Exhibit 10.2

 

January 15, 2019

 

KushCo Holdings, Inc.

11958 Monarch Street

Garden Grove, CA 92841

Attn: Nicholas Kovacevich

Chief Executive Officer

 

 

Dear Mr. Kovacevich:

 

This letter (the “Agreement”) constitutes the agreement between A.G.P./Alliance
Global Partners, as lead placement agent (“A.G.P.”), and Compass Point Research
& Trading, LLC, as co-placement agent (“Compass” and together with A.G.P, the
“Placement Agents”), and KushCo Holdings, Inc., a company incorporated under the
laws of the State of Nevada (the “Company”), that the Placement Agents shall
serve as the placement agents for the Company, on a “reasonable best efforts”
basis, in connection with the proposed placement (the “Placement”) of (i) shares
(the “Shares”) of the Company’s common stock, par value $0.001 per share (the
“Common Stock”) and (ii) warrants to purchase shares of Common Stock of the
Company (the “Warrants,” and together with the Shares, the “Securities”). The
Securities actually placed by the Placement Agents are referred to herein as the
“Placement Agent Securities.” The terms of the Placement shall be mutually
agreed upon by the Company and the purchasers (each, a “Purchaser” and
collectively, the “Purchasers”), and nothing herein constitutes that the
Placement Agents would have the power or authority to bind the Company or any
Purchaser, or an obligation for the Company will issue any Securities or
complete the Placement. The Company expressly acknowledges and agrees that the
Placement Agents’ obligations hereunder are on a reasonable best efforts basis
only and that the execution of this Agreement does not constitute a commitment
by the Placement Agents to purchase the Securities and does not ensure the
successful placement of the Securities or any portion thereof or the success of
the Placement Agents with respect to securing any other financing on behalf of
the Company. Each of the Placement Agents may retain other brokers or dealers to
act as sub-agents or selected-dealers on its behalf in connection with the
Placement. Certain affiliates of the Placement Agents may participate in the
Placement by purchasing some of the Placement Agent Securities. The sale of
Placement Agent Securities to any Purchaser will be evidenced by a securities
purchase agreement (the “Purchase Agreement”) between the Company and such
Purchaser, in a form reasonably acceptable to the Company and the Purchaser.
Capitalized terms that are not otherwise defined herein have the meanings given
to such terms in the Purchase Agreement. Prior to the signing of any Purchase
Agreement, officers of the Company will be available to answer inquiries from
prospective Purchasers.

 

SECTION 1.      REPRESENTATIONS AND WARRANTIES OF THE COMPANY; COVENANTS OF THE
COMPANY.

 

A.         Representations of the Company. With respect to the Placement Agent
Securities, each of the representations and warranties (together with any
related disclosure schedules thereto) and covenants made by the Company to the
Purchasers in the Purchase Agreement in connection with the Placement, is hereby
incorporated herein by reference into this Agreement (as though fully restated
herein) and is, as of the date of this Agreement and as of the Closing Date,
hereby made to, and in favor of, the Placement Agents. In addition to the
foregoing, the Company represents and warrants that there are no affiliations
with any FINRA member firm among the Company's officers, directors or, to the
knowledge of the Company, any five percent (5.0%) or greater stockholder of the
Company, except as set forth in the Purchase Agreement and SEC Reports.

 

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B.           Covenants of the Company. The Company covenants and agrees to
continue to retain (i) a firm of independent PCAOB registered public accountants
for a period of at least three (3) years after the Closing Date and (ii) a
competent transfer agent with respect to the Placement Agent Securities for a
period of three (3) years after the Closing Date.

 

SECTION 2.       REPRESENTATIONS OF THE PLACEMENT AGENT. The Placement Agents,
each severally, and not jointly and severally, represent and warrant that it (i)
is a member in good standing of FINRA, (ii) is registered as a broker/dealer
under the Exchange Act, (iii) is licensed as a broker/dealer under the laws of
the United States of America, applicable to the offers and sales of the
Placement Agent Securities by the Placement Agents, (iv) is and will be a
corporate body validly existing under the laws of its place of incorporation,
(v) has full power and authority to enter into and perform its obligations under
this Agreement. Each of the Placement Agents will immediately notify the Company
in writing of any change in its status with respect to subsections (i) through
(v) above. The Placement Agents covenant that they will each use its reasonable
best efforts to conduct the Placement hereunder in compliance with the
provisions of this Agreement and the requirements of applicable law.  

 

SECTION 3.        COMPENSATION. In consideration of the services to be provided
for hereunder, the Company shall pay to the Placement Agents or their respective
designees a total cash fee equal to seven percent (7%) of gross proceeds from
the offering if the total amount of Placement Agent Securities offered (the
“Cash Fee”), of which $270,000 from the Cash Fee shall be payable to Northland
Securities, Inc. for advisory services in connection with the Placement. The
Cash Fee shall be paid on the Closing Date. The Company shall not be required to
pay the Placement Agent any fees or expenses except for the Cash Fee,
reimbursement of $100,000 for legal expenses, $10,000 for IPREO software related
expenses, $1,700 for background check expenses, $3,000 for tombstones and
$10,300 in marketing related expenses, including roadshow expenses, in each case
with respect to the engagement hereunder; provided, however, that the
reimbursable amount shall not be more than an aggregate of $125,000. A.G.P.
reserves the right to reduce any item of compensation or adjust the terms
thereof as specified herein in the event that a determination shall be made by
FINRA to the effect that the Placement Agents’ aggregate compensation is in
excess of FINRA Rules or that the terms thereof require adjustment.

 

SECTION 4.       INDEMNIFICATION.

 

A.           To the extent permitted by law, with respect to the Placement Agent
Securities, the Company will indemnify the Placement Agents and its affiliates,
stockholders, directors, officers, employees, members and controlling persons
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) against all losses, claims, damages, expenses and liabilities, as
the same are incurred (including the reasonable fees and expenses of counsel),
relating to or arising out of its activities hereunder or pursuant to this
Agreement, except to the extent that any losses, claims, damages, expenses or
liabilities (or actions in respect thereof) are found in a final judgment (not
subject to appeal) by a court of law to have resulted primarily and directly
from a Placement Agent’s willful misconduct or gross negligence in performing
the services described herein.

 

B.           Promptly after receipt by the Placement Agents of notice of any
claim or the commencement of any action or proceeding with respect to which the
Placement Agents are entitled to indemnity hereunder, the Placement Agents will
notify the Company in writing of such claim or of the commencement of such
action or proceeding, but failure to so notify the Company shall not relieve the
Company from any obligation it may have hereunder, except and only to the extent
such failure results in the forfeiture by the Company of substantial rights and
defenses. If the Company so elects or is requested by the Placement Agents, the
Company will assume the defense of such action or proceeding and will employ
counsel reasonably satisfactory to the Placement Agents and will pay the fees
and expenses of such counsel. Notwithstanding the preceding sentence, each of
Placement Agents will be entitled to employ its own counsel separate from
counsel for the Company and from any other party in such action if counsel for
any Placement Agent reasonably determines that it would be inappropriate under
the applicable rules of professional responsibility for the same counsel to
represent both the Company and the Placement Agents. In such event, the
reasonable fees and disbursements of no more than one such separate counsel will
be paid by the Company, in addition to fees of local counsel. The Company will
have the right to settle the claim or proceeding, provided that the Company will
not settle any such claim, action or proceeding without the prior written
consent of the Placement Agents, which will not be unreasonably withheld.

 

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C.           The Company agrees to notify the Placement Agents promptly of the
assertion against it or any other person of any claim or the commencement of any
action or proceeding relating to a transaction contemplated by this Agreement.

 

D.           If for any reason the foregoing indemnity is unavailable to the
Placement Agents or insufficient to hold the Placement Agents harmless, then the
Company shall contribute to the amount paid or payable by the Placement Agents
as a result of such losses, claims, damages or liabilities in such proportion as
is appropriate to reflect not only the relative benefits received by the Company
on the one hand and the Placement Agents on the other, but also the relative
fault of the Company on the one hand and the liable Placement Agent on the other
that resulted in such losses, claims, damages or liabilities, as well as any
relevant equitable considerations. The amounts paid or payable by a party in
respect of losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees and expenses incurred in defending any
litigation, proceeding or other action or claim. Notwithstanding the provisions
hereof, the liable Placement Agent’s share of the liability hereunder shall not
be in excess of the amount of fees actually received, or to be received, by such
Placement Agent under this Agreement (excluding any amounts received as
reimbursement of expenses incurred by such Placement Agent).

