EX1A-1 UNDR AGMT 3 ronco_1a-ex0101.htm ENGAGEMENT LETTER

Exhibit 1.1

 

 

 

 

Ronco Brands, Inc.

15505 Long Vista Dr. Ste. 250

Austin, TX 78728

 

 

Wellington Shields & Co.

140 Broadway, 44th Floor

New York, NY 10005

 

 

 

 

 

 

 

   

 

 

 

 

 

 

Mr. William Moore

President

Ronco Brands, Inc.

15505 Long Vista Dr. Ste. 250

Austin, TX 78729

 

Dear Mr. William Moore,

 

This letter confirms our complete understanding with respect to the retention of Wellington Shields & Co. ("Wellington"), a registered broker/dealer as the exclusive financial advisor to Ronco Brands, Inc. (the "Company") or any of its subsidiaries, as it relates to advisory services in relation to a Regulation A Plus Offering of up to $20,000,000.

 

Upon the terms and subject to the conditions set forth hereinafter, the parties hereto agree as follows:

 

1.Appointment. The Company hereby retains Wellington and Wellington hereby agrees to act as the Company's exclusive financial advisor as more specifically set forth in paragraph 2 below, effective as of the date hereof (the "Effective Date").

 

2.Scope and Certain Conditions of Services. The Company hereby retains Wellington to consult with and advise the Company with respect to various financial matters, including:

 

a.Accept investor data from Company via means that will be established by mutual agreement of the parties;
b.Review and process information from potential investors, including but not limited to running reasonable background checks for anti-money laundering ("AML"), IRS tax fraud identification and USA PATRIOT Act purposes, and gather and review responses to customer identification information;
c.Review subscription agreements received from prospective investors to confirm they are complete;
d.Contact Company and/or Company's agent, if needed, to gather additional information or clarification from prospective investors;
e.Advise Company as to permitted investment limits for investors pursuant to Regulation A, Tier 2;

 

 

 

   

 

 

 

f.Provide Company with prompt notice about inconsistent, incorrect or otherwise flagged (e.g. for underage or AML reasons) subscriptions;
g.Transmit data to transfer agent as book-entry data for maintaining Company's responsibilities for managing investors (investor relationship management, aka "IRM") and for maintaining future good-delivery and recordkeeping; and
h.Keep investor details and data confidential and do not disclose to any third-party except as required by regulators, by law or in our performance under this Agreement (e.g. as needed for AML).
3.Fees and Compensation. In consideration for the services rendered by Wellington hereunder, the Company agrees to pay Wellington the following fees and other compensation:
a.A success fee (the "Placement Success Fee") for capital raise, payable upon the successful completion of the Placement, equal to six percent (6%) of the gross proceeds of the Placement. The Placement Success Fee is due and payable to Wellington immediately upon the closing of the Placement and shall be disbursed directly to Wellington simultaneously with the delivery of the proceeds of the Placement to the Company.
b.At the time of closing the placement, the Company also shall pay Wellington non-callable warrants of the Company (the "Placement Agent Warrants") issuable to Wellington, or its designee simultaneously with the closing of the Placement, equal to three percent (3%) warrant coverage of the amount raised. The Placement Agent Warrants shall entitle the holder thereof to purchase securities of the Company at a purchase price equal to 110% of the implied price per share of the Placement or 110% of the public market closing price of the Company's common stock on the date of the Placement, whichever is lower, and shall be exercisable for a period of five years after the closing of the Placement. The Placement Agent Warrants shall be satisfactory in form and substance to Wellington and its counsel and shall contain provisions for, among other things, cashless exercise. Wellington will also be entitled to compensation resulting from any cash generated by the company from the exercise of any warrants issued to investors introduced to the company by Wellington that participate in the offering.
c.The Company agrees to reimburse Wellington for its direct expenses within 10 days of submission but Wellington must get prior written approval from the Company before submitting any expenses.
d.A non-refundable engagement fee (the "Retainer") in the amount of thirty thousand dollars ($30,000) to be payable to Wellington by the Company at the time of signing this letter.

