H.C. Wainwright Letterhead] June 13, 2014
Exhibit 10.4
[X.X. Xxxxxxxxxx Letterhead]
June 13, 2014
STRICTLY CONFIDENTIAL
MELA Sciences, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0
Irvington, NY 10533
Attn: Xxxxxx Xxxx
Dear Xx. Xxxx:
This letter agreement (this “Agreement”) constitutes the agreement between MELA Sciences, Inc. (the “Company”) and X.X. Xxxxxxxxxx & Co., LLC (“Xxxxxxxxxx”) that Xxxxxxxxxx shall serve as the exclusive agent, advisor or underwriter in an offering ( the “Offering”) of securities of the Company (“Securities”) during the Term (as defined below) of this Agreement. The terms of the Offering and the Securities issued in connection therewith shall be mutually agreed upon by the Company and Xxxxxxxxxx and nothing herein implies that Xxxxxxxxxx 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 Xxxxxxxxxx’x assistance in an Offering will be subject to the satisfactory completion of such investigation and inquiry into the affairs of the Company as Xxxxxxxxxx deems appropriate under the circumstances and to the receipt of all internal approvals of Xxxxxxxxxx in connection with the transaction. The Company expressly acknowledges and agrees that Xxxxxxxxxx’x 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 Xxxxxxxxxx to purchase the Securities and does not ensure a successful Offering of the Securities or the success of Xxxxxxxxxx with respect to securing any other financing on behalf of the Company. Subject to the prior approval of the Company, Xxxxxxxxxx may retain other brokers, dealers, agents or underwriters on its behalf in connection with an Offering.
A. Compensation; Reimbursement. At the closing of the Offering (“Closing”), the Company shall compensate Xxxxxxxxxx as follows:
1. Cash Fee. The Company shall pay to Xxxxxxxxxx a cash fee, or as to an underwritten Offering an underwriter discount, equal to 6% of the aggregate gross proceeds raised in the Offering (including for such purposes gross proceeds raised in any over-allotment, greenshoe or oversubscription, and excluding for such purposes (i) the amount of any exercise or conversion price subsequently received by the Company upon the exercise of warrants with an exercise term of over 30 months or the conversion of any other derivative securities issued in the Offering and (ii) the amount of such proceeds that is used by the Company to redeem its Series A Convertible Preferred Stock, par value $0.10 per share, issued in February 2014 (the “Redemption”)). Notwithstanding anything herein to the contrary, as to any Offering occurring after the first Offering, the Company may hire an advisor and allocate to such advisor out of Xxxxxxxxxx’x cash fee up to 20% of such cash fee paid to Xxxxxxxxxx on such subsequent Offerings.
2. Warrant Coverage. The Company shall issue to Xxxxxxxxxx or its designees at Closing, warrants (the “Xxxxxxxxxx Warrants”) to purchase that number of shares of common stock of the Company equal to 6% of the aggregate number of shares of Common Stock accounting for the gross proceeds raised in the Offering (including for such purposes gross proceeds raised in any over-allotment, greenshoe or over-subscription, in which case additional Xxxxxxxxxx Warrants will be issued, and excluding for such purposes (i) the amount of any exercise or conversion price subsequently received by the Company upon the exercise of warrants with an exercise term of over 30 months or the conversion of any other derivative securities issued in the Offering and (ii) the amount of such proceeds that is used by the Company for the Redemption). If the Securities included in an Offering are non-convertible, the Xxxxxxxxxx Warrants shall be determined by dividing the gross proceeds raised in such Offering by the then market price of the Common Stock. If warrants are issued in the Offering, the Xxxxxxxxxx Warrants shall have the same terms as the warrants issued to investors in the applicable Offering. If no warrants are issued to investors in an Offering, the Xxxxxxxxxx Warrants shall be exercisable for Common Stock and in a customary form reasonably acceptable to Xxxxxxxxxx, have a term of 5 years and an exercise price equal to 110% of the then market price of the Common Stock, and shall contain pro rata, anti-dilution adjustment provisions for corporate actions, such as stock splits, but shall not contain other anti-dilution adjustment provisions.
