Document:

ex10-17.htm

Exhibit 10.17

 

 

 

October 6, 2014

 

Mr. Ronald A. Woessner 

Chief Executive Officer 

COPsync, Inc.

P.O.  Box 802108

Dallas, Texas 75380

 

Dear Mr. Woessner,

We are pleased that COPsync, Inc., a U.S. corporation ("COPsync" or the "Company") has decided to retain Maxim Group LLC ("Maxim") to provide general financial advisory and investment banking services to the Company as set forth herein. This letter agreement ("Agreement") will confirm Maxim's acceptance of such retention and set forth the terms of our engagement.

1.     Retention. The Company hereby retains Maxim as its financial advisor and investment banker to provide general financial advisory and investment banking services, and Maxim accepts such retention on the terms and conditions set forth in this Agreement. In connection with this Agreement, Maxim may provide certain or all of the following services (collectively referred to as the ''Advisory Services"):

 

(a)           provide a valuation analysis of the Company including:

I. Comparable company analysis;

II. Precedent transaction analysis;

(b)           assist management of the Company and advise the Company with respect to its strategic planning process and business plans including an analysis of markets, positioning, financial models, organizational structure, potential strategic alliances and capital requirements;

(c)           advise the Company on matters relating to its capitalization including a potential reverse split and national listing application;

(d)           assist management  of the Company with the preparation of the Company's marketing materials and investor presentations;

(e)           assist the Company in broadening its shareholder base including non-deal road show activity;

(f)           assist the Company with strategic introductions;

 

(g)           work closely with the Company's management team to develop a set of long and short-term goals with special focus on enhancing corporate and shareholder value. This will include assisting the Company in determining key business actions, including assistance with strategic partnership discussions and review of financing requirements, intended to help enhance shareholder value and exposure to the investment community;

 

(h)           advise the Company on potential financing alternatives and merger and acquisition criteria and activity, including facilitation and negotiation of any financial or structural aspects of such alternatives; and

 

 

 

 

	 	Members FINRA & SIPC 

405 Lexington Ave.• New York, NY 10174 • tel (212) 895-3500 • (800) 724-0761 • fax (212) 895-3783 •www.maximgrp.com

New York, NY • Woodbury, NY • Boca Raton, FL • San Francisco, CA • Red Bank, NJ

	 

 

  

  

  

 

COPsync, Inc.

October 2014

 

(i) provide such other financial advisory and investment banking services upon which the parties may mutually agree.

 

It is expressly understood and agreed that Maxim shall be required to perform only such tasks as may be necessary or desirable in connection with the rendering of its services hereunder and therefore may not perform all of the tasks enumerated above during the term of this Agreement. Moreover , it is further understood that Maxim need not perform each of the above-referenced tasks in order to receive the fees described in Section 3. It is further understood that Maxim's tasks may not be limited to those enumerated in this paragraph.

2.    Information. In connection with Maxim 's activities hereunder, the Company will cooperate with Maxim and furnish Maxim upon request with all information regarding the business , operations, properties, financial condition, management and prospects of the Company (all such information so furnished being the "Information") which Maxim deems appropriate and will provide Maxim with access to the Company's officers, directors, employees, independent accountants and legal counsel. The Company represents and warrants to Maxim that all information made available to Maxim hereunder will be complete and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances under which such statements are or will be made. The Company further represents and warrants that any projections and other forward-looking information provided by it to Maxim will have been prepared in good faith and will be based upon assumptions which, in light of the circumstances under which they are made, are reasonable. The Company recognizes and confirms that Maxim: (i) will use and rely primarily on the Information and on information available from generally recognized public sources in performing the services contemplated by this Agreement without having independently verified the same; (ii) does not assume responsibility for the accuracy or completeness of the Information and such other information; and (iii) will not make an appraisal of any assets of the Company. Any advice rendered by Maxim pursuant to this Agreement may not be disclosed publicly without Maxim's prior written consent. Maxim hereby acknowledges that certain of the Information received by Maxim may be confidential and/or proprietary, including Information with respect to the Company's technologies, products, business plans, marketing, and other Information which must be maintained by Maxim as confidential. Maxim agrees that it will not disclose such confidential and/or proprietary information to any other companies in the industry in which the Company is involved .

 

3.   Compensation. As consideration for Maxim's services pursuant to this Agreement, Maxim shall be entitled to receive, and the Company agrees to pay Maxim, the following compensation:

(a)           The Company shall pay to Maxim a non-refundable monthly fee of $5,000 (USD) for the term of this Agreement; however in no event shall the Company pay fewer than six (6) monthly fee payments to Maxim. The monthly fee payments are payable at the beginning of each month upon execution ·of this. Agreement until the termination of the Agreement (subject to the minimum six month time period detailed in the preceding sentence). The monthly fee payments shall be payable by wire or other immediately available funds.

 

(b)    The Company will issue to Maxim or its designees 2,375,000 shares of the Company's Common Stock ("Common Stock") as of the execution date of this Agreement. The shares of Common Stock will have unlimited piggyback registration rights and the same rights afforded other holders of the Company's Common Stock. The certificate representing the shares shall bear the customary Rule 144 language. Maxim agrees to hold the shares (i.e., not pledge, transfer, gift or otherwise transfer the shares) until the earlier of (a) the one year anniversary from the date of 

 

 

 

 

 

	 	Members FINRA & SIPC 

405 Lexington Ave.• New York, NY 10174 • tel (212) 895-3500 • (800) 724-0761 • fax (212) 895-3783 •www.maximgrp.com

New York, NY • Woodbury, NY • Boca Raton, FL • San Francisco, CA • Red Bank, NJ

	 

 

  

  

  

 

COPsync, Inc.

