Exhibit 10.19

 

AGINCOURT, LTD

10 South Riverside Plaza, #1800

Chicago, Illinois 60606

 

December 12, 2013

 

Tom Parigian

Managing Partner

Paulson Investment Company

40 Wall Street, New York, NY 10005

 

Re: Sub-Agency Agreement

 

Dear Mr. Parigian:

 

Pursuant to that certain Exclusive Investment Banking Agreement dated March 12,
2013 and supplemented on May 21, 2013 and as of even date herewith (the
"Placement Agency Agreement"), Agincourt, Ltd. (“AGENT”) has been engaged by
Cardax Pharmaceuticals, Inc., a Delaware corporation (“Holdings”), and (the
"Company"), to act as the Company's lead placement agent in connection with the
offering by the Company of shares of common stock (the “Common Stock”) of Koffee
Korner, Inc., a Delaware corporation (“PubCo”), and warrants to purchase shares
of Common Stock (the “Warrants”) which will be issued and sold contingent upon,
and at the closing of, the proposed merger of a wholly owned subsidiary of PubCo
with and into Cardax Pharma, Inc. (“Pharma”), a wholly owned subsidiary of the
Company resulting in, among other matters, PubCo owning 100% of Pharma and
Holdings owning more than 50% of the Common Stock of PubCo. The shares of the
Common Stock and the Warrants (collectively, the “Securities”) that will be
issued and sold in the offering (the "Offering") will be offered on a "best
efforts" basis to "accredited investors", as defined in Regulation D under the
Securities Act of 1933, as amended (the "Act"), in a "private placement" under
Section 4(2) and Regulation D of the Act. The AGENT is not obligated to provide
more than its commercially reasonable efforts to place the Securities to
consummate the Offering and the Company has the right to terminate the Offering.
This Sub-Agency Agreement (this ''Agreement") sets forth the terms and
consideration Paulson Investment Co. Inc., an Oregon Corporation ("Paulson."),
will receive from AGENT in connection with its role as the AGENT's sub-agent in
the Offering.

 

1.   Services. Paulson will assist AGENT in placing the Securities to be sold in
the Offering to selected investors who are "accredited investors". Paulson
acknowledges that AGENT, as the lead placement agent, has full authority to
administer the Offering and to take such actions and make decisions as AGENT in
its sole discretion deems appropriate.

 

(a)          Fees. Simultaneously with each closing of the Offering, AGENT shall
direct the escrow agent for the Offering to pay Paulson from the escrow account
established for the Offering a cash placement fee equal 9% of the aggregate
purchase price paid by each Referred Investor (as defined below) for Securities
that are sold at such closing (the "Placement Agent's Fee"). AGENT agrees that
no closing in which subscription funds submitted by Referred Investors are
included as proceeds shall be consummated without providing for payment to
Paulson as contemplated herein and that, in the event an escrow account is not
used in connection with one or more closings, then AGENT shall immediately pay
Paulson, or cause Paulson to be paid, the Placement Agent's Fee from
compensation AGENT receives or is due in relation to each closing. The Placement
Agent's Fee shall be paid to Paulson by wire transfer or in such other manner as
Paulson may reasonably request from time to time.

 

 

 

 

Within 15 days following the final closing of the Offering, Paulson will provide
the AGENT, and PubCo with a list of all persons that were Specifically
Introduced in connection with the Offering. Should any person that was
Specifically Introduced make an investment in PubCo or Pharma, through an
offering that is not a public offering by either of those companies, at any time
during the period which extends for a period of eighteen (18) months from the
date of the final closing, the company which receives the investment shall pay
Paulson the fee Paulson would receive if the investment were made in this
offering.

