Document:

Exhibit

EXHIBIT 10.2

March 27, 2018

STRICTLY CONFIDENTIAL

Attn:    Richard W. Pascoe
Chief Executive Officer
Apricus Biosciences, Inc.
11975 El Camino Real, Suite 300
San Diego, CA 92130

Dear Richard:

This letter agreement (this “Agreement”) constitutes the agreement between Apricus Biosciences, Inc. (the “Company”) and H.C. Wainwright & Co., LLC (“Wainwright”), that Wainwright shall serve as the exclusive agent, advisor or underwriter in any offering (each, an “Offering”) of securities of the Company (the “Securities”) during the Term (as defined below) of this Agreement.  The terms of each Offering and the Securities issued in connection therewith shall be mutually agreed upon by the Company and Wainwright and nothing herein implies that Wainwright would have the power or authority to bind the Company and nothing herein implies that the Company shall have an obligation to issue any Securities.  It is understood that Wainwright’s assistance in an Offering will be subject to the satisfactory completion of such investigation and inquiry into the affairs of the Company as Wainwright deems appropriate under the circumstances and to the receipt of all internal approvals of Wainwright in connection with the transaction.  The Company expressly acknowledges and agrees that Wainwright’s involvement in an Offering is strictly on a reasonable best efforts basis and that the consummation of an Offering will be subject to, among other things, market conditions. The execution of this Agreement does not constitute a commitment by Wainwright to purchase, or the Company to sell, the Securities and does not ensure a successful Offering of the Securities or the success of Wainwright with respect to securing any other financing on behalf of the Company.  Wainwright may retain other brokers, dealers, agents or underwriters on its behalf in connection with an Offering.

A.Compensation; Reimbursement.  At the closing of each Offering (each, a “Closing”), the Company shall compensate Wainwright as follows:

1.Cash Fee.  The Company shall pay to Wainwright a cash fee, or as to an underwritten Offering, an underwriter discount equal to 7.0% of the aggregate gross proceeds raised in each Offering.  

2.Warrant Coverage.  If the Securities included in an Offering include warrants, the Company shall issue to Wainwright or its designees at each Closing, warrants (the “Wainwright Warrants”) to purchase that number of shares of common stock of the Company equal to 5.0% of the aggregate number of shares of common stock placed in each Offering, and if an Offering includes a “greenshoe” or “additional investment” option component, such number of shares of common stock underlying such additional option component, with the Wainwright Warrants issuable upon the closing of the additional shares of common stock following the exercise of such option.  The Wainwright Warrants shall have the same terms as the warrants issued to investors in the applicable Offering, except that the Wainwright Warrants shall have a term of no greater than 5 years and an exercise price equal to 125% of the public offering price of an Offering.  

430 Park Avenue  |  New York, New York 10022  |  212.356.0500  |  www.hcwco.com

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Member: FINRA/SIPC

3.Expense Allowance.  Out of the proceeds of each Closing, the Company also agrees to pay Wainwright (a) a management fee equal to 1.0% of the gross proceeds raised in each Offering; (b) $35,000 for non-accountable expenses; (c) up to $75,000 for fees and expenses of legal counsel and other out-of-pocket expenses; and (d) the additional reimbursable amount payable by the Company pursuant to Paragraph D.3 hereunder; provided, however, that such reimbursement amount in no way limits or impairs the indemnification and contribution provisions of this Agreement.  

4.Tail Fee.  Wainwright shall be entitled to compensation under clauses (1) and (2) hereunder, calculated in the manner set forth therein, with respect to any public or private offering or other financing or capital-raising transaction of any kind, other than sales pursuant to that certain Common Stock Purchase Agreement with Aspire Capital Fund, LLC, dated July 5, 2016 (“Tail Financing”) to the extent that such financing or capital is provided to the Company by investors whom Wainwright had contacted during the Term, or introduced to the Company during Term, if such Tail Financing is consummated at any time within the 6-month period following the expiration or termination of this Agreement.  Upon the Company’s request, Wainwright shall promptly provide a list to the Company of any such investors.

5.Right of First Refusal.  If within the 12-month period following consummation of each Offering, the Company or any of its subsidiaries (a) decides to finance or refinance any indebtedness using a manager or agent, Wainwright (or any affiliate designated by Wainwright) shall have the right to act as sole book runner, sole manager, sole placement agent or sole agent with respect to such financing or refinancing; or (b) decides to raise funds by means of a public offering or a private placement of equity or debt securities using an underwriter or placement agent, Wainwright (or any affiliate designated by Wainwright) shall have the right to act as sole book runner, sole underwriter or sole placement agent for such financing; provided, further, that this right of first refusal shall exclude any financing principally directed toward the Company’s existing investors other than those introduced to the Company by Wainwright in an Offering or pursuant to a prior engagement.  If Wainwright or one of its affiliates decides to accept any such engagement, the agreement governing such engagement will contain, among other things, provisions for customary fees for transactions of similar size and nature and the provisions of this Agreement, including indemnification, which are appropriate to such a transaction.  For purposes of clarity, this right of first refusal shall not apply to a strategic transaction with a business engaged in the Company’s industry or any merger transaction which would result in a change in control of the Company wherein the Company is not the surviving entity, including any financing or refinancing completed in connection with such change in control.