October 2014

 

issuance or (b) the effective date of the listing for trading of the Company's common stock on either the NYSE or the NASDAQ automated inter-dealer quotation system.

 

4.           Expenses. In addition to payment to Maxim of the compensation set forth in Section 3 hereof: the Company shall promptly upon request from time to time reimburse Maxim for all reasonable expenses (including, without limitation, fees and disbursements of counsel and all travel and other out-of-pocket expenses) incurred by Maxim in connection with its engagement hereunder. Maxim will provide the Company an invoice and copies of receipts pursuant to its expenses and such expenses shall not exceed $2,500 without prior authorization of the Company; provided that the foregoing limitation and consent shall not apply to legal fees.

5.           Indemnification. The Company agrees to indemnify Maxim in accordance with the indemnification and other provisions attached to this Agreement as Exhibit A {the "Indemnification Provisions"), which provisions are incorporated herein by reference and shall survive the termination or expiration of this Agreement.

 

6.           Future Rights. As additional consideration for its services hereunder and as an inducement to cause Maxim to enter into this Agreement, if at any time during the term of this Agreement or within twelve (12) months from the effective date of the termination of this Agreement, the Company proposes to effect a public offering of its securities on a US exchange, private placement of securities or other financing, the Company shall offer to retain Maxim as lead book running manager of such offering, or as its exclusive agent in connection with such financing or other matter, upon such terms as the parties may mutually agree, such terms to be set forth in a separate engagement letter or other agreement between the parties. Such offer shall be made in writing in order to be effective. The Company shall not offer to retain any other investment banking firm in connection with any such offering or financing, on terms more favorable than those discussed with Maxim without offering to retain Maxim on such more favorable terms. Maxim shall notify the Company within 10 days of its receipt of the written offer contemplated above as to whether or not it agrees to accept such retention. If Maxim should decline such retention, the Company shall have no further obligations to Maxim, except as specifically provided for herein. This Section shall supersede and replace Paragraph 4.e. of that certain Finder's Fee and Indemnity Agreement, dated. August 26, 2014 between the Company and Maxim .

7.           Other Activities. The Company acknowledges that Maxim has been, and may in the future be, engaged to provide services as an underwriter, placement agent, finder, advisor and investment banker to other companies in the industry in which the Company is involved. Subject to the confidentiality provisions of Maxim contained in Section 2 hereof, the Company acknowledges and agrees that nothing contained in this Agreement shall limit or restrict the right of Maxim or of any member, manager, officer, employee, agent or representative of Maxim, to be a member, manager, partner, officer, director, employee, agent or representative of, investor in, or to engage in, any other business, whether or not of a similar nature to the Company's business, nor to limit or restrict the right of Maxim to render services of any kind to any other corporation, firm, individual or association. Maxim may, but shall not be required to, present opportunities to the Company.

8.           Term and Termination; Survival of Provisions. Either Maxim or the Company may terminate this Agreement at any time upon 30 days' prior written notice to the other party after the six. (6) month anniversary of this Agreement. In the event of such termination, the Company shall pay and deliver to Maxim: (i) all compensation earned through the date of such termination (''Termination Date") pursuant to any provision of Section 3 hereof: and (ii) all compensation which may be earned by Maxim after the Termination Date pursuant to Section 3 hereof, and shall reimburse Maxim for all expenses incurred by Maxim in connection with its services hereunder pursuant to Section 4 hereof. All such fees

 

 

 

 

 

	 	Members FINRA & SIPC 

405 Lexington Ave.• New York, NY 10174 • tel (212) 895-3500 • (800) 724-0761 • fax (212) 895-3783 •www.maximgrp.com

New York, NY • Woodbury, NY • Boca Raton, FL • San Francisco, CA • Red Bank, NJ

	 

 

  

  

  

 

COPsync, Inc.

October 2014

 

and reimbursements due to Maxim pursuant to the immediately preceding sentence shall be paid to Maxim on or before the Termination Date (in the event such fees and reimbursements are earned or owed as of the Termination Date). Notwithstanding anything expressed or implied herein to the contrary: (i) any other agreement entered into between Maxim and the Company may only be terminated in accordance with the terms thereof, notwithstanding an actual or purported termination of this Agreement, and (ii) the terms and provisions of Sections 3, 4, 5 (including, but not limited to, the Indemnification Provisions attached to this Agreement and incorporated herein by reference), 6, 8, 9, 10, 11, 15 and 17 shall survive the termination of this Agreement.

 

9.    Notices. All notices will be in writing and will be effective when delivered in person or sent via facsimile and confirmed by letter, to the party to whom it is addressed at the following addresses or such other address as such party may advise the other in writing:

 

	
To the Company :

	
Mr. Ronald A. Woessner

Chief Executive Officer

COPsync, Inc.

P.O. Box 802108

Dallas, TX 75380-2108

Telephone: (972) 865-6192

Fax : (972) 201-9646

 

16415 Addison Road

Suite 300

Addison , Texas 75001

 

	
To Maxim

	
James Siegel, Esq.