 

 

   

 

 

 

 

4.       Term of Retention. The Company hereby retains Wellington to provide the services set forth in Section 2 above during the Offering period, commencing on the date hereof and until the earlier of the completion or cancellation of the Offering or the termination of this Agreement as provided in this section. Either Party may terminate their participation in this Agreement by giving 30 days' notice via email to the other at any time. Such termination shall only affect future business and not apply to transactions or other business conducted prior to the date of termination.
        In the event of any termination, the obligation to pay the Fees and Compensation set forth in paragraph 3 (a) and (b), and the Expenses as set forth in paragraph 3 (c) shall survive any termination or expiration of this Engagement Agreement. Moreover, it is expressly understood and agreed by the parties hereto that any financing, whether debt or equity, of the Company, secured or placed within twelve (12) months of the termination or expiration of this Engagement Agreement with any investors or lenders, provided that the prospective investor candidate was presented information on the Company by Wellington and had discussion with Wellington during the Term shall result in such fees and compensation being due and payable by the Company to Wellington as required by paragraph 3 of this Engagement Agreement.
5.       Preferential Right. If the Company closes a Placement or a Transaction during the Term, for the twelve month period commencing on the later of (i) the date of the closing of the Placement or (ii) the date of the closing of any Transaction, Wellington shall have a preferential right whereby the Company will offer Wellington the first opportunity to provide any financing arrangements to the Company.
6.       Public Announcements. During the Term, and prior to any press release or other public disclosure relating to services hereunder which is legally allowed by law, the Company and Wellington shall confer and reach agreement upon the contents of any such disclosure. Prior to the funding, Wellington shall not be mentioned in any Company press releases. At no time should the name of the investor funding the deal be used in any public press release.
7.       No General Solicitation. Any offers made in connection with the placement of the Securities will be made only to prospective purchasers on an individual basis and no general solicitation or general advertising in any form will be used to place the Securities.
8. Communications. All communications hereunder, except as may be otherwise specifically provided herein, shall be in writing and shall be mailed, hand delivered, or faxed and confirmed by letter or sent by overnight delivery service, to the party whom it is addressed at the following addresses or such other address as such party may advise the other in writing:

 

To the Company: To Wellington:
   
Mr. William Moore Mr. Edward Cabrera
President Head of Investment Banking
Ronco Brands, Inc. Wellington Shields & Co.
15505 Long Vista DR. Ste. 250 140 Broadway, 44th Floor
Austin, TX 78728 New York, NY  10005

 

 

 

   

 

 

  

ATTACHMENT 1

AUTHORIZATION OF PAYMENT

 

I, Mr. William Moore, on behalf of Ronco Brands, Inc. authorize the lender/investor to pay Wellington Shields & Co. LLC directly from escrow at the time of closing any funding as mentioned in clause 3a of this engagement letter. This authorization is to remain in full force and effect unless written authorization by Wellington Shields & Co., LLC is provided to the lender/investor to revoke this agreement. Please wire the funds to the wire instructions provided below.

 

/s/ William Moore

Mr. William Moore

President

Ronco Brands, Inc.

 

 

Agreed and Accepted

 

 

 

As of this 16th day of February 2017

 

 

 

WELLINGTON SHIELDS & CO., LLC WIRE INSTRUCTIONS

 

 

Bank: JPMorgan Chase Bank
  One Chase Manhattan Plaza
  New York, N.Y. 10005
   
ABA No. 021000021
   
Acct Name: Wellington Shields & Co., LLC
  140 Broadway, 44th Floor
  New York, N.Y. 10005
   
Acct No. 806376612

 

 

 

   

 

 

 

EXHIBIT A

STANDARD TERMS AND CONDITIONS

 

1.The Company shall promptly provide Wellington Shields with all relevant information about the Company (to the extent available to the Company) that shall be reasonably requested or required by Wellington Shields which information shall be true, accurate and correct in all material respects at the time furnished.
   
2.Wellington Shields shall keep all information obtained from the Company strictly confidential except: (a) for information which is otherwise publicly available, or previously known to Wellington Shields or was obtained by Wellington Shields independently of the Company and without breach of Wellington Shields' agreement with the Company; (b) Wellington Shields may disclose such information to its affiliates, shareholders, officers, directors, representatives, agents, employees and attorneys, and to financial institutions, but shall ensure, to the best of its ability, that all such persons will keep such information strictly confidential; (c) pursuant to any order of a court of competent jurisdiction or other governmental body (Wellington Shields will give written notice to the Company of such order within forty-eight (48) hours of receipt of such order); and (d) upon prior written consent of the Company.
   
3.The Company recognizes that in order for Wellington Shields to perform properly its obligations in a professional manner, it is necessary that Wellington Shields be informed of and, to the extent practicable, participate in meetings and discussions between the Company, on the one hand, and investors and potential investors introduced relating to the matters covered by the terms of Wellington Shields' engagement.
   
4.The Company agrees that any report or opinion, oral or written, delivered to it by Wellington Shields is prepared solely for its confidential use and shall not be reproduced, summarized, or referred to in any public document or given or otherwise divulged to any other person, other than its employees and attorneys, without Wellington Shields' prior written consent, except as may be required by applicable law or regulation, which consent shall not be unreasonably withheld or delayed.
   
5.No fee payable by the Company to any other financial advisor or lender shall reduce or otherwise affect any fee payable by the Company to Wellington Shields.
   
6.The Company represents and warrants that; (a) it has full right, power and authority to enter into this Agreement and to perform all of its obligations hereunder; (b) the Agreement has been duly authorized and executed and constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms; and (c) the execution and delivery of the Agreement and the consummation of the transactions contemplated hereby does not conflict with or result in a breach of (i) the Company's certificate of incorporation or by-laws or (ii) any agreement to which the Company is a party by which any of their property or assets is bound.
   
7.Nothing contained in the Agreement shall be constituted to place Wellington Shields and the Company in the relationship of partners or joint ventures. Neither Wellington Shields nor the Company shall represent itself as the agent or legal representative of the other for any purpose whatsoever nor shall either have the power to obligate or bind the other in any manner whatsoever. Wellington Shields in performing its services hereunder shall at all times be an independent contractor.

 

 

 

   

 

 

 

 

8.The Agreement has been and is made solely for the benefit of Wellington Shields, the Company and each of the persons, agents, employees, officers, directors and controlling persons referred to in Exhibit B and their respective heirs, executors, personal representatives, successors and assigns, and nothing contained in the Agreement shall confer any rights upon, nor shall this Agreement be construed to create any rights in, any person who is not a party to such Agreement, other than as set forth in this paragraph.

 
9.The rights and obligations of either party under this Agreement may not be assigned without the prior written consent of the other party hereto and any other purported assignment shall be null and void without force and effect.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

EXHIBIT B

INDEMNIFICATION

 

Recognizing that transactions of the type contemplated in this engagement sometimes result in litigation and that the role of Wellington Shields is advisory, the Company agrees to indemnify and hold harmless Wellington Shields and its affiliates and their irrespective officers, directors, employees, agents and controlling persons within the meaning of Section 15 of the Securities Act of 1933, as amended (the "Act") or Section 20(a) of the Securities Exchange Act ("Indemnified Parties") and against any and all loss, charge, claim, damage, expense and liability whatsoever, including, but not limited to, all attorneys' fees and expenses (hereinafter a "Claim" or "Claims"), related to or arising in any manner out of, based upon, or in connection with (i) any untrue statement or alleged untrue statement of a material fact made by the Company or any omission or alleged omission of the Company to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) any transaction, proposal or any other matter (items (i) and (ii) being hereinafter referred to as a "Matter" or "Matters") contemplated by the engagement of Wellington Shields hereunder, and will promptly reimburse the Indemnified Parties for all expenses (including reasonable fees and expenses of legal counsel) as incurred in connection with the investigation of, preparation for or defense of any pending or threatened Claim related to or arising in any manner out of any Matter contemplated by the engagement of Wellington Shields hereunder, or any action or proceeding arising there from (collectively, "Proceedings"), whether or not such Indemnified party is a formal party to any such Proceeding. Notwithstanding the foregoing, the Company shall not be liable in respect of any Claims that a court of competent jurisdiction has judicially determined by final judgment (and the time to appeal has expired or the last right of appeal has been denied) which resulted solely or in part from the negligence, gross negligence or willful misconduct of an Indemnified Party or the violation of any securities laws or regulations by an Indemnified Party. The Company further agrees that it will not, without the prior written consent of Wellington Shields settle compromise or consent to the entry of any judgment in any pending or threatened proceeding in respect of which indemnification may be sought hereunder (whether or not Wellington Shields or any Indemnified Party is an actual or potential party to such Proceeding), unless such settlement, compromise or consent includes an unconditional release of Wellington Shields and each other Indemnified Party hereunder from all liability arising out of such proceeding.

