ex10-1





 







Exhibit 10.1

 



COOPERATION AGREEMENT

 


This
Cooperation Agreement (this “Agreement”), effective as of March
4, 2021 (the “Effective
Date”), is entered into by and among Wrap
Technologies, Inc., a Delaware corporation (“Wrap”), Elwood G. Norris
(“Norris”) and
the other persons and entities identified under that certain Norris
Schedule 13D (as defined below) as Reporting Persons (each, a
“Norris Party”
and collectively, the “Norris
Parties”). Wrap and the Norris Parties are together
referred to herein as the “Parties,” and each, a
“Party.” Unless
otherwise defined herein, capitalized terms shall have the meanings
given to them in Section 17 herein.

 


WHEREAS, the Norris Parties beneficially
own 6,452,457 shares of Wrap’s common stock, par value
$0.0001 per share (the “Common Stock”), as of the
Effective Date;

 


WHEREAS, on January 4, 2021, the Norris
Parties submitted to Wrap’s Board of Directors (the
“Board”) a
letter that served as a notice of intent to nominate director
candidates for election and to submit stockholder proposals for
consideration at the 2021 annual meeting of stockholders of Wrap
(the “2021 Annual
Meeting”), which was subsequently supplemented by the
Norris Parties on February 18, 2021 (such supplemented notice
together with the previously submitted notice, the
“Nomination
Notice”);

 


WHEREAS, the Parties have determined
that the interests of Wrap and its stockholders would be best
served by, among other things, avoiding the substantial expense and
duration of a proxy contest;

 


WHEREAS, Wrap and the Norris Parties
desire to enter into this Agreement regarding the addition of two
(2) directors to the Board and certain other matters, as provided
in this Agreement; and

 


WHEREAS, the Norris Parties, among other
things, have agreed to withdraw the Nomination Notice and to
refrain from submitting any director nominations and stockholder
proposals during the Standstill Period (as defined
below).

 


NOW, THEREFORE, in consideration of the
promises, representations and mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:

 


1. Withdrawal of Nomination
Notice. As of the Effective Date, the Norris Parties hereby
irrevocably agree to take the following actions:

 


(a) immediately and
irrevocably withdraw the Nomination Notice and any other notices
relating to the 2021 Annual Meeting submitted to Wrap in connection
therewith or related thereto and any solicitation materials
concerning the foregoing or otherwise related to the 2021 Annual
Meeting (which they do by their execution of this Agreement) and
not to take any further action in connection with the solicitation
of proxies in connection with the Nomination Notice or any other
notices relating to the 2021 Annual Meeting (other than in
connection with such withdrawal or Section 10 herein); and

 


(b) immediately cease
any and all solicitation and other activities in connection with
the 2021 Annual Meeting (it being understood and agreed that the
Norris Parties are required to vote their own shares of Common
Stock at the 2021 Annual Meeting, subject to the provisions of this
Agreement).

 


 




 

-1-








 






 


2. Board Composition.

 


(a) Board Matters.

 


(i) As soon as
practicable following the Effective Date, (A) the Nominating and
Governance Committee of the Board (the “Nominating Committee”) shall
jointly conduct a search process (the “Joint Search Process”) with the
Norris Parties to choose two (2) new director candidates (each a
“New Director”
and together, the “New
Directors”). The first New Director (or any
Replacement thereof) shall be selected and approved by the
Nominating Committee (with such approval not being unreasonably
withheld) from a set of candidates identified by the Norris Parties
as part of the Joint Search Process, and the second New Director
(or any Replacement thereof) shall be selected and approved by the
Norris Parties (with such approval not being unreasonably withheld)
from a set of candidates identified by the Nominating Committee as
part of the Joint Search Process. The Nominating Committee shall
review the qualifications of the New Directors, each to serve as a
member of the Board and (B) the Board shall determine whether each
New Director is an “Independent Director,” as defined
in The Nasdaq Stock Market LLC Listing Rule 5605 (or applicable
requirement of such other national securities exchange designated
as the primary market on which the Common Stock is listed for
trading) (the “Exchange
Independence Requirement”). In connection with the
foregoing, and as a condition to the nomination or appointment of
each New Director to the Board, each New Director shall (A) be
required to provide to Wrap information required to be, or that is
customarily disclosed by directors or director candidates, in proxy
statements or other filings under applicable law or stock exchange
regulations, information in connection with assessing eligibility,
independence, and other criteria applicable to directors or related
to satisfying compliance and legal obligations, and a fully
completed and executed copy of Wrap’s director candidate
questionnaire (substantially in the form completed by Wrap’s
incumbent non-management directors) and other reasonable and
customary director onboarding documentation (substantially in the
form completed by Wrap’s incumbent non-management directors);
(B) be interviewed by and be reasonably acceptable to the
Nominating Committee and the Board (acting in good faith in
accordance with their customary and generally applicable procedures
for evaluating director candidates); and (C) consent to appropriate
background checks comparable to those undergone by other
non-management directors of Wrap.

 


(ii) Within forty-five
(45) days following the Effective Date (the “Appointment Date”), the Board and
all applicable committees of the Board shall hold meetings and take
all necessary actions to accomplish the following, to (A) increase
the size of the Board’s membership by two (2) director seats
and (B) appoint the New Directors (or any Replacements) (as defined
below) to serve as directors of the Board, with a term beginning
upon such appointment and expiring at the 2021 Annual Meeting or at
such later time when such New Director’s (or any
Replacements) successor is duly elected or appointed in accordance
with Wrap’s Bylaws (as defined below) and applicable
law.