Maxim Group LLC

405 Lexington Avenue

NewYork,NY 10174

Attention: James Siegel

Telephone:  (212) 895-3508

Facsimile:   (212) 895-3888

 

	
 

	
Mr. Clifford A. Teller

Maxim Group LLC

405 Lexington Avenue

NewYork.,NY 10174

Attention: Clifford A. Teller

 

10.   Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be enforced, governed by and construed in accordance with the laws of New York without regard to principles of conflict of laws. Any controversy between the parties to this Agreement, or arising .under this Agreement, shall be resolved by arbitration before the Financial Industry Regulatory Authority ("F1NRA'') in New York City. The following arbitration agreement should be read in conjunction with these disclosures:

 

	
(a)

	
ARBITRATION IS FINAL AND BINDING ON THE PARTIES;

	
(b)

	
THE PARTIES  ARE WAIVING  THE1R  RIGHT TO SEEK REMEDIES IN  COURT, INCLUDING THE RIGHT TO JURY TRIAL;

 

 

 

 

 

	 	Members FINRA & SIPC 

405 Lexington Ave.• New York, NY 10174 • tel (212) 895-3500 • (800) 724-0761 • fax (212) 895-3783 •www.maximgrp.com

New York, NY • Woodbury, NY • Boca Raton, FL • San Francisco, CA • Red Bank, NJ

	 

 

  

  

  

 

COPsync, Inc.

October 2014

 

 

	
(c)

	
PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM COURT PROCEEDING; 

	
(d)

	
THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDING OR LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED; AND 

 

ARBITRATION AGREEMENT ANY AND ALL CONTROVERSIES, DISPUTES OR CLAIMS BETWEEN THE .UNDERSIGNED AND YOU OR YOUR AGENTS, REPRESENTATIVES, EMPLOYEES, DIRECTORS, OFFICERS OR CONTROL PERSONS , ARISING OUT OF, IN CONNECTION WITH, FROM OR WITH RESPECT TO (a) ANY PROVISIONS OF OR THE VALIDITY OF THIS AGREEMENT OR ANY RELATED AGREEMENTS, (b) THE RELATIONSHIP OF THE PARTIES HERETO, OR (c) ANY CONTROVERSY ARISING OUT OF YOUR BUSINESS SHALL BE CONDUCTED PURSUANT TO THE CODE OF ARBITRATION PROCEDURE OF FINRA. ARBITRATION MUST BE COMMENCED BY SERVICE OF A WRITTEN DEMAND FOR ARBITRATION OR A WRITTEN NOTICE OF INTENTION TO ARBITRATE. IF YOU ARE A PARTY TO SUCH ARBITRATION, TO THE EXTENT PERMITTED BY THE RULES OF THE APPLICABLE ARBITRATION TRIBUNAL, THE ARBITRATION SHALL BE CONDUCTED IN NEW YORK, NEW YORK. THE DECISION AND AWARD OF THE ARBITRATORS(S) SHALL BE CONCLUSIVE AND BINDING UPON ALL PARTIES, AND ANY JUDGMENT UPON ANY AWARD RENDERED MAY BE ENTERED IN A COURT HAVING JURISDICTION THEREOF, AND NEITHER PARTY SHALL OPPOSE SUCH ENTRY.

11.           Amendments.This Agreement may not be modified or amended except in a writing duly executed by the parties hereto.

 

12.           Headings.  The section headings in this Agreement have been inserted as a matter of reference and are not part of this Agreement.

13.           Successors and Assigns. The benefits of this Agreement shall inure to the parties hereto, their respective successors and assigns and to the indemnified pat1ies hereunder and their respective successors and assigns, and the obligations and liabilities assumed in this Agreement shall be binding upon the parties hereto and their respective successors and assigns . Notwithstanding anything contained herein to the contrary, neither Maxim nor the Company shall assign any of its obligations hereunder without the prior written consent of the other party .

14.           No Third Party Beneficiaries. This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person or entity not a party hereto, except those entitled to the benefits of the Indemnification Provisions. Without limiting the foregoing, the Company acknowledges and agrees that Maxim is not being engaged as, and shall not be deemed to be, an agent or fiduciary of the Company's stockholders or creditors or any other person by virtue of this Agreement or the retention of Maxim hereunder, all of which are hereby expressly waived.

15.           Waiver.  Any waiver or any breach of any of the terms or conditions of this Agreement shall not operate as a waiver of any other breach of such terms or conditions or of any other term or condition, nor shall any failure to insist upon strict performance or to enforce any provision hereof on any one occasion operate as a waiver of such provision or of any other provision hereof or a waiver of the right to insist upon strict performance or to enforce such provision or any other provision on any subsequent occasion. Any waiver must be in writing.

 

 

 

 

 

	 	Members FINRA & SIPC 

405 Lexington Ave.• New York, NY 10174 • tel (212) 895-3500 • (800) 724-0761 • fax (212) 895-3783 •www.maximgrp.com

New York, NY • Woodbury, NY • Boca Raton, FL • San Francisco, CA • Red Bank, NJ

	 

 

  

  

  

 

COPsync, Inc.

October 2014

 

16.           Counterparts. This Agreement may be executed in any number of counterparts and by facsimile transmission, each of which shall be deemed to be an original instrument, but all of which taken together shall constitute one and the same agreement. Facsimile signatures shall be deemed to be original signatures for all purposes.

17.    Disclaimers. Maxim and the Company further agree that neither Maxim nor any of its affiliates or any of its/their respective officers, directors, controlling persons (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act. of 1934), employees or agents shall have any liability to the Company, its security holders or creditors, or any person asserting claims on behalf of or in the right of the Company (whether direct or indirect, in contract, tort, for an act of negligence or otherwise) for any. losses, fees, damages, liabilities , costs, expenses or equitable relief arising out of or relating to this Agreement or the Advisory Services rendered herein, except for losses, fees, damages, liabilities, costs or expenses that arise out of or are based on any action of or failure to act by Maxim and that are finally and fully judicially determined to have resulted solely from the gross negligence or willful misconduct of Maxim.

 

 

 

 

 

(Signature Page to Follow)

 

 

 

 

 

 

 

	 	Members FINRA & SIPC 

405 Lexington Ave.• New York, NY 10174 • tel (212) 895-3500 • (800) 724-0761 • fax (212) 895-3783 •www.maximgrp.com

New York, NY • Woodbury, NY • Boca Raton, FL • San Francisco, CA • Red Bank, NJ

	 

 

  

  

  

 

COPsync, Inc.

October 2014

 

If the terms of our engagement as set forth in this letter are satisfactory to you, please confirm by signing and returning one copy of this letter, together with a check or wire for. $5,000 representing the initial monthly payment, and in addition, the 2,375,000 shares of the Company's .Common Stock in connection with the Agreement.

 

 

	 	Very truly yours,
	 	 
	 	MAXIM GROUP LLC
	 	
 

 

 

 

Agreed to and accepted this 6th day of October, 2014

 

 

Name : Ronald A. Woessner

Title: Chief Executive Officer

 

 

 

 

	 	Members FINRA & SIPC 

405 Lexington Ave.• New York, NY 10174 • tel (212) 895-3500 • (800) 724-0761 • fax (212) 895-3783 •www.maximgrp.com

New York, NY • Woodbury, NY • Boca Raton, FL • San Francisco, CA • Red Bank, NJ

	 

 

  

  

  

 

COPsync, Inc.

October 2014

 

Exhibit A

INDEMNIFICATION PROVISIONS

 

 

Capitalized tenns used in this Exhibit shall have the meanings ascribed to such terms in the Agreement to which this Exhibit is attached.

The Company agrees to indemnify and hold harmless Maxim and each of the other Indemnified Parties (as hereinafter defined) from and against any and all losses, claims, damages, obligations, penalties, . judgments, awards, liabilities, costs, expenses and disbursements, and any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise (including, without limitation , the reasonable costs, expenses and disbursements,  as and when  incurred, of investigating, preparing,  pursing or defending any such  action, suit, proceeding  or investigation  (whether or not in connection with litigation in which any Indemnified Party is a party)) (collectively, "Losses''), caused by, ·relating to, based upon , arising out of, or in connection with, Maxim's acting for the Company, including, without limitation , any act or omission by Maxim in connection with its acceptance of or the performance or non-performance of its obligations under the Agreement between the Company and Maxim to which these indemnification provisions are attached and form a part (the "Agreement") , any breach by the Company of any representation, warranty, covenant or agreement contained in the Agreement; or the enforcement by Maxim of its rights under the Agreement or these indemnification provisions, except to the extent that any such Losses are found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily from the gross negligence, bad faith or willful misconduct of the Indemnified Party seeking indemnification ion hereunder. The Company also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement of Maxim by the Company, except to the extent that any such liability is found in a formal judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily from such Indemnified Party 's gross negligence, bad faith or willful misconduct.

These Indemnification  Provisions  shall extend to the following persons (collectively, the "Indemnified Parties"):  Maxim, its present and former affiliated entities, managers, members, officers, employees, legal counsel, agents and controlling persons (within the meaning of the federal securities laws), and the officers, directors, partners, stockholders, members, managers, employees, legal counsel, agents and controlling persons of any of them. These indemnification provisions shall be in addition to any liability which the Company may otherwise have to any Indemnified Party.

If any action, suit, proceeding or investigation is commenced , as to which an Indemnified Party proposes to demand indemnification, it shall notify the Company with reasonable promptness; provided , however, that any failure by an Indemnified Party to notify the Company shall not relieve the Company from its obligations hereunder, except to the extent that the Company shall have been prejudiced by such failure . An Indemnified Party shall have the right to retain counsel of its own choice to represent it, and the reasonable fees, expenses and disbursements of such counsel shall be borne by the Indemnified Party unless: (i) the Company has failed promptly to assume the defense and employ counsel or (ii) the named parties to any such action, suit, proceeding or investigation include such Indemnified Party and the Company, and such Indemnified Party shall have been advised in the reasonable opinion of counsel that there is an actual conflict of interest that prevents the counsel selected by the Company from representing both the Company (or another client of such counsel) and any such Indemnified Party; provided that the Company shall not in such event be responsible hereunder for the fees and expenses of more than one firm of separate counsel for all Indemnified Persons in connection with any action, suit, proceeding or investigation, in addition to any local counsel. The Indemnified Parties agree that they will permit the Company to assume the defense and control the settlement of such action, suit, proceeding or investigation, if they can reach an acceptable agreement as

 

 

 

 

 

	 	Members FINRA & SIPC 

405 Lexington Ave.• New York, NY 10174 • tel (212) 895-3500 • (800) 724-0761 • fax (212) 895-3783 •www.maximgrp.com

New York, NY • Woodbury, NY • Boca Raton, FL • San Francisco, CA • Red Bank, NJ

	 

 

  

  

  

 

COPsync, Inc.

