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BREAN CAPITAL, LLC

570 Lexington Avenue

New York, NY 10022-6822

212/702-6500

www.breancapital.com

 

April 19, 2013

 

STRICTLY PRIVATE

AND CONFIDENTIAL

 

Mr. Art Agolli

Chief Executive Officer

Petrosonic Energy, Inc.

Suite 300, 714-1Street SE

Calgary, AB T2G 2G8

Canada

 

Dear Art:

 

This is to acknowledge and confirm the terms of our corporate finance
representation agreement (the “Agreement”) as follows:

 

1.Petrosonic Energy, Inc., its subsidiaries and affiliates (the “Company”)
hereby engages Brean Capital, LLC (“Brean”), and Brean hereby agrees to render
services to the Company, on an exclusive basis as the Company’s corporate
finance advisor or placement agent in a strategic investment by a potential
strategic investor or industry investor (or any other investor accepted by the
Company), subject to satisfactory completion of due diligence by Brean and
market conditions.

 

Brean agrees to provide general financial advice to the Company and undertake
specific investment banking transactions and/or advisory assignments undertaken
by the Company during the term of this Agreement, including but not limited to
public or private offerings of debt or equity securities, acquisitions, mergers
or the partial or complete sale of the stock or assets of the Company or any of
its divisions or subsidiaries, joint ventures, strategic alliances or any other
financing transactions and the preparation of any fairness opinions required in
connection with any transactions or other matter. Notwithstanding anything
herein to the contrary, this Agreement excludes, and shall not apply to joint
ventures, strategic alliances or investments by and into the Company, or similar
transactions, relating to persons or entities in Kuwait.

 

Upon the Company’s request, Brean will endeavor to: assist the Company in its
due diligence review of any investor or company and other matters, if any,
pertinent to a transaction; work with the Company and its management in
preparing any offering memoranda or similar documents describing the Company and
its operations for use in discussions with any investor or company; assist in
preparing any financial projections or modeling in respect of a transaction;
assist in structuring and negotiating the transaction; and undertake certain
investigations and reviews with regard to the possible rendering of an opinion
as to the fairness, from a financial point of view, of the consideration to be
paid or received by the shareholders of the Company in a transaction where such
an opinion is required.

 

In order to coordinate the efforts to complete a transaction satisfactory to the
Company, during the period of Brean’s engagement hereunder, only Brean will have
the authority to initiate discussions with prospective investors. In the event
the Company or its management receives an inquiry from, or are otherwise in
contact with, a party concerning the availability of the Company for a
transaction, they will promptly refer the party to Brean in order that Brean may
continue such discussions, and that party will be identified and included under
this Agreement. In addition, should the Company have been contacted by
prospective investors prior to Brean’s engagement, they will likewise be
identified and included under this Agreement. All prospective investors required
to be referred pursuant to this paragraph and not so referred shall nevertheless
be included under the terms of this Agreement.

 

 

 

 

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Mr. Art Agolli

April 19, 2013

Page 2

 

Additionally, Brean agrees to: develop with the Company a program to introduce
the Company to institutional investors; arrange, organize, assist in preparation
for and participate in an institutional road show consisting of group and
one-on-one meetings and/or telephone calls with institutional investors, the
timing of which shall be mutually agreeable to the Company and Brean; update and
review with the Company the institutional investors who have expressed interest
in the Company; and follow up with the institutional investors as required.

 

Brean conducts institutional investor conferences from time to time for its
various industry sectors. Brean agrees to invite the Company to participate in
relevant institutional investor conferences for which its participation or
attendance will be beneficial to the Company in Brean’s opinion.

 

If the Company so desires, Brean agrees to act as the Company’s Designated
Advisor for Disclosure (“DAD”) for the purpose of sponsoring the Company’s
publicly traded common stock on the OTCQX exchange. In its capacity as the
Company’s DAD, Brean will assist the Company in all of the actions required to
cause the listing to be maintained in good standing, including but not limited
to performing any required due diligence on the Company.

 

The Company will ensure the accuracy of any information provided to Brean during
the term of this Agreement and that it will not contain any untrue statement of
a material fact or omit to state a material fact required to make the
information not misleading. The Company will advise Brean immediately of the
occurrence of any event or any other change known to the Company which results
in the information containing an untrue statement of a material fact or omitting
to state a material fact required to be stated or necessary to make the
information not misleading.

 

The Company agrees that Brean may rely upon, and are a third party beneficiary
of, the representations and warranties, and applicable covenants, set forth in
any agreements with investors in the offering completed pursuant to this
Agreement.

 

2.The term of this engagement shall be for a period of twelve months (the
“Engagement Period”) commencing with the execution of this Agreement by the
Company (the “Effective Date”) subject to extension by mutual written agreement
of the parties at any time subsequent to the end of the initial Engagement
Period,.