 


(iii) The Board shall
nominate the New Directors (or any Replacements) as candidates for
election to the Board at the 2021 Annual Meeting with a term
expiring at the 2022 annual meeting of stockholders of Wrap (the
“2022 Annual
Meeting”) or at such later time when such New
Director’s successor is duly elected or appointed in
accordance with the Bylaws of Wrap dated March 31, 2017, and as may
be further amended from time to time (the “Bylaws”) and applicable
law.

 


 




 

-2-








 






 

 


(iv) Wrap will include
information about Wrap’s nominees for election to the Board,
including the New Directors (or any Replacement), in Wrap’s
proxy statement filed with the Securities and Exchange Commission
(the “SEC”) in
connection with the 2021 Annual Meeting (the “Proxy Statement”); provided, however, that as a condition to
Wrap’s obligation to nominate each New Director (or any
Replacement) for election at the 2021 Annual Meeting and include
information about each New Director in the Proxy Statement, each
New Director (or any Replacement) shall then be in compliance with
the Company Policies (as defined below).

 


(v) In connection with
the 2021 Annual Meeting and each subsequent annual or special
meeting of stockholders of Wrap that occurs prior to the
Termination Date at which the election of directors is a proposal
for consideration by stockholders, Wrap agrees to recommend,
support and solicit proxies for the election of the New Directors
(or any Replacement) in the same historic manner in which Wrap has
supported its nominees for election at prior annual meetings of
stockholders at which the election of directors was uncontested in
the aggregate, so long as each New Director is then in compliance
with the Company Policies. Wrap agrees that the New Directors (and
any Replacement) shall receive (A) the same benefits of director
and officer insurance as all other non-management directors on the
Board, (B) the same compensation for his or her service as a
director (including service on committees) as the compensation
received by other non-management directors on the Board for regular
service on the Board or committees, according to the Board’s
director compensation policy, and (C) such other benefits on the
same basis as all other non-management directors on the Board,
according to the Board’s director compensation
policy.

 


(b) Board Policies and Procedures.
Each Party acknowledges that the New Directors (and any
Replacement), upon election to the Board, shall be governed by all
of the same policies, processes, procedures, codes, rules,
standards and guidelines applicable to members of the Board,
including, but not limited to, Wrap’s Code of Business
Conduct and Ethics and any other policies on stock ownership,
director resignation, public disclosures and confidentiality
(collectively, the “Company
Policies”), and will be required to adhere to
Wrap’s policies on confidentiality imposed on all members of
the Board.

 


(c) Replacement Rights. If, from
the date on which the New Directors are elected or appointed to the
Board until the Termination Date, either New Director (or any
Replacement) is unable to serve as a director due to (i)
resignation or (ii) death or disability (the “Former Director”), then a
replacement director (a “Replacement”) with relevant
financial and business experience, who qualifies as
“independent” pursuant to the Exchange Independence
Requirement, the SEC rules and regulations, and such Replacement
shall be identified and selected in the same manner in which the
Former Director was identified and selected. The Replacement shall
be expeditiously appointed to the Board, subject to the approval
(not to be unreasonably withheld) by each of the Nominating
Committee and the Board, after conducting a good faith customary
due diligence process and consistent with the Board’s
fiduciary duties (and who satisfies the Company Policies applicable
to all directors). Any Replacement appointed to the Board in
accordance with this Section 2(c) shall be appointed to any
applicable committee of the Board of which the Former Director was
a member immediately prior to such director’s resignation or
removal. In the event that the Nominating Committee determines in
good faith not to appoint any Replacement, then another Replacement
shall be identified and selected in the manner otherwise described
in this Section
2(c).

 


3. Management.

 


(a) Effective no later
than the Effective Date: (i) the Board will appoint incumbent
interim-Chief Executive Officer of Wrap, Thomas P. Smith, as the
Chief Executive Officer of Wrap (“CEO”); and (ii) the Chief
Government Affairs Officer of Wrap shall report directly to, and
take directions from, Mr. Smith immediately upon his appointment as
CEO. Mr. Smith will retain his title as President. As CEO and
President, Mr. Smith will be the most senior executive officer of
the Company and report directly to the Board. The Board will make
no changes to the foregoing actions prior to the time both
vacancies created by the action in Section 2(a)(ii) are filled in
accordance with Section 2(a)(ii) and Section 2(c) (to the extent
applicable); provided that the Board may
make changes if it determines in good faith, after consulting with
outside counsel, that maintaining the status quo would prohibit
Board members from complying with their fiduciary duties as
directors of Wrap to the non-employee, non-Board member
stockholders.

 


(b) Promptly following
the 2021 Annual Meeting, the Board will elect a Chairman of the
Board who meets the Exchange Independence Requirement before and
immediately after such appointment.

 


 




 

-3-








 






 

 


4. Voting.

 


(a) From the Effective
Date until the Termination Date (the “Standstill Period”), each of the
Norris Parties agrees that it will appear in person or by proxy at
each annual or special meeting of stockholders of Wrap (including
any adjournment, postponement, rescheduling or continuation
thereof), whether such meeting is held at a physical location or
virtually by means of remote communications, and will vote (or
execute a consent with respect to) all Voting Securities (as
defined below) beneficially owned by it in accordance with the
Board’s recommendations with respect to (i) each election of
directors, any removal of directors and any replacement of
directors, (ii) the ratification of the appointment of Wrap’s
independent registered public accounting firm, (iii) Wrap’s
“say-on-pay” proposal(s) and (iv) any other proposal to
be submitted to the stockholders of Wrap by either Wrap or any
stockholders of Wrap; provided, however, that each of the
Norris Parties shall be permitted to vote in its discretion on any
proposal of Wrap in respect of any Extraordinary Transaction (as
defined below).

 


5. Mutual
Non-Disparagement.

 


(a) Subject to
Section
7, each Norris
Party agrees that, during the Standstill Period, neither it nor any
of its Representatives (as defined below) shall, and it shall cause
each of its Representatives not to, directly or indirectly, in any
capacity or manner, make, express, transmit, speak, write or
otherwise communicate in any way (or cause, further, assist,
solicit, encourage, support or participate in any of the
foregoing), any remark, comment, message, information, declaration,
communication or other statement of any kind, whether oral, in
writing, electronically transferred or otherwise, that might
reasonably be construed to be derogatory or critical of, or
negative toward, or constitute an ad hominem attack on, or
otherwise disparages, defames or damages the reputation or good
name of Wrap or any of its Representatives, or any of their
businesses, products or services.

 


(b) Wrap hereby
agrees that, during the Standstill Period, neither it nor any of
its Representatives shall, and it shall cause each of its
Representatives not to, directly or indirectly, in any capacity or
manner, make, express, transmit, speak, write or otherwise
communicate in any way (or cause, further, assist, solicit,
encourage, support or participate in any of the foregoing), any
remark, comment, message, information, declaration, communication
or other statement of any kind, whether oral, in writing,
electronically transferred or otherwise, that might reasonably be
construed to be derogatory or critical of, or negative toward, or
constitute an ad hominem attack on, or otherwise disparages,
defames or damages the reputation or good name of any Norris Party
or any of its Representatives, or any of its businesses, products
or services.

 


(c) Notwithstanding the
foregoing, nothing in this Section 5 or elsewhere in this
Agreement shall prohibit any Party from making any statement or
disclosure required under the federal securities laws or other
applicable laws (including to comply with any subpoena or other
legal process from any governmental or regulatory authority with
competent jurisdiction over the relevant Party hereto) or stock
exchange regulations; provided, however, that, unless
prohibited under applicable law, such Party must provide written
notice to the other Party at least one (1) business day prior to
making any such statement or disclosure required under the federal
securities laws or other applicable laws or under stock exchange
regulations or other applicable regulations that would otherwise be
prohibited by the provisions of this Section 5, and reasonably consider any
comments of such other Party.

 


(d) The limitations set
forth in Sections 5(a) and 5(b) shall not prevent any
Party from responding to any public statement made by the other
Party of the nature described in Sections 5(a) and 5(b), if such statement by the
other Party was made in breach of this Agreement.

 


6. No
Litigation.

 


(a) The Norris Parties
covenant and agree that, during the Standstill Period, they shall
not, and shall not permit any of their Representatives to, alone or
in concert with others, knowingly encourage or pursue, or knowingly
assist any other person to threaten, initiate or pursue, any
lawsuit, claim or proceeding (including commencing, encouraging or
supporting any derivative action in the name of Wrap or any class
action against Wrap or any of its officers or directors, in each
case with the intent of circumventing any terms of this Agreement)
before any court or governmental, administrative or regulatory body
(collectively, “Legal
Proceeding”) against Wrap or any of its
Representatives, except for any Legal Proceeding initiated solely
to remedy a breach of or to enforce this Agreement; provided, however, that the foregoing
shall not prevent the Norris Parties or any of their respective
Representatives from responding to oral questions, interrogatories,
requests for information or documents, subpoenas, civil
investigative demands or similar processes (a “Legal Requirement”) in connection
with any Legal Proceeding if such Legal Proceeding has not been
initiated by, or on behalf of, the Norris Parties or any of their
Representatives; provided, further, that in the event that
any of the Norris Parties or any of its Representatives receives
such Legal Requirement, the Norris Parties shall, unless prohibited
by applicable law, give prompt written notice of such Legal
Requirement to Wrap.

 


 




 

-4-








 






 

 


(b) Wrap covenants and
agrees that, during the Standstill Period, it shall not, and shall
not permit any of its Representatives to, alone or in concert with
others, knowingly encourage or pursue, or knowingly assist any
other person to threaten, initiate or pursue, any Legal Proceeding
against any of the Norris Parties or any of its Representatives,
except for any Legal Proceeding initiated solely to remedy a breach
of or to enforce this Agreement; provided, however, that the foregoing
shall not prevent Wrap or any of its Representatives from
responding to a Legal Requirement in connection with any Legal
Proceeding if such Legal Proceeding has not been initiated by, or
on behalf of, Wrap or any of its Representatives; provided, further, that in the event Wrap
or any of its Representatives receives such Legal Requirement, Wrap
shall, unless prohibited by applicable law, give prompt written
notice of such Legal Requirement to the Norris
Parties.

 


7. Standstill.

 


(a) During the
Standstill Period, each Norris Party shall not, and shall cause its
respective Representatives not to, directly or
indirectly:

 


(i) make any
announcement or proposal with respect to, or offer, seek, propose
or indicate an interest in, (A) any form of business combination or
acquisition or other transaction relating to a material amount of
assets or securities of Wrap or any of its subsidiaries, (B) any
form of restructuring, recapitalization or similar transaction with
respect to Wrap or any of its subsidiaries or (C) any form of
tender or exchange offer for shares of Common Stock or other Voting
Securities, whether or not such transaction involves a Change of
Control;

 


(ii) engage in, or
assist in the engagement in, any solicitation of proxies or written
consents to vote any Voting Securities, or conduct, or assist in
the conducting of, any type of binding or nonbinding referendum
with respect to any Voting Securities, or assist or participate in
any other way, directly or indirectly, in any solicitation of
proxies (or written consents) with respect to, or from the holders
of, any Voting Securities, or otherwise become a
“participant” in a “solicitation,” as such
terms are defined in Instruction 3 of Item 4 of Schedule 14A and
Rule 14a-1 of Regulation 14A, respectively, under the Securities
Exchange Act of 1934, as amended, and with the rules and
regulations thereunder (the “Exchange Act”), to vote any
securities of Wrap (including by initiating, encouraging or
participating in any “withhold” or similar
campaign);

 


(iii) purchase or
otherwise acquire, or offer, seek, propose or agree to acquire,
ownership (including beneficial ownership) of any securities of
Wrap, any direct or indirect rights or options to acquire any such
securities, any derivative securities or contracts or instruments
in any way related to the price of shares of Common Stock, or any
assets or liabilities of Wrap; provided, however, that the foregoing
shall not prevent Norris from receiving any securities of Wrap as
compensation for his service as an officer or employee of
Wrap;

 


(iv) advise, encourage
or influence any person with respect to the voting of (or execution
of a written consent in respect of) or disposition of any
securities of Wrap;

 


(v) sell, offer or
agree to sell directly or indirectly, through swap or hedging
transactions or otherwise, the securities of Wrap or any rights
decoupled from the underlying securities held by any of the Norris
Parties to any person not (A) a party to this Agreement, (B) a
member of the Board, (C) an officer of Wrap, or (D) an Affiliate of
any Party (any person not set forth in clauses (A) through (D)
shall be referred to as a “Third Party”) that would knowingly
result in such Third Party, together with its Affiliates, owning,
controlling or otherwise having any beneficial or other ownership
interest representing in the aggregate in excess of 4.9% of the
shares of Common Stock outstanding at such time, except for
Schedule 13G filers that are mutual funds, pension funds, index
funds or investment fund managers that have not been identified on
the most recent “SharkWatch 50” list, as published by
FactSet and any successor (the “SharkWatch List”), are not
publicly disclosed Affiliate funds of such a filer on the
SharkWatch List, or have no known plans to engage in
“shareholder activism”;

 


 




 

-5-








 






 

 


(vi) take any action in
support of or make any proposal or request that constitutes or
would result in: (A) advising, controlling, changing or influencing
any director or the management of Wrap, including, but not limited
to, any plans or proposals to change the number or term of
directors or to fill any vacancies on the Board, except as set
forth in this Agreement, (B) any material change in the
capitalization, stock repurchase programs and practices or dividend
policy of Wrap, (C) any other material change in Wrap’s
management, business or corporate structure, (D) seeking to have
Wrap waive or make amendments or modifications to the Bylaws or the
Amended and Restated Certificate of Incorporation of Wrap dated
March 31, 2017, and as may be further amended from time to time, or
other actions that may impede or facilitate the acquisition of
control of Wrap by any person, (E) causing a class of securities of
Wrap to be delisted from, or to cease to be authorized to be quoted
on, any securities exchange, or (F) causing a class of securities
of Wrap to become eligible for termination of registration pursuant
to Section 12(g)(4) of the Exchange Act;

 


(vii) communicate with
stockholders of Wrap or others pursuant to Rule 14a-1(l)(2)(iv)
under the Exchange Act;

 


(viii) engage in any
course of conduct with the purpose of causing stockholders of Wrap
to vote contrary to the recommendation of the Board on any matter
presented to Wrap’s stockholders for their vote at any
meeting of Wrap’s stockholders or by written
consent;

 


(ix) act, including by
making public announcements or speaking to reporters or members of
the media (whether “on the record” or on
“background” or “off the record”), to seek
to influence Wrap’s stockholders, management or the Board
with respect to Wrap’s policies, operations, balance sheet,
capital allocation, marketing approach, business configuration,
Extraordinary Transactions, or strategy or to obtain representation
on the Board or seek the removal or replacement of any director in
any manner, except as expressly permitted by this
Agreement;

 


(x) call or seek to
call, or request the call of, alone or in concert with others, any
meeting of stockholders, whether or not such a meeting is permitted
by the Bylaws, including a “town hall
meeting”;

 


(xi) deposit any shares
of Common Stock or other Voting Securities in any voting trust or
subject any shares of Common Stock or other Voting Securities to
any arrangement or agreement with respect to the voting of any
shares of Common Stock or Voting Securities (other than any such
voting trust arrangement or agreement solely among the Norris
Parties that is otherwise in accordance with this
Agreement);

 


(xii) seek, or encourage
or advise any person, to submit nominations in furtherance of a
“contested solicitation” for the election, removal or
replacement of directors with respect to Wrap or seek, encourage or
take any other action with respect to the election, removal or
replacement of any directors;

 


(xiii) form, join or in
any other way participate in any “group” (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to
any Voting Security; provided, however, that the Norris
Parties as disclosed in that certain Schedule 13D, dated January 4,
2021, as amended on February 19, 2021 (together, the
“Norris Schedule 13D”) shall not be
considered a “group” for the purpose of this
Section 7(a)(xiii);
provided,
further, that
nothing herein shall limit the ability of an Affiliate of a Norris
Party to join the “group” disclosed on the Norris
Schedule 13D following the execution of this Agreement, so long as
any such Affiliate agrees in writing to be subject to, and bound
by, the terms and conditions of this Agreement and, if required
under the Exchange Act, files a Schedule 13D or an amendment
thereof, as applicable, within two (2) business days after
disclosing that the Norris Party has formed a group with such
Affiliate;

 


(xiv) demand a copy of
Wrap’s list of stockholders or its other books and records or
make any request pursuant to Rule 14a-7 under the Exchange Act or
under any statutory or regulatory provisions of the State of
Delaware providing for stockholder access to books and records
(including lists of stockholders) of Wrap;

 


 




 

-6-








 






 

 


(xv) make any request or
submit any proposal to amend or waive the terms of this
Section 7
other than through non-public communications with Wrap that would
not be reasonably likely to trigger public disclosure obligations
for any Party;

 


(xvi) engage any private
investigations firm or other person to investigate any of
Wrap’s directors or officers;

 


(xvii) disclose in a
manner that could reasonably be expected to become public any
intent, purpose, plan or proposal with respect to any director or
Wrap’s management, policies, strategy, operations, financial
results or affairs, any of its securities or assets or this
Agreement that is inconsistent with the provisions of this
Agreement; or

 


(xviii) enter into any
discussions, negotiations, agreements or understandings with any
person with respect to any action the Norris Parties are prohibited
from taking pursuant to this Section 7, or finance, advise, assist,
knowingly encourage or seek to persuade any person to take any
action or make any statement with respect to any such action, or
otherwise take or cause any action or make any statement
inconsistent with any of the foregoing.

 


Notwithstanding
anything to the contrary contained in this Section 7, the Norris Parties shall not
be prohibited or restricted from: (A) communicating privately with
the Board or any officer or director of Wrap, in the manner set
forth for communicating with Wrap in the Company Policies,
regarding any matter, so long as such communications are not
intended to, and would not reasonably be expected to, require any
public disclosure of such communications by any of the Norris
Parties or their respective Affiliates, Wrap or its Affiliates or
any Third Party, subject in any case to any confidentiality
obligations to Wrap of any such director or officer and applicable
law, rules or regulations, (B) taking any action necessary to
comply with any law, rule or regulation or any action required by
any governmental or regulatory authority or stock exchange that
has, or may have, jurisdiction over any Norris Party, provided that a breach by the
Norris Parties of this Agreement is not the cause of the applicable
requirement, or (C) privately communicating to any of their
potential investors or investors factual information regarding
Wrap, provided such
communications are subject to reasonable confidentiality
obligations and are not otherwise reasonably expected to be
publicly disclosed.

 


(b) The provisions of
this Section 7 and other terms and
conditions set forth in this Agreement shall not limit in any
respect the actions of any director of Wrap in his or her capacity
as such, recognizing that such actions are subject to such
director’s fiduciary duties to Wrap and its stockholders and
the Company Policies. The Parties further agree and acknowledge
that neither the Norris Parties nor any of their Affiliates shall
seek to do indirectly through the New Directors (or any
Replacement) anything that would be prohibited if done by any of
the Norris Parties or their Affiliates. The provisions of this
Section 7 shall also not prevent the
Norris Parties from freely voting their shares of Common Stock
(except as otherwise provided in Section 4 hereto).

 


(c) During the
Standstill Period, each Norris Party shall refrain from taking any
actions which could have the effect of encouraging, assisting or
influencing other stockholders of Wrap or any other persons to
engage in actions which, if taken by any Norris Party, would
violate this Agreement.

 


(d) Notwithstanding
anything contained in this Agreement to the contrary, the
provisions of Sections 2, 4 and 5 of this Agreement shall
automatically terminate upon the consummation of a Change of
Control transaction agreed to by the Board if the acquiring or
counter-party to the Change of Control transaction has conditioned
the closing of the transaction on the termination of such
sections.

 


(e) During the
Standstill Period, each of the Norris Parties agrees not to, and to
cause its Representatives not to, comment publicly about any
director or Wrap’s management, policies, strategy,
operations, financial results or affairs or any transactions
involving Wrap or any of its subsidiaries, except as expressly
permitted by this Agreement.

 


(f) At any time the
Norris Parties cease to have the Norris Schedule 13D filed with the
SEC and during the Standstill Period, upon reasonable written
notice from Wrap pursuant to Section 18 herein, the Norris Parties
shall promptly provide Wrap with information regarding the amount
of the securities of Wrap (i) beneficially owned by each such
entity or individual, (ii) which the Norris Parties have (A) any
direct or indirect rights or options to acquire or (B) any economic
exposure through any derivative securities or contracts or
instruments in any way related to the price of such securities, or
(iii) with respect to which any Norris Party has hedged its
position by selling covered call options. This ownership
information provided to Wrap will be kept strictly confidential,
unless required to be disclosed pursuant to applicable laws and
regulations, any subpoena, legal process or other legal requirement
or in connection with any litigation or similar proceedings in
connection with this Agreement.

 


 




 

-7-








 






 

 


8. Representations
and Warranties of Wrap. Wrap represents
and warrants to the other Parties that (a) Wrap has the corporate
power and authority to execute this Agreement and to bind it
thereto, (b) this Agreement has been duly and validly authorized,
executed and delivered by Wrap, constitutes a valid and binding
obligation and agreement of Wrap, and is enforceable against Wrap
in accordance with its terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws generally
affecting the rights and remedies of creditors and subject to
general equity principles, and (c) the execution, delivery and
performance of this Agreement by Wrap does not and will not violate
or conflict with (i) any law, rule, regulation, order, judgment or
decree applicable to it, or (ii) result in any breach or violation
of or constitute a default (or an event which with notice or lapse
of time or both could become a default) under or pursuant to, or
result in the loss of a material benefit under, or give any right
of termination, amendment, acceleration or cancellation of, any
organizational document, or any material agreement, contract,
commitment, understanding or arrangement to which Wrap is a party
or by which it is bound.