		
	B.
	Term and Termination of Engagement; Exclusivity.  The term of Wainwright’s exclusive engagement will begin on the date hereof and end thirty days after the date hereof (the “Term”).  Notwithstanding anything to the contrary contained herein, the Company agrees that the provisions relating to the payment of fees, reimbursement of expenses, right of first refusal, tail, indemnification and contribution, confidentiality, conflicts, independent contractor and waiver of the right to trial by jury will survive any termination of this Agreement.  Notwithstanding anything to the contrary contained herein, the Company has the right to terminate the Agreement for cause in compliance with FINRA Rule 5110(f)(2)(D)(ii). The exercise of such right of termination for cause eliminates the Company’s obligations with respect to the provisions relating to the tail fees and right of first refusal. Notwithstanding anything to the contrary contained in this Agreement, in the event that an Offering pursuant to this Agreement shall not be carried out for any reason whatsoever during the Term, the Company shall be obligated to pay to Wainwright its actual and accountable out-of-pocket expenses related to an Offering (including the fees and disbursements of Wainwright’s legal counsel). During Wainwright’s engagement hereunder: (A) the Company will not, and will not permit its representatives to, other than in coordination with Wainwright, contact or solicit institutions, corporations or other entities or individuals as potential purchasers of the Securities; provided that this shall not prohibit the Company from engaging in discussions with respect to potential mergers and acquisitions or any strategic transaction and (B) the Company will not pursue any financing transaction which would be in lieu of an Offering. Furthermore, the Company agrees that during Wainwright’s 

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engagement hereunder, all inquiries, whether direct or indirect, from prospective investors (other than the Company’s existing investors not introduced to the Company by Wainwright through this Offering or pursuant to a prior engagement) will be referred to Wainwright and will be deemed to have been contacted by Wainwright in connection with an Offering.  Additionally, except as set forth hereunder, the Company represents, warrants and covenants that no brokerage or finder’s fees or commissions are or will be payable by the Company or any subsidiary of the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other third-party with respect to any Offering.

C.Information; Reliance.  The Company shall furnish, or cause to be furnished, to Wainwright all information reasonably requested by Wainwright for the purpose of rendering services hereunder and conducting due diligence (all such information being the “Information”).  In addition, the Company agrees to make available to Wainwright upon reasonable request from time to time the officers, directors, accountants, counsel and other advisors of the Company. The Company recognizes and confirms that Wainwright (a) will use and rely on the Information, including any documents provided to investors in each Offering (the “Offering Documents” which shall include any Purchase Agreements (as defined below)), and on information available from generally recognized public sources in performing the services contemplated by this Agreement without having independently verified the same; (b) does not assume responsibility for the accuracy or completeness of the Offering Documents or the Information and such other information; and (c) will not make an appraisal of any of the assets or liabilities of the Company.  Upon reasonable request, the Company will meet with Wainwright or its representatives to discuss all information relevant for disclosure in the Offering Documents and will cooperate in any investigation undertaken by Wainwright thereof, including any document included or incorporated by reference therein.  At each Offering, at the request of Wainwright, the Company shall deliver such legal letters (including, without limitation, negative assurance letters), opinions, comfort letters, officers’ and secretary certificates and good standing certificates, all in form and substance satisfactory to Wainwright and its counsel as is customary for such Offering.  Wainwright shall be a third party beneficiary of any representations, warranties, covenants and closing conditions made by the Company in any Offering Documents, including representations, warranties, covenants and closing conditions made to any investor in an Offering.

D.Related Agreements.  At each Offering, the Company shall enter into the following additional agreements:

1.Underwritten Offering.  If an Offering is an underwritten Offering, the Company and Wainwright shall enter into a customary underwriting agreement in form and substance satisfactory to Wainwright and its counsel.

2.Best Efforts Offering.  If an Offering is on a best efforts basis, the sale of Securities to the investors in the Offering will be evidenced by a purchase agreement (“Purchase Agreement”) between the Company and such investors in a form reasonably satisfactory to the Company and Wainwright.  Wainwright shall be a third party beneficiary with respect to the representations and warranties included in the Purchase Agreement. Prior to the signing of any Purchase Agreement, officers of the Company with responsibility for financial affairs will be available to answer inquiries from prospective investors.

3.Escrow and Settlement.  In respect of each Offering, the Company and Wainwright shall enter into an escrow agreement with a third party escrow agent, which may also be Wainwright’s clearing agent, pursuant to which Wainwright’s compensation and expenses shall be paid from the gross proceeds of the Securities sold.  If the Offering is settled in whole or in part via delivery versus payment (“DVP”), Wainwright shall arrange for its clearing agent to provide the funds to facilitate such settlement. The Company shall bear the cost of the escrow agent and shall reimburse Wainwright for the actual out-of-pocket cost of such clearing agent settlement and financing, if any, which cost shall not exceed $10,000.

4.FINRA Amendments.  Notwithstanding anything herein to the contrary, in the event that Wainwright determines that any of the terms provided for hereunder shall not comply with a FINRA rule, including but not limited to FINRA Rule 5110, then the Company shall agree to amend this Agreement (or 

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include such revisions in the final underwriting agreement) in writing upon the request of Wainwright to comply with any such rules; provided that any such amendments shall not provide for terms that are less favorable to the Company than are reflected in this Agreement.

E.Confidentiality.  In the event of the consummation or public announcement of any Offering, Wainwright shall have the right to disclose its participation in such Offering, including, without limitation, the Offering at its cost of “tombstone” advertisements in financial and other newspapers and journals.

F.Indemnity.

1.    In connection with the Company’s engagement of Wainwright as Offering agent, the Company hereby agrees to indemnify and hold harmless Wainwright and its affiliates, and the respective controlling persons, directors, officers, members, shareholders, agents and employees of any of the foregoing (collectively the “Indemnified Persons”), from and against any and all claims, actions, suits, proceedings (including those of shareholders), damages, liabilities and expenses incurred by any of them (including the reasonable fees and expenses of counsel), as incurred, (collectively a “Claim”), that are (A) related to or arise out of (i) any actions taken or omitted to be taken (including any untrue statements made or any statements omitted to be made) by the Company, or (ii) any actions taken or omitted to be taken by any Indemnified Person in connection with the Company’s engagement of Wainwright, or (B) otherwise relate to or arise out of Wainwright’s activities on the Company’s behalf under Wainwright’s engagement, and the Company shall reimburse any Indemnified Person for all expenses (including the reasonable fees and expenses of counsel) as incurred by such Indemnified Person in connection with investigating, preparing or defending any such claim, action, suit or proceeding, whether or not in connection with pending or threatened litigation in which any Indemnified Person is a party.  The Company will not, however, be responsible for any Claim that is finally judicially determined to have resulted from the gross negligence or willful misconduct of any person seeking indemnification for such Claim.  The Company further agrees that no Indemnified Person shall have any liability to the Company for or in connection with the Company’s engagement of Wainwright except for any Claim incurred by the Company as a result of such Indemnified Person’s gross negligence or willful misconduct.

2.    The Company further agrees that it will not, without the prior written consent of Wainwright, settle, compromise or consent to the entry of any judgment in any pending or threatened Claim in respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is an actual or potential party to such Claim), unless such settlement, compromise or consent includes an unconditional, irrevocable release of each Indemnified Person from any and all liability arising out of such Claim.

3.    Promptly upon receipt by an Indemnified Person of notice of any complaint or the assertion or institution of any Claim with respect to which indemnification is being sought hereunder, such Indemnified Person shall notify the Company in writing of such complaint or of such assertion or institution but failure to so notify the Company shall not relieve the Company from any obligation it may have hereunder, except and only to the extent such failure results in the forfeiture by the Company of substantial rights and defenses.  If the Company is requested by such Indemnified Person, the Company will assume the defense of such Claim, including the employment of counsel reasonably satisfactory to such Indemnified Person and the payment of the fees and expenses of such counsel. In the event, however, that legal counsel to such Indemnified Person reasonably determines that having common counsel would present such counsel with a conflict of interest or if the defendant in, or target of, any such Claim, includes an Indemnified Person and the Company, and legal counsel to such Indemnified Person reasonably concludes that there may be legal defenses available to it or other Indemnified Persons different from or in addition to those available to the Company, then such Indemnified Person may employ its own separate counsel to represent or defend him, her or it in any such Claim and the Company shall pay the reasonable fees and expenses of such counsel.  Notwithstanding anything herein to the contrary, if the Company fails timely or diligently to defend, contest, or otherwise protect against any Claim, the relevant Indemnified Party shall have the right, but not the obligation, to defend, contest, compromise, settle, assert crossclaims, or counterclaims or otherwise protect against the same, and shall be fully indemnified by the Company therefor, including without limitation, for the reasonable fees and expenses of its counsel and all amounts paid as a result of such Claim or the compromise or settlement thereof.  

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Notwithstanding anything herein to the contrary, it is agreed that the Company shall not, in connection with any proceeding or related proceedings, be liable for the fees and expenses of more than one separate firm for all Indemnified Persons.  In addition, with respect to any Claim in which the Company assumes the defense, the Indemnified Person shall have the right to participate in such Claim and to retain his, her or its own counsel therefor at his, her or its own expense.

