EXHIBIT 10.3
 
 
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December 22, 2014

Palatin Technologies, Inc.
4-B Cedar Brook Drive
Cedar Brook Corporate Center
Cranbury, NJ 08512

Attention:                      Stephen T. Wills
Chief Financial Officer

Re:           Private Placement of Securities in a PIPE Transaction

This letter confirms the agreement between Piper Jaffray & Co. (“Piper Jaffray”
or “we” or “us”) and Palatin Technologies, Inc. (the “Company” or “you”) as
follows:

1.
Engagement.  The Company hereby engages Piper Jaffray to act as its sole lead
placement agent in connection with the proposed offering by private placement of
equity, equity-linked or warrant securities (but excluding any venture loan or
similar debt financing, even if including a warrant component) (the
“Securities”) issued by the Company (the “Placement”), and we accept this
engagement upon the terms and conditions set forth in this engagement letter
(the “Agreement”).

 
During the term of our engagement, we will, as appropriate to the Placement:

 
 
●
consult with you in planning and implementing the Placement;

 
 
●
review the business and operations of the Company and its historical and
projected financial condition;

 
 
●
assist you in preparing and distributing relevant documents we mutually agree
are beneficial or necessary to the consummation of the Placement, including
documents describing the Company, the Securities and the terms of the Placement
(collectively, the “Offering Materials”);

 
●
assist you in preparing for due diligence conducted by prospective purchasers of
the Securities;

 
●
assist you in identifying and contacting prospective purchasers of the
Securities;

 
●
consult with you as to the structure and timing of the Placement;

 
 
 

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Palatin Technologies, Inc.
December 22, 2014
Page 2
 
 
●
assist you in negotiating definitive documentation with prospective purchasers
of the Securities and, if requested by you, participate in such negotiations;
and

 
●
render such other financial advisory and investment banking services as may from
time to time be agreed upon by Piper Jaffray and the Company.

 
You acknowledge and agree that our engagement pursuant to this letter does not
constitute an agreement or a commitment, express or implied, by us or any of our
affiliates to underwrite, purchase or place any Securities or otherwise provide
any financing, nor an agreement by you to issue and sell any Securities. The
Placement will be made by Piper Jaffray, if at all, on a “best efforts” basis.

 
You further acknowledge and agree that our services hereunder shall be subject
to, among other things, satisfactory completion of due diligence by Piper
Jaffray, market conditions, the absence of adverse changes to the Company’s
business or financial condition and other conditions that Piper Jaffray may deem
appropriate for placements of such nature.  During the term of this engagement,
you will not make any commitment with any other person to sell Securities
without our prior consent, other than with Canaccord Genuity (“Canaccord”) and
Roth Capital Partners (“Roth”) who we understand the Company currently intends
to hire to act as co-placement agents (Canaccord and Roth each a “Co-Placement
Agent” and collectively the “Co-Placement Agents”) in connection with the
Offering. We further understand the Company intends to hire Noble Financial
Capital Markets (“Noble”) as Financial Advisor in connection with the Offering.

2.
Term.  Our engagement shall automatically expire six (6) months from the date of
this engagement letter, unless extended in writing by Piper Jaffray and the
Company.  You or we may terminate our engagement under this Agreement prior to
automatic expiration, with or without cause, upon ten (10) days’ written notice
to the other party; provided, however, no such notice may be given by you prior
to 60 days from the date of this Agreement.  Upon termination or expiration,
this Agreement shall have no further force or effect, except that the provisions
concerning the Company’s obligations to Piper Jaffray and certain related
persons provided in Annex A, the Company’s obligation to pay Piper Jaffray fees
and expenses as described in this Agreement, the confidentiality provisions of
Section 9, the status of Piper Jaffray as an independent contractor, your
representations, warranties and agreements, the limitation on to whom Piper
Jaffray shall owe any duties, governing law, choice of forum, successors and
assigns, and waiver of the right to trial by jury shall survive any such
termination or expiration of this Agreement.

3.
Fees.  For our services under this Agreement, you agree to pay us the following
fees:

 
 
 

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Palatin Technologies, Inc.
December 22, 2014
Page 3

 
●
Placement Fee.
A placement fee of (i) four and three-quarters percent (4.75%) of the gross
proceeds of all Securities sold in the Placement (including sales to any entity
affiliated or associated with Piper Jaffray), payable to Piper Jaffray in cash
at each closing.

 
Notwithstanding the foregoing, the Placement Fee, payable in connection with the
Offering, shall be split with a minimum of fifty-two and six-tenths percent
(52.6%) of the aggregate net Placement Fee paid to Piper Jaffray (or if the
Placement Fee is $950,000, then $500,000), a maximum of twenty-one percent
(21.0%) of the aggregate net Placement Fee paid to Canaccord (or if the
Placement Fee is $950,000, then $200,000), a maximum of thirteen and two-tenths
percent (13.2%) of the aggregate net Placement Fee paid to Roth (or if the
Placement Fee is $950,000, then $125,000), and a maximum of thirteen and
two-tenths percent (13.20%) of the aggregate net Placement Fee paid to Noble (or
if the Placement Fee is $950,000, then $125,000); provided, however, if any of
the Co-Placement Agents or Financial Advisor are not entitled to any portion of
the net Placement Fee, then Piper Jaffray shall receive such additional portion
of the net Placement Fee otherwise payable to such Co-Placement Agent or
Financial Advisor with respect to such Offering on a pro-rata basis.

4.
Expenses.  At closing, you agree to reimburse us for our reasonable
out-of-pocket expenses incurred  in preparing to market and marketing the
Securities, including, but not limited to, travel, reasonable fees and
disbursements of our counsel, and printing and distribution of Offering
Materials, whether or not a closing occurs, but such reimbursement will not
exceed $100,000 in the aggregate without your approval.

5.
Indemnification and Contribution.  The Company and Piper Jaffray agree to the
provisions with respect to the Company’s indemnity of Piper Jaffray and other
matters set forth on Annex A attached hereto, the terms of which are hereby
incorporated into this agreement by reference in their entirety and made a part
of this Agreement.

6.
Representations, Warranties and Agreements of the Company.  You represent and
warrant to, and agree with us, that:

(a)  
The Company has not taken, and will not take, any action, directly or
indirectly, that may cause the Placement to fail to be entitled to an exemption
from registration under the U.S. federal securities laws, or applicable state
securities or “blue sky” laws.  The Company shall be responsible for any costs
and expenses associated with filings, applications or registrations with any
governmental or regulatory body;

 
(b)
The Company hereby warrants that the Offering Materials, and any other
information relating to the Company or the Placement, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements contained therein, in the light of circumstances under
which they were made, not misleading.  The Company agrees to provide Piper
Jaffray with (i) prompt notice of any material development affecting the Company
or the occurrence of any event or other change known to the Company that could
result in the Offering Materials containing an untrue statement of a material
fact or omitting to state any material fact necessary to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading, (ii) copies of any financial reports as soon as reasonably
practicable and (iii) such other information concerning the business and
financial condition of the Company as Piper Jaffray may from time to time
reasonably request. Piper Jaffray will have the right to approve the Offering
Materials and other written communications furnished by or on behalf of the
Company in connection with the Placement. The Company will comply with
Securities and Exchange Commission Regulation FD;

 
 
 

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Palatin Technologies, Inc.
December 22, 2014
Page 4

 
(c)
The Company acknowledges that Piper Jaffray will be using information provided
by others, including, without limitation, information provided by or on behalf
of the Company, and that Piper Jaffray does not assume responsibility for and
may rely, without independent verification, on the accuracy and completeness of
any such information;

 
(d)
The Company undertakes to provide Piper Jaffray with copies of all subscription
or purchase agreements entered into with investors, and to the extent not
included in all such subscription or purchase agreements, all information
otherwise known to the Company with respect to each investor that is relevant
for purposes of compliance by Piper Jaffray with its filing obligations under
Financial Industry Regulatory Authority (“FINRA”) Rule 5123;

 
(e)
The Company will not engage in general solicitation or general advertising in
connection with the Placement (other than solicitations in connection with the
Company’s registration statement on Form S-1 initially filed on September 29,
2014); and

 
(f)
At each closing, you will permit us to rely on the representations and
warranties of the Company. The Company will cause to be furnished to Piper
Jaffray and the purchasers of the Securities, on each closing date of the
Placement, copies of such opinions of counsel and such other documents, letters,
certificates and opinions as Piper Jaffray or the purchasers may reasonably
request in form and substance reasonably satisfactory to Piper Jaffray and its
counsel and the purchasers and their counsel. To the extent the Company’s
counsel shall deliver a legal opinion in connection with the Placement to the
purchasers of the Securities, such opinion shall also be addressed to Piper
Jaffray and be in form and substance satisfactory to the purchasers of the
Securities and Piper Jaffray.

 
 
 

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Palatin Technologies, Inc.
December 22, 2014
Page 5
 
7.
Representations, Warranties and Agreements of Piper Jaffray.  We represent and
warrant to, and agree with you, that:

(a)  
Piper Jaffray is a broker-dealer registered with the U.S. Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended,
and is a member firm of FINRA, and at all times relevant to this engagement,
will maintain such registration and membership;

(b)  
Piper Jaffray will offer the Securities only to “accredited investors,” as
defined in Rule 501 under the Securities Act of 1933, as amended (the
“Securities Act”), that (i) qualify as either “qualified institutional buyers,”
as defined under Rule 144A promulgated under the Securities Act or “large
institutional accredited investors” within the meaning of Squadron, Ellenoff,
Pleasant & Lehrer, SEC No-Action Letter (available February 28, 1992) and (ii)
in our reasonable belief, are purchasing securities of the Company for their own
account and not with a view towards distribution; and

(c)  
Piper Jaffray will not engage in general solicitation or general advertising in
connection with the Placement.

 
 
8.
Compliance with Law.  It is understood that the Company intends the Placement to
take the form of a private investment in public equity (“PIPE”) transaction.  If
the Placement takes such form, the Company shall enter into agreements with the
purchasers of the Securities (the “Transaction Agreements”) whereby (a) the
Company covenants and agrees to prepare and file with the SEC, within a period
of time agreed to with the purchasers of the Securities (typically within 30
days after the initial closing of the Placement), a registration statement for
an offering to be made on a delayed or continuous basis pursuant to Rule 415 of
the 1933 Act registering the resale from time to time by holders thereof of all
of the Securities or the shares underlying the Securities, as the case may be
(the “Registration”), and (b) the Company will promptly (i) notify the NYSE MKT
(or such other market on which the Common Stock is then quoted or listed if the
Common Stock is not listed on the NYSE MKT) that it intends to offer and sell
the Securities as contemplated and (ii) qualify the Securities or the shares
underlying the Securities, as the case may be, for listing on the NYSE MKT (or
such other market on which the Common Stock is then quoted or listed if the
Common Stock is not listed on the NYSE MTK), in each case in accordance with the
rules and regulations of the NYSE MKT (or such other appropriate market) and the
Company’s listing agreement with that organization.  The Transaction Agreements
shall state that (a) the Registration shall be on a Form S-3 or another
appropriate form permitting registration of the Securities for resale by such
holders in the manner or manners designated by them and (b) the Company shall
use its best efforts to cause the Registration to become effective under the
1933 Act for a period of one (1) year or until such earlier time as the
Securities may be resold without restriction pursuant to Rule 144.

 
 
 

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Palatin Technologies, Inc.
December 22, 2014
Page 6

9.
Confidentiality and Disclosure.  We agree to use all material non-public
information provided to us by you or on your behalf solely for the purpose of
providing the services that are the subject of this Agreement and, except as
otherwise required by law, regulation or legal process, to treat all such
information confidentially and not disclose such information to any third party
without the Company’s consent, other than to our affiliates and our respective
employees, legal counsel, independent auditors and other experts or agents who
need to know such information in connection with the Placement or any other
services provided by us or our affiliates to you and your affiliates.  We accept
responsibility for compliance with the provisions of this paragraph by the
persons referred to above.  This undertaking by us will automatically terminate
one (1) year following the earlier of completion of the Placement or termination
of our engagement hereunder.

 
The Company agrees that any information or advice, written or oral, rendered by
Piper Jaffray or its representatives in connection with this engagement letter
is solely for the confidential use of the Company and the Board of Directors of
the Company and, except as otherwise required by applicable law, regulation or
legal process, the Company will not and will not permit any third party to
disclose, reproduce, disseminate, quote or otherwise refer to such advice or
information in any manner without Piper Jaffray’s prior written consent.

10.
No Third Party Beneficiaries.  The Company acknowledges and agrees that Piper
Jaffray has been retained to act as exclusive placement agent to the Company,
and not as an advisor to or agent of any other person, and that the Company’s
engagement of Piper Jaffray is not intended to confer rights upon any person not
a party to this Agreement (including shareholders, employees or creditors of the
Company) as against Piper Jaffray or its affiliates, or their respective
directors, officers, employees or agents. Accordingly, no other person (other
than the Indemnified Persons set forth in Annex A attached hereto) will acquire
or have any rights by virtue of this Agreement.

11.
Independent Contractor.  Piper Jaffray shall act as an independent contractor
under this Agreement, and any duties arising out of its engagement shall be owed
solely to the Company.  You acknowledge that nothing in this Agreement is
intended to create duties to you or your creditors or securityholders beyond
those expressly provided for in this Agreement, and we and you specifically
disclaim the creation of any fiduciary relationship between, or the imposition
of any fiduciary duties on, either party.

12.
Piper Jaffray Affiliates; Conflicts; Exculpation.  At Piper Jaffray’s
discretion, any right set forth herein may be exercised, and any services to be
provided by Piper Jaffray may be provided, by an affiliate of Piper
Jaffray.  The Company hereby agrees that Piper Jaffray and/or any affiliate or
employee of Piper Jaffray will have the right, but not the obligation, to
purchase Securities for its own account and that any such purchase will not
constitute a conflict of interest for purposes of Piper Jaffray’s engagement
hereunder.

 
 
 

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Palatin Technologies, Inc.
December 22, 2014
Page 7

You acknowledge that we are a securities firm engaged in securities trading and
brokerage activities and providing investment banking and financial advisory
services.  In the ordinary course of business, we and our affiliates may at any
time hold long or short positions, and may trade or otherwise effect
transactions, for our own account or the accounts of customers, in your debt or
equity securities, or the debt or equity securities of your affiliates or other
entities that may be involved in the transactions contemplated by this
Agreement.

In addition, we and our affiliates may from time to time perform various
investment banking and financial advisory services for other clients and
customers who may have conflicting interests with respect to you or the
Placement.  You also acknowledge that we and our affiliates have no obligation
to use in connection with this engagement or to furnish you confidential
information obtained from other companies.

Furthermore, you acknowledge we may have fiduciary or other relationships
whereby we or our affiliates may exercise voting power over securities of
various persons, which securities may from time to time include securities of
the Company or of potential investors or others with interests in respect of the
Placement.  You acknowledge that we or such affiliates may exercise such powers
and otherwise perform our functions in connection with such fiduciary or other
relationships without regard to our relationship with you hereunder.

You acknowledge that we are not an advisor as to legal, tax, accounting or
regulatory matters in any jurisdiction.  You should consult with your own
advisors concerning such matters and are responsible for making your own
independent investigation and appraisal of the transactions contemplated by this
Agreement, and we have no responsibility or liability to you with respect to
such matters.

13.
Publicity.  The Company acknowledges that upon completion of the Placement,
Piper Jaffray may, at its own expense, disseminate or place an announcement in
one or more media forums as it may choose, stating that Piper Jaffray has acted
as sole lead placement agent to the Company in connection with such Placement.

14.
Amendments and Successors.  This Agreement may not be waived, amended, modified
or assigned, in any way, in whole or in part, including by operation of law,
without the prior written consent of the Company and Piper Jaffray, except that
this Agreement shall be deemed to be automatically assigned to any successor in
interest of the Company or Piper Jaffray or otherwise by operation of law.  The
provisions of this Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of the Company and Piper Jaffray.  The
invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provisions of this Agreement,
which will remain in full force and effect.

 
 
 

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Palatin Technologies, Inc.
December 22, 2014
Page 8
 
15.
Entire Agreement.  This Agreement constitