Exhibit 10.2

 

June 7, 2018

 

Kush Bottles, Inc.

1800 Newport Circle

Santa Ana, CA 92705

Attn: Nicholas Kovacevich

Chief Executive Officer

 

Dear Mr. Kovacevich:

 

This letter (the “Agreement”) constitutes the agreement between A.G.P./Alliance
Global Partners (the “Placement Agent”) and Kush Bottles, Inc., a company
incorporated under the laws of the State of Nevada (the “Company”), that the
Placement Agent shall serve as a placement agent 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
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 Agent 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 Agent would have the power or authority to
bind the Company or any Purchaser, or an obligation for the Company will issue
any Shares or complete the Placement. The Company expressly acknowledges and
agrees that the Placement Agent’s 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 Agent to purchase the Securities and does not
ensure the successful placement of the Securities or any portion thereof or the
success of the Placement Agent with respect to securing any other financing on
behalf of the Company. The Placement Agent 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 Agent 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 Agent. 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 Agent
represents and warrants 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 Agent, (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. The Placement Agent will immediately notify
the Company in writing of any change in its status with respect to subsections
(i) through (v) above. The Placement Agent covenants that it will 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 Agent or their respective
designees a cash fee equal to seven percent (7%) of gross proceeds from the
offering if the total amount of Placement Agent Securities offered is greater
than $20,000,000 (the “Cash Fee”). 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 $75,000 for legal expenses,
$20,000 for IPREO software related expenses, $5,000 for background check
expenses, $3,000 for tombstones and $17,000 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 $120,000. The Placement Agent will also be entitled to a
non-accountable expense allowance equal to 1% of gross proceeds from the
offering. The Placement Agent 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 Agent’s
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 Agent and its affiliates,
stockholders, directors, officers, employees,s 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 the Placement Agent’s willful misconduct or gross negligence in performing
the services described herein.

 

B.           Promptly after receipt by the Placement Agent of notice of any
claim or the commencement of any action or proceeding with respect to which the
Placement Agent is entitled to indemnity hereunder, the Placement Agent 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 Agent, the
Company will assume the defense of such action or proceeding and will employ
counsel reasonably satisfactory to the Placement Agent and will pay the fees and
expenses of such counsel. Notwithstanding the preceding sentence, the Placement
Agent will be entitled to employ counsel separate from counsel for the Company
and from any other party in such action if counsel for the 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 Agent. 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 Agent, which will not be unreasonably withheld.

 

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C.           The Company agrees to notify the Placement Agent 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 Agent or insufficient to hold the Placement Agent harmless, then the
Company shall contribute to the amount paid or payable by the Placement Agent 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 Agent on the other, but also the relative fault
of the Company on the one hand and the 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 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 the
Placement Agent under this Agreement (excluding any amounts received as
reimbursement of expenses incurred by the 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) June 15, 2018 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 Agent’s performance
of due diligence it deems, it necessary to terminate the engagement, the
Placement Agent 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 Agent shall be paid by the Company to
the Placement Agent on or before the Termination Date (in the event such fees
are earned or owed as of the Termination Date). The Placement Agent agrees not
to use any confidential information concerning the Company provided to the
Placement Agent 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 Agent 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
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 Agent is 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 Agent hereunder, all of which are hereby expressly waived.

 

SECTION 8.         CLOSING. The obligations of the Placement Agent, 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 Agent:

 

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 Agent.

 

B.           The Placement Agent 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 Agent and dated as of the Closing Date,
in form and substance reasonably satisfactory to the Placement Agent.

 

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 Agent. 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 Agent, make or authorize Placement
Agent’s 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 Agent hereunder may be cancelled by the Placement Agent 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 Agent 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
Agent shall, on and after the Closing Date, have the right to reference the
Placement and the Placement Agent’s role in connection therewith in the
Placement Agent’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 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 Agent 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

 

Accepted and Agreed to as of

the date first written above:

 

KUSH BOTTLES, INC.     By: /s/ Nicholas Kovacevich     Name: Nicholas Kovacevich
    Title:   Chief Executive Officer            

Address for notice:

1800 Newport Circle

Santa Ana, CA 92705

Attn: Chief Executive Officer

   

  

[Signature Page to Placement Agency Agreement.]

 

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