 

E.           These indemnification provisions shall remain in full force and
effect whether or not the transaction contemplated by this Agreement is
completed and shall survive the termination of this Agreement, and shall be in
addition to any liability that the Company might otherwise have to any
indemnified party under this Agreement or otherwise.

 

SECTION 5.       ENGAGEMENT TERM. The Placement Agent’s engagement hereunder
will be until the earlier of (i) January 31, 2019 and (ii) the Closing Date. The
date of termination of this Agreement is referred to herein as the “Termination
Date.” In the event, however, in the course of the Placement Agents’ performance
of due diligence it deems, it necessary to terminate the engagement, the
Placement Agents may do so prior to the Termination Date. The Company may elect
to terminate the engagement hereunder for any reason prior to the Termination
Date but will remain responsible for fees pursuant to Section 3 hereof with
respect to the Placement Agent Securities if sold in the Placement.
Notwithstanding anything to the contrary contained herein, the provisions
concerning the Company’s obligation to pay any fees actually earned pursuant to
Section 3 hereof and the provisions concerning confidentiality, indemnification
and contribution contained herein will survive any expiration or termination of
this Agreement. If this Agreement is terminated prior to the completion of the
Placement, all fees due to the Placement Agents shall be paid by the Company to
the Placement Agents on or before the Termination Date (in the event such fees
are earned or owed as of the Termination Date). The Placement Agents agree not
to use any confidential information concerning the Company provided to the
Placement Agents by the Company for any purposes other than those contemplated
under this Agreement.

 

SECTION 6.      PLACEMENT AGENT INFORMATION. The Company agrees that any
information or advice rendered by the Placement Agents in connection with this
engagement is for the confidential use of the Company only in their evaluation
of the Placement and, except as otherwise required by law, the Company will not
disclose or otherwise refer to the advice or information in any manner without
each of the Placement Agent’s prior written consent.

 

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SECTION 7.       NO FIDUCIARY RELATIONSHIP. This Agreement does not create, and
shall not be construed as creating rights enforceable by any person or entity
not a party hereto, except those entitled hereto by virtue of the
indemnification provisions hereof. The Company acknowledges and agrees that the
Placement Agents are not and shall not be construed as a fiduciary of the
Company and shall have no duties or liabilities to the equity holders or the
creditors of the Company or any other person by virtue of this Agreement or the
retention of the Placement Agents hereunder, all of which are hereby expressly
waived.

 

SECTION 8.       CLOSING. The obligations of the Placement Agents, and the
closing of the sale of the Placement Agent Securities hereunder are subject to
the accuracy, when made and on the Closing Date, of the representations and
warranties on the part of the Company contained herein and in the Purchase
Agreement, to the performance by the Company of its obligations hereunder, and
to each of the following additional terms and conditions, except as otherwise
disclosed to and acknowledged and waived by the Placement Agents:

 

A.           All corporate proceedings and other legal matters incident to the
authorization, form, execution, delivery and validity of each of this Agreement,
the Placement Agent Securities, and all other legal matters relating to this
Agreement and the transactions contemplated hereby with respect to the Placement
Agent Securities shall be reasonably satisfactory in all material respects to
the Placement Agents.

 

B.           The Placement Agents shall have received from outside counsel to
the Company such counsel’s written opinion with respect to the Placement Agent
Securities, addressed to the Placement Agents and dated as of the Closing Date,
in form and substance reasonably satisfactory to the Placement Agents.

 

C.           The Common Stock shall be registered under the Exchange Act and, as
of the Closing Date, the Placement Agent Securities shall be listed and admitted
and authorized for trading on the Trading Market or other applicable U.S.
national exchange and satisfactory evidence of such action shall have been
provided to the Placement Agents. The Company shall have taken no action
designed to, or likely to have the effect of terminating the registration of the
Common Stock under the Exchange Act or delisting or suspending from trading the
Common Stock from the Trading Market or other applicable U.S. national exchange,
nor has the Company received any information suggesting that the Commission or
the Trading Market or other U.S. applicable national exchange is contemplating
terminating such registration or listing.

 

D.           No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or
body which would, as of the Closing Date, prevent the issuance or sale of the
Placement Agent Securities or materially and adversely affect or potentially and
adversely affect the business or operations of the Company; and no injunction,
restraining order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Placement Agent Securities or materially and
adversely affect or potentially and adversely affect the business or operations
of the Company.

