EXHIBIT 10.4
 
WHARTON CAPITAL MARKETS LLC

December 8, 2011
 
CONFIDENTIAL

Pure BioScience,  Inc.
1725 Gillespie Way
El Cajon, CA  92020

Gentlemen:

This letter (the “Agreement”) constitutes the agreement between Pure
BioScience,  Inc. (the “Company”) and Wharton Capital Markets LLC (“Wharton” or
the “Placement Agent”), pursuant to which Wharton shall serve as an exclusive
placement agent (the “Services”) for the Company, in connection with the
proposed offer and placement (the “Offering”) of securities of the Company (the
“Securities”) pursuant to a Registration Statement on Form S-3 under the
Securities Act of 1933, as amended (the “Securities Act”) and Rule 415(a)(1)(x)
thereunder, including shares (the “Shares”) of the Company’s common stock (the
“Common Stock”), and, to the extent included in the Offering, warrants to
purchase shares of Common Stock. The Placement Agent shall introduce Lincoln
Park Capital Fund, LLC (the “Investor”) to the Company in connection with the
purchase or financing of up to $10 Million or more of the Company’s Securities.
The terms of the Offering and the Securities shall be mutually agreed upon by
the Company and the Investor in the Offering, and nothing herein implies that
Wharton would have the power or authority to bind the Company or obligate the
Company to issue any Securities or complete the Offering. The Company expressly
acknowledges and agrees that Wharton’s obligations hereunder are on a reasonable
efforts basis only and that the execution of this Agreement does not constitute
a commitment by Wharton to purchase the Securities and does not ensure the
successful placement of the Securities or any portion thereof by Wharton.
 
SECTION 1.     FEES AND EXPENSES.

In connection with the Services described above, the Company agrees to pay to
Wharton the following:
 
 
A.
Placement Agent’s Fee.  The Company shall pay to Wharton a cash placement fee
(the “Placement Agent’s Fee”) equal to 6% of the aggregate gross proceeds of the
Securities sold in the Offering at the time of closing, however, such cash fee
will only be due and payable at the time the Company actually receives funds
from the Investor.  In addition, the Company agrees to issue to Wharton or its
designee 2% five year cashless warrants of financing subscribed for or pro-rated
portion thereof under the same terms as the investor.  For illustrative
purposes, in a financing with aggregate gross proceeds of $10 million, the
Company would issue to Wharton or its designee a warrant to purchase 200,000
shares of common stock.  In the event there are no investor warrants then the
placement agent warrants shall have a strike price equal to 110% of the market
price at the time of closing.  The Placement Agent’s Fee shall be payable by
wire transfer to Wharton immediately upon the closing of the Offering (the
“Closing”).

 
 
 

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B.
Expenses. In addition to any fees payable to Wharton hereunder, the Company
agrees to reimburse Wharton for all reasonable out-of-pocket expenses incurred
and documented by Wharton in connection with its engagement hereunder, including
the reasonable fees of Wharton’s counsel, but in no event more than $3,500
without the prior written approval of the Company. Such reimbursement shall be
payable immediately upon the Closing of the Offering (but only in the event of a
Closing) from the gross proceeds of the Securities sold.

SECTION 2.     TERM OF ENGAGEMENT.
 
         The term of Wharton’s engagement will begin on the date hereof and end
on the earlier of the consummation of the Offering or December 22, 2011.
Notwithstanding anything to the contrary contained herein, the provisions
concerning confidentiality, indemnification, contribution, and the Company’s
obligations to pay fees and to reimburse expenses actually incurred pursuant to
Section 1 hereof, will survive any expiration or termination of this Agreement.
 
SECTION 3.    FEE TAIL.

The Placement Agent’s Fee and expense reimbursements provided above shall be due
and payable to Wharton irrespective of whether the Investor consummate the
Offering during the term of this Agreement or thereafter. In addition, the
Placement Agent shall be entitled to a Placement Agent’s Fee, calculated and
distributed in the manner provided in Section 1 hereof, with respect to any
future public or private offering, purchase options or other financing or
capital raising transaction of any kind provided to the Company by the Investor
at any time within the 12-month period following the expiration or termination
of this Agreement.

SECTION 4.  USE OF INFORMATION.

