Placement Agent and Advisory Services Agreement

1.

The Company acknowledges and agrees that BSL’s obligations hereunder are on a reasonable best efforts basis only and that the execution of this Agreement does not constitute a commitment by BSL to purchase any securities and does not ensure the successful placement of any securities or any portion thereof or the success of BSL with respect to securing any other Financing on behalf of the Company. BSL will act solely as a broker with respect to identifying and negotiating with potential investors in a Financing (“Investors”). BSL will not act as an underwriter in any Financing.

As a result, Company is hereby:

(a) representing to BSL that no Company signatory is presently engaged on its own or with any other party for purposes of offering the Company for sale or for any other purpose that would interfere or compete with BSL’s services;

(b) covenanting that no Company signatory will engage with any other party or on its own for purposes of offering the Company for sale or for any other purpose that would interfere or compete with BSL’s services during the Term;

(c) covenanting to cooperate fully and promptly with BSL during the Term in furtherance of the purposes of this Agreement and to immediately refer all inquiries on the Company to BSL; and

(d) acknowledging that in the event any Company signatory has engaged a party in the past to offer the Company for sale, or for any other reason that would result in the payment of a contingent fee to such party should a Financing (as defined below) close after the commencement date, such engagement has been terminated and any payments that may become due thereunder shall have no effect on the fees due to BSL hereunder.

BSL is pleased to act as exclusive financial advisor to the Company, including its affiliates and subsidiaries, in connection with the Company’s intention to pursue the corporate finance activities described in this Agreement or any combination thereof. In such Financings, BSL may be referred to as the “Advisor”, “Underwriter”, or “Placement Agent.” The exclusive engagement outlined in this letter has the objective of providing growth capital and stock liquidity for the Company’s expansion plan.

BSL’s failure to identify any prospects for the Company shall not constitute a breach of this Agreement and Company acknowledges that BSL cannot guarantee the successful consummation of any Financing. Financing means the alienation to any party, regardless of how or by whom procured, by one or more of the Company’s signatories or other owners of the Company of title to or beneficial interest (whether held directly or indirectly by such Company’s signatory[ies]) in any shares, any membership or partnership interests, the goodwill, or substantially all of the assets of the Company or any division thereof including, without limitation: a sale, transfer, merger, or disposal, in whole or in part, of the Company; (ii) the entering into, transfer or surrender of any lease, license, option, joint venture, partnership, or franchise; (iii) any other financial arrangement relating to the Company and having an effect similar to clause (i) or (ii); (iv) the filing of a petition for bankruptcy or receivership by, on behalf of, or against any Company signatory; or (v) the filing of a request to register any securities of a Company signatory with the Securities and Exchange Commission (or similar regulatory body outside the United States).

2.

BSL’s Compensation: The Company hereby agrees to pay BSL fees in such amount and upon such terms and conditions contained herein upon the successful completion of a Financing as follows:

Cash Advisory Fee. The Company agrees to issue to BSL Two Hundred Fifty Thousand (250,000) common stock shares with an issuance date of the Effective Date as advisory fee (“Advisory Fee”).

Success Fees. The Company will pay BSL a Success Fee, as described below, when the Company closes on a Financing during the Term (as hereinafter defined) of this Agreement or during a two (2) year period thereafter.

Financing- If the Company consummates an Financing (to include debt which is convertible into equity), defined as a corporate investment or financial investment of/with/into the Company, or if stock/equity is purchased directly from a shareholder(s) of the Company, BSL shall receive a Success Fees of eight percent (8%) of the gross proceeds received in the Financing (including, without limitation, upon the exercise of any warrants issued in an Financing); and warrants to purchase eight percent (8%) of the number of shares issued in the Financing plus, and in the event that warrants or other rights are issued in the Financing, eight percent (8%) of the shares issuable upon exercise of the warrants or other rights, and in the event of the debt financing, warrants to purchase an amount of Company common stock equal to the eight percent (8%) of the gross amount of debt financing or facility received by the Company divided by the Strike Price per Share. 

The warrant exercise price, i.e. the “Strike Price per Share”, shall be defined as the lower of: 1.) the price per share paid by investors in each respective Financing, 2.) in the event that securities convertible are sold in the Financing, the conversion price of such securities, or 3.) in the event that warrants or other rights are issued in the Financing, the exercise price of such warrants or other rights.

