EXHIBIT 99.4
December 19, 2005
Xxxxx X. Xxxxxx
President and CEO
Novelos Therapeutics, Inc.
One Gateway Center, Xxx 000
Xxxxxx, XX 00000
Dear Xxxxx:
1. This letter agreement (the "Agreement") confirms our understanding that
Novelos Therapeutics, Inc. ("Company") has engaged Xxxxxxxxxxx & Co. Inc.
("Xxxxxxxxxxx") to act as lead placement agent to the Company for a period
of 60 days, commencing as of the date of your acceptance of this letter,
for the sale by the Company of shares of common stock (the "Shares") of
the Company, and warrants ("Warrants") to purchase shares of common stock
of the Company (the "Warrant Shares"; the sale of the Shares and Warrants
are collectively referred to as the "Proposed Financing"). The Company may
instruct Xxxxxxxxxxx to share up to 40% of the economics with one
investment bank in connection with the Proposed Financing. In connection
with the closing of the Proposed Financing, the Company agrees that it
will file a registration statement registering the resale of the Shares
and Warrant Shares within 30 days of the final closing of the Proposed
Financing, use its best efforts to make such registration statement
effective within 120 calendar days from the date of the final closing of
the Proposed Financing and keep such registration statement effective for
a period of two years; provided, however, that if the final closing of the
Proposed Financing does not occur on or before January 15, 2006, the
Company will not be obligated to file a registration statement registering
the resale of the Shares and Warrant Shares until five (5) business days
after it files its 10-KSB for the year ended December 31, 2005 with the
SEC (but no later than March 31, 2006).
The Proposed Financing will be made pursuant to the exemptions afforded by
Section 4(2) of the Securities Act of 1933, as amended (the "Act"), and
Regulation D promulgated thereunder and applicable state securities laws.
Our undertaking herein shall be subject to, among other things, the terms
and conditions set forth in this Agreement, our due diligence
investigation of the Company, the continuance of the Company without
material adverse change, the absence of unfavorable market conditions in
general, approval of our commitment committee and our continued
satisfaction with the results of our ongoing review of the Company's
business and affairs. It is understood that execution of this Agreement
does not assure the successful completion of the Proposed Financing.
2. Our services to the Company will include: (i) assistance in the
preparation of the Company's Offering Materials described below; (ii)
assistance in structuring the Proposed Financing and its terms; (iii)
identifying and contacting selected qualified accredited investors to
purchase the securities being offered in the Proposed Financing (the
"Purchasers") and furnishing them, on behalf of the Company, with copies
of the Offering Materials; and (iv) negotiating, under your guidance, the
financial aspects of the Proposed Financing.
3. As compensation for the services to be provided by Xxxxxxxxxxx hereunder,
the Company agrees to pay to Xxxxxxxxxxx a cash fee equal to 7.0% of the
gross proceeds of the Proposed Financing payable to Xxxxxxxxxxx at the
closing of the Proposed Financing. In addition, Xxxxxxxxxxx shall receive
at the closing of the Proposed Financing a five year non-callable warrant
to purchase shares of the Company's Common Stock equal to 6.0% of the
number of Shares sold in the Proposed
Financing. If the Proposed Financing is consummated by means of more than
one closing, Xxxxxxxxxxx shall be entitled to the fees and warrants
provided herein with respect to each such closing.
In addition and regardless of whether the Proposed Financing is
consummated, upon request by Xxxxxxxxxxx from time to time, the Company
shall reimburse Xxxxxxxxxxx for all documented out-of-pocket expenses
incurred by Xxxxxxxxxxx in connection with the Proposed Financing,
including reasonable fees and expenses of its counsel, which will be
limited to $20,000, without prior written consent by the Company.
4. The Company acknowledges and agrees that Xxxxxxxxxxx has been retained
solely to provide the advice and services set forth in this Agreement.
Xxxxxxxxxxx shall act as an independent contractor, and any duties of
Xxxxxxxxxxx arising out of its engagement hereunder shall be owed solely
to the Company. As Xxxxxxxxxxx will be acting on your behalf in such
capacity, it is our firm practice to be indemnified in connection with
engagements of this type and the Company agrees to the indemnification
agreement attached hereto as Exhibit A.
5. The Company has not taken, and will not take, any action, directly or
indirectly, so as to cause the Proposed Financing to fail to be entitled
to exemption under Section 4(2) of the Act or any other applicable
securities laws. Any filings under federal or state securities laws shall
be prepared by the Company's outside counsel.
6. Xxxxxxxxxxx will assist the Company in preparing and providing its
publicly filed documents or other reasonably requested materials to the
Purchasers ("Offering Materials") relating to the Proposed Financing. The
Company authorizes Xxxxxxxxxxx to transmit the Offering Materials to
prospective Purchasers of the Proposed Financing, as may be identified to
the Company, and represents and warrants that the information that it
provides to be included in the Offering Materials, at all times through
the closing, will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances
under which they were made, not misleading. The Company shall not transmit
the Offering Materials to prospective Purchasers without first advising
Xxxxxxxxxxx. The Proposed Financing shall be made pursuant to the terms of
a purchase agreement or subscription agreement (each a "Purchase
Agreement") in form satisfactory to Xxxxxxxxxxx and the Company shall
establish an escrow account (the "Escrow Account") with a suitable
financial institution agreeable to the Company and Xxxxxxxxxxx (the
"Escrow Agent"), and shall enter into an Escrow Agreement (the "Escrow
Agreement") with the Escrow Agent. Upon the closing of the Proposed
Financing (or each such closing if there shall be more than one), the
Escrow Agent shall deliver to the Company, by wire transfer of immediately
available funds, the funds deposited in the Escrow Account in payment for
the Securities, less (x) the amounts payable to the Escrow Agent pursuant
to the terms of the Escrow Agreement, and (y) the amounts payable to
Xxxxxxxxxxx pursuant to Section 3 hereof. The receipt by Xxxxxxxxxxx of
the amounts to which it is entitled pursuant to Section 3 shall be a
condition to any closing of the Proposed Financing. The Company will also
cause to be furnished to Xxxxxxxxxxx at the Closing, copies of such other
agreements, opinions, certificates and other documents delivered at the
Closing as Xxxxxxxxxxx may reasonably request including, without
limitation, an opinion of Company counsel to the effect that the placement
of the Securities was exempt from registration under the Act.
7. The Company represents and warrants that: (i) the representations and
warranties contained in each Purchase Agreement will be true and correct
in all respects on the date such Purchase Agreement is
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entered into and as of the closing date of the sale of the Shares to which
such Purchase Agreement relates, and (ii) Xxxxxxxxxxx shall be entitled to
rely on such representations and warranties (and on the representations
and warranties contained in any of the other Offering Materials) as if
they were made directly to Xxxxxxxxxxx. Xxxxxxxxxxx shall also be entitled
to rely upon any opinions of counsel delivered to any purchaser in the
Proposed Financing, including, without limitation, any opinions relating
to the registration statement. The Company will also cause to be furnished
to Xxxxxxxxxxx at the closing, copies of such other agreements, opinions,
certificates and other documents delivered at the closing as Xxxxxxxxxxx
may reasonably request including, without limitation, an opinion of
Company counsel to the effect that the Proposed Financing was exempt from
registration under the Act.
8. Xxxxxxxxxxx represents and warrants that: (i) it is duly registered as a
broker-dealer pursuant to the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder and is a member in
good standing of the NASD, (ii) during the course of the Proposed
Financing, it will not make any untrue statement of a material fact, or
omit to state a material fact required to be stated by it or necessary to
make any statement made by it not misleading, concerning the Proposed
Financing or any matters set forth in or contemplated by the Offering
Materials (it being understood that the statements made in the Offering
Materials are deemed to be made by the Company and not by Xxxxxxxxxxx),
(iii) Xxxxxxxxxxx will not offer, offer to sell or sell any Shares or
Warrants on the basis of any written communications or documents relating
to the Company or its business other than the Offering Materials, (iv)
Xxxxxxxxxxx will not engage in any form of general solicitation or general
advertising which is prohibited by Regulation D in connection with the
Proposed Financing, (v) Xxxxxxxxxxx will not offer to sell or sell the
Shares or Warrants to any investor unless Xxxxxxxxxxx believes and has
reason to believe, based on such investigation believed. by it to be
appropriate, that such investor is an "accredited investor" as defined in
Regulation D, Rules 501, of the Act, and (vi) Xxxxxxxxxxx will cooperate
fully with the Company and its counsel with respect to compliance with all
applicable federal, state and foreign securities and "blue sky" laws
applicable to the Proposed Financing.
9. The Company will make available to Xxxxxxxxxxx all financial and other
information concerning the Company's business and operations and the
Proposed Financing, which Xxxxxxxxxxx reasonably requests and will provide
access to the Company's officers, directors, employees, independent
accountants and legal counsel. Xxxxxxxxxxx shall be entitled to rely
without investigation upon all information that is available from public
sources as well as all other information supplied to it by or on behalf of
the Company or the Company's other advisors and shall not in any respect
be responsible for the accuracy or completeness of, or have any obligation
to verify, the same or to conduct any appraisal of assets.
10. Xxxxxxxxxxx agrees to treat all information provided to it by the Company
in connection with the Proposed Financing as confidential; provided,
however, that such obligation of confidentiality: (i) shall not apply to
any information that is already or becomes public through no breach of
this provision or that becomes available to Xxxxxxxxxxx on a
non-confidential basis from a third party that does not violate any
obligation to the Company in making such disclosure; and (ii) shall not
prohibit Xxxxxxxxxxx from providing the Offering Materials to prospective
investors approved by the Company.
11. Xxxxxxxxxxx shall not be prevented from engaging in future transactions
involving companies in a similar industry to the Company provided that no
Confidential Information is used in connection
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with such engagement.
12. Any written advice provided by Xxxxxxxxxxx pursuant to this Agreement will
be solely for the information and assistance of the Company in connection
with the Proposed Financing and may not be quoted, nor will any such
advice or the name of Xxxxxxxxxxx be referred to in any report, document,
release or other communication, whether written (including, without
limitation, the Offering Materials) or oral, prepared, issued or
transmitted by the Company or any affiliate, director, officer, employee,
agent or representative of any thereof, without, in each instance,
Xxxxxxxxxxx 's prior written consent.
13. The Company grants Xxxxxxxxxxx the right of first refusal for a period of
nine 9 months from the date of the final closing of the Proposed Financing
to act as co-manager for a single offering of the Company (with
Xxxxxxxxxxx participating in a minimum of 25% of the economics provided to
bankers in such transaction). The Company shall give Xxxxxxxxxxx prior
written notice of such offering and Xxxxxxxxxxx shall have the right,
within 20 business days of receiving such notice, to agree to provide or
arrange for such financing or services. If Xxxxxxxxxxx declines to provide
or arrange for such financing or services within such 20 day period, the
Company may engage another investment banker. If Xxxxxxxxxxx provides any
such additional services, the Company and Xxxxxxxxxxx will enter into a
separate agreement to be mutually agreed upon, including provision of
additional fees.
14. This Agreement may be terminated by either the Company or Xxxxxxxxxxx at
any time upon written notice. Upon the expiration or termination of this
Agreement, Xxxxxxxxxxx will be entitled to prompt reimbursement of all its
outstanding out-of-pocket expenses and fees as described above. If at any
time prior to nine(9) months after the termination or expiration of this
Agreement, the Company consummates a private financing transaction,
including the Proposed Financing, with any party contacted regarding the
Proposed Financing during the term of our engagement other than existing
stockholders of the Company as set forth on Schedule A attached hereto,
Xxxxxxxxxxx will be entitled to payment in full of the compensation
described in the third paragraph of this Agreement. Promptly following any
termination or expiration of this Agreement, Xxxxxxxxxxx will provide the
Company with written notice of the parties contacted by Xxxxxxxxxxx
regarding the Proposed Financing during the term of our engagement. The
indemnity provisions contained in Exhibit A will also remain operative and
in full force and effect regardless of any expiration or termination of
this Agreement.
15. This Agreement shall not give rise to any express or implied commitment by
Xxxxxxxxxxx to purchase or place any securities of the Company.
16. The indemnification obligations of the parties are set forth on Exhibit A
attached hereto.