 


9. Representations
and Warranties of the Norris Parties. Each Norris Party
represents and warrants to the other Parties that (a) this
Agreement has been duly and validly authorized, executed and
delivered by such Norris Party, and constitutes a valid and binding
obligation and agreement of such Norris Party, enforceable against
such Norris Party in accordance with its terms, except as
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws generally affecting the rights and remedies of
creditors and subject to general equity principles, (b) the
signatory for such Norris Party has the power and authority to
execute this Agreement and any other documents or agreements
entered into in connection with this Agreement on behalf of itself
and the applicable Norris Party associated with that
signatory’s name, and to bind such Norris Party to the terms
hereof and thereof, (c) the execution, delivery and performance of
this Agreement by such Norris Party does not and will not violate
or conflict with (i) any law, rule, regulation, order, judgment or
decree applicable to it, or (ii) result in any breach or violation
of or constitute a default (or an event which with notice or lapse
of time or both could become a default) under or pursuant to, or
result in the loss of a material benefit under, or give any right
of termination, amendment, acceleration or cancellation of, any
organizational document, agreement, contract, commitment,
understanding or arrangement to which such member is a party or by
which it is bound and (d) the New Directors (or any Replacement)
will not be, and the Norris Parties will not consider the New
Directors (or any Replacement) to be, stockholder designees or
stockholder representatives of the Norris Parties.

 


10. SEC Filings.

 


(a) No later than two
(2) business days following the Effective Date, Wrap shall file
with the SEC a Current Report on Form 8-K reporting its entry into
this Agreement and appending this Agreement as an exhibit thereto
(the “Form
8-K”). The Form 8-K shall be consistent with the terms
of this Agreement. Wrap shall provide the Norris Parties with a
reasonable opportunity to review and comment on the Form 8-K prior
to the filing with the SEC and consider in good faith any comments
of the Norris Parties.

 


(b) No later than two
(2) business days following the Effective Date, the Norris Parties
shall file with the SEC an amendment to the Norris Schedule 13D, in
compliance with Section 13 of the Exchange Act reporting their
entry into this Agreement and appending this Agreement as an
exhibit thereto or incorporating this Agreement by reference to
Wrap’s Current Report on Form 8-K referred to in Section 10(a) hereof (the
“Schedule 13D
Amendment”). The Schedule 13D Amendment shall be
consistent with the terms of this Agreement. The Norris Parties
shall provide Wrap with a reasonable opportunity to review and
comment on the Schedule 13D Amendment prior to it being filed with
the SEC and consider in good faith any comments of
Wrap.

 


(c) Promptly following
the execution of this Agreement, Wrap shall issue a press release
(the “Press
Release”) in a form prepared by Wrap and approved by
the Norris Parties (such approval not to be unreasonably withheld).
Prior to the issuance of the Press Release, neither Wrap nor the
Norris Parties shall issue any press release or make any public
announcement regarding this Agreement or take any action that would
require public disclosure thereof without the prior written consent
of the other Parties, except to the extent required by applicable
law or the rules of any national securities exchange.

 


11. Term;
Termination. Unless otherwise
mutually agreed in writing by Wrap or the Norris Parties, the term
of this Agreement shall commence on the Effective Date and shall
continue until the date (the “Termination Date”) that is the
earliest of (a) the tenth day (the “Final Replacement Date”) following
the adjournment of the first applicable annual meeting of
Wrap’s stockholders, which follows the 2021 Annual Meeting,
at which the New Directors (or any Replacement) were not
successfully re-elected at such meeting and no subsequent
Replacements were appointed by the Board by the Final Replacement
Date, (b) the New Directors (or any Replacement) fail to be
re-nominated for election to the Board at any annual or special
meeting of Wrap’s stockholders (including any adjournment
postponement, rescheduling or continuation thereof) at which such
New Directors (or such Replacement) are up for election, and (c)
the consummation of an Extraordinary Transaction.

 


 




 

-8-








 






 

 


Notwithstanding
anything to the contrary herein, (i) the Norris Parties may earlier
terminate this Agreement if Wrap commits a material breach of its
obligations under this Agreement that (if capable of being cured)
is not cured within fifteen (15) days after receipt by Wrap from a
Norris Party specifying the material breach, or, if impossible to
cure within fifteen (15) days, that Wrap has not taken any
substantive action to cure within such fifteen (15)-day period, and
(ii) Wrap may earlier terminate this Agreement if any of the Norris
Parties commits a material breach of this Agreement that (if
capable of being cured) is not cured within fifteen (15) days after
receipt by such Norris Party from Wrap specifying the material
breach, or, if impossible to cure within fifteen (15) days, that
such Norris Party has not taken any substantive action to cure
within such fifteen (15)-day period. Termination of this Agreement
shall not relieve any Party from its responsibilities in respect of
any breach of this Agreement prior to such termination. The Parties
agree that if the Board does not comply with the provisions of
Section 2(a)(ii) hereof by the Appointment Date and such
non-compliance is not directly the result of a breach by the Norris
Parties of their obligations under this Agreement, then (x) such
non-compliance shall constitute a material breach of Wrap’s
obligations hereunder and that the cure period set forth in clause
(i) above shall not apply to such material breach; and (y) if the
Norris Parties exercise their termination right upon such
non-compliance, Wrap agrees that (A) so long as the Norris Group
provides a notice in the same form as the Nomination Notice (the
“Subsequent Nomination Notice”) within 10 days after
such termination, such notice will be deemed timely with respect to
nominations and proposals for consideration at the 2021 Annual
Meeting and (y) the Company shall not include in the Proxy
Statement any statement that would permit a proxy to confer
discretionary authority with respect to the matters set forth in
such Subsequent Nomination Notice (or if the Proxy Statement has
been issued at the date of such Subsequent Nomination Notice, Wrap
shall amend the Proxy Statement to the extent necessary to remove
any such statement).

