reasonably requested by StartEngine to any materials that mention StartEngine. The Company represents and warrants that, to its knowledge, all Information and the Offering Materials, including, but not limited to, the Company’s financial statements, will be complete and correct 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. StartEngine will not be obligated to verify the accuracy and/or adequacy of such Information supplied or disclosed to potential investors. If the Offering Materials and/or the Information are required to be amended so as not to be misleading or omit to state such a material fact, and the Offering is still posted on xxx.xxxxxxxxxxx.xxx, the Company shall notify StartEngine immediately in the manner prescribed in Section 11, and any amendment shall be made evident to Investors by the Company. StartEngine grants the Company a limited, revocable, non-exclusive, non-transferable license to post the Offering Materials on the Platform for the term of the engagement. StartEngine shall be entitled to rely upon any representations, warranties or covenants made by the Company or any third party disclosed in the Offering Materials to the Company or by the Company to the potential and actual investors and any third party. The Company agrees to cooperate with all reasonable requests from StartEngine public relations and marketing initiatives for the Platform. During the Offering and until this Agreement is terminated, Company may have access to information collected by StartEngine as long as the Company does not violate any privacy policies established by StartEngine.
(b) Until the date that is two years from the date hereof, StartEngine will keep all information obtained from the Company confidential except: (i) Offering Materials which are provided to StartEngine to be made available on the Platform and the Offering Circular filed with the SEC; (ii) Offering information such as the number of reservations, amount reserved, funding goals, etc. (iii) information which is otherwise publicly available, or previously known to or obtained by, StartEngine independently of the Company and without breach of any of StartEngine’s agreements with the Company; (iv) StartEngine may disclose such information to its officers, directors, employees, agents and representatives, and to its other advisors and financial sources on a need to know basis only and will require that all such persons will keep such information strictly confidential. No such obligation of confidentiality shall apply to information that: (x) is in the public domain as of the date hereof or hereafter enters the public domain without a breach by StartEngine, (y) was known or became known by StartEngine prior to the Company’s disclosure thereof to StartEngine as evidenced by written records, (z) becomes known to StartEngine from a source other than the Company, and other than by the breach of an obligation of confidentiality owed to the Company; (v) is disclosed by the Company to a third party without restrictions on its disclosure; (vi) is independently developed by StartEngine as evidenced by written records; or (vii) is required to be disclosed by StartEngine or its officers, directors, employees, agents, attorneys and to its other advisors and financial sources, pursuant to any order of a court of competent jurisdiction or other governmental body or as may otherwise be required by law.
4. Compensation. For the Platform posting services described in Section 2, Company has two options for compensating StartEngine. Please select one option at time of signing. This selection cannot be changed after the offering goes live on StartEngine. Please see Appendix A for a list fees of all other fees.
● $50 per Investor Fee. StartEngine shall be entitled to receive an administration fee of $50 per Investor upon deposit of funds by each Investor into the designated escrow account (“Platform Fees”). Invoices are sent every two weeks, and shall be paid by the Company within 10 days. In the event any closing is held at a time when any Investor Fee is owing to StartEngine, Company authorizes the escrow agent to reimburse such fees to StartEngine from any funds held in escrow. If a closing is not held at a time when any Investor Fee is owing to StartEngine, Company shall pay StartEngine via ACH deposit. StartEngine will initiate an invitation to pay via ACH through Xxxx.xxx. Checks are not accepted. In the event Company cancels the Offering, Platform Fees will still be due to StartEngine on accounts where funds were actually received. In addition, StartEngine shall be entitled to receive warrants to purchase that number of shares determined by dividing (i) the product of (a) the number of individual investors for which StartEngine will receive a Platform Fee times (b) $50 by (ii) 30% of the issue price to the investors (“Warrants”). The form of Warrant is attached as Appendix B to this Agreement. Platform fees and Warrants are earned upon Investor deposit into the designated escrow account and are due regardless of whether the Company cancels its offering.
● $20,000 Monthly Listing Fee. StartEngine shall be entitled to receive a monthly administration fee of $20,000 for the duration of the offering, for a minimum of 3 months. Company must pay the first invoice before offering commences, and each subsequent invoice in advance of each 30 day period. Platform fees are earned at the beginning of each 30 day period and are due regardless of whether the Company cancels its offering. The listing fee is not pro-rated or refunded in case of termination during the 30 day period. In addition, StartEngine shall be entitled to receive warrants to purchase that number of shares determined by dividing (i) the total platform fees by (ii) 30% of the issue price to the investors (“Warrants”). The form of Warrant is attached as Appendix B to this Agreement. Platform fees and Warrants are earned at the beginning of each 30 day period and are due regardless of whether the Company cancels its offering.
Company agrees that StartEngine shall design, build and create your campaign page and provide account and marketing consulting services for a fee of $4,000. Payments are required upfront prior to commencing the service.
Company agrees to purchase StartEngine Secure for a fee of $3 per investor. StartEngine Secure operates as a transfer agent to manage all of your cap table needs. Secure fees shall be taken from each disbursement. If your company does not meet your minimum funding goal, no service shall be provided and thus no payment shall be due to StartEngine. Please see Appendix D for complete agreement.
5. Term of Engagement. This Agreement will remain in effect for 12 months from the date of this Agreement. The parties hereto may terminate this Agreement at any time by written consent. This Agreement will automatically renew after 12 months.
6. Mutual Indemnification. The Company and StartEngine agree to indemnify and hold each other harmless from and against any and all claims, demands, losses, causes of action, damages, lawsuits, judgments, including attorney’s fees and costs, to the extent caused by or arising out of or relating to the work, errors, omissions and/or operations of the other party. The Company will indemnify and hold harmless StartEngine, its directors and officers and each person, if any, who controls StartEngine against any losses, claims, damages or liabilities, joint or several, to which StartEngine may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement of a material fact or omission of a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading in any of the material provided by the Company to appear on StartEngine’s Platform or filed with the SEC, or any amendment or supplement thereof. The Company shall reimburse StartEngine for any legal or other expenses reasonably incurred in connection with investigation or defense or loss, claim, damage, liability or action referred to in the previous sentence as such expenses are incurred. The Company will not, however, be responsible for any claims, losses, damages, liabilities, or expenses, which are finally judicially determined to have resulted solely from StartEngine’s gross negligence or intentional misconduct. The Company shall assume the defense of such action, including the employment and fees of counsel (reasonably satisfactory to StartEngine) and payment of reasonable and accountable expenses.