 

3.On the Effective Date, the Company agrees to remit to Brean 150,000 shares of
the Company’s common stock (the “Retainer Shares”) and a warrant for the
purchase of up to 150,000 shares of common stock (the “Retainer Warrants”) with
an exercise price of 75 cents and a five year term. The Retainer Shares will
bear piggyback registration rights. The share numbers and exercise price above
in this paragraph shall be appropriately adjusted in the event of a stock split
or similar event.

 

The Company agrees that should it consummate a financing transaction with a
strategic investor or industry investor (or any other investor accepted by the
Company) from the Effective Date through a period lasting until termination of
the Agreement with any party or parties, or for one year after the termination
of the Agreement, with investors with whom Brean has been in contact, and has
been obtained through the efforts of Brean, directly or indirectly, or through
the use of any work product or materials prepared by Brean, in addition to the
compensation set forth above, the Company shall pay to Brean, or cause Brean to
be paid, at the closing of such transaction, a USD cash fee equal to 8% of the
gross proceeds raised and a warrant (the “Agent’s Warrant”) allowing it to
purchase, at its option, such number of shares or principal amount of a security
with pricing and terms identical to the security or securities purchased by
investors in a transaction covered under this Agreement, in an amount that is
equal to 10% of the gross proceeds and firm commitments received by the Company
pursuant to any such transaction.

 

 

 

 

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Mr. Art Agolli

April 19, 2013

Page 3

 

The Agent’s Warrant will be exercisable at any time before the fifth anniversary
of the date of issue and will, among other things: (i) be transferable or
issuable (at Brean’s option) to employees, officers and directors of Brean, or
their affiliates, or designees of Brean, (ii) carry piggyback registration
rights, (iii) be non-callable and (iv) contain such other terms as are
customarily included in warrants of this type. Also, Brean will be afforded
customary indemnification protections granted to the investors as part of the
agreement governing the registration of the investor securities sold in the
transaction, as a third party beneficiary to such provisions.

 

The Company agrees that should it consummate a transaction in which there is a
change in control of the company (a “Sale Transaction”) from the Effective Date
through a period lasting until termination of the Agreement with any party or
parties, or for one year after the termination of the Agreement with parties
with whom Brean has been in contact and has been obtained through the efforts of
Brean, directly or indirectly, or through the use of any work product or
materials prepared by Brean, the Company shall pay to Brean, or cause Brean to
be paid, at the closing of such transaction, a fee equal to 5% of the gross
proceeds received by the Company. For the purposes of this Agreement, “gross
proceeds” shall mean any and all cash, notes and securities received by the
Company in the Sale Transaction, whether in lump sum or in installments, and
including items of such nature which are received by the Company as contingent
payments.

 

The Company agrees that should it consummate a non-financing strategic
transaction (such as a joint venture) from the Effective Date through a period
lasting until termination of the Agreement, or for one year after the
termination of the Agreement, with a party or parties first introduced by and
obtained through the efforts of Brean, directly or indirectly, or through the
use of any work product or materials prepared by Brean, the Company and Brean
agree to enter into a separate agreement setting forth compensation to Brean in
connection with such transaction, which according to the parties’ intentions
would generally consist of a 1.5% equity or royalty interest in the joint
venture or similar value or arrangement, provided however the terms shall be
agreed case-by-case depending on the circumstances.

 

4.Any fees not paid when due will accrue interest to the extent permitted by
applicable law, at a rate of 10% per year and the Company will be responsible
for any reasonable legal fees incurred by Brean in collecting such fees. The
Retainer Shares will be forwarded by the Company for receipt by Brean within ten
business days of the Effective Date.

 

5.The Company will reimburse Brean for reasonable out-of-pocket expenses,
including but not limited to travel, meals, lodging and legal fees, incurred in
connection with its representation and services hereunder. Reimbursement for
out-of-pocket expenses will be paid by the Company within ten (10) days of
receipt of invoice from Brean, except for the significant expenses of the
institutional road show (including, without limitation, travel, lodging and
institutional lunches) which will be paid directly by the Company. The Company’s
obligation to Brean for reimbursement of out-of-pocket expenses will survive any
cancellation of this Agreement.

 

For the twelve month period commencing on the closing of a transaction pursuant
to this Agreement, if the Company proposes to effect any Sale Transaction, any
public offering, any Rule 144A offering, or any private placement of securities
or if the Company elects to proceed with a non-strategic financing during the
term of this Agreement, the Company agrees to offer to engage Brean as no less
than co-lead managing underwriter and bookrunner, co-lead placement agent or
co-lead financial advisor, as the case may be, and the Company agrees that Brean
will have the right to place no less than 25% of any non-strategic financing
transaction and will receive a fee equal to the percentage of the transaction
placed, and in any event Brean will receive no less than 15% of the fee in any
non-strategic financing transaction, on terms and conditions customary to Brean
on similar transactions, provided, however, that Brean may decline such
engagement in its sole and absolute discretion at such time. Brean’s election to
exercise its right with respect to a particular proposed transaction will not
adversely affect its rights hereunder with respect to any proposed transaction
of the Company during the twelve month period referred to above.