3. Expense Allowance. Out of the proceeds of each Closing, the Company also agrees to reimburse Xxxxxxxxxx its documented, out of pocket legal fees and expenses not to exceed $60,000 (provided, however, that such reimbursement amount in no way limits or impairs the indemnification and contribution provisions of this Agreement).
4. Tail Fee. Xxxxxxxxxx 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 common stock and common stock equivalents (“Tail Financing”) to the extent that such financing or capital is provided to the Company by investors who participated in the Offering (other than the Sabby or Broadfin funds), if such Tail Financing is consummated at any time within the 9-month period following the expiration or termination of this Agreement.
X. Xxxx and Termination of Engagement; Exclusivity. The term of Xxxxxxxxxx’x exclusive engagement will begin on the date hereof and end 12 months 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, indemnification and contribution, confidentiality, conflicts, independent contractor and waiver of the right to trial by jury will survive any termination of this Agreement. During the Term: (i) the Company will not, and will not permit its representatives to, other than in coordination with Xxxxxxxxxx, contact or solicit institutions, corporations or other entities or individuals as potential purchasers of the Securities and (ii) the Company will not pursue any underwritten offering, registered direct offering or PIPE financing, other than in coordination with Xxxxxxxxxx. Furthermore, the Company agrees that during the Term, all inquiries, whether direct or indirect, from prospective investors will be referred to Xxxxxxxxxx.
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C. Information; Reliance. The Company shall furnish, or cause to be furnished, to Xxxxxxxxxx all information reasonably requested by Xxxxxxxxxx for the purpose of rendering services hereunder (all such information being the “Information”). In addition, the Company agrees to make available to Xxxxxxxxxx upon request from time to time the officers, directors, accountants, counsel and other advisors of the Company. The Company recognizes and confirms that Xxxxxxxxxx (a) will use and rely on the Information, including any documents provided to investors in the 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 (except with respect to information that is expressly furnished by or on behalf of Xxxxxxxxxx for inclusion therein) or the Information and such other information relating to the Company to be included therein; 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 Xxxxxxxxxx or its representatives to discuss all information relevant for disclosure in the Offering Documents and will cooperate in any investigation undertaken by Xxxxxxxxxx thereof, including any document included or incorporated by reference therein. At the request of Xxxxxxxxxx, the Company shall deliver such legal letters, comfort letters and officer’s certificates, all in form and substance satisfactory to Xxxxxxxxxx and its counsel as is customary for such Offering. Xxxxxxxxxx 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. In connection with the Offering, the Company shall enter into the following additional agreements:
1. Underwritten Offering. If the Offering is an underwritten Offering, the Company and Xxxxxxxxxx shall enter into a customary underwriting agreement in form and substance satisfactory to Xxxxxxxxxx and its counsel and to the Company 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 Xxxxxxxxxx. 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. In respect of the Offering, the Company and Xxxxxxxxxx shall enter into an escrow agreement with a third party escrow agent pursuant to which Xxxxxxxxxx’x compensation shall be paid from the gross proceeds of the Securities sold. The Company shall bear the cost of the escrow agent.
4. FINRA Amendments. Notwithstanding anything herein to the-contrary, in the event that Xxxxxxxxxx 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
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Company shall agree to amend this Agreement (or include such revisions in the final Offering Documents) in writing upon the request of Xxxxxxxxxx to comply with any such rules; provided that any such amendments shall not provide for terms that are less favorable to the Company.
E. Confidentiality. In the event of the consummation or public announcement of the Offering, Xxxxxxxxxx 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 Xxxxxxxxxx as Offering agent, the Company hereby agrees to indemnify and hold harmless Xxxxxxxxxx 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 Xxxxxxxxxx, or (B) otherwise relate to or arise out of Xxxxxxxxxx’x activities on the Company’s behalf under Xxxxxxxxxx’x 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 fraud, 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 Xxxxxxxxxx except for any Claim incurred by the Company as a result of such Indemnified Person’s fraud, gross negligence or willful misconduct.