The Company will furnish Wharton such written information as Wharton reasonably
requests in connection with the performance of its Services hereunder. The
Company understands, acknowledges and agrees that, in performing its Services
hereunder, Wharton will use and rely upon such information as well as publicly
available information regarding the Company and that Wharton does not assume
responsibility for independent verification of the accuracy or completeness of
any information, whether publicly available or otherwise furnished to it,
concerning the Company or otherwise relevant to the Offering, including, without
limitation, any financial information, forecasts or projections considered by
Wharton in connection with the provision of its Services. Wharton agrees not to
use any confidential information concerning the Company provided to Wharton by
the Company for any purposes other than those contemplated under this Agreement.

SECTION 5.   NEWS RELEASES/ANNOUNCEMENTS.

The Company agrees not to issue any press releases relating to the Offering, or
place any “tombstone” advertisements in financial newspapers or other financial
journals, without the prior review of Wharton and without mentioning that
Wharton is acting, or has acted, as exclusive placement agent for the Offering.

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SECTION 6.  REPRESENTATIONS AND WARRANTIES.

The Company represents and warrants to, and agrees with, the Placement Agent
that:

(A)           The Company has filed with the Securities and Exchange Commission
(the “Commission”) a registration statement on Form S-3 (Registration File No.
333-158555) under the Securities Act of 1933, as amended (the “Securities Act”),
which became effective on May 8, 2009, for the registration of the Shares under
the Securities Act. At the time of such filing, the Company met the requirements
of Form S-3 under the Securities Act. Such registration statement meets the
requirements set forth in Rule 415 (a)(1)(x) under the Securities Act and
complies with said Rule. The Company will file with the Commission pursuant to
Rule 424(b) under the Securities Act, and the rules and regulations (the “Rules
and Regulations”) of the Commission promulgated thereunder, a supplement to the
form of prospectus included in such registration statement relating to the
placement of the Shares and the plan of distribution thereof. Such registration
statement, including the exhibits thereto, as amended at the date of this
Agreement, is hereinafter called the “Registration Statement”, such prospectus
in the form in which it appears in the Registration Statement is hereinafter
called the “Base Prospectus”; and the supplemented form of prospectus, in the
form in which it will be filed with the Commission pursuant to Rule 424(b)
(including the Base Prospectus as so supplemented) is hereinafter called the
“Prospectus Supplement”.

(B)           The Registration Statement (and any further documents to be filed
with the Commission) contains all exhibits and schedules as required by the
Securities Act.  Each of the Registration Statement and any post-effective
amendment thereto, at the time it became effective, and the Base Prospectus and
Prospectus Supplement, complied and complies in all material respects with the
Securities Act and the Exchange Act and the applicable Rules and Regulations
thereunder, and did not and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements there in not
misleading. There are no documents required to be filed with the Commission in
connection with the transaction contemplated hereby that (x) have not been filed
as required pursuant to the Securities Act, or (y) will not be filed within the
requisite time period.

SECTION 7.  INDEMNIFICATION.

A.    In connection with the Company’s engagement of Wharton as Placement Agent,
the Company hereby agrees to indemnify and hold harmless Wharton 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),
as incurred (collectively a “Claim”), that are (i) related to or arise out of
(a) any actions taken or omitted to be taken (including any untrue statements
made or any statements omitted to be made) by the Company, or (b) any actions
taken or omitted to be taken by any Indemnified Person in connection with the
Company’s engagement of Wharton, or (ii) otherwise relate to or arise out of
Wharton’s activities on the Company’s behalf under Wharton’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 Wharton except for any Claim incurred by the
Company as a result of such Indemnified Person’s gross negligence or willful
misconduct.
 

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B.   The Company further agrees that it will not, without the prior written
consent of Wharton, 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.

C.   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 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 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 cross claims 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.

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

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E.   The Company’s indemnity, reimbursement and contribution obligations under
this Agreement (i) 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 equity, and (ii) shall be effective whether or not the Company is at fault in
any way.

SECTION 8.  LIMITATION OF ENGAGEMENT TO THE COMPANY.

The Company acknowledges that Wharton has been retained only by the Company,
that Wharton is providing Services hereunder as an independent contractor (and
not in any fiduciary or agency capacity) and that the Company’s engagement of
Wharton 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 Wharton or any of its affiliates, or any of its or
their respective officers, directors, controlling persons, employees or agents.
The Company acknowledges that any recommendation or advice, written or oral,
given by Wharton to the Company in connection with Wharton’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.