October 2014

 

to the procedure and process. The Company shall be liable for any settlement of any claim against any Indemnified Party made with the Company's prior written consent. The Company shall not, without the prior written consent of Maxim, settle or compromise any claim, or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent (i) includes, as an unconditional term thereof, the giving by the claimant to all of the Indemnified Parties of an unconditional release from all liability in respect of such claim, and (ii) does not contain any factual or legal admission by or with respect to an Indemnified Party or an adverse statement with respect to the character, professionalism, expertise or reputation of any Indemnified Party or any action or inaction of any Indemnified Party.

 

In order to provide for just and equitable contribution, if a claim for indemnification pursuant to these indemnification provisions is made but it is found  in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provide for indemnification in such case, then the Company shall contribute to the Losses to which any Indemnified Party may be subject (i) in accordance with the relative benefits received by the Company and its stockholders, subsidiaries and affiliates, on the one hand, and the Indemnified Party, on the other hand, and (ii) if (and only if) the allocation provided in clause (i) of this sentence is not permitted by applicable law, in such proportion as to reflect not only the relative benefits, but also the relative fault of the Company, on the one hand, and the Indemnified Party, on the other hand, in connection with the statements, acts or omissions which resulted in such Losses as well as any relevant equitable  considerations. No person found liable for a fraudulent misrepresentation shall be entitled to contribution from any person who is not also found liable for fraudulent misrepresentation. The relative benefits received (or anticipated to be received) by the Company and its stockholders, subsidiaries and affiliates shall be deemed to be equal to the aggregate consideration payable or receivable by such parties in connection with the transaction or transactions to which the Agreement relates relative to the amount of compensation actually received by Maxim in connection with such transaction or transactions. Notwithstanding the foregoing, in no event shall the amount contributed by all Indemnified Parties exceed the amount of compensation received by Maxim pursuant to the Agreement.

Neither termination nor completion of the Agreement shall affect these Indemnification Provisions which shall remain operative and in full force and effect. The Indemnification Provisions shall be binding upon the Company and its successors and assigns and shall inure to the benefit of the Indemnified Parties and their respective successors, assigns, heirs and personal representatives.

 

 

 

 

 

 

 

 

 

 

 

	 	Members FINRA & SIPC 

405 Lexington Ave.• New York, NY 10174 • tel (212) 895-3500 • (800) 724-0761 • fax (212) 895-3783 •www.maximgrp.com

New York, NY • Woodbury, NY • Boca Raton, FL • San Francisco, CA • Red Bank, NJExhibit 4.S

Exhibit 4.S

PHOENIX PROPERTY OPTION AGREEMENT

BETWEEN

BATTLE MOUNTAIN GOLD INC.

AND

BATTLE MOUNTAIN GOLD (USA), INC.

AND

GREAT AMERICAN MINERALS, INC.

Dated March 13, 2013

E-554

TABLE OF CONTENTS

				
	1.0	INTERPRETATION	2
	 	1.1	Definitions	2
	 	1.2	Included Words	3
	 	1.3	Headings	3
	 	1.4	References	3
	 	1.5	Exhibit	3
	 	1.6	Currency	3
	 	1.7	Governing Law	3
	 	1.8	Severability	4
	 		
	2.0	REPRESENTATIONS, WARRANTIES AND COVENANTS	4
	 	2.1	Representations and Warranties of BMG and BMG USA	4
	 	2.2	Representations and Warranties of GAM	4
	 	2.3	Survival of Representations, Warranties and Covenants	5
	 		
	3.0	PROPERTY	5
	 	3.1	Option to Purchase Property	5
	 	3.2	Consideration	5
	 	3.3	Transfer of Property	6
	 		
	4.0	ASSUMPTION OF OBLIGATIONS AND INDEMNIFICATION	6
	 		
	5.0	ESCROW	7
	 	5.1	Escrow Terms	7
	 		
	6.0	DEFAULT	7
	 		
	7.0	FORCE MAJEURE	8
	 	7.1	Effect of Force Majeure	8
	 	7.2	Notice	8
	 		
	8.0	GENERAL	8
	 	8.1	Further Assurances	8
	 	8.2	Notice	9
	 	8.3	Successors and Assigns	9
	 	8.4	Entire Agreement	9
	 	8.5	Counterparts	10
	 	8.6	Amendment	10
	 		
	9.0	CONSENTS	10

 

		
	Exhibit “A”	Property
	 	
	Exhibit “B”	Pre-Existing Rights

E-555

PHOENIX OPTION AGREEMENT

THIS AGREEMENT made as of the 13th day of March, 2013.

BETWEEN:

BATTLE MOUNTAIN GOLD INC., a British Columbia company, having its registered office at 20th Floor, 250 Howe Street, Vancouver, British Columbia V6C 3R8

(“BMG”)

AND:

BATTLE MOUNTAIN GOLD (USA), INC., a Nevada corporation having its registered office at 6121 Lakeside Drive, Suite 260, Reno, Nevada 89511

(“BMG USA”)

AND:

GREAT AMERICAN MINERALS, INC., a Nevada corporation having an office located at 11521 N. Warren St. Hayden, ID 83835

(“GAM”)

WHEREAS:

A. GAM owns a 40% participation interest in the Phoenix Joint Venture and a 40% right, title and interest in and to the mining claims described in Exhibit “A” hereto (such 40% interest being referred to herein as the “Property”) located in the State of Nevada in the United States of America;

B. BMG USA wishes to acquire the 40% interest of GAM in the Property;

C. BMG USA is a wholly owned subsidiary of BMG;

D. Madison Minerals Inc., through its wholly owned subsidiary Madison Enterprises (Nevada) Inc., holds a 60% participation interest in the Phoenix Joint Venture pursuant to an Exploration, Development and Mine Operating Agreement dated March 29, 2006 (the “Joint Venture Agreement”); and

E. The Property is subject to an advanced minimum royalty payment of USD$60,000 per annum, payable to Victory Exploration Inc., which may be credited against certain production royalties.