Other - If during the term of this Agreement, the Company enters into an agreement with respect to, or consummates, any transaction or series or combination of transactions, whereby, directly or indirectly, control of or a material interest in the Company or any of its business, or a material amount of any of their respective assets, is transferred, including, without limitation, a sale or exchange of capital stock or assets, a merger or consolidation, business combination, a tender or exchange offer, recapitalization, a leveraged or management buy-out, the formation of a joint venture, minority investment or partnership or similar transaction, then the Company shall pay to BSL upon the closing of such transaction a fee equal to eight percent (8%) of the Transaction Value of such transaction or a mutually agreed to amount, which shall include (i) the total amount of indebtedness for borrowed funds, capitalized lease obligations and non-trade liabilities of the Company that are either assumed by the acquirer, redeemed or otherwise satisfied in connection with the transaction, or which remain outstanding after the transaction is consummated; (ii) the fair market value of any assets excluded from the transaction; (iii) the fair market value of any ownership interests which are retained by the Company’s shareholders or which remain outstanding after the transaction is consummated; and (iv) the amount of any contingent payments, including, without limitation, earn-outs, payable in connection with the transaction.

Transactions that are excluded from this or carved out are indicated in EXHIBIT B.

The cash portion of any Success Fees will be due and payable upon the closing of each Financing and will be payable directly to BSL from the account established for such closing or in such other manner as may be acceptable to BSL. The Company shall establish and maintain an SEC compliant offering deposit or escrow account with Sutter Securities Clearing, LLC for the receipt and disbursement of funds for the closing of any Financing and for the maintenance and administration of the Company’s digital shareholder ledger and related digital securities services, as applicable.

Any and all warrants to be issued to BSL will be due and payable upon the closing of each Financing. Warrants shall be issued to BSL in conjunction with the closing of each Financing (unless otherwise agreed to in writing). Warrants may not be transferred or assigned, in whole or in part, at any time without the prior written consent of the Company except to a wholly owned subsidiary of BSL or a registered representative of BSL. It shall be a condition to the transfer of warrants that any transferee thereof shall deliver to the Company a written agreement to accept and be bound by all of the terms and conditions contained in the warrant.

The warrants shall be exercisable from the date of issuance and for a term of three (3) years. The warrants shall contain cashless exercise provisions and shall be non-callable and non-cancelable with immediate piggy-back registration rights. The warrants shall also have customary provisions for stock dividends, splits, mergers, and any future stock issuances etc., at a price(s) below said exercise price per share and shall provide for automatic exercise immediately prior to expiration. The warrants will contain terms and conditions that are no less favorable to BSL than the terms and conditions of any warrants issued to the participants in the relevant Financing.

In the event the any Advisory Fee, Success Fee or expense reimbursement becomes delinquent, BSL employs the same prudent collection procedures as other businesses and, if it becomes necessary to file suit or to engage a collection agency for the collection of any fees and/or expenses, the Company shall pay all related costs and expenses of such collection efforts, including reasonable attorney fees.

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(e)

5.  

Term; Termination of Agreement. The initial term of this Agreement shall six (6) months from the Company’s delivery of the Offering Memorandum to BSL (the “Initial Term”). After the Initial Term, the term of this Agreement will automatically be extended for an additional successive one (1) year periods unless either party provides written notice to the other party of its intent not to so extend the term at least thirty (30) days before the expiration of the then current term. The Initial Term and any subsequent extensions shall be known as the “Term”. Either party may terminate this Agreement prior to its expiration by notifying the other party in writing upon a material breach by that other party, unless such breach is curable and is in fact cured within thirty (30) days after such notice. Notwithstanding the foregoing, all provisions of this Agreement (including Exhibit A hereto) other than Sections 1, 3 and 4 (a) and (b) shall survive the termination or expiration of this Agreement. BSL shall be entitled to compensation under Section 2 (and payment for expenses under Section 12) based on the completion of a Financing prior to the termination or expiration of this Agreement. In addition, upon termination or expiration of this Agreement, BSL shall be entitled to a Success Fee(s) during the two (2) year period following the termination or expiration of this Agreement if the Company completes a Financing with a party, which became aware of the Company or which became known to the Company prior to such termination or expiration, and or which completed a Financing with the Company. Within thirty (30) days of the Effective Date and / or from time to time during the Term of this Agreement and / or within ten (10) business days after the expiration or termination of this Agreement, BSL will provide to the Company a list in writing of all persons or entities introduced by BSL to the Company pursuant to this Agreement (the “Introduction List”). Within ten (10) business day following the delivery of the Introduction List to the Company, the Company will provide BSL with written notice of any objections to the inclusion of any person or entity in the Introduction List and state the basis for each objection in reasonable detail. The Parties will cooperate to resolve the status of any person or entity as to which the Company shall have made a timely and proper objection.