 


12. Expenses.
Each Party shall be responsible for its own fees and expenses in
connection with the negotiation and execution of this Agreement and
the transactions contemplated hereby; provided, however, that Wrap shall
promptly reimburse Norris for the reasonable, documented
out-of-pocket fees and expenses incurred by the Norris Parties in
connection with the negotiation and execution of this Agreement and
the transactions contemplated hereby in an amount not to exceed in
the aggregate $150,000.


 


13. No
Other Discussions or Arrangements. The Norris
Parties represent and warrant that, as of the date of this
Agreement, except as specifically disclosed on the Norris Schedule
13D, or as disclosed to Wrap in writing prior to the Effective
Date, (a) the Norris Parties do not own, of record or beneficially,
any Voting Securities or any securities convertible into, or
exchangeable or exercisable for, any Voting Securities and (b) the
Norris Parties have not entered into, directly or indirectly, any
agreements or understandings with any person (other than their own
Representatives) with respect to any potential transaction
involving Wrap or the voting or disposition of any securities of
Wrap.

 


14. Governing Law;
Jurisdiction. This Agreement
shall be governed by and construed in accordance with the internal
laws of the State of Delaware without giving effect to any choice
or conflict of law provision or rule that would cause the
application of laws of any jurisdiction other than those of the
State of Delaware. Each Party agrees that it shall bring any suit,
action or other proceeding in respect of any claim arising out of
or related to this Agreement (each, an “Action”) exclusively in (a) the
Delaware Court of Chancery in and for New Castle County, (b) in the
event (but only in the event) that such court does not have subject
matter jurisdiction over such Action, the United States District
Court for the District of Delaware or (c) in the event (but only in
the event) such courts identified in clauses (a) and (b) do not
have subject matter jurisdiction over such Action, any other
Delaware state court (collectively, the “Chosen Courts”), and, solely in
connection with an Action, (i) irrevocably submits to the exclusive
jurisdiction of the Chosen Courts, (ii) irrevocably submits to the
exclusive venue of any such Action in the Chosen Courts and waives
any objection to laying venue in any such Action in the Chosen
Courts, (iii) waives any objection that the Chosen Courts are an
inconvenient forum or do not have jurisdiction over any Party
hereto and (iv) agrees that service of process upon such Party in
any such Action shall be effective if notice is given in accordance
with Section
18 of this
Agreement. Each Party agrees that a final judgment in any Action
brought in the Chosen Courts shall be conclusive and binding upon
each of the Parties and may be enforced in any other court, the
jurisdiction of which each of the Parties is or may be subject, by
suit upon such judgment. Notwithstanding the foregoing, nothing in
this Section
14 shall limit the
appeal rights in any Action for any Party.

 


 




 

-9-








 






 

 


15. Waiver of Jury
Trial. EACH PARTY HERETO
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS
AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF
ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING
WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES
THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.

 


16. Specific
Performance. Each of the
Parties acknowledges and agrees that irreparable injury to the
other Party would occur in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms
or are otherwise breached and that such injury would not be
adequately compensable by the remedies available at law (including
the payment of money damages). It is accordingly agreed that each
of the Parties (the “Moving
Party”) shall be entitled to specific enforcement of,
and injunctive or other equitable relief as a remedy for any such
breach or to prevent any violation or threatened violation of, the
terms hereof, and the other Party will not take action, directly or
indirectly, in opposition to the Moving Party seeking such relief
on the grounds that any other remedy or relief is available at law
or in equity. The Parties further agree to waive any requirement
for the security or posting of any bond in connection with any such
relief. The remedies available pursuant to this Section 16 shall not be deemed to be
the exclusive remedies for a breach of this Agreement but shall be
in addition to all other remedies available at law or
equity.

 


17. Certain
Definitions. As used in this
Agreement:

 


(a) “Affiliate” shall mean any
“Affiliate” as
defined in Rule 12b-2 promulgated by the SEC under the Exchange
Act, including, for the avoidance of doubt, persons who become
Affiliates subsequent to the Effective Date;

 


(b) “Associate” shall mean any
“Associate” as
defined in Rule 12b-2 promulgated by the SEC under the Exchange
Act, including, for the avoidance of doubt, persons who become
Associates subsequent to the Effective Date;

 


(c) “beneficial owner”,
“beneficial
ownership” and “beneficially own” shall have the
same meanings as set forth in Rule 13d-3 promulgated by the SEC
under the Exchange Act;

 


(d) “business day” shall mean any day
other than a Saturday, Sunday or day on which the commercial banks
in the State of New York are authorized or obligated to be closed
by applicable law;

 


(e) a
“Change of
Control” transaction shall be deemed to have taken
place if (i) any person is or becomes a beneficial owner, directly
or indirectly, of securities of Wrap representing more than fifty
percent (50%) of the equity interests and voting power of
Wrap’s then-outstanding equity securities or (ii) Wrap enters
into a stock-for-stock transaction whereby immediately after the
consummation of the transaction Wrap’s stockholders retain
less than fifty percent (50%) of the equity interests and voting
power of the surviving entity’s then-outstanding equity
securities;

 


(f) “Extraordinary Transaction” shall
mean any equity tender offer, equity exchange offer, merger,
acquisition, business combination, or other transaction with a
Third Party that, in each case, would result in a Change of
Control, liquidation, dissolution or other extraordinary
transaction involving a majority of its equity securities or a
majority of its assets, and, for the avoidance of doubt, including
any such transaction with a Third Party that is submitted for a
vote of Wrap’s stockholders;