E-556

NOW THEREFORE THIS AGREEMENT WITNESSES that for and in consideration of the mutual covenants and agreements contained herein the Parties agree as follows:

		
	1.0	INTERPRETATION

 

			
	 	1.1	Definitions

For the purposes of this Agreement the following words and phrases will have the following meanings:

“Canadian Dollars” means the lawful currency of Canada.

“Defaulting Parties” shall have the meaning set forth in Section 6.0.

“Delayed Party” shall have the meaning set forth in Section 7.1.

“Encumbrance” means a mortgage, charge (whether royalty or otherwise), pledge, hypothec, security interest, lien, action, claim, demand or equity of any nature.

“Initial BMG Shares” shall have the meaning set forth in Section 3.2(b). 

“Initial Release Date” shall have the meaning set forth in Section 5.1.1. 

“IPO” means an initial public offering of shares in the capital of BMG.

“Joint Venture Agreement” shall have the meaning set forth in Recital D.

“Market Price” means the volume weighted average trading price on a Canadian stock exchange of the common shares of BMG or, in the case of an RTO, the common shares of the resulting public company, for the 20 trading days preceding the issuance of the Subsequent BMG Shares.

“Option” shall have the meaning set forth in Section 3.1.

“Parties” means, collectively, BMG, BMG USA and GAM and “Party” means any one of them.

“Phoenix Joint Venture” means that particular joint venture in respect of the Property pursuant to the Joint Venture Agreement.

“Property” means a 40% participation interest in the Phoenix Joint Venture and a 40% right, title and interest in and to the mining claims described in Exhibit “A” attached hereto.

E-557

2

“RTO” means a reverse take-over, as defined in Policy 5.2 of the TSX Venture Exchange Corporate Finance Manual, or any form of business combination, including, but not limited to a plan of arrangement, amalgamation or merger, involving BMG and a public entity.

“Subsequent BMG Shares” shall have the meaning set forth in Section 3.2(d).

“to its knowledge” means to a Party’s knowledge and belief, without independent inquiry.

			
	 	1.2	Included Words

This Agreement will be read with such changes in gender or number as the context requires.

			
	 	1.3	Headings

The headings to the sections, paragraphs, parts or clauses of this Agreement are inserted for convenience only and will not affect the construction hereof.

			
	 	1.4	References

Unless otherwise stated, a reference herein to a numbered section, paragraph, clause or schedule, refers to the section, paragraph, clause or schedule bearing that number or letter in this Agreement. A reference to “this Agreement”, “hereof”, “hereunder”, “herein”, or words of similar meaning, means this Agreement including the schedules hereto, together with any amendments thereof.

			
	 	1.5	Exhibit

The following exhibits are incorporated into this Agreement by reference:

			
	 	Exhibit “A”	Property
		 	
		Exhibit “B”	Pre-Existing Rights

 

			
	 	1.6	Currency

Except as otherwise expressly provided in this Agreement, all dollar amounts referred to in this Agreement are stated in Canadian Dollars.

			
	 	1.7	Governing Law

This Agreement will be construed and governed by the laws in force in the Province of British Columbia and the courts of the Province of British Columbia will have exclusive jurisdiction to hear and determine all disputes arising hereunder. This Section 1.6 will not be construed to affect the rights of a Party to enforce a judgment or award outside of British Columbia. 

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	 	1.8	Severability

If any provision of this Agreement is or becomes illegal, invalid or unenforceable in whole or in part, the remaining provisions will nevertheless be and remain valid and subsisting and such remaining provisions will be construed as if this Agreement had been executed without the illegal, invalid or unenforceable portion.

		
	2.0	REPRESENTATIONS, WARRANTIES AND COVENANTS

 

			
	 	2.1	Representations and Warranties of BMG and BMG USA

BMG and BMG USA jointly and severally represent and warrant to GAM that:

		(a)	

   they are bodies corporate duly incorporated under the laws of their respective jurisdictions of incorporation;

	 	 	

   

		(b)	

   each of BMG and BMG USA has full power and authority to carry on its business and to enter into this Agreement and any agreement or instrument referred to or contemplated by this Agreement and all corporate authorizations have been obtained for the execution of this Agreement and for the performance of its obligations hereunder;

		 	

   

		(c)	

   neither the execution and delivery of this Agreement nor any of the agreements referred to herein or contemplated hereby, nor the consummation of the transactions hereby contemplated conflict with, result in the breach of or accelerate the performance required by any agreement to which it is a party; and

		 	

   

		(d)	

   the execution and delivery of this Agreement and the agreements contemplated hereby will not violate or result in the breach of the laws of any jurisdiction applicable or pertaining thereto or of its constating documents.