6.  

Indemnification. The indemnification provisions set forth in Exhibit A hereto are incorporated by reference and are a part of this Agreement.

Notices shall be deemed to have been given contemporaneously in the case of fax or e-mail. Notices given by first class mail shall be deemed to have been given seven days after mailing. Evidence that the notice was properly addressed, stamped and mailed shall be prima facie evidence of mailing.

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All communications regarding any possible transactions, requests for due diligence or other information, requests for facility tours, product demonstrations or management meetings, will be submitted or directed to the Company, and BSL shall not contact any employees, customers, suppliers or contractors of the Company or its affiliates without express permission. Nothing in this Agreement shall constitute a grant of authority to BSL or any representatives thereof to remove, examine or copy any particular document or types of information regarding the Company, and the Company shall retain control over the particular documents or items to be provided, examined or copied. BSL shall be permitted to maintain at least one copy of all Company information, confidential or not, in any format, whether electronic, digital or hard copy, to satisfy its recordkeeping requirements.

The provisions of this Section shall survive any termination of this Agreement.

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(i) THE PERSONNEL REPRESENTING BSL IN NEGOTIATING THIS AGREEMENT DO NOT HAVE AUTHORITY TO MAKE ANY STATEMENTS, PROMISES OR REPRESENTATIONS IN CONFLICT WITH OR IN ADDITION TO THE INFORMATION IN THIS AGREEMENT AND BSL SPECIFICALLY DISCLAIMS ANY RESPONSIBILITY FOR ANY SUCH STATEMENTS, PROMISES, OR REPRESENTATIONS; STANDS AND ACKNOWLEDGES THAT:

(ii) COMPANY HAS NOT RELIED UPON SUCH STATEMENTS, PROMISES, OR REPRESENTATIONS AND WAIVES ANY RIGHTS OR CLAIMS ARISING FROM ANY SUCH STATEMENTS, PROMISES, OR REPRESENTATIONS;

(iii) WHILE COMPANY AND THE PERSONNEL REPRESENTING BSL IN NEGOTIATING THIS AGREEMENT MAY HAVE DISCUSSED POTENTIAL VALUE RANGES FOR THE COMPANY AND/OR TARGET SALE PRICES AND TRANSACTION STRUCTURES, THE EXACT VALUE OF THE COMPANY COULD NOT POSSIBLY BE ASCERTAINED BY BSL OR ANY OTHER PARTY WITHOUT GOING TO MARKET AND, FURTHER, THAT THE EXACT VALUE OF THE COMPANY AND THE PRECISE STRUCTURE OF AN EVENTUAL TRANSACTIONS CAN ONLY BE DETERMINED BY WHAT A WILLING AND ABLE COUNTERPARTY AGREES TO PAY AND COMPANY AGREES TO ACCEPT IN AN ARMS-LENGTH TRANSACTION IN THE ABSENCE OF DURESS;

(iv) BSL’S ENGAGEMENT IS NOT A GUARANTEE THAT A VALUE OR STRUCTURE ACCEPTABLE TO COMPANY WILL OR CAN BE ACHIEVED VIA THE PROVISION OF THE SERVICES;

24.

Non-Circumvention. Other than as provided for herein, the Company agrees to NOT proceed with any operating relationship or transaction with any investors, introduced client, entities or persons or any other contact introduced by BSL to the Company. The Company agrees to NOT to attempt to contact any Investors, entities or persons or any other contact introduced by BSL to the Company without prior written approval from BSL. This Section shall survive termination or expiration of the Agreement.

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