17. This Agreement and Exhibit A incorporates the entire understanding of the
parties and supersedes all previous agreements relating to the subject
matter hereof. The benefits of this Agreement shall inure to the parties
hereto, their respective successors and assigns and the obligations and
liabilities assumed in this Agreement shall be binding upon the parties
hereto and their respective successors and assigns. Notwithstanding
anything contained herein to the contrary, none of the parties hereto
shall assign any of its obligations hereunder without the prior written
consent of each of the other parties hereto.
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18. All notices provided hereunder shall be given in writing and either
delivered personally or by overnight courier service or sent by certified
mail, return receipt requested, if to Oppenheimer, to Xxxxxxxxxxx & Co.
Inc., 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx Xxxxxx, with a copy to Xxxxx, Xxxxx, Xxxx, Xxxxxx, Xxxxxxx and
Popeo P.C., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X.
Xxxxxxxxxx, Esq. and if to the Company, to Novelos Therapeutics, Inc., Xxx
Xxxxxxx Xxxxxx, Xxx 000, Xxxxxx, XX 00000, Attention: Xxxxx X. Xxxxxx,
with a copy to Xxxxx Xxxx LLP, 000 Xxxxxxx Xxxxxxxxx, Xxxxxx, XX 00000,
Attention: Xxxx Xxxx, Esq. Any notice delivered personally shall be deemed
given upon receipt; any notice given by overnight courier shall be deemed
given on the next business day after delivery to the overnight courier;
and any notice given by certified mail shall be deemed given upon the
second business day after certification thereof.
19. The failure or neglect of either of the parties hereto to insist, in any
one or more instances, upon the strict performance of any of the terms or
conditions of this Agreement, or its waiver of strict performance of any
of the terms or conditions of this Agreement, shall not be construed as a
waiver or relinquishment in the future of such term or condition by such
party, but the same shall continue in full force and effect. Any waiver
must be in writing.
20. 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, without regard to conflicts of law principles.
Each of the parties irrevocably submits to the exclusive jurisdiction of
any court of the City of New York, State of New York or the United States
District Court located in the City of New York, State of New York for the
purpose of any suit, action or other proceeding arising out of this
Agreement, or any of the agreements or transactions contemplated hereby,
and agrees that service of process in connection with any such suit,
action or proceeding may be made in accordance with Section 18 hereof. The
parties hereby expressly waive all rights to trial by jury in any suit,
action or proceeding arising under this Agreement.
21. This Agreement may not be modified or amended except in a writing duly
executed by the parties hereto.
22. At any time after the consummation or other public announcement of the
Proposed Financing, Xxxxxxxxxxx may place an announcement in such
newspapers and publications as it may choose, stating that Xxxxxxxxxxx has
acted as exclusive financial advisor and/or placement agent in connection
with the Proposed Financing.
23. For the convenience of the parties, this Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
instrument, but all of which taken together shall constitute one and the
same agreement. Facsimile signatures shall be deemed to be original
signatures for all purposes.
* * * * *
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24. After reviewing this Agreement, please confirm that the foregoing is in
accordance with your understanding by signing and returning the duplicate
of this letter attached hereto, whereupon it shall be our binding
Agreement.
Very truly yours,
XXXXXXXXXXX & CO. INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Xxxxxx Xxxxxx
Managing Director
Accepted and agreed to
this 19th day of December, 2005.
NOVELOS THERAPEUTICS, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
President and CEO
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EXHIBIT A
December 19, 2005
Xxxxxxxxxxx & Co. Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Managing Director
Dear Xx. Xxxxxx:
In connection with our engagement of Xxxxxxxxxxx & Co. Inc.
("Oppenheimer") as our placement agent, we hereby agree to indemnify and hold
harmless Xxxxxxxxxxx and its affiliates, and the respective controlling persons,
directors, officers, 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), (collectively a "Claim"), which 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 our engagement of Xxxxxxxxxxx, or (B) otherwise relate to or arise out of
Xxxxxxxxxxx'x activities on our behalf under Xxxxxxxxxxx'x engagement, unless
such statement or omission was made in reliance upon and in conformity with (i)
written information furnished to the Company with respect to Xxxxxxxxxxx by or
on behalf of Xxxxxxxxxxx expressly for use in the Offering Materials or any
amendment or supplement thereto or (ii) any other document or communication
executed by or on behalf of Xxxxxxxxxxx or based upon written information
furnished by or on behalf of Xxxxxxxxxxx filed in any jurisdiction in order to
qualify the Proposed Financing under the securities laws thereof, with respect
to Xxxxxxxxxxx. We shall reimburse any Indemnified Person is a party. We will
not, however, be responsible for any Claim, which is finally judicially
determined to have resulted from the gross negligence or willful misconduct of
any person seeking indemnification hereunder. We further agree that no
Indemnified Person shall have any liability to us for or in connection with our
engagement of Xxxxxxxxxxx except for any Claim incurred by us as a result of any
Indemnified Person's gross negligence or willful misconduct.