		 	

   

			
	 	2.2	Representations and Warranties of GAM

GAM represents and warrants to BMG and BMG USA that:

		(a)	

   to its knowledge, the Property is presently in good standing under the laws of the State of Nevada;

		 	

   

		(b)	

   it is the beneficial owner of the Property free and clear of any Encumbrances;

		 	

   

		(c)	

   it has the right to enter into this Agreement and to dispose of the Property in accordance with the terms of this Agreement, subject to the to the rights described in Exhibit B;

		 	

   

	 	(d)	

   to its knowledge there is no adverse claim or challenge against or to GAM’s ownership of or title to the Property, is there any basis therefore, and GAM has not entered into any 

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agreements or options to acquire or purchase the Property or any portion thereof or to place an Encumbrance thereon, save as disclosed in Exhibit B;

		(e)	

   it has no knowledge of any environmental problem or condition which exists on the Property as of the date of execution of this Agreement; and

		 	

   

		(f)	

   to its knowledge there are no notifications from any local, state or federal governmental agency or body that any environmental problem or condition exists on the Property which are outstanding.

	 	 	

   

			
	 	2.3	Survival of Representations, Warranties and Covenants

The representations, warranties, covenants and agreements contained in this Agreement are conditions on which the Parties have relied in entering into this Agreement and will survive the execution hereof, any investigation made by a Party whether prior to or after executing this Agreement and the exercise of the Option , for a period of six (6) months, and each Party will indemnify and save the other harmless from all losses, damages, costs, actions and suits arising out of or in connection with any breach of any representation, warranty, covenant or agreement made by it and contained in this Agreement. A Party may waive any of such representations, warranties, covenants or agreements in whole or in part at any time without prejudice of its right in respect of any other breach of the same or any other representation, warranty, covenant or agreement. To be effective any waiver must be in writing and will be limited to the specific circumstances for which it is given.

		
	3.0	PROPERTY

 

			
	 	3.1	Option to Purchase Property

GAM hereby grants to BMG USA the sole and exclusive right and option (the “Option”), subject to the terms of this Agreement, to acquire the Property free and clear of all charges, encumbrances and claims save and except for those set out herein.

			
	 	3.2	Consideration

GAM will sell to BMG USA the Property upon the completion of all of the following by BMG or BMG USA:

		(a)	

   payment of $50,000 in cash to GAM immediately upon execution of this Agreement;

		 	

   

	 	(b)	

   issuance of 2,000,000 common shares of BMG (the “Initial BMG Shares”) at a deemed value of $0.15 per share to GAM immediately upon execution of this Agreement, such Initial BMG Shares bearing any applicable legends and restrictions as required by applicable securities laws; 

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		(c)	

   payment of $50,000 in cash to GAM six months after the date of this Agreement; and

		 	

   

		(d)	

   at the sole discretion and option of BMG, payment to GAM, within 12 months after the date of this Agreement, of $1,600,000 in either:

	 	 	

   

		(i)	

   cash; or

		 	

   

		(ii)	

   in common shares of BMG, or in the case of an RTO, common shares of the resulting public company (the “Subsequent BMG Shares”), such Subsequent BMG Shares bearing any applicable legends and restrictions as required by applicable securities laws, at a share price equal to the lesser of:

	 	 	

   

		(A)	

   in the case of an IPO, the IPO share price;

		 	

   

		(B)	

   the Market Price; and

		 	

   

	 	(C)	

   $0.40 per share.

Notwithstanding the foregoing, BMG may only issue the Subsequent BMG Shares provided that GAM receives shares of BMG or a successor entity which is a reporting issuer and listed on a recognized stock exchange; in all other events BMG and BMG USA must pay the $1,600,000 in cash.

	 	3.3	

   Transfer of Property

3.3.1 Upon timely completion of the items described in Section 3.2(a) and (b) and provided that BMG and BMG USA are not in material default of any other provisions of this Agreement, the Parties agree to execute a memorandum describing BMG USA’s interest in the Property which BMG USA may file against the Property.

3.3.2 Upon timely completion of all items described in Section 3.2 of this Agreement and provided that BMG and BMG USA are not in default of any other provisions of this Agreement, GAM will deliver to BMG USA a duly executed transfer of the Property in favour of BMG USA.

		
	4.0	ASSUMPTION OF OBLIGATIONS AND INDEMNIFICATION

From the date of this Agreement until the expiry or due exercise thereof, BMG and BMG USA will jointly and severally assume all of the obligations of GAM under the Joint Venture Agreement and agrees to perform all of the obligations of GAM thereunder and pay timely all monies due thereunder on behalf of GAM, provided that GAM shall have the right to an observer on the Management Committee and the right to reject proposed Programs and Budgets, as defined in the Joint Venture Agreement, which are not fully funded in advance by BMG or BMG USA, as the case may be. BMG and BMG USA will jointly and severally indemnify and hold harmless GAM from any costs, damages, or liabilities of

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whatsoever kind and nature during the term of this Agreement resulting from any failure of BMG or BMG USA to comply with the assumed obligations under the Joint Venture Agreement. During the currency of this Agreement, BMG and BMG USA shall provide GAM with copies of all reports and other correspondence in connection with the Joint Venture Agreement.