SECTION 9.  LIMITATION OF WHARTON’S LIABILITY TO THE COMPANY.

Wharton and the Company further agree that neither Wharton nor any of its
affiliates or any of their respective officers, directors, controlling persons
employees or agents shall 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
Wharton and that are finally judicially determined to have resulted solely from
the gross negligence or willful misconduct of Wharton.

SECTION 10.  CLOSING.

The obligations of the Placement Agent and the Investor, and the closing of the
sale of the Securities hereunder, are subject to each of the following terms and
conditions:

(A)     No stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the Commission.
 
(B)     All corporate proceedings and other legal matters incident to the
authorization, form, execution, delivery and validity of each of this Agreement,
the Securities, the Registration Statement, the Base Prospectus and the
Prospectus Supplement and all other legal matters relating to this Agreement and
the transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agent.
 
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        (C)     No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental agency
or body which would, as of the Closing Date, prevent the issuance or sale of
Securities or materially and adversely affect or potentially and adversely
affect the business or operations of the Company; and no injunction, restraining
order or order of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would prevent
the issuance or sale of the Securities or materially and adversely affect or
potentially and adversely affect the business or operations of the Company.

(D)     The Company shall have prepared and filed with the Commission a Current
Report on Form 8-K with respect to the Offering, including as an exhibit thereto
this Agreement.

(E)      FINRA shall have raised no objection to the fairness and reasonableness
of the terms and arrangements of this Agreement. The Company shall make an
Issuer Filing with FINRA pursuant to FINRA Rule 5110 with respect to the
Registration Statement and pay all filing fees in connection therewith.

(F)      Prior to the Closing Date, the Company shall have furnished to the
Placement Agent such further information, certificates and documents as the
Placement Agent may reasonably request, including an opinion of outside counsel
to the Company, addressed to the Placement Agent, in form and substance
reasonably satisfactory to the Placement Agent.

SECTION 11.  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
termination of this Agreement, shall be heard only in the state or federal
courts located in the County of New York, State of New York. The parties hereto
expressly agree to submit themselves to the jurisdiction of the foregoing courts
and expressly waive any rights they may have to contest the jurisdiction, venue
or authority of such courts. 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 Wharton and the Company.

SECTION 12.   NOTICES.

All notices hereunder shall be in writing and sent by certified mail, hand
delivery, overnight delivery or fax, if sent to the parties at their respective
addresses or fax numbers set forth on the signature page hereto. Notices sent by
certified mail shall be deemed received five days after mailing, 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 facsimile
transmission shall be deemed received as of the date and time printed on the
facsimile transmission receipt.
 

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SECTION 13.  MISCELLANEOUS.

This Agreement embodies the entire agreement and understanding between the
parties hereto, and supersedes all prior agreements and understandings relating
to the subject matter hereof. This Agreement may not be assigned by either party
without the prior written consent of the other party. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. 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 or any other provision of
this Agreement, which will remain in full force and effect.  This Agreement may
not be amended or otherwise modified or waived except by an instrument in
writing signed by both the Company and Wharton.  The representations,
warranties, agreements and covenants contained herein shall survive the closing
of the Offering and delivery and/or exercise of the Securities, as
applicable.  This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.  Facsimile or electronic signatures shall create a
valid and binding obligation of the party executing the Agreement (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or electronic signature page were an original thereof.
 
Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to Wharton a copy of this Agreement.
 
 

  Very truly yours,
 
WHARTON CAPITAL MARKETS LLC
         
 
By:
/s/ Howard Kerker     Name:  Howard Kerker     Title:  President    
 
 
 
Address for notice:
Wharton Capital Markets LLC
488 Madison Avenue, 23rd Floor
New York, NY, 10022
Fax (212) 888-7054
Attention: General Counsel
 

 

 
 
Accepted and Agreed to as of
the date first written above:

PURE BIOSCIENCE,  INC.
       
By:
/s/ Craig Johnson     Name:  Craig Johnson     Title:  Chief Financial Officer  
 
 
Address for notice:
Pure BioScience,  Inc.
1725 Gillespie Way
El Cajon, FL  92020
Santa Monica, CA  90402
Fax ___________________
Attention:  ______________
 

 

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