 

(b)          Certain Definitions. As used herein, "Referred Investors" means
investors whom Paulson "introduced" (as defined below) to AGENT and which AGENT
introduces to the Company during the period commencing on the earlier of the
date of this Agreement or of the earliest date on the Offering Documents (as
defined below) and ending on the later of the date of the final closing in
relation to the Offering or the date that the Offering is terminated. An
investor "introduced'' by Paulson to AGENT means a person or entity (and any
related family members, successors or affiliates, including, without limitation
affiliated entities and trusts) that is identified by Paulson to AGENT on a
schedule to be provided by Paulson on or before each Closing, subject to the
Company's approval and agreement, or in another reasonable manner (e.g., by
email or hand notice), who as a result of actions by Paulson (i) met with the
Company and/or had a conversation with the Company either in person or via
telephone or other means of communication regarding the Offering or (ii) was
provided with a copy of the Offering Documents by Paulson, the Company or AGENT
based upon expressing an interest in the Offering, and was not previously
introduced to the Company by AGENT or any other placement agent acting for AGENT
or the Company; provided, that an investor introduced by Paulson to AGENT and
which AGENT introduces to the Company will not be a "Referred Investor" and
Paulson will not receive any fee or compensation with respect to such investor
if such investor: (i) is an institutional investor unless such institutional
investor was approved by AGENT as a potential Referred Investor prior to the
distribution of any Offering Documents to such institutional Investor; or (ii)
was introduced to AGENT or to the Company by any other placement agent engaged
by AGENT or the Company in connection with the Offering. A "Specifically
Introduced'' means a person or entity (and any related family members,
successors or affiliates, including, without limitation affiliated entities and
trusts) that is identified by Paulson to AGENT on a schedule to be provided by
Paulson on or before each Closing, subject to the Company's approval and
agreement, or in another reasonable manner (e.g., by email or hand notice), who
as a result of actions by Paulson met with the Company and/or had a conversation
with the Company either in person or via telephone or other means of
communication regarding the Offering.

 

(c)          Warrant Coverage / Compensation. In addition to the Placement
Agent's Fee, as additional compensation, AGENT shall cause Paulson or its
designees who are accredited investors to be paid a warrant (the "Agent's
Warrants") to purchase such number of shares of the Company's common stock equal
to 8% of the total number of shares of PubCo's common stock all Securities sold
are convertible into at the closing of the Reverse Acquisition, at a purchase
price of $0.625 per share (or such other price per share that equals the lowest
purchase price per share that is specified in a warrant granted to AGENT arising
from AGENT's services to the Company pursuant to the Placement Agency
Agreement). Capitalized terms used in this Section 1(c) but not otherwise
defined herein shall have the respective meanings given to such terms in the
Offering Documents.

 

(d)          Expenses. Contingent upon the closing of the first Offering,
Paulson shall receive a non-accountable expense fee of $20,000. Beyond the
aforementioned expense fee, Paulson shall be responsible for its own expenses
incurred in connection with this engagement, unless approved in writing in
advance by the AGENT. Paulson shall be responsible to pay any and all fees and
expenses of its Representatives, and shall comply with all laws, rules and
regulations (including, without limitation, any and all filings and compliance
with the FINRA rules and regulations) applicable to payments involving third
parties.

 

2

 

 

(e)          Survival. The obligations of AGENT set forth in this Section 1
shall survive termination of this Agreement. Payment to Paulson and its
designees, if any, of the Placement Agent's Fee, the Agent's Warrants and
Expenses is due at and as a condition to any closing of the Offering, unless
this condition is waived, in full or in part, by Paulson in its sole and
exclusive discretion, in which case such payment shall be due promptly (and in
no event more than three business days) following the time that Paulson requests
such payment in the future. To the extent there is more than one closing of the
Offering, payment of the proportional amount of the Placement Agent's Fee will
be made out of the proceeds of subscriptions for the Securities sold at each
closing.

 

2.   Offering Documents. AGENT will make available to Paulson, as soon as
practicable after sufficient quantities thereof are made available to AGENT by
the Company, copies any final investor presentation or other Offering Documents
(defined below) to be used in connection with the Offering of the Securities in
such numbers as Paulson may reasonably request. As used herein, "Offering
Documents" means the offering memorandum or other offering materials (e.g., an
investor presentation, subscription agreement and related documents, etc.), as
it or they may be amended, restated and/or supplemented from time to time,
authorized by the Company for use in connection with the Offering. Paulson will
not use any documentation or provide other information regarding the
solicitation of investment in the Company other than the Offering Documents that
have been approved by AGENT.

 

3.   Term of Engagement. This Agreement will terminate upon the termination or
expiration of the Placement Agency Agreement ("Termination Date"). It is hereby
agreed and acknowledged that Paulson may terminate this Agreement prior to the
Termination Date by providing to AGENT at least thirty (30) days advance written
notification; provided, however, that this Agreement shall remain in full force
and effect with respect to any transactions which took place prior to such
notification.

 

4.   Representations, Warranties and Covenants. Each party hereto represents,
warrants and/or covenants, as applicable, to the other party hereto as follows:

 

(a)          Such party has complied and will continue to comply with applicable
federal and state securities laws relating to private offerings, including
Regulation D, under the Act and the investors such party contacts in connection
with the Offering in reliance on Regulation D will be "accredited investors"
("Covered Persons");

 

(b)          Such party has not engaged and will not engage in any general
solicitation or advertising in connection with the Offering, unless otherwise
agreed by the Company and AGENT;

 

(c)          Such party has complied and will continue to comply with all other
applicable laws and regulations relating to the Offering, including, without
limitation, Regulation M, and applicable Financial Industry Regulatory
Authority, Inc.'s ("FINRA") rules and other restrictions on the dissemination of
research reports and the activities of analysts;

 

(d)          Such party has all federal and state licenses, registrations and
other governmental permits, if any, which are or may be required in order for
such party to serve as an agent in connection with the Offering, such party is a
member in good standing with FINRA and such party and its registered
representatives making such contacts to accredited investors are duly licensed
in the states where the accredited investor resides;

 

(e)          Such party has provided or will provide each investor solicited by
such party with a copy of the Offering Documents the Company provides to the
placement agents, and will not make any representation or provide any
information to any potential investor other than as set forth therein;

 

3

 

 

(f)          For purposes of sales to be made in reliance on Regulation D, such
party will not make any offer to or distribute the Offering Documents to any
person(s) other than the Covered Persons, and only if such Covered Persons are
reasonably believed to be "accredited investors";

 

(g)          Such party will not bid for, purchase, or attempt to induce others
to purchase, sell, directly or indirectly, any Securities, except as
contemplated by this Agreement and the Offering Documents; 

 

(h)          Such party will keep accurate records with respect to the delivery
of copies of the Offering Documents, including the name, address and telephone
number of each person receiving a copy thereof from such party and the date of
delivery to each such recipient;

 

(i)          Such party shall provide to the other all transaction and due
diligence files from the Offering for FINRA compliance purposes; and

 

(j)          Such party shall provide to the Company or any successor surviving
entity in any merger of the Company, such information that the Company or such
successor surviving entity is required to disclose under applicable securities
laws.

 

5.    Blue Sky Matters. Paulson shall advise AGENT of any jurisdiction in which
Paulson proposes to make (or solicit) offers in advance of making (or
soliciting) any such offer, and Paulson shall not make any offer in any
jurisdiction in which AGENT advises Paulson in writing that offers may not be
made. AGENT shall advise Paulson as to the information AGENT has received from
the Company's counsel concerning the jurisdictions in which the Securities
comprising the Securities are either registered or exempted under the "blue sky"
laws of such jurisdictions, but AGENT has not assumed and will not assume any
obligation or responsibility as to Paulson 's legal right to sell the Securities
in any jurisdiction. Paulson shall not bear any responsibility for filing a Form
D with the U.S. Securities and Exchange Commission or making any other
securities filings with respect to this Offering, except to the extent that
applicable law requires Paulson to make such filing(s). AGENT shall work with
the Company to ensure that Form D and "blue sky" Form U2 filings are timely made
in relation to the Offering and, separately, shall be responsible for ensuring
compliance with FINRA Rule 5123 filings.