 

In order to provide for just and equitable contribution in any case in which (i) an Indemnified Party is entitled to indemnification pursuant to this Engagement Agreement but it is judicially determined by the entry of a final judgment decree by a court of competent jurisdiction and the time to appeal has expired or the last right of appeal has been denied) that such indemnification may not be enforced in such case, or (ii) contribution may be required by the Company in circumstances for which an Indemnified party is otherwise entitled to indemnification under the Agreement, then, and in each such case, the Company shall contribute to the aggregate losses, Claims, damages and/or liabilities in an amount equal to the amount for which indemnification was held unavailable. Notwithstanding the foregoing, Wellington Shields shall not be obligated to contribute any amount hereunder that exceeds the amount of fees previously received by Wellington Shields pursuant to this Agreement.

 

The Company further 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 Wellington Shields' engagement hereunder except for Claims that a court of competent jurisdiction shall have determined by final judgment (and the time to appeal has expired or the last right of appeal has been denied) resulted solely or in part from the negligence, gross negligence or willful misconduct of such Indemnified Party or the violation of any securities laws or regulations by an Indemnified Party. The indemnity, reimbursement and contribution obligations of the Company set forth herein shall be in addiction to any liability which the Company may otherwise have an shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company or an Indemnified Party.

 

 

 

   

 

 

 

The indemnity, reimbursement and contribution provisions set forth herein shall remain operative and full force and effect regardless of (i) any withdrawal, termination or consummation of or failure to initiate or consummate any Matter referred to herein, (ii) any investigation made by or on behalf of any party hereto or any person controlling (within the meaning of Section 15 of the Securities act of 1933 as amended, or Section 20 of the Securities Exchange Act of 1934, as amended) any party hereto, (iii) any termination or the completion or expiration of this Engagement Agreement with Wellington Shields and (iv) whether or not Wellington Shields shall, or shall not be called upon to, render any formal or informal advice in the course of such engagement.

 

Unless otherwise defined, capitalized terms used herein shall have the meaning ascribed to them in the Engagement Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

EXHIBIT C

JURISDICTION

 

Each of the Company and Wellington Shields hereby irrevocably attorns that any dispute or difference arising out of or in connection with this contract shall be determined by the appointment of a single arbitrator to be agreed between the parties, or failing agreement within fourteen days, after either party has given to the other a written request to concur in the appointment of an arbitrator, by an arbitrator to be appointed by the President or a Vice President of the Chartered Institute of Arbitrator.

 

Each of Wellington Shields and the Company hereby waives, and the Company agrees not to assert in any such suit, action or proceeding, in each case, to the fullest extent permitted by applicable law, any claim that: (a) the Company is not personally subject to the jurisdiction of any such court; (b) it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in the aid of execution, execution or otherwise) with respect to it or its property; (c) any such suit, action or proceeding is brought in an inconvenient forum; (d) the venue of any such suit, action or proceeding is improper; or (e) this Agreement may not be enforced in or by any such court.

 

Nothing in these provisions shall affect any party's right to serve process in any manner permitted by law or limit its rights to bring a proceeding in the competent courts of any jurisdiction or jurisdictions or to enforce any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.