		
	5.0	ESCROW

 

			
	 	5.1	Escrow Terms

5.1.1 GAM agrees that the Initial BMG Shares issued to GAM will be subject to the following escrow release terms, provided that equivalent escrow terms are also imposed on the other shareholders subject to escrow requirements:

			
	Percentage	 	Release Date
	 
10%	 	 
Date of final acceptance by the TSX Venture Exchange (“TSX-V” or other stock exchange for listing of BMG on the TSX-V or other stock exchange (the “Initial Release Date”)
	15%	 	 
6 months from the Initial Release Date
	15%	 	 
12 months from the Initial Release Date
	15%	 	 
18 months from the Initial Release Date
	15%	 	 
24 months from the Initial Release Date
	15%	 	 
30 months from the Initial Release Date
	15%	 	 
36 months from the Initial Release Date

5.1.2 GAM further agrees that it will execute any pooling or escrow agreement in respect of the Initial BMG Shares that GAM is required to enter into by any regulatory authority.

		
	6.0	DEFAULT

If BMG or BMG USA (collectively, the “Defaulting Parties”) defaults in any of their obligations hereunder, GAM may give the Defaulting Parties written notice thereof and specify the default or defaults relied on. If the Defaulting Parties have not, in the case of cash payments or share issuances, cured such default within 30 days after receipt of such notice or, in all other cases, taken reasonable commercial steps to cure such default within 30 days after receipt of such notice and continue diligently

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pursue same, this Agreement shall be terminated and GAM shall be entitled to retain all prior payments and share issuances and the Defaulting Parties shall have no further recourse against GAM.

		
	7.0	FORCE MAJEURE

 

			
	 	7.1	Effect of Force Majeure

If any Party (a “Delayed Party”) is at any time from the date of this Agreement until the expiry or exercise thereof prevented or delayed in complying with any provisions of this Agreement by reason of strikes, walk-outs, labour shortages, power shortages, fires, wars, terrorist acts, acts of God, governmental regulations restricting normal operations, shipping delays or any other reason or reasons beyond its control, excepting the want of funds on the part of the Delayed Party, then the time limited for the performance by the Delayed Party of its obligations hereunder shall be extended by a period of time equal in length to the period of each such prevention or delay.

			
	 	7.2	Notice

A Delayed Party shall give Notice to the other Parties of each event of force majeure under Section 7.1 hereof within 30 days thereof, and upon cessation of such event shall furnish the other Parties with Notice of that event together with particulars of the number of days by which the obligations of the Delayed Party hereunder have been extended by virtue of such event of force majeure and all preceding events of force majeure.

		
	8.0	GENERAL

 

			
	 	8.1	Further Assurances

Each of the Parties hereby covenants and agrees that at any time and from time to time until the exercise or termination of the Option it will, upon the request of the other Party, do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably required for the better carrying out and performance of all the terms of this Agreement.

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	 	8.2	Notice

8.2.1 Any notice required or permitted to be given or delivery required to be made to any Party may be effectively given or delivered if it is delivered personally to:

			
	 	(a)	In the case of BMG and BMG USA:

c/o 20th Floor, 250 Howe Street
Vancouver, British Columbia
V6C 3R8

			
	 	Attention:	Brian Abraham and Jessica Yee

 

			
	 	(b)	In the case of GAM:

11521 N. Warren St.
Hayden, ID 83835

			
	 	Attention:	Corporate Secretary

Or to such other address as the Party entitled to or receiving such notice may notify the other Party as provided for herein.

8.2.2 A notice will be deemed to have been received by the addressee on the first Business Day occurring after the date of delivery or transmission provided that such is a Business Day, and if not, on the second Business Day occurring after the date of delivery or transmission.

			
	 	8.3	Successors and Assigns

 

This Agreement will be binding upon and enure to the benefit of the Parties and their respective successors and assigns. Nothing herein express or implied is intended to confer upon any person, other than the Parties and their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

			
	 	8.4	Entire Agreement

This Agreement constitutes the entire agreement between the Parties and supersedes all prior letters of intent, agreements, representations, warranties, statements, promises, information, arrangements and understandings, whether oral or written, express or implied with respect to the subject matter of this Agreement.

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	 	8.5	Counterparts

This Agreement may be executed in any number of counterparts with the same effect as if all of the Parties had signed the same document and all counterparts will be construed together and will constitute one and the same instrument.

			
	 	8.6	Amendment

No modification or amendment to this Agreement may be made unless agreed to by the Parties in writing.

		
	9.0	CONSENTS

This Agreement is expressly subject to the receipt of the consents listed in Exhibit B.

		
	BATTLE MOUNTAIN GOLD INC.
		
	Per:	Signed “David Elliott”
		Authorized Signatory
		 
	BATTLE MOUNTAIN GOLD (USA), INC.
		
	Per:	Signed “David Elliott”
		Authorized Signatory
		 
	GREAT AMERICAN MINERALS, INC.
		
	Per:	Signed”
		Authorized Signatory

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This is EXHIBIT “A” to that

Sale Agreement between Battle Mountain Gold Inc., Battle Mountain Gold (USA), Inc.,

and Great American Minerals, Inc.

 

E-566

A-1

 

 

E-567

A-2

 

E-568

A-3

 

E-569

A-4

 

E-570

A-5

 

E-571

A-6

 

E-572

A-7

 

E-573

A-8

 

E-574

A-9

 

E-575

A-10

 

E-576

A-11

This is EXHIBIT “B” to that

Option Agreement between Battle Mountain Gold Inc., Battle Mountain Gold (USA), Inc.,

and Great American Minerals, Inc.

	1.	

   The consent and waiver regarding the pre-emptive right of Madison Minerals Inc. in s. 16.3 of the Joint Venture Agreement.

	 	

   

	2.	

   Notice to MF Investment Holding Company 1 (Cayman) Limited.

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