2. The Company further agrees that it will not, without the prior written consent of Xxxxxxxxxx, 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. The Company shall not be liable for any settlement of any litigation or proceeding effected without its written consent.
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
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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 so elects or 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. 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 Xxxxxxxxxx is the Indemnified Person), the Company and Xxxxxxxxxx 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 Xxxxxxxxxx on the other, in connection with Xxxxxxxxxx’x engagement referred to above, and also the relative fault of each of the Company and Xxxxxxxxxx, as well as any other relevant equitable considerations; provided that in no event shall the amount of Xxxxxxxxxx’x contribution to such Claim exceed the amount of fees actually received by Xxxxxxxxxx from the Company pursuant to Xxxxxxxxxx’x engagement. The Company hereby agrees that the relative benefits to the Company, on the one hand, and Xxxxxxxxxx on the other, with respect to Xxxxxxxxxx’x 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 Xxxxxxxxxx is engaged to render services bears to (b) the fee paid or proposed to be paid to Xxxxxxxxxx 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.
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G. Limitation of Engagement to the Company. The Company acknowledges that Xxxxxxxxxx has been retained only by the Company, that Xxxxxxxxxx is providing services hereunder as an independent contractor (and not in any fiduciary or agency capacity) and that the Company’s engagement of Xxxxxxxxxx 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 Xxxxxxxxxx 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 Xxxxxxxxxx, no one other than the Company is authorized to rely upon this Agreement or any other statements or conduct of Xxxxxxxxxx, 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 Xxxxxxxxxx to the Company in connection with Xxxxxxxxxx’x 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. Xxxxxxxxxx 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 Xxxxxxxxxx.
H. Limitation of Xxxxxxxxxx’x Liability to the Company. Xxxxxxxxxx and the Company further agree that neither Xxxxxxxxxx nor 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 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 Xxxxxxxxxx and that are finally judicially determined to have resulted solely from the gross negligence or willful misconduct of Xxxxxxxxxx.
I. 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 of the bringing of any action, or suit by a party hereto against the other party hereto, arising out of or relating to this Agreement, the party in whose favor the final judgment or award shall be entered shall be entitled to have and recover from the other party 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 Xxxxxxxxxx and the Company.
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J. Notices. All notices hereunder will be in writing and sent by certified mail, hand delivery, overnight delivery or fax, if sent to Xxxxxxxxxx, to X.X. Xxxxxxxxxx & Co. LLC, at the address set forth on the first page hereof, e-mail: xxxxxxx@xxxxx.xxx, Attention: Head of Investment Banking, and if sent to the Company, to the address set forth on the first page hereof, fax number (000) 000-0000 Attention: Chief Financial 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, and notices delivered by fax shall be deemed received as of the date and time printed thereon by the fax machine.
K. Conflicts. The Company acknowledges that Xxxxxxxxxx and its affiliates may have and may continue to have investment banking and other relationships with parties other than the Company pursuant to which Xxxxxxxxxx may acquire information of interest to the Company. Xxxxxxxxxx shall have no obligation to disclose such information to the Company or to use such information in connection with any contemplated transaction.
L. Anti-Money Laundering. To help the United States government fight the funding of terrorism and money laundering, the federal laws of the United States requires 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.
M. 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 Xxxxxxxxxx and the Company. This Agreement shall be binding upon and inure to the benefit of both Xxxxxxxxxx and the Company and their respective assigns, successors, and legal representatives. This Agreement constitutes the entire agreement of Xxxxxxxxxx and the Company with respect to this Offering 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 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 Xxxxxxxxxx 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, | ||||
| X.X. XXXXXXXXXX & CO, LLC | ||||
| By | /s/ Xxxx X. Xxxxxxx |
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| Name: | Xxxx X. Xxxxxxx | |||
| Title: | Chief Executive Officer | |||
Accepted and Agreed:
| MELA SCIENCES, INC. | ||||
| By | /s/ Xxxxxx X. Xxxx. |
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| Name: | Xxxxxx X. Xxxx | |||
| Title: | Chief Financial Officer | |||
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