 


(g) “other Party” shall mean, with
respect to Wrap, any of the Norris Parties, and with respect to the
Norris Parties, Wrap;

 


 




 

-10-








 






 

 


(h) “person” or “persons” shall mean any
individual, corporation (including not-for-profit), general or
limited partnership, limited liability company, joint venture,
estate, trust, association, organization or other entity of any
kind, structure or nature;

 


(i)  “Representative”
shall mean a person’s Affiliates and Associates and its and
their respective directors, officers, employees, partners, members,
managers, family members, consultants, legal or other advisors,
agents and other representatives; provided, that when used with
respect to Wrap, “Representatives” shall not include
any non-executive employees; and

 


(j) “Voting Securities” means the
Common Stock and any other securities of Wrap entitled to vote in
the election of directors.

 


18. Notices. All notices,
requests, consents, claims, demands, waivers, and other
communications hereunder shall be in writing and shall be deemed to
have been given: (a) when delivered by hand (with written
confirmation of receipt), (b) when received by the addressee if
sent by a nationally recognized overnight courier (receipt
requested), (c) on the date sent by facsimile or email (with
confirmation of transmission) if sent during normal business hours,
and on the next business day if sent after normal business hours,
or (d) on the third day after the date mailed, by certified or
registered mail, return receipt requested, postage prepaid. Such
communications must be sent to the respective Parties at the
addresses set forth in this Section 18 (or to such other address
that may be designated by a Party from time to time in accordance
with this Section 18).

 


If to
Wrap, to its address at:

 


Wrap
Technologies, Inc.


1817 W
4th
Street


Tempe,
AZ 85281


Attention: Wayne
Walker


Email:
WWalker@Walkernell.com

 


With
copies (which shall not constitute notice) to:

 


Vinson
& Elkins L.L.P.


1114
Avenue of the Americas, 32nd Floor


New
York, NY 10036


Attention: Lawrence
S. Elbaum


 C. Patrick
Gadson

Email:
lelbaum@velaw.com


pgadson@velaw.com

 


Disclosure Law
Group


655
West Broadway, Suite 870


San
Diego, CA 92101


Attention: Daniel
W. Rumsey

Email:
drumsey@disclosurelawgroup.com


 

 


If to a
Norris Party, to the address at:

 


15891
Blue Crystal Trail


Poway,
CA 92064


Attention: Elwood
G. Norris


Email:
woodynorris@cox.net

 


With a
copy (which shall not constitute notice) to:

 


Sheppard Mullin
Richter & Hampton LLP


12275
El Camino Real, Suite 200


San
Diego, CA 92130


Attention: John D.
Tishler


Email:
JTishler@sheppardmullin.com


 




 

-11-








 






 


 


19. Entire
Agreement. This Agreement
constitutes the sole and entire agreement of the Parties with
respect to the subject matter contained herein, and supersedes all
prior and contemporaneous understandings, agreements,
representations, and warranties, both written and oral, with
respect to such subject matter. This Agreement may only be amended,
modified, or supplemented by an agreement in writing signed by each
Party.

 


20. Severability.
If any term or provision of this Agreement is invalid, illegal, or
unenforceable in any jurisdiction, such invalidity, illegality, or
unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction.

 


21. Counterparts.
This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall be deemed to
be one and the same agreement. A signed copy of this Agreement
delivered by facsimile, email, or other means of electronic
transmission shall be deemed to have the same legal effect as
delivery of an original signed copy of this Agreement.

 


22. Assignment. No Party may
assign any of its rights or delegate any of its obligations
hereunder without the prior written consent of the other Parties;
provided, that each
Party may assign any of its rights and delegate any of its
obligations hereunder to any person or entity that acquires
substantially all of that Party’s assets, whether by stock
sale, merger, asset sale or otherwise. Any purported assignment or
delegation in violation of this Section 22 shall be null and void. No
assignment or delegation shall relieve the assigning or delegating
Party of any of its obligations hereunder. This Agreement is for
the sole benefit of the Parties and their respective successors and
permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other person or entity any
legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

 


23. Waivers.
No waiver by any Party of any of the provisions hereof shall be
effective unless explicitly set forth in writing and signed by the
Party so waiving. No waiver by any Party shall operate or be
construed as a waiver in respect of any failure, breach, or default
not expressly identified by such written waiver, whether of a
similar or different character, and whether occurring before or
after that waiver. No failure to exercise, or delay in exercising,
any right, remedy, power, or privilege arising from this Agreement
shall operate or be construed as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power, or
privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power, or
privilege.

 


 

 


[Remainder
of Page Intentionally Left Blank]

 




 

-12-








 






 


IN WITNESS WHEREOF, the Parties have
executed this Agreement to be effective as of the Effective
Date.

 


	
 

	
 

WRAP:

 


WRAP
TECHNOLOGIES, INC.

 


By:
/s/ Scot
Cohen



Name:
Scot Cohen

Title: Executive
Chairman








 



 


 





Signature Page to



Cooperation Agreement


 


 

-13-








 






 

 


	
 

	
 

NORRIS
PARTIES:

 


ELWOOD
G. NORRIS

 


By:
/s/ Elwood G.
Norris                                                                


 

 


STEPHANIE
A. NORRIS

 


By:
/s/ Stephanie A.
Norris                                                      


 


 


NORRIS
FAMILY 1997 TRUST


 


By:
/s/ Elwood G.
Norris                                                                


Name:
Elwood G. Norris

Title:
Trustee






 




 


 





Signature Page to



Cooperation Agreement


 


 

-14-