4.    The Company agrees that if any indemnity sought by an Indemnified Person hereunder is held by a court to be unavailable for any reason then (whether or not Wainwright is the Indemnified Person), the Company and Wainwright shall contribute to the Claim for which such indemnity is held unavailable in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and Wainwright on the other, in connection with Wainwright’s engagement referred to above, subject to the limitation that in no event shall the amount of Wainwright’s contribution to such Claim exceed the amount of fees actually received by Wainwright from the Company pursuant to Wainwright’s engagement.  The Company hereby agrees that the relative benefits to the Company, on the one hand, and Wainwright on the other, with respect to Wainwright’s engagement shall be deemed to be in the same proportion as (a) the total value paid or proposed to be paid or received by the Company pursuant to the applicable Offering (whether or not consummated) for which Wainwright is engaged to render services bears to (b) the fee paid or proposed to be paid to Wainwright in connection with such engagement.

5.    The Company’s indemnity, reimbursement and contribution obligations under this Agreement (a) shall be in addition to, and shall in no way limit or otherwise adversely affect any rights that any Indemnified Party may have at law or at equity and (b) shall be effective whether or not the Company is at fault in any way.

G.Limitation of Engagement to the Company.  The Company acknowledges that Wainwright has been retained only by the Company, that Wainwright is providing services hereunder as an independent contractor (and not in any fiduciary or agency capacity) and that the Company’s engagement of Wainwright is not deemed to be on behalf of, and is not intended to confer rights upon, any shareholder, owner or partner of the Company or any other person not a party hereto as against Wainwright or any of its affiliates, or any of its or their respective officers, directors, controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), employees or agents.  Unless otherwise expressly agreed in writing by Wainwright, no one other than the Company is authorized to rely upon this Agreement or any other statements or conduct of Wainwright, and no one other than the Company is intended to be a beneficiary of this Agreement.  The Company acknowledges that any recommendation or advice, written or oral, given by Wainwright to the Company in connection with Wainwright’s engagement is intended solely for the benefit and use of the Company’s management and directors in considering a possible Offering, and any such recommendation or advice is not on behalf of, and shall not confer any rights or remedies upon, any other person or be used or relied upon for any other purpose.  Wainwright shall not have the authority to make any commitment binding on the Company.  The Company, in its sole discretion, shall have the right to reject any investor introduced to it by Wainwright.

H.Limitation of Wainwright’s Liability to the Company.  Wainwright and the Company further agree that neither Wainwright nor any of its affiliates or any of its their respective officers, directors, controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), 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 services rendered hereunder, except for losses, fees, damages, liabilities, costs or expenses that arise out of or are based on any action of or failure to act by Wainwright and that are finally judicially determined to have resulted solely from the gross negligence or willful misconduct of Wainwright.

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I.Representations, Warranties and Covenants of Placement Agent. Wainwright hereby represents and warrants to the Company that the following representations and warranties are true and correct as of the date of this Agreement:
 
		
	1.
	H.C. Wainwright & Co., LLC (“H.C. Wainwright”) is a member in good standing of FINRA and is registered as a broker-dealer under the Exchange Act.  H.C. Wainwright is in compliance with all applicable rules and regulations of the SEC and FINRA, except to the extent that such noncompliance would not have a material adverse effect on the transactions contemplated hereby. None of H.C. Wainwright or its affiliates, or any person acting on behalf of the foregoing (other than the Company or its affiliates or any person acting on its or their behalf, in respect of which no representation is made) has or will engage in general advertising or general solicitation or has taken nor will it take any action that conflicts with the conditions and requirements of, or that would make unavailable with respect to the Offering, the exemption(s) from registration available pursuant to Rule 506 of Regulation D or Section 4(a)(2) of the Act, or knows of any reason why any such exemption would be otherwise unavailable to it.

		
	2.
	Neither H.C. Wainwright nor any H.C. Wainwright Related Persons (as defined below) are subject to any Disqualification Event. H.C. Wainwright has exercised reasonable care to determine whether any H.C. Wainwright Covered Person is subject to a Disqualification Event. The Prospectus will contain a true and complete description of the matters required to be disclosed with respect to H.C. Wainwright and H.C. Wainwright Related Persons pursuant to the disclosure requirements of Rule 506(e) of Regulation D, to the extent applicable. As used herein, “H.C. Wainwright Related Persons” means any predecessor of H.C. Wainwright, any affiliated company, any director, executive officer, other officer of H.C. Wainwright participating in the Offering, any general partner or managing member of H.C. Wainwright, any beneficial owner of 20% or more of H.C. Wainwright’s outstanding voting equity securities, calculated on the basis of voting power, and any “promoter” (as defined in Rule 405 under the Act) connected with H.C. Wainwright in any capacity. H.C. Wainwright agrees to promptly notify the Company in writing of (i) any Disqualification Event relating to any H.C. Wainwright Related Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any H.C. Wainwright Related Person.