 

6.   Reporting. Executed subscription/transaction documents shall be reviewed by
Paulson, and promptly and -subsequently forwarded to AGENT at the address set
forth above or as otherwise directed by AGENT. The acceptance of the executed
subscription documents and subscription amounts are subject to allotment in
AGENT's discretion and acceptance by the Company in its sole discretion. AGENT
reserves the right to close the subscription books at any time without notice
and to reject any subscriptions, in whole or in part.

 

7.  Payment, Disclosure of Payment and Delivery. Payment for the Securities
Paulson places shall be made as described in the Offering Documents. AGENT shall
work with the Company to and use its commercially reasonable efforts to ensure
that the Offering Documents appropriately disclose such payment to Paulson .
Securities placed by Paulson shall be delivered to the investor(s) on such
closing date(s) as advised by the Company. Paulson does not have the right or
authority to have any control over any of the funds for the purchase of the
Securities in the Offering.

 

8.  Indemnification. Each party hereto (the "indemnifying party") agrees to
indemnify the other party hereto and such other party's controlling persons,
representatives and agents for any loss, damage, claim or expense arising out of
the indemnifying party's breach of the representations, warranties and covenants
set forth in Sections 4, 5 and 7 above, other than with respect to any such
loss, damage, claim or expense arising out of such other party's gross
negligence or willful misconduct.

 

4

 

 

9.   Choice of Law; Assignment; Waiver of Trial by Jury. This Agreement (and all
controversies which may arise between the parties related to or arising from
this Agreement) is governed by the laws of the State of New York, without regard
to conflicts of law principles. Each party hereby irrevocably and
unconditionally consents to subject to the exclusive jurisdiction of the courts
of the State of New York and of the United States of America located in New York
County, New York for any litigation arising out of or relating to this Agreement
and the transactions contemplated hereby (and agrees not to commence any
litigation relating thereto expect in such courts), waives any objection to the
laying of venue of any such litigation in such courts and agrees not to plead or
claim in any such court that such litigation brought therein has been brought in
an inconvenient forum. This Agreement will be binding upon and inure to the
benefit of each of the parties and their respective successors and assigns;
provided that Paulson may not assign its rights or delegate its duties under
this Agreement without the prior consent of AGENT. This Agreement may be
assigned by AGENT in connection and to the same person as any assignment by
AGENT of the Placement Agency Agreement. The parties agree to waive trial by
jury in any action, proceeding or counterclaim brought by or on behalf of any
party with respect to any matter whatsoever relating to or arising from this
Agreement, the engagement of Paulson hereunder or the Offering. The prevailing
party in any legal proceeding between the parties hereto shall be entitled to
collect any costs, disbursements and reasonable attorney's fees from the other
party.

 

10.   Sub-Agency Relationship. Paulson understands that all offers to purchase
Securities are subject to acceptance by the Company in its sole discretion, that
any fee payable to Paulson herein is dependent upon AGENT's right to receive
compensation from the Company pursuant to the Placement Agency Agreement.
Nothing herein shall serve to cause Paulson to become or constitute a partner or
joint venturer or form any other relationship with AGENT, other than as a
sub-agent specified herein. AGENT represents that it is currently authorized
under the terms of the Placement Agency Agreement to engage and compensate
selected dealer(s) (directly or by direction to the Company, which shall be
binding on the Company, as the case may be), under this Agreement in connection
with the Offering. The terms of the Placement Agency Agreement are incorporated
herein and made part of this Agreement.