We further agree that we will not, without the prior written consent of
Xxxxxxxxxxx, 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 hereunder from any
and all liability arising out of such Claim.
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
us in writing of such complaint or of such assertion or institution but failure
to so notify us shall not relieve us from any obligation we may have hereunder,
unless and only to the extent such failure results in the forfeiture by us of
substantial rights and defenses. If we so elect or are requested by such
Indemnified Person, we 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 and provides
written correspondence to us, that having common counsel would
present such counsel with a conflict of interest which is not waivable or if the
defendant in, or target of, any such Claim, includes an Indemnified Person and
us, 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 us, then such Indemnified Person may
employ its own separate counsel reasonably acceptable to us to represent or
defend it in any such Claim and we shall pay the reasonable fees and expenses of
such counsel. Notwithstanding anything herein to the contrary, if we fail 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 us
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 any Claim in which we assume the defense, the Indemnified
Person shall have the right to participate in such Claim and to retain its own
counsel therefor at its own expense.
We agree that if any indemnity sought by an Indemnified Person hereunder
is unavailable for any reason then (whether or not Xxxxxxxxxxx is the
Indemnified Person), we and Xxxxxxxxxxx shall contribute to the Claim for which
such indemnity is held unavailable in such proportion as is appropriate to
reflect the relative benefits to us, on the one hand, and Xxxxxxxxxxx on the
other, in connection with Xxxxxxxxxxx'x engagement referred to above, subject to
the limitation that in no event shall the amount of Xxxxxxxxxxx'x contribution
to such Claim exceed the amount of fees actually received by Xxxxxxxxxxx from us
pursuant to Xxxxxxxxxxx'x engagement. We hereby agree that the relative benefits
to us, on the one hand, and Xxxxxxxxxxx on the other, with respect to
Xxxxxxxxxxx'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 us or our stockholders as
the case may be, pursuant to the transaction (whether or not consummated) for
which you are engaged to render services bears to (b) the fee paid or proposed
to be paid to Xxxxxxxxxxx in connection with such engagement.
Our indemnity, reimbursement and contribution obligations under this
Agreement 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.
The validity and interpretation of this agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be fully performed therein (excluding the
conflicts of laws rules). Each of Xxxxxxxxxxx and the Company hereby irrevocably
submits to the jurisdiction of any court of the State of New York, County of New
York or the United States District Court for the Southern District of New York
for the purpose of any suit, action or other proceeding arising out of this
agreement or the transactions contemplated hereby, which is brought by or
against Xxxxxxxxxxx or the Company and in connection therewith, each of
Xxxxxxxxxxx and the Company (i) hereby irrevocably agrees that all claims in
respect of any such suit, action or proceeding may be heard and determined in
any such court, (ii) to the extent that it has acquired, or hereafter may
acquire, any immunity from jurisdiction of any such court or from any legal
process therein, it hereby waives, to the fullest extent permitted by law, such
immunity and (iii) agrees not to commence any action, suit or proceeding
relating to this agreement other than in any such court. Each of Xxxxxxxxxxx and
the Company hereby waives and agrees not to assert in any such action, suit or
proceeding, to the fullest extent permitted by applicable law, any claim that
(a) it 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 aid of execution, execution or otherwise) with
respect to its property of (c) any suit, action or proceeding is brought in an
inconvenient forum.
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The provisions of this Agreement shall remain in full force and effect
following the completion or termination of Xxxxxxxxxxx'x engagement.
Very truly yours,
NOVELOS THERAPEUTICS, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Xxxxx X. Xxxxxx
President and CEO
Confirmed and agreed to:
XXXXXXXXXXX & CO. INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------
Xxxxxx Xxxxxx
Managing Director
Date: December 19, 2005
------------------------
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