J.Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be fully performed therein.  Any disputes that arise under this Agreement, even after the termination of this Agreement, will be heard only in the state or federal courts located in the City of New York, State of New York.  The parties hereto expressly agree to submit themselves to the jurisdiction of the foregoing courts in the City of New York, State of New York. The parties hereto expressly waive any rights they may have to contest the jurisdiction, venue or authority of any court sitting in the City and State of New York.  In the event Wainwright or any Indemnified Person is successful in  any action, or suit against the Company, arising out of or relating to this Agreement,  the final judgment or award  entered shall be entitled to have and recover from the Company the costs and expenses incurred in connection therewith, including its reasonable attorneys’ fees.  Any rights to trial by jury with respect to any such action, proceeding or suit are hereby waived by Wainwright and the Company.  

K.Notices.  All notices hereunder will be in writing and sent by certified mail, hand delivery, overnight delivery or fax, if sent to Wainwright, at the address set forth on the first page hereof, e-mail: notices@hcwco.com, Attention: Head of Investment Banking, and if sent to the Company, to the address set forth on the first page hereof, e-mail: rpascoe@apricusbio.com, Attention: Chief Executive Officer.  Notices sent by certified mail shall be deemed received five days thereafter, notices sent by hand delivery or overnight delivery shall be deemed received on the date of the relevant written record of receipt, notices delivered by fax shall be deemed received as of the date and time printed thereon by the fax machine and notices sent by e-mail shall be deemed received as of the date and time they were sent.

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L.Conflicts.  The Company acknowledges that Wainwright and its affiliates may have and may continue to have investment banking and other relationships with parties other than the Company pursuant to which Wainwright may acquire information of interest to the Company. Wainwright shall have no obligation to disclose such information to the Company or to use such information in connection with any contemplated transaction.

M.Anti-Money Laundering.  To help the United States government fight the funding of terrorism and money laundering, the federal laws of the United States require all financial institutions to obtain, verify and record information that identifies each person with whom they do business. This means we must ask you for certain identifying information, including a government-issued identification number (e.g., a U.S. taxpayer identification number) and such other information or documents that we consider appropriate to verify your identity, such as certified articles of incorporation, a government-issued business license, a partnership agreement or a trust instrument.

N.Miscellaneous.  The Company represents and warrants that it has all requisite power and authority to enter into and carry out the terms and provisions of this Agreement and the execution, delivery and performance of this Agreement does not breach or conflict with any agreement, document or instrument to which it is a party or bound.   This Agreement shall not be modified or amended except in writing signed by Wainwright and the Company.  This Agreement shall be binding upon and inure to the benefit of both Wainwright and the Company and their respective assigns, successors, and legal representatives.  This Agreement constitutes the entire agreement of Wainwright and the Company with respect to the subject matter hereof and supersedes any prior agreements with respect to the subject matter hereof.  If any provision of this Agreement is determined to be invalid or unenforceable in any respect, such determination will not affect such provision in any other respect, and the remainder of the Agreement shall remain in full force and effect.  This Agreement may be executed in counterparts (including facsimile or electronic counterparts), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

*********************

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In acknowledgment that the foregoing correctly sets forth the understanding reached by Wainwright and the Company, please sign in the space provided below, whereupon this letter shall constitute a binding Agreement as of the date indicated above.

Very truly yours,

H.C. WAINWRIGHT & CO., LLC

By /s/  Mark W. Viklund
     Name:  Mark W. Viklund
     Title:  Chief Executive Officer

Accepted and Agreed:

APRICUS BIOSCIENCES, INC.

By  /s/  Richard W. Pascoe
Name: Richard W.  Pascoe
Title: Chief Executive Officer

8Exhibit 4.7

 

	
3 August 2017
    	

    
	
 
    	
 
    
	
Strictly Private and Confidential
    	
Gogarburn
    
	
 
    	
Edinburgh EH12 1HQ
    
	
 
    	
 
    
	
John Hughes
    	
Telephone: 0131 556 8555
    
	
 
    	
Fax: 0131 626 3010
    
	
 
    	
www.rbs.com
    

 

 

 

Dear John

 

This letter is further to the letter of appointment between the Companies and you dated 9 May 2017 in respect of your appointment as a non-executive director of the Companies (the “Original Appointment Letter”). It is agreed that the Original Appointment Letter shall be further amended and restated as set out in this letter.

 

1. Definitions

 

Terms defined in the Original Appointment Letter shall have the same meaning when used in this letter, unless defined below. ln addition, the definitions below shall apply where used in this letter.

 

i.                      Effective Date: 3 August 2017.

 

ii.                   Original Appointment Letter: has the meaning given to it above.

 

iii.                Restated Appointment Letter: the Original Appointment Letter as amended and restated by this letter in the form set out in Appendix 1.

 

2. Amendment and Restatement

 

With effect on and from the Effective Date, the Original Appointment Letter shall be amended and restated in the form set out in Appendix 1 so that the terms and conditions of your appointment by the Companies shall, on and from that date, be governed by and construed in accordance with the provisions of the Restated Appointment Letter.