 

11.   Entire Agreement. This Agreement represents the entire agreement by and
between AGENT and Paulson and supersedes any and all other agreements, either
oral or written, with respect to the Agreement. Each party to this Agreement
acknowledges that no representations, inducements, promises or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf of
any party, which is not embodied herein, and that no other agreement, statement,
or promise not contained in this Agreement shall be valid or binding. AGENT and
Paulson hereby agree that the opening and closing statements of this Agreement
are incorporated herein by this reference and made a material part of this
Agreement. If any part of this Agreement is found, or deemed by a court of
competent jurisdiction, to be invalid or unenforceable, that part shall be
severable from the remainder of the Agreement. Any modification of this
Agreement will be effective only if it is in writing and signed by AGENT and
Paulson .

 

12.   Authority and Notices. The signatories of the parties to this Agreement
have the requisite corporate authority to enter into this Agreement and the
authority to execute this Agreement. Any notices, affidavits or other
communications hereunder shall be in writing and shall be deemed to have been
duly delivered if personally delivered, mailed by certified mail or registered
mail, return receipt requested, postage prepaid, or overnight express mail with
signature of addressee required, at the addresses set forth above (or at such
other address for a party as shall be specified by like notice). Any notices,
affidavits or other communications shall first be faxed to the other party and
deemed to put the other party on notice, but will not be deemed sufficient for
service unless so stated herein.

 

5

 

 

13.   Counterparts. This Agreement may be executed in counterparts and shall be
deemed to be an original instrument which will be enforceable against the
parties executing such counterparts. The exchange of copies of this Agreement
and of signature pages by facsimile transmission or in pdf format shall
constitute effective execution and delivery of this Agreement. Signature of the
parties transmitted by facsimile or in pdf format shall be deemed to be their
original signatures for all purposes.

 

14.   Limitation of Liability. Neither Paulson nor any of its affiliates or any
of its or their officers, directors, controlling persons (within the meaning of
Section 15 of the Act or Section 20 of the 1934 Act), employees or agents shall
have any liability to AGENT or the Company, either of their security holders or
creditors, or any person asserting claims on behalf of or in the right of AGENT
or the Company (whether direct or indirect, in contract, tort, for an act of
negligence or otherwise) for any losses, fees, damages, liabilities, costs,
expenses or equitable relief arising out of or relating to this Agreement or the
services rendered hereunder, except for losses, fees, damages, liabilities,
costs or expenses that arise out of or are based on any action of or failure to
act by Paulson and that are determined by a court of competent jurisdiction to
have resulted from the intentional misrepresentation or willful misconduct of
Paulson . Notwithstanding the foregoing, in no event shall Paulson 's obligation
hereunder exceed the fees payable to it hereunder except where Paulson shall
have been determined by a court of competent jurisdiction to have intentionally
misrepresented a material fact or to have engaged in willful misconduct or
violation of applicable law, in which case such liability shall be unlimited.

 

15.   Subsequent Revisions. The parties to this Agreement each hereby confirm
that they will cooperate with each other to the extent that it may be necessary
to enter into any revisions or amendments to this Agreement in the future to
conform to any federal or state regulations.

 

[Signature Page Follows] 

 

6

 

 

If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return this Agreement, whereupon it will become a binding
agreement between AGENT and Paulson in accordance with its terms.

 

  Very truly yours,       AGINCOURT LTD         By: /s/ James J. Cahill   Name:
James J.  Cahill   Title: Managing Director

 

Acknowledged and Agreed to by:   PAULSON INVESTMENT COMPANY, INC.     By: /s/
Lorraine Maxfield Name: Lorraine Maxfield Title:    Sr. VP, Corporate Finance  
  Acknowledged by:   CARDAX PHARMACEUTICALS, INC.     By: /s/ David G. Watumull
Name: David G.  Watumull Title:    President and Chief Executive Officer    
CARDAX PHARMA, INC.   By: /s/ David G. Watumull Name: David G.  Watumull Title:
   President and Chief Executive Officer