 

 

 

 

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Mr. Art Agolli

April 19, 2013

Page 4

 

6.Indemnification is incorporated by reference to Addendum I.

 

7.The benefits of this Agreement shall inure to the parties hereto and their
respective successors and assigns, and the obligations and liabilities assumed
in this Agreement shall be binding upon the parties hereto and their respective
successors and assigns. Notwithstanding anything contained herein to the
contrary, the Company shall not assign to an unaffiliated third party any of its
rights or obligations hereunder without the express written consent of Brean.

 

8.Any dispute between the parties to this Agreement shall be settled by
arbitration before the facilities of the Financial Industry Regulatory Authority
(“FINRA”) in the City of New York and will be conducted pursuant to applicable
federal laws, the laws of the State of New York, without regard to conflicts of
laws, and the rules of the selected arbitral facility. The parties understand
that the award of the arbitrators, or of a majority of them, will be final and
that a judgment upon any award rendered may be entered in any court having
jurisdiction. Notwithstanding the foregoing, if FINRA declines or is otherwise
unavailable to arbitrate a dispute arising under this Agreement, the parties
agree that such dispute shall be resolved through a federal court residing in
the City of New York, pursuant to applicable federal laws, the laws of the State
of New York, without regard to conflicts of laws.

 

9.All notices provided hereunder shall be given in writing and either delivered
personally or by overnight courier service or sent by certified mail, return
receipt requested, if to Brean, to 570 Lexington Avenue, New York, New York
10022, Attention: William J. McCluskey; and if to the Company, to 205 Suite 204,
Calgary, AB T2G OR3, Canada, Attention: Art Agolli.

 

10.The Company represents and warrants to Brean that Art Agolli is the Chief
Executive Officer of the Company and is authorized on behalf of the Company to
execute the Agreement, and the execution of this Agreement will not conflict
with or breach the certificate or articles of incorporation or by-laws of the
Company or any agreement to which the Company is a party.

 

11.The Agreement sets forth the entire understanding of the parties relating to
the subject matter hereof, and supersedes and cancels any prior communications,
understandings and agreements between the parties. This Agreement cannot be
modified, or changed, nor can any of its provisions be waived, except by written
agreement signed by all parties.

 

Please confirm that the foregoing is in accordance with your understanding by
signing and returning this letter to Brean and keeping a duplicate for your
files. This Agreement shall be effective after your acceptance below and its
receipt by Brean at its address set forth on this letter.

 

  Sincerely,       BREAN CAPITAL, LLC         By: /s/ William J. McCluskey  
William J. McCluskey

 

Accepted and agreed to as of the 19th day of April, 2013.

 

 

 

 

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Mr. Art Agolli

April 19, 2013

Page 5

 

PETROSONIC ENERGY, INC.         By: /s/ Art Agolli     Art Agolli  

 

 

 

 

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Mr. Art Agolli

April 19, 2013

Page 6

 

Addendum I - Indemnification

 

The Company shall:

 

a.Indemnify Brean, its parents, affiliates and/or subsidiaries and each of their
respective officers, directors, employees and agents (collectively, the
"Indemnified Parties") and hold them harmless against any losses, claims,
damages, expenses or liabilities to which the Indemnified Parties may become
subject arising in any manner out of or in connection with the rendering of
services by Brean hereunder unless it is finally judicially determined, without
any further right to appeal, that such losses, claims, damages, expenses or
liabilities resulted primarily from the gross negligence, bad faith or willful
misconduct of Brean; and

 

b.Reimburse the Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating, preparing to defend or
defending lawsuits, claims or other proceedings arising in any manner out of or
in connection with the rendering of services by Brean hereunder; provided,
however, that in the event a final judicial determination is made to the effect
specified in subparagraph (a) above, the Indemnified Parties will remit to the
Company any amount reimbursed under this paragraph (b).

 

The Company agrees that the indemnification and reimbursement commitments set
forth in this paragraph shall apply whether or not the Indemnified Parties are a
formal party of any such lawsuits, claims or other proceedings, that the
Indemnified Parties are entitled to retain separate counsel of their choice in
connection with any of the matters to which such commitments relate and that
such commitments shall extend upon the terms set forth in this paragraph to any
Indemnified Party.

 

Further, the Company and Brean agree that if any indemnification or
reimbursement sought by Brean of the Company is finally judicially determined to
be unavailable then, whether or not Brean is entitled to indemnification or
reimbursement, the Company and Brean shall contribute to the losses, claims,
damages, liabilities and expenses for which such indemnification is held
unavailable in such proportion as is appropriate to reflect the relative
benefits to the Company on the one hand, and Brean on the other, in connection
with the transactions to which such indemnification or reimbursement related,
and other equitable considerations; provided, however, that in no event shall
the amount to be contributed by the Indemnified Parties exceed the amount of the
fee actually received by Brean hereunder. The provisions hereof shall survive
any termination of this Agreement.