 

3. Governing Law

 

This letter, and any non-contractual obligations arising out of or in connection with it, are governed by and shall be construed in accordance with the law of Scotland.

 

Please do not hesitate to contact me if you have any questions in relation to this letter. This letter has been sent to you in duplicate. Please sign and date both copies, retaining one copy for your records and returning the other to me at House G, RBS, PO Box 1000, Edinburgh, EH12 1HQ.

 

Yours sincerely

 

	
/s/ Aileen Taylor
    	
 
    
	
Aileen Taylor, for   and on behalf of the Companies
    	
 
    
	
Chief Governance   Officer and Board Counsel
    	
 
    

 

	
 
    	
The Royal Bank of   Scotland Group plc
   Registered in Scotland No 45551
   Registered Office: 36 St
   Andrew Square
   Edinburgh EH2 2YB
    

 

 

Acknowledged and agreed by

 

	
/s/ John Hughes
    	
 
    	
Date:
    	
3 August 2017
    
	
John Hughes
    	
 
    	
 
    

 

 

Appendix 1 – Form of Restated Appointment Letter

 

[Restated Appointment Letter to be inserted]

 

 

	
3 August 2017
    	

    
	
 
    	
 
    
	
Strictly Private and Confidential
    	
Gogarburn
    
	
 
    	
Edinburgh EH12 1HQ
    
	
 
    	
 
    
	
John Hughes
    	
Telephone: 0131 556 8555
    
	
 
    	
Fax:
    	
0131 626 3010
    
	
 
    	
www.rbs.com
    

Dear John

 

This letter sets out the terms of your appointment as a non-executive director of:

 

(i)                                     The Royal Bank of Scotland Group plc (the “Group”), The Royal Bank of Scotland plc, National Westminster Bank Plc and NatWest Holdings Limited, with effect from 21 June 2017; and

 

(ii)                                  Ulster Bank Limited, with effect from 28 July 2017,

 

(together the “Companies”)

 

Your appointment will be for an initial term that extends to the conclusion of the Companies’ next Annual General Meetings and thereafter will be subject to re-election as described below. It is agreed that this is a contract for services and not a contract of employment.

 

1. Appointment

 

Your appointment is subject to the articles of association of the Companies and may be terminated on the written notice of either you or the Companies as described below.

 

You will be required to stand for re-election by shareholders at each Annual General Meeting of each of the Companies (as applicable). Continuation of your appointment is also contingent on satisfactory performance and any relevant statutory provisions relating to the removal of a director.

 

Your appointment is also subject to the Board Appointment Policy, which states that Non-executive Directors are appointed for an initial term of 3 years (subject to annual re-election in line with the UK Corporate Governance Code). Each 3 year term commences from the first election by shareholders at an AGM, or, in the case of NatWest Holdings Limited and Ulster Bank Limited, the date of appointment. At the end of their initial 3 year term, Non-executive Directors are subject to a formal assessment by the Group Nominations & Governance Committee. Such assessment will include detailed discussion on performance, time commitment and experience.

 

After such formal assessment, Non-executive Directors may then serve a second 3 year term, provided they are happy to do so and if their performance has been satisfactory. A second formal review will then take place at the end of the second three year term and a Non-executive Directors will either step down from the Board or be reappointed on a twelve month term (subject to an overall maximum tenure of nine years).

 

 

2. Termination

 

Your appointment may be terminated by either you or the Companies giving written notice to the other, such notice to take immediate effect.

 

In the event that your re-election is not approved by shareholders, your appointment will terminate automatically with immediate effect.

 

On termination of your appointment you shall, at the request of the Companies, resign as a director of the Companies.

 

No compensation or payment in lieu of notice will be payable upon termination of your appointment.

 

3. Time Commitment

 

You will devote such time as is necessary to fulfil your role including preparation for and attendance at the Board meetings of the Companies, Annual General and any other General Meetings of the Companies and the annual Board strategy offsite.

 

By accepting this appointment, you have confirmed that you are able to allocate sufficient time to meet the requirements of your role.

 

4. Role

 

Your principal responsibilities and duties are set out in your role profile, as amended from time to time. A copy of your role profile as at 3 August 2017 is attached.

 

Non-executive Directors have the same legal responsibilities to the Companies as any other director and you should have particular regard to the duties set out in the Companies Act 2006 (the “2006 Act”). You will have particular regard to the general duties of directors as set out in Part 10, Chapter 2 of the 2006 Act, including the duty to promote the success of the company:

 

“A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

 

(a)       the likely consequences of any decision in the long term,

(b)       the interests of the company’s employees,

(c)       the need to foster the company’s business relationships with suppliers, customers and others,

(d)       the impact of the company’s operations on the community and the environment,

(e)       the desirability of the company maintaining a reputation for high standards of business conduct, and

(f)       the need to act fairly as between members of the company.”