 

E.           The Company shall have entered into a Purchase Agreement with each
of the Purchasers of the Placement Agent Securities and such agreements shall be
in full force and effect and shall contain representations, warranties and
covenants of the Company as agreed upon between the Company and the Purchasers.

 

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F.           FINRA shall have raised no objection to the fairness and
reasonableness of the terms and arrangements of this Agreement. In addition, the
Company shall, if requested by the Placement Agents, make or authorize Placement
Agents’ counsel to make on the Company’s behalf, any filing with the FINRA
Corporate Financing Department pursuant to FINRA Rule 2710 with respect to the
Placement and pay all filing fees required in connection therewith.

 

If any of the conditions specified in this Section 8 shall not have been
fulfilled when and as required by this Agreement, all obligations of the
Placement Agents hereunder may be cancelled by the Placement Agents at, or at
any time prior to, the Closing Date. Notice of such cancellation shall be given
to the Company in writing or orally. Any such oral notice shall be confirmed
promptly thereafter in writing.

 

SECTION 9.       GOVERNING LAW. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York applicable to
agreements made and to be performed entirely in such State. This Agreement may
not be assigned by either party without the prior written consent of the other
party. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns. Any right
to trial by jury with respect to any dispute arising under this Agreement or any
transaction or conduct in connection herewith is waived. Any dispute arising
under this Agreement may be brought into the courts of the State of New York or
into the Federal Court located in New York, New York and, by execution and
delivery of this Agreement, the Company hereby accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of aforesaid
courts. Each party hereto hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by
delivering a copy thereof via overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorney's fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

  

SECTION 10.     ENTIRE AGREEMENT/MISCELLANEOUS. This Agreement embodies the
entire agreement and understanding between the parties hereto, and supersedes
all prior agreements and understandings, relating to the subject matter hereof.
If any provision of this Agreement is determined to be invalid or unenforceable
in any respect, such determination will not affect such provision in any other
respect or any other provision of this Agreement, which will remain in full
force and effect. This Agreement may not be amended or otherwise modified or
waived except by an instrument in writing signed by both the Placement Agents
and the Company. The representations, warranties, agreements and covenants
contained herein shall survive the Closing Date of the Placement and delivery of
the Placement Agent Securities. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or a .pdf format file, such signature shall
create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile
or .pdf signature page were an original thereof.

 

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SECTION 12.     NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is sent to the email address
specified on the signature pages attached hereto prior to 6:30 p.m. (New York
City time) on a business day, (b) the next business day after the date of
transmission, if such notice or communication is sent to the email address on
the signature pages attached hereto on a day that is not a business day or later
than 6:30 p.m. (New York City time) on any business day, (c) the third business
day following the date of mailing, if sent by U.S. internationally recognized
air courier service, or (d) upon actual receipt by the party to whom such notice
is required to be given. The address for such notices and communications shall
be as set forth on the signature pages hereto.

 

SECTION 13.     Press Announcements. The Company agrees that the Placement
Agents shall, on and after the Closing Date, have the right to reference the
Placement and the Placement Agents’ role in connection therewith in the
Placement Agents’ 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 remainder of this page has been intentionally left blank.]

 

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Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to the Placement Agents the enclosed copy of this Agreement.

 

  Very truly yours,       A.G.P./ALLIANCE GLOBAL PARTNERS.       By:         /s/
David Bocchi     Name: David Bocchi     Title:   Head of Investment Banking    
  Address for notice:  

590 Madison Avenue 36th Floor

New York, New York 10022

Attn: David Bocchi

Email: db@allianceg.com 

      COMPASS POINT RESEARCH & TRADING, LLC         By: /s/ Christopher Nealon  
      Name: Christopher Nealon   Title: Managing Director, Operations        

Address for notice:

1055 Thomas Jefferson Street, NW

Suite 303

Washington, DC 20007 USA

Email:

 

[Signature Page to Placement Agency Agreement.]

 

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Accepted and Agreed to as of

the date first written above:

 

KUSHCO HOLDINGS, INC.   By:  /s/ Nicholas Kovacevich     Name: Nicholas
Kovacevich     Title: Chief Executive Officer  

 

  Address for notice:     11958 Monarch Street,     Garden Grove, CA 92841    
Attn: Chief Executive Officer  

 

[Signature Page to Placement Agency Agreement.]

 

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