7. Representations and Warranties. Each of the Company and StartEngine represents and warrants that (a) it has full right, power and authority to enter into this Agreement and to perform all of its obligations hereunder and (b) this Agreement has been duly authorized and executed and constitutes a legal, valid and binding agreement of such party enforceable in accordance with its terms. The Company represents and warrants that all information posted on the Platform with respect to the Company 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. The Company acknowledges that StartEngine will not be required to independently verify the accuracy and adequacy of such information supplied or disclosed to potential Investors. The Company represents that it has not taken, and it will not take any action, directly or indirectly, so as to cause the Offering to fail to be entitled to rely upon the exemption from registration afforded by Reg A+ and other applicable rules and regulations, including filing any state “blue sky” filings. The Company agrees that any representations and warranties made by it to any prospective investor in the Offering or placement agent shall be deemed also to be made to StartEngine for its benefit and StartEngine shall be deemed a third party beneficiary to any such agreements. The Company agrees that it will comply with the SEC’s ongoing reporting requirements under Reg A+.
8. Parties; Assignment; Independent Contractor; Governing Law; No Tax Advice. This Agreement has been and is made solely for the benefit of the parties hereto and each of their respective persons, agents, employees, officers, directors and controlling persons and their respective heirs, executors, personal representatives, successors and assigns, and nothing contained in this Agreement will confer any rights upon, nor will this Agreement be construed to create any rights in, any person who is not party to such Agreement, other than as set forth in this section. The rights and obligations of either party under this Agreement may not be assigned without the prior written consent of the other party hereto and any other purported assignment will be null and void. StartEngine has been retained under this Agreement as an independent contractor, and it is understood and agreed that this Agreement does not create a fiduciary relationship between StartEngine and the Company or their respective officers, directors and controlling persons. StartEngine shall have no control over any aspect of the Company and StartEngine shall not be considered to be the agent of the Company for any purpose whatsoever and StartEngine is not granted any right or authority to assume or create any obligation or liability, express or implied, on the Company’s behalf, or to bind the Company in any manner whatsoever. The Company acknowledges that StartEngine does not provide financial, accounting, investment, tax or legal advice. This Agreement shall be construed and interpreted in accordance with the laws of the State of New York.
9. Legal and Other Compliance. The Company at its own expense, will use its best efforts to obtain any registration, qualification or approval required to sell any Securities under the laws (including U.S. state “blue sky” laws relating to broker registration and the making of notice filings) of any applicable jurisdictions (including any applicable foreign jurisdiction or any instrumentality thereof). Without limiting the generality of the foregoing, the Company represents that it is not subject to any disqualifying event as set forth in Rule 262 under the Securities Act. The Company agrees that it is responsible for compliance with the restrictions on investment amounts set out in Reg A+. The Company understands and agrees that there are compliance requirements that pertain to the Offering both on the Platform and off the Platform. The Company further understands and agrees that StartEngine does not purport to make any representation, warranty, or guarantee that any activity by the Company or StartEngine, whether through the Platform or not, is in compliance with applicable state or Federal securities laws or the rules and regulations of any self-regulatory organization. It is expressly understood that none of the services provided by StartEngine should be deemed legal advice. StartEngine makes no representation or warranties that offerings of securities on the Platform comply with state or Federal securities laws. The Company agrees that it shall consult its legal counsel to independently determine whether use of the Platform for the Offering complies with state and Federal laws, rules and regulations.
10. Exclusivity.
(a) It is expressly understood that StartEngine will post other company offerings on the Platform and is not required to operate the Platform as its sole and exclusive function. In addition to operating the Platform, StartEngine and its affiliates may engage in other business activities in the future.
(b) The Company’s engagement with StartEngine pursuant to this Agreement shall be exclusive for the term of this Agreement and it is expressly understood that the Company may not post the Offering Materials on the company’s website or any website, including any other Reg A+ online investment technology platform.
11. Notices. Any notices required by this Agreement shall be in writing and shall be addressed, and delivered or mailed postage prepaid, 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 StartEngine:
StartEngine Crowdfunding, Inc.
000 X. Xx Xxxx Xxx.
Xxx Xxxxxxx, XX 00000
Tel: 000-000-0000
Attn: Xxxxxx Xxxxx
If to the Company:
00000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Tel: 000-000-0000
Attn:
12. Disclaimer. The Company acknowledges and agrees that its use of the Platform provided by StartEngine is done at the Company’s own risk. To the fullest extent permissible by law, neither StartEngine nor any other party involved in creating, producing, or delivering the Platform shall be liable to the Company or any third-party for any lost profits or lost opportunity, or for any direct, incidental, consequential, special, indirect or punitive damages arising out of the Company’s access to, or use of, the Platform. In addition, the Company acknowledges that it will be solely accountable for all content on and relating to the Offering on xxx.xxxxxxxxxxx.xxx. Without limiting the foregoing, everything on the Platform is provided to the Company “as is” without warranties or guarantees of any kind, either expressed or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement.
13. Validity. In case any term of this Agreement will be held invalid, illegal or unenforceable, in whole or in part, the validity of any of the other terms of this Agreement will not in any way be affected thereby.
14. Entire Agreement Counterparts; Amendments. This Agreement is the final, complete, and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior or contemporaneous communications and understandings between the parties. No modification of or amendment to this Agreement will be effective unless in writing and signed by the party to be charged. This Agreement may be executed in counterparts and each of such counterparts will for all purposes be deemed to be an original, and such counterparts will together constitute one and the same instrument.
15. Press and Marketing. The Company agrees that StartEngine shall, from and after any closing, have the right to reference the Offering and StartEngine’s role in connection therewith in StartEngine’s marketing materials and on its website and to place advertisements in financial and other newspapers and journals, in each case at its own expense. The Company also acknowledges that StartEngine has the right to utilize the email database of its all users of the Platform for the purposes of marketing and promotion. StartEngine has the right to publish all campaign statistics. Any advertising conducted by the Company must include the StartEngine logo. StartEngine shall provide appropriate placements and sizes and provide a link to the artwork options.
The Company acknowledges that they have the responsibility to provide a brief video testimonial to StartEngine within 14 days of the offering live date. Testimonial logistics will be organized by StartEngine.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof.
| STARTENGINE CROWDFUNDING, INC. |
| By: | /s/ Xxxxxx Xxxxx | |
| Name: | Xxxxxx Xxxxx | |
| Title: | Chief Executive Officer |
| PSI International, Inc. | ||
| By: | /s/ Xxxxxxx X. Xxxx | |
| Name: | Xxxxxxx X. Xxxx | |
| Title: | Chief Executive Officer | |
APPENDIX A
| ● | Escrow Setup - $500 (one-time fee) | |
| ● | Escrow Account - $35/month account reporting fee (regardless of amount of funds in bank account) | |
| ● | Accounting Fee - $5/transaction (one-time fee to manually post transactions) | |
| ● | API Licence - $300/month | |
| ● | System License Fee - $15/transaction | |
| ● | Funds processing fee - ACH - $1.00, Check $10, Wire $15US/$35/Int’l | |
| ● | ACH Exception - $7/transaction | |
| ● | Bank Surcharges - May apply for check returns, NSF’s, etc. (Fees vary) | |
| ● | Bad Actor Checks (US) - $85 for each offering “covered person” (issuer and each associated person) | |
| ● | Bad Actor Checks (International) - $150/individual, $250/entity | |
| ● | AML for individuals - $5.00 domestic, $10.00 EU/UK, $120 other int’l (only for investments of $2,000 or more) | |
| ● | AML for entities - $5.00 domestic, $75.00 EU/UK, $120 other int’l (only for investments of $2,000 or more) | |
| ● | eSign Subscription Agreements - $1/agreement | |
| ● | StartEngine Secure - $3/investor (This service will renew annually unless either party provides written notice of termination.) |
* Fees are subject to change within a 48 hours written notice.
APPENDIX B
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
[COMPANY]
| Initial Warrant Shares: _____________1 | Initial Exercise Date: _______ __, 20__ |
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, StartEngine Crowdfunding, Inc. or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the 5 year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from [COMPANY], a ______________ corporation (the “Company”), up to _________ shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s common stock (“Common Stock”); provided, however, the number of Warrant Shares issuable hereunder shall increase by 25% on each 6-month anniversary of the Initial Exercise Date if, prior to such date, a Liquidity Event has not occurred. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated in this Section 1:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
1 The number of warrant shares shall be determined by dividing (i) the product of (a) the number of individual investors times and (b) $50 by (ii) 30% of the issue price to the investors. If the monthly listing fee is selected then that number of shares determined by dividing (i) the total platform fees by (ii) 30% of the issue price to the investors.
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Commission” means the United States Securities and Exchange Commission.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Going Public Date” Such first date whereby the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act or the Common Stock is qualified under Regulation A.
“Liens” means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Liquidity Event” shall mean any one of the following events has occurred: (a) an initial underwritten public offering of Common Stock by a nationally recognized underwriter pursuant to a registration Statement filed in accordance with the Securities Act and pursuant to which at least, $30,000,000 in gross proceeds is raised for the benefit of the Company and pursuant to which the Holder has the right to include the Warrant Shares for inclusion in such offering or (b) a Fundamental Transaction with a valuation to the Company of at least $50,000,000 pursuant to which the Holder has the right to put this Warrant back to the Company for cash equal to the Black Scholes Value pursuant to Section 3(e).
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Trading Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).
“Transfer Agent” means _____________________, the current transfer agent of the Company, with a mailing address of ___________________ and a facsimile number of _______________, and any successor transfer agent of the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within three (3) Business Days of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $_____2, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering for sale or resale the Warrant Shares, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;
(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to this Section 2(c).
d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid.
2 100% of the issue price paid by investors.
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. Following the Going Public Date, in addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
e) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents, at an effective price per share less than the Exercise Price then in effect (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate Transaction, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised.
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) or Section 2(f)] on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) or Section 2(f)] on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, provides to the Company an opinion of counsel, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that the transfer of this Warrant does not require registration under the Securities Act.
e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of [______________________], without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of this Warrant shall be commenced in the state and federal courts sitting in the City of New York, of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant. If any party shall commence an action or proceeding to enforce any provisions of this Warrant, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above Attention: _________________, facsimile number _______________, email address _______________, or such other facsimile number, email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of such Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.
h) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
i) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
j) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
k) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
l) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
m) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
n) Piggyback Registration Rights. If, at any time after date hereof, the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act), or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the stock option or other employee benefit plans, the Company shall send to the Holder a written notice of such determination and if, within 15 calendar days after the date of such notice, the Holder (or any permitted successor or assign) shall so request in writing, the Company shall include in such registration statement all or any part of the Warrant Shares that such Holder requests to be registered. Further, in the event that the offering is a firm-commitment underwritten offering, the Company may exclude the Warrant Shares if so requested in writing by the lead underwriter of such offering. In the case of inclusion in a firm-commitment underwritten offering, the Holders must sell their Warrant Shares on the same terms set by the underwriters for shares of Common Stock to be sold for the account of the Company.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| PSI International, Inc. | ||
| By: | ||
| Name: | ||
| Title: | ||
NOTICE OF EXERCISE
TO: __________________
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE OF HOLDER]
Name of Investing Entity:
________________________________________________________________________
Signature of Authorized Signatory of Investing Entity:
_________________________________________________
Name of Authorized Signatory:
___________________________________________________________________
Title of Authorized Signatory:
____________________________________________________________________
Date:
_______________________________________________________________________________________________
ASSIGNMENT FORM
(To
assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________, _______
Holder’s Signature: _____________________________
Holder’s Address: _____________________________
_____________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
APPENDIX C
This StartEngine Service Level Agreement (“SLA” or “Agreement”) sets forth our policies and guarantees for the Platform. Please review this SLA together with our Terms of Use and Privacy Policy, as found via links at the bottom of our website, which also provide for certain rights and obligations relating to your use of the Platform. Unless otherwise expressly provided below, this SLA is subject at all times to the Terms of Use then in-effect.
StartEngine reserves the right to change the terms of this SLA at any time with written notice.
Service Commitment
StartEngine will use commercially reasonable efforts to make the Platform available with an Annual Uptime Percentage of at least 99.00%, excluding planned service maintenance. In the event that StartEngine does not meet this SLA uptime commitment during the Company campaign, Company will be eligible to receive a Service Credit as follows:
Annual Uptime Percentage & Data Integrity Service Credit
The maximum cumulative credit for any and all applicable Service Credits in a month is 100% of the total fees actually paid by Company to StartEngine in any month so affected.
| Threshold | Uptime | |||||
| 95.1% to 99.99% | 10 | % | ||||
| 90.1% to 95% | 25 | % | ||||
| Below 90% | 100 | % | ||||
Definitions
“Annual Uptime Percentage” is calculated by subtracting from 100% the percentage of 5-minute periods during a Service Year in which StartEngine’s Platform was Unavailable to you. If you have been using our Platform for less than a full 365 days, your Service Year for purposes of submitting a Claim and determining a Service Credit will be deemed to be the preceding 365 days, but any such days prior to your actual use of the service will be deemed to have had 100% Availability. Any Unavailability occurring during your period of use, but prior to submitting a Claim cannot be used as a basis for future submitted Claims. Annual Uptime Percentage measurements exclude Unavailability resulting directly or indirectly from any SLA Exclusion.
“Availability” means the ability to login and perform operations by means of the Platform.
“Claim” means a claim for a Service Credit you submit by opening a support case with StartEngine, on the basis that the Platform has been Unavailable to you during a service period.
“Licensee” refers to the person or entity who is using and paying for services on the Platform.
“Incident” means any set of circumstances resulting in the Unavailability of or data loss in the Platform at any time, consistent with the Service Level commitments under this Agreement. An Incident, for purposes of submitting and determining the validity of a Claim, shall not be based on any SLA Exclusions.
“Service Credit” is a dollar credit, calculated as set forth below and in the table above that we may credit back to you upon your submission of a validated and accepted SLA Claim.
“Service Level” means the amount of time expressed as a percentage during which the Platform is available and accessible to users.
“Service Year” is the 365 day period preceding the date of an SLA claim.
“SLA Exclusion” means an instance or reason for which the Service Level Commitment hereunder does not apply and the associated inability to login and perform operations by means of the Platform does not constitute Unavailability or Data Loss for purposes of a Service Credit.
“Unavailable” or “Unavailability” means each full increment of 5 minutes during your use of the Platform where your access to the Platform has no functionality.
APPENDIX D
StartEngine Secure Service Agreement
This agreement (“Agreement”) sets forth the terms and conditions by which __________________ (“Issuer”, “you”, “your”) appoints StartEngine Crowdfunding, Inc. (“Service Provider”, “us”, “our”, “we”) as the exclusive provider of software and services relating to the recording of the issuance, transfer and registration of Issuer’s securities issued pursuant to Section 4(a)(6) under the Securities Act of 1933, and associated holder positions,and for clearing ownership changes and new issuances (the “Services”) of the Issuer’s __________________ securities (the “Securities”). The parties hereby agree to the following Terms and Conditions:
1. STATUS OF SERVICE PROVIDER
| a. | Service Provider is not a stock transfer agent registered with the Securities and Exchange Commission. Issuer agrees and acknowledges that in the event it wishes in the future to take advantage of the conditional safe harbor from the provisions of Section 12(g) of the Securities Exchange Act of 1934, it must engage a registered transfer agent. | |
| b. | Service Provider will not hold, manage, possess or otherwise handle securities. | |
| c. | Service Provider is not providing escrow services to Issuer. | |
| d. | Service Provider is not providing payment services to Issuer but will provide security holder information to Issuer in order for Issuer to contact such holders and obtain the information necessary to make dividend payments or pay amounts owing under debt securities. Issuer acknowledges that Service Provider does not maintain banking information with respect to investors in Issuer’s securities. |
2. GENERAL APPOINTMENT OF SERVICE PROVIDER
| a. | Issuer hereby engages Service Provider to provide software and services relating to the recording of the issuance, transfer and registration of Issuer’s Securities (as defined in 2(c) below) and associated holders, and to perform such other services related to the Securities as provided herein. You hereby certify that the Issuer has taken such action as shall have been required to appoint Service Provider to provide the Services and that authority has been granted to enter into this Agreement, which will remain valid and in force so long as we provide Services to Issuer. | |
| b. | The term “Securities” as used in this Agreement shall mean the equity and debt securities, revenue share, including any warrants and options, of Issuer issued pursuant to Section 4(a)(6) of the Securities Act on the StartEngine platform. Issuer affirms, represents and warrants that it has entered (or caused to be entered) all applicable data concerning its Securities and associated holder positions. | |
| c. | Issuer further represents and warrants that it will not use the Services for any Securities that have not been duly authorized and issued in accordance with its articles of incorporation and bylaws or equivalent instruments. |
3. MANAGEMENT OF RECORDS OF SECURITIES AND HOLDERS
Records with respect to the Securities and holders of the Securities shall be managed by Issuer and its authorized Administrators in the Service Provider’s system.
| a. | Self-Management | ||
| i. | Issuer may grant users, at its discretion, administrative rights to the system. Such users shall have complete, unfettered ability to initiate and/or perform tasks ; | ||
| ii. | All investor communications (to holders of record) other than confirmations of ownership and statements of change related thereto, whether by email, SMS text message, phone calls or other means shall be the responsibility of Issuer and/or its Administrators. The parties unconditionally agree that Service Provider will not be responsible for creating, editing or commenting on, or have any involvement with any such investor communication relating to the ownership or transfer of the Securities, and no action, including the provision of communication tools, may be regarded or interpreted as Service Provider having participated in the content of any such communications. | ||
| b. | Service Provider shall not add, modify or remove Securities from the system. Service Provider, may however, provide technical assistance to Issuer to effect such changes as Issuer may direct, including in order to correct an error. Such technical assistance shall not constitute any representation as to the accuracy of the records maintained by Issuer. | ||
| c. | Issuer warrants and represents to Service Provider that it will keep complete and accurate records of the Securities and the holders thereof. | ||
4. BOOK-ENTRY ONLY, NO DTC SECURITIES
| a. | Ownership of Issuer’s Securities will be “book-entry” only form, meaning that ownership interests shall be recorded and kept only on the books and records of Issuer. No physical certificates shall be issued, nor received, by Service Provider or any other person. Service Provider’s system permits Issuer to record and maintain Securities in book-entry form only. Book-entry form means Issuer maintains records of shares on an investor’s behalf without issuing physical certificates. Service Provider shall provide the means for Issuer to send out email confirmations of positions and notifications of changes from Issuer upon each event affecting any person’s ownership interest. | |
| b. | The securities covered by this Agreement are not DTC eligible. |
5. AUTHORIZED OFFICERS AND ACCOUNT ADMINISTRATORS
| a. | Issuer shall have the ability to appoint a single Administrator for its Service Provider account, access to which may be either via our dashboard tools or our Application Programming Interface (“API”). Issuer accepts sole and absolute liability and responsibility for managing its Administrators and for safeguarding passwords, API keys, and other security measures. | |
| b. | Service Provider shall be protected and held harmless when enabling and accepting any actions taken by, or instructions given by an Administrator. When any Administrator of Issuer shall no longer be vested with the authority to effect actions in the Securities for Issuer, a written notice thereof shall be given to Service Provider and until receipt of such notice Service Provider shall be fully protected and held harmless in recognizing, enabling and accepting the actions of such Administrator. |
| c. | Service Provider shall not be considered notified of any termination of Administrators of Issuer until notice of such termination shall be given in writing by Issuer or its Administrators to Service Provider. Such terminations shall have no effect on any transactions or activities of such person prior to the effectiveness of such termination, including those which have already been entered into our systems and are pending or in process. |
6. DATA ACCESSIBILITY
| a. | Issuer understands and agrees that inspection of Securities records and other records maintained on the systems of Service Provider may be subject to the inspection rights of securities regulatory authorities including the Securities and Exchange Commission and the Financial Industry Regulatory Authority. | |
| b. | Service Provider is hereby authorized to make certain data available to industry third-party systems, both directly and via API integrations, including but not limited to broker-dealers, investment advisers, registered service providers, securities exchanges, rating agencies, research firms and others for purposes of enabling them to obtain information about and descriptions of Issuer’s Securities, payment history of such Securities, confirmations of a holder’s ownership positions, enforcing restrictions on any proposed divestitures (including ownership changes), among other things. |
7. RESPONSIBILITIES, INDEMNITY, AND COMPENSATION
| a. | Service Provider may rely and act, or refuse to act, without investigation upon any list, instruction, certification, authorization, or other communication, including electronic communications and actions input into the Service via dashboard or API (“communications”), provided by the Issuer, its agents or representatives. Issuer agrees that it shall not give Service Provider direction to take any action or refrain from taking any action, if implementing such direction would be in violation of applicable law, regulation or any third parties’ contract rights. Issuer agrees that it shall not transfer any Security if such Security is subject to any restriction or prohibition on transfer, and Service Provider shall not be liable to Issuer or any other party for refusing to effect any such transfer. | |
| b. | Service Provider may conclusively and in good faith rely and act, or refuse to act or provide its services, upon the records and information provided to it by Issuer and/or its Administrators without being required or expected to undertake an independent review or audit of such records and information, and shall have no responsibility or liability for the accuracy or inaccuracy of such records and information. | |
| c. | Service Provider may, in connection with the services described in this Agreement, engage, at Service Provider’s sole expense (unless agreed in writing by Issuer), without notice, subcontractors, agents, co- Service Providers or attorneys-in-fact, and service providers (e.g. hosting datacenter) in its sole and absolute discretion. Service Provider is authorized by Issuer to execute all agreements, appoint agents or sub-agents and do all other acts deemed necessary to carry out the general purposes of, and to fulfill its obligations under this Agreement. |
| d. | Issuer agrees that Service Provider shall be paid all agreed upon fees for its services and reimbursed for expenses. Issuer shall pay [$100 per month] [$1,000 per year ], payable by credit card or ACH. Service Provider may increase or decrease (“change”) the fees we charge at any time upon 60 days’ notice. All fees are incurred immediately at time of service usage (or order), not at the time of execution and are not prorated for any partial periods, nor are they refundable in whole or in part, regardless of whether or not the service was completed or cancelled, unless agreed to in writing by Service Provider. Furthermore, Service Provider may add new Services, discontinue any tools or Services, or make modifications to tools or Services at any time and without notice, in its sole and absolute discretion. Issuer shall pay interest at the rate of 1.50% per month for all balances due to Service Provider which remain unpaid for 30 days after the due date thereof. Furthermore, Service Provider may, at its option, cease providing Services to Issuer at any time, in its sole discretion, until past due amounts are paid. |
8. CONSENT TO USE OF NAME AND LOGO
Each
party may disclose in regulatory filings, marketing materials and in other communications the fact that the parties have entered
into this Agreement, however, neither party may disclose the specific terms of this Agreement including the fees agreed by and
between the parties without the prior written consent of the other party, unless disclosure of such fee information is already
public, is required to be disclosed by SEC rules and regulations, or pursuant to a court order.
9. UNCLAIMED PROPERTY ADMINISTRATION; LOST SECURITY HOLDER SEARCH
Service Provider will not provide unclaimed property reporting services for unclaimed funds or Securities, which may be deemed abandoned or otherwise subject to applicable unclaimed property law or regulation. Any obligations with respect to unclaimed property are solely the responsibility of Issuer. Service Provider shall have no responsibility to provide services regarding lost holder accounts for Issuer’s Securities.
10. MUTUAL CONFIDENTIALITY OF INFORMATION
| a. | As used herein, the “Confidential Information” means all confidential and proprietary information of a party disclosed (“Disclosing Party”) to the other party (“Receiving Party”), whether orally or in writing, that is designated as confidential or that reasonably should be understood to be confidential given the nature of the information and the circumstances of disclosure, including the terms and conditions of this Agreement, data, business and marketing plans, technology and technical information, product designs, API designs, and business processes. Confidential Information shall not include any information that: (i) is or becomes generally known to the public without breach of any obligation owed to Disclosing Party; (ii) was known to Receiving Party prior to its disclosure by Disclosing Party without breach of any obligation owed to the Disclosing Party; (iii) was independently developed by Receiving Party without breach of any obligation owed to Disclosing Party; or (iv) is received from a third party without breach of any obligation owed to Disclosing Party. All intellectual property, work product, software, code, and other proprietary information or work product of both parties to this Agreement is expressly agreed to be Confidential Information. | |
| b. | Receiving Party shall not disclose, use, transmit, or otherwise disseminate, sell or transfer any of the Confidential Information of Disclosing Party for any purpose other than as is set forth in this Agreement, including in Section 8 above, except with Disclosing Party’s prior written permission (with email serving as an appropriate form of written communication). |
| c. | Each party agrees to effectively protect the confidentiality of the Confidential Information of the other party in the same manner that it protects the confidentiality of its own proprietary and confidential information of like kind, but in no event using less than reasonable care. | |
| d. | If Receiving Party discloses or uses or threatens to disclose or use any of the Confidential Information of Disclosing Party in breach of the terms hereunder, Disclosing Party shall have the right, in addition to any other remedies available in law and equity, to seek injunctive relief to enjoin such act, it being specifically acknowledged by each of the parties to this Agreement that any other available remedies are inadequate. |
11. TERM
| a. | The Agreement shall have a term of one year, beginning when the offering launches, which term shall automatically renew for successive one year terms unless either party shall provide written notice of cancellation 30 days prior to the end of any applicable term period. If the Company does not launch or does not meet their minimum funding goal, no service shall be provided and thus no payment shall be due to StartEngine. In addition, either party may terminate this Agreement (i) at any time upon 30 days’ notice, (ii) immediately if the other party is in material breach of its obligations hereunder, unless the breaching party has cured such breach, (iii) immediately upon notification or confirmation of any bankruptcy, receivership or dissolution of either party, or, (iv) immediately upon notification or confirmation of any judgment or final order by any law enforcement or regulatory authority against either party or any of their associated persons (officers, directors and substantial beneficial owners). | |
| b. | Upon the effective date of termination in accordance with the provisions noted above Service Provider shall deliver within 90 days, at the expense of Issuer, to Issuer or to a successor Service Provider as directed in writing by Issuer, all records of Issuer in the possession of Service Provider, in a form and format as decided by Service Provider in its sole and absolute discretion. |
12. WARRANTIES AND DISCLAIMER
| a. | Mutual Warranties. Each party to this Agreement represents and warrants to the other that it has the right and authority to enter into this Agreement and to perform all of its respective obligations and undertakings. Each party further represents and warrants that: (a) this Agreement has been duly executed and delivered and constitutes a valid and binding agreement enforceable against such party in accordance with its terms; (b) no authorization or approval from any other person is required in connection with such party’s execution, delivery, or performance of this Agreement; and (c) the execution, delivery, and performance of this Agreement does not violate the terms or conditions of any other agreement to which it is a party or by which it is otherwise bound. | |
| b. | Warranties by Issuer: |
| i. | Issuer hereby represents and warrants that all information, records and materials provided to Service Provider or set forth on Service Provider’s systems are accurate, truthful and comply with all applicable laws, and will not infringe the copyright, trade secret, privacy, publicity, or other rights of any third party. Issuer hereby indemnifies and holds Service Provider harmless for any and all violations or breaches of this Section 12(b). Issuer acknowledges that it is sharing its information, materials and records with Service Provider in order for us to provide the Services and perform under this Agreement. | |
| ii. | Breach of Warranties. In the event of any breach of any of Issuer’s responsibilities or warranties herein, in addition to any other remedies available at law or in equity Service Provider will have the right to immediately, in Service Provider’s sole and reasonable discretion, suspend Services if deemed necessary by Service Provider to prevent or eliminate difficulties in the operation of Services or harm to Service Provider’s business or reputation, or to prevent potential litigation or other controversies. |
| c. | Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SERVICE PROVIDER MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND WHETHER EXPRESS, IMPLIED (EITHER IN FACT OR BY OPERATION OF LAW), OR STATUTORILY. SERVICE PROVIDER EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, QUALITY, ACCURACY, TITLE, AND NON-INFRINGEMENT. SERVICE PROVIDER DOES NOT WARRANT AGAINST INTERFERENCE WITH THE USE OF THE SERVICES OR SOFTWARE OR AGAINST INFRINGEMENT. SERVICE PROVIDER DOES NOT WARRANT THAT THE SERVICES OR SOFTWARE ARE ERROR-FREE OR THAT OPERATION OF THE DASHBOARD, THE API OR THE SERVICE WILL BE SECURE OR UNINTERRUPTED. SERVICE PROVIDER EXPRESSLY DISCLAIMS ANY AND ALL LIABILITY ARISING OUT OF THE FLOW OF DATA AND DELAYS ON THE INTERNET. ISSUER WILL NOT HAVE THE RIGHT TO MAKE OR PASS ON ANY REPRESENTATION OR WARRANTY ON BEHALF OF SERVICE PROVIDER TO ANY THIRD PARTY. ISSUER’S ACCESS TO AND USE OF THE SERVICES AND API ARE AT ISSUER’S OWN RISK. ISSUER UNDERSTANDS AND AGREES THAT THE SERVICES ARE PROVIDED TO IT ON AN “AS IS” AND “AS AVAILABLE” BASIS. Service Provider WILL NOT BE LIABLE TO ISSUER FOR ANY DAMAGES RESULTING FROM ISSUER’S RELIANCE ON OR USE OF THE SERVICES. |
13. LIMITATION OF LIABILITY
| a. | Disclaimer of Consequential Damages. ISSUER HEREBY ACKNOWLEDGES AND AGREES, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, SERVICE PROVIDER WILL NOT, UNDER ANY CIRCUMSTANCES, BE LIABLE TO ISSUER FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, OR EXEMPLARY DAMAGES ARISING OUT OF OR RELATED TO THE TRANSACTION CONTEMPLATED UNDER THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO, LOST PROFITS, LOSS OF BUSINESS OR HOLDER CLAIMS. | |
| b. | Cap on Liability. ISSUER HEREBY ACKNOWLEDGES AND AGREES THAT UNDER NO CIRCUMSTANCES WILL SERVICE PROVIDER’S TOTAL LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT, REGARDLESS OF WHETHER THE ACTION OR CLAIM IS BASED ON CONTRACT, TORT, WARRANTY OR OTHERWISE, WILL EXCEED THE TOTAL AMOUNT OF FEES PAID, IF ANY, BY ISSUER TO SERVICE PROVIDER UNDER THIS AGREEMENT DURING THE 12 MONTH PERIOD PRIOR TO THE OCCURRENCE OF THE EVENT GIVING RISE TO SUCH LIABILITY. |
| c. | General Indemnification. Issuer hereby agrees to indemnify, protect, defend and hold harmless Service Provider and its officers, directors, members, shareholders, employees, agents, related businesses (including but not limited to StartEngine Crowdfunding, Inc, its affiliates and subsidiaries), partners, vendors, successors and assigns from and against any and all third party claims, demands, obligations, losses, liabilities, damages, recoveries and deficiencies (including interest, penalties and reasonable attorneys’ fees, costs and expenses), which Service Provider may suffer as a result of: (a) any breach of or material inaccuracy in the representations and warranties, or breach, non-fulfillment or default in the performance of any of the conditions, covenants and agreements, of Issuer contained in this Agreement; or error or misstatement of any information, directions or actions delivered by Issuer or its agents pursuant to any of the provisions of this Agreement, or (b) any obligation which is expressly the responsibility of Issuer under this Agreement, or (c) any other cost, claim or liability arising out of or relating to operation or use of the license granted hereunder. Any amount due under the aforesaid indemnity will be due and payable by Issuer within thirty (30) days after demand thereof. Furthermore, Issuer shall protect, hold harmless and indemnify Service Provider and its officers, directors, members, shareholders, employees, agents, partners, vendors, successors and assigns from and against any and all liability related to Issuer’s business and business related operations and affairs, and use of the API, license, the Services API or any breach of the terms of this Agreement. |
14. PAYMENT
| a. | The fee for StartEngine Secure is $3 per investor plus additional transaction fees detailed Appendix I. Secure fees will be taken out of each disbursement. | |
| b. | Secure shall renew on the date the company launched their campaign on StartEngine. |
15. MISCELLANEOUS
| a. | Notices. All notices permitted or required by this Agreement will be via email, and will be deemed to have been delivered and received upon sending via any nationally recognized and trusted SMTP delivery service. Notices shall be delivered to the addresses of record which, if to Service Provider, shall be to [CONTACT DETAILS], and if to Issuer shall be to the email address on file in your account. | |
| b. | No Implied License. Except as expressly provided in this Agreement, this Agreement is not intended and will not be construed to confer upon either party any license rights to any patent, trademark, copyright, or other intellectual property rights of either party hereto or any other rights of any kind not specifically conferred in this Agreement. All right, title, and interest in the technology used and the services provided are and remain the exclusive property of Service Provider. | |
| c. | Severability. If any portion or provision of this Agreement is for any reason found to be ineffective, unenforceable, or illegal by any arbitrator or court having jurisdiction, such condition will not affect the validity or enforceability of any of the remaining portions or provisions hereof. |
| d. | No Legal Partnership or Agency. This Agreement is not intended and shall not be construed as creating a joint venture or a legal partnership between the Issuer and Service Provider, and shall not be interpreted as permitting either party to act as an agent for the other party to this Agreement. or creating a fiduciary relationship or duty or any other obligations other than those expressly imposed by this Agreement. | |
| e. | No Underwriting. Issuer agrees without reservation that Service Provider is not acting as an underwriter of any Securities offering, nor as a broker or dealer on any Securities transaction. Furthermore, Issuer agrees that it is not authorized to nor is it acting as an agent of Service Provider concerning any Securities offering. | |
| f. | No Legal, Tax or Accounting Advice. Issuer agrees without reservation that Service Provider does not provide any legal, tax or accounting advice in any way, nor on any matter, regardless of the communication, and whether is it oral or written. Issuer unconditionally agrees to rely solely on its legal, tax and accounting professionals for any such advice and on all matters. | |
| g. | No Investment Advice or Recommendations. Issuer agrees that Service Provider does not provide any investment advice, nor does Service Provider make any Securities recommendations nor solicit the offer or sale of Securities to any issuer or investor. Service Provider does not provide any brokerage or other service or advice in the structuring of any offering. Issuer agrees that any communications from Service Provider, whether written, oral or otherwise, regardless of content, will never be interpreted or relied upon as investment advice or a securities recommendation. Issuer agrees that it will only rely on the advice of its attorneys, accountants and other professional advisors, including any registered broker-dealers acting as an underwriter for a securities offering. | |
| h. | Electronic Signature and Communications Notice and Consent. Both Issuer and Service Provider hereby consents and agrees that electronically signing this Agreement constitutes each party’s signature, acceptance and agreement as if actually signed by that party in writing. Further, each party agrees that no certification authority or other third party verification is necessary to validate any electronic signature; and that the lack of such certification or third party verification will not in any way affect the enforceability of your signature or resulting contract between Issuer and Service Provider. Each party understands and agrees that their e-signature executed in conjunction with the electronic submission of this Agreement shall be legally binding. Each party agrees that their electronic signature is the legal equivalent of their manual signature on this Agreement and consents to be legally bound by the Agreement’s terms and conditions. Furthermore, both Issuer and Service Provider hereby agree that all current and future notices, confirmations and other communications regarding this Agreement specifically, and future communications in general between the parties, may be made by email, sent to the email address of record as set forth in the Notices section above or as otherwise from time to time changed or updated and disclosed to the other party, without necessity of confirmation of receipt, delivery or reading, and such form of electronic communication is sufficient for all matters regarding the relationship between the parties. If any such electronically-sent communication fails to be received for any reason, including but not limited to such communications being diverted to the recipients’ spam filters by the recipients email service provider, or due to a recipient’s change of address, or due to technology issues by the recipient’s service provider, the parties agree that the burden of such failure to receive is on the recipient and not the sender, and that the sender is under no obligation to resend communications via any other means, including but not limited to postal service or overnight courier, and that such communications shall for all purposes, including legal and regulatory, be deemed to have been delivered and received. No physical, paper documents will be sent to Issuer, and if you desire physical documents then you agree to directly and personally print, at your own expense, the electronically-sent communication(s) and maintaining such physical records in any manner or form that you desire. Your Consent is Hereby Given: By signing this Agreement electronically, you explicitly agree to this Agreement and to receive documents electronically, including your copy of this signed Agreement as well as ongoing disclosures, communications and notices. |
| i. | Assignment. No party may transfer or assign its rights and obligations under this Agreement without the prior written consent of the other parties. Notwithstanding the foregoing, without the consent of the other parties, any party may transfer or assign its rights and obligations hereunder in whole or in part (a) pursuant to any merger or consolidation, and, (b) to the successors and assigns of all or substantially all of the assets of such assigning party, provided such entity shall be bound by the terms hereof. This Agreement will be binding upon and will inure to the benefit of successors and assigns. | |
| j. | Binding Arbitration, Applicable Law and Venue, Attorneys’ Fees. This Agreement is governed by, and will be interpreted and enforced in accordance with the laws of the State of California without regard to principles of the conflict of laws. The parties hereby agree that any claim or dispute arising under this Agreement may only be brought in arbitration, with venue in Los Angeles, California. It is further agreed that any such action will be pursuant to the rules of the American Arbitration Association. Issuer and Service Provider each consent to this method of dispute resolution, as well as jurisdiction, and consent to Los Angeles being a convenient forum for any such claim or dispute and each party waives any right it may have to object to either the venue or jurisdiction for such claim or dispute. In the event of any dispute among the parties, the prevailing party shall be entitled to recover damages plus reasonable costs and attorney’s fees and the decision of the arbitrator shall be final, binding and enforceable in any court. | |
| k. | Counterparts; Facsimile; Email; Signatures. This Agreement may be executed in counterparts, each of which will be deemed an original and all of which, taken together, will constitute one and the same instrument, binding on each signatory thereto. This Agreement may be executed by signatures, electronically or otherwise, delivered by email, and a copy hereof that is properly executed and delivered by a party will be binding upon that party to the same extent as an original executed version hereof. | |
| l. | Force Majeure. No party will be liable for any default or delay in performance of any of its obligations under this Agreement if such default or delay is caused, directly or indirectly, by fire, flood, earthquake or other acts of God; labor disputes, strikes or lockouts; wars, rebellions or revolutions; riots or civil disorder; accidents or unavoidable casualties; interruptions in transportation or communications facilities or delays in transit or communication; supply shortages or the failure of any person to perform any commitment to such party related to this Agreement; or any other cause, whether similar or dissimilar to those expressly enumerated in this Section 15(n), beyond such party’s reasonable control. | |
| m. | Interpretation. Each party to this Agreement has been represented by counsel and/or has had sufficient time to carefully review each of the terms and provisions of this Agreement and voluntarily accepted each term and provision and executed this Agreement. All pronouns and any variation thereof will be deemed to refer to the masculine and feminine, and to the singular or plural as the identity of the person or persons may require for proper interpretation of this Agreement. And it is the express will of all parties that this Agreement is written in English and uses the font styles and sizes contained herein. | |
| n. | Captions. The section headings in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. | |
| o. | Beneficiaries. The parties agree that there are no third party beneficiaries to this Agreement. | |
| p. | Entire Agreement; Amendments. This Agreement sets forth the entire agreement between the parties concerning the Service Provider services provided, and supersedes all prior or contemporaneous communications, representations or agreements between the parties, whether oral or written, regarding the subject matter of this Agreement. This agreement may not be modified or amended except by written agreement executed by all the parties of this Agreement. |
APPENDIX I
StartEngine Secure Services
| ● | Campaign page message board is active during the subscription | ||
| ● | Invest services to respond to chat or email from investors and refer unanswered questions to Issuer. | ||
| ● | Annual report Form C-AR: | ||
| ● | Weekly then daily reminders from 1st day to 120 days after end of fiscal year | ||
| ● | Report URL with copy button to post on company website | ||
| ● | Display report link on header of the campaign page. Additional reports displayed when click “view all reports” link | ||
| ● | Filing with XXXXX encoded XML | ||
| ● | Automatic update to all the shareholders with link to report | ||
| ● | Termination report Form C-TR | ||
| ● | After three annual reports and company under $10M in assets | ||
| ● | Filing with XXXXX encoded XML | ||
| ● | Notification to all of the shareholders | ||
| ● | Unlimited shareholder updates with the new editor (video and graphics) | ||
| ● | Permanent record of all communications | ||
| ● | Transfer recording services charged to issuer: | ||
| ● | Add new investor (no fee) | ||
| ● | Full or partial ownership transfer additional - $2 per recording | ||
| ● | Change of address with email confirmation - $2 per recording | ||
| ● | Stock splits recording and email confirmation - $2 per shareholder | ||
| ● | Convertible note conversion into shares recording and email confirmation - $2 per shareholder | ||
APPENDIX C
Payment Terms
Company appoints StartEngine and StartEngine’s payment processor and acquiring bank (the “Processor”) as its agent for the purpose of receiving payments from its investors (as defined in the Agreement), (each such payment being a “Transaction” and the related funds being “Funds”). Company agrees that as of when StartEngine’s designated payment processor or acquiring bank, are first in possession of Funds, such Funds shall be deemed to have been received by Company or its designated escrow company (the “Escrow Agent”). In the event that, for whatever reason, StartEngine or Processor fails to settle Funds to Company or Escrow Agent, Company shall: (i) shall not seek to collect the Funds from investors a second time; and (ii) shall issue to investors such equity or other consideration as it has promised in exchange for the Funds. Each Transaction shall be, as a matter of law, a two-party payment transaction between the investor as payor and the Company as payee, acting through its agent, StartEngine.
Company shall require investors to make Transaction payments in such method as StartEngine shall require. The methods that StartEngine may require include, without limitation, credit or debit card, ACH or wire transfer. ACH and wire Transactions shall be payable to the Escrow Agent or StartEngine, as indicated by StartEngine on the ACH or wire instructions provided by StartEngine to investors and Company though the StartEngine site.
As agent for StartEngine in receipt of Transaction Funds, StartEngine shall follow Company’s instructions with respect to settlement of Funds and StartEngine has the right to issue receipts to investors for Transactions Funds in the name of the Company (each a “Receipt”). Company shall honor Receipts. Each investor is a third party beneficiary under this Addendum and entitled to enforce StartEngine’s rights hereunder.
Company represents that it is party to an escrow agreement with the Escrow Agent identified in the Agreement and that such Escrow Agent is acting for and on behalf of the Company in its receipt of Transaction Funds.
Company acknowledges that StartEngine is not a bank or money transmitter. In the event of a bankruptcy or insolvency of StartEngine or its payment processor or acquiring bank, Funds may be at risk of loss. Company will not necessarily benefit from FDIC insurance in respect of Funds that are not yet in its possession.
Company, to its knowledge, shall not permit any Transaction to occur involving any: (i) person or entity who to its knowledge appears on the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), Specially Designated Nationals List (SDN); (ii) person or entity who is less than 18 years of age; or (iii) person or entity that is making a Transaction for any purpose other than an investment in Company pursuant to a valid Subscription Agreement. Company states that each Transaction that occurs shall constitute payment for an issuance of equity by Company and shall not be for any other purpose or on behalf of any third party.
Company shall not be liable for the failure of any Transaction on account of the card being ineffective and Company shall never be liable to settle any Transaction Funds to Company or Escrow Agent that Processor has not itself received. Company acknowledges and agrees that StartEngine shall be under no obligation to challenge any chargebacks under the Processing Agreement, either on behalf of Company or StartEngine.
Company agrees to the fees as set out in Appendix A hereto. StartEngine reserves the right to cause Processor to offset all fees and other amounts owing to StartEngine or Processor from Transaction settlements that would otherwise be payable to Company.
In the event that a chargeback occurs with respect to any Transaction, and the related investor’s holding of securities is cancelled, Company shall provide the necessary information to the transfer agent, or through StartEngine Secure, as the case may be, to reflect the cancellation of such holding. Chargebacks can occur up to 6 months after the date of the original transaction. Company agrees that the Escrow Agent shall hold back 6% of all funds to account for the probability of chargebacks for 6 months (an increase of 120 days from the 60 day ACH hold) from the close of the campaign. In the event that StartEngine or Processor become liable for any chargebacks, fraud, fines or other amounts on account of Transactions: (i) Company shall void the investor subscription in question; and (ii) Company shall deliver the amounts thereof to StartEngine on demand and Company authorizes StartEngine to retrieve such amounts from the Escrow Agent.
Company acknowledges that, as agent for the Company, StartEngine shall allow investors the option of investing up to $2,000 via credit card per investment. This amount is dependent on the individual’s investment limits as outlined in the Regulation Crowdfunding and Regulation A rules.
Company acknowledges that no refunds will be needed or required, except in the case of chargebacks, because Transactions are not processed until the company disburses. Refunds are not offered after the campaign has closed, except in the case of chargebacks, and investors cannot cancel their investment in the 48 hours prior to the end of the offering.
Company desires to effect settlement of credits and debits from the Company Deposit Account (which account is identified by uploading a scan of a blank Company check or by such other means as StartEngine may require) by means of ACH and/or wire transfer in conjunction with the Agreement. In accordance with this desire, Company authorizes StartEngine and/or its affiliates to initiate debit and credit entries to the Company Deposit Account. Company agrees to maintain sufficient funds in Company Deposit Account to cover debit transactions. By signing this authorization, Company states that it has authority to agree to such transactions and that the Company Deposit Account indicated is a valid and legitimate account for the handling of these transactions. This authority is to remain in effect until StartEngine receives written notice from Company revoking it. This authorization is for the payment of payment processing fees, chargeback amounts, or any other sums owed to StartEngine or StartEngine’s affiliates. Company also certifies that the appropriate authorizations are in place to allow Company to authorize this method of settlement. All changes to the identification of the Company Deposit Account under this authorization must be made in writing in accordance with the Agreement. Company understands that if the information supplied as to the ABA Routing Number and Account Number of the Company Deposit Account is incorrect, and funds are incorrectly deposited, StartEngine will attempt to assist Company in the recovery of such funds but has no liability as to restitution of the same. StartEngine’s assistance in recovering the funds, where available, will be billed to Company at StartEngine’s current hourly rate for such work. Company acknowledges that the origination of ACH transactions to the Company Deposit Account must comply with the provisions of U.S. law.