 

You will be required to exercise relevant powers in accordance with the Companies’ articles of association and in accordance with relevant policies in internal control frameworks.

 

 

5. Regulatory Requirements

 

With effect from 7 March 2016, the PRA and FCA introduced a new regulatory regime to strengthen individual accountability in banking which replaced the Approved Persons’ Regime. Only certain non-executive directors (those who will hold Senior Manager Functions under the Senior Managers’ Regime) require prior regulatory approval to perform their role. Your role profile, as amended from time to time, will either (i) contain details of your Senior Manager Functions; or (ii) reflect your status as a Notified Non-executive Director.

 

It is a condition of your appointment that you comply with all applicable regulatory requirements, including but not limited to complying with the PRA and FCA Conduct Rules, as they apply from time to time. Further details are available on request from the Chief Governance Officer and Board Counsel.

 

It is also a condition of your appointment that you remain fit and proper to perform the role of a non-executive director and any applicable Senior Manager Functions in line with the PRA and FCA’s regulatory requirements and that you report any matter that may impact your ongoing fitness and propriety promptly to the Companies and the regulators.

 

6. Remuneration

 

As a non-executive director you will be paid a fee in accordance with the Directors’ Remuneration Policy approved by shareholders from time to time. The fee covers membership of all five Boards, plus the relevant fee(s) for any additional Committee membership(s) and/or chairmanship(s) you may assume. Your remuneration will be reviewed annually and is disclosed in the Group’s Report and Accounts.

 

You will be paid monthly and will be reimbursed for all reasonable and properly documented expenses you incur in performing your duties.

 

7. Outside Interests

 

It is accepted and acknowledged that you may have business interests other than those of the Companies and that you have declared any actual or potential conflicts of interest that are apparent at present.

 

The agreement of the Boards must be sought before you accept any additional commitments that might affect the time you are able to devote to your role as a non-executive director of the Companies. In particular, you must notify the Chief Governance Officer and Board Counsel as early as possible if you are contemplating any additional appointments.

 

Please note that there are regulatory limits imposed by the Capital Requirements Directive on the number of directorships you are able to hold. These limits are a total of ither (1) one executive and two non-executive positions; or (2) four non-executive director positions, in both cases including your RBS roles. Directorships in organisations which do not pursue predominantly commercial objectives do not count; and executive or non-executive directorships within the same group of companies count as a single directorship. The regulator, may at its discretion, grant a waiver to enable one additional non-executive position to be held. The Chief Governance Officer

 

 

and Board Counsel monitors compliance with these regulatory limits and will be happy to discuss your own situation with you.

 

In the event that you become aware of any actual or potential conflicts of interest (including any relevant interests in transactions), these should be disclosed to the Chief Governance Officer and Board Counsel as soon as they are apparent to you. This is to enable such conflicts to be authorised or noted, as applicable, by the Boards in accordance with the 2006 Act.

 

Further details are set out in the Group’s Guidelines on Conflicts of Interest, a copy of which is attached to this letter.

 

8. Confidentiality and return of and access to information

 

You acknowledge that all information acquired during your appointment is confidential to the Companies and should not be released, disclosed or communicated, either during your appointment or following termination of your appointment to third parties without prior written clearance from the Board.

 

You acknowledge the need to hold and retain the Companies’ information (in whatever format it is received) under appropriately secure conditions.

 

As a director, you will frequently be in possession of price sensitive information and you should avoid making any statements that might risk disclosure of unpublished price sensitive information.

 

Upon termination of your appointment (for whatever reason), you shall deliver to the Companies all documents, records, papers or other property which may be in your possession or under your control, and which relate in any way to the business affairs of the Companies, and you shall not retain any copies thereof.

 

Please contact the Chief Governance Officer and Board Counsel if you subsequently require access to information. The Companies will seek to accommodate all reasonable requests for information, subject to any legal or regulatory obligations or restrictions that may prohibit them from doing so.

 

9. Review Process

 

Your performance as a non-executive director will be subject to review annually as part of the Board evaluation exercise, which reviews the performance of individual directors, the Board as a whole and its Committees. If, in the interim, there are any matters that cause you concern about your role, you should discuss them with the Chairman as soon as is appropriate.

 

10. Insurance

 

Subject to legislative provisions, you will be entitled to be indemnified out of the assets of the Group against all costs and liabilities incurred by you in the execution of your duties.

 

In addition, the Group has in place directors’ and officers’ liability insurance. It is intended to maintain such cover for the full term of your appointment.

 

 

11. Independent Professional Advice

 

Should a situation arise when you consider that you need to take independent professional advice in relation to your duties as a director, you should first discuss the situation with the Chief Governance Officer and Board Counsel. The reasonable costs of any independent advice obtained will be reimbursed by the Companies.

 

12. Dealing in Securities / Investments

 

As a director, you are subject to the RBS Personal Account Dealing (‘PAD’) Policy and you cannot deal in RBS securities outside of certain scheduled ‘Open Windows’ (which are periods which coincide with the announcement of RBS results) or at any time while you are in possession of ‘inside information’.

 

You and your ‘connected persons’ are also required to obtain permission before dealing on your ‘own account’ in RBS securities. A copy of the PAD Policy has been provided to you along with further details of your obligations and the associated disclosure requirements.

 

13. Governing Law

 

Your engagement with the Companies is governed by and shall be construed in accordance with the law of Scotland and your engagement shall be subject to the jurisdiction of the Scottish courts.

 

Please do not hesitate to contact me if you have any questions in relation to this letter. This letter has been sent to you in duplicate. Please sign and date both copies, retaining one copy for your records and returning the other to me at House G, RBS, PO Box 1000, Edinburgh, EH12 1HQ.

 

Yours sincerely

 

	
/s/ Aileen Taylor
    	
 
    
	
Aileen Taylor
    	
 
    
	
Chief Governance   Officer and Board Counsel
    	
 
    
	
For and on behalf   of the Companies
    	
 
    
	
 
    	
 
    
	
/s/ John Hughes
    	
 
    
	
John Hughes
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
3 August 2017
    	
 
    

 

Enclosures:
  Non-executive director role profile 
  Guidelines on Conflicts of Interest

 

 

Role Profile: Non-Executive Director (NED) - Notified NED

 

	
Organisation   Unit:
    	
 
    	
The Royal Bank of   Scotland Group plc (RBSG), The Royal Bank of Scotland plc (RBS), National   Westminster Bank Plc (NatWest), Ulster Bank Limited (UBL)
    
	
 
    	
 
    	
 
    
	
Reports   To:
    	
 
    	
Chairman, RBSG
    
	
 
    	
 
    	
 
    
	
Role   Holder:
    	
 
    	
John Hughes
    
	
 
    	
 
    	
 
    
	
Version   Control / Date:
    	
 
    	
July 2017
    

 

Responsibilities as a Non-executive Director and Committee member (as applicable):

 

Ÿ             Attend and contribute to Board and Committee meetings, providing input and independent oversight and challenge to management.

Ÿ             Review and approve the Group’s strategic aims, including the adequacy of resources in place for the Group to meet its obligations, providing constructive challenge to management’s proposals on strategy and bringing different and external perspective to Board discussions.

Ÿ             Review the risk appetite framework and risk appetite targets for the Group’s strategic risk objectives and monitor performance against risk appetite for the Group and its principal businesses.

Ÿ             Support the Chairman in setting the tone from the top on culture and oversee actions being taken by management to embed a culture of risk awareness and ethical behaviour in line with the Group’s values.

Ÿ             Monitor the integrity of the financial information and review and oversee the systems of financial and internal controls.

Ÿ             Approve key financial objectives and plans, and review the performance of management against plans.

Ÿ             Comply with the statutory and fiduciary duties of directors under UK company law and applicable corporate governance standards.

Ÿ             Allocate sufficient time to discharge your responsibilities effectively and devote such time as is necessary to fulfil your role.

Ÿ             Regularly update and refresh your skills and knowledge.

Regulatory Responsibilities:

 

Conduct

Ÿ             Comply with the PRA / FCA Conduct Rules (as applicable), having regard to the specific guidance on the rules.

 

Skills, knowledge and experience required for role:

 

Ÿ             Maintain a requisite breadth of understanding of the Group and financial services industry to provide effective challenge and support to the executives.

Ÿ             Be financially literate and have an appropriate understanding of financial organisations and related products.

Ÿ             Experience of large, complex businesses at a senior level.

Ÿ             At all times be of sufficiently good repute, remain independent and possess sufficient knowledge, skills and experience to perform duties.

Ÿ             Understand the Threshold Conditions under the Financial Services and Markets Act 2000 and Fundamental Rules within the PRA Rulebook and FCA Principles for Businesses.

 

	
Board and Committee Memberships:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Member Of:
    	
 
    	
 
    
	
Ÿ  The Royal Bank of Scotland Group plc Board
    	
 
    	
 
    
	
Ÿ  The Royal Bank of Scotland plc Board
    	
 
    	
 
    
	
Ÿ  National Westminster Bank Plc Board
    	
 
    	
 
    
	
Ÿ  Ulster Bank Limited Board
    	
 
    	
 
    
	
Ÿ  NatWest Holdings Limited Board
    	
 
    	
 
    

 

	
In signing this document I accept the role   accountabilities detailed above and understand the regulatory requirements   and expectations in respect of my role.
    
	
Role   Holder
    	
 
    	
/s/ John Hughes
    	
 
    	
Chairman   
    	
 
    	
/s/ Howard Davies   3-8-17
    
	
Signature & Date:
    	
 
    	
Signature &   Date:
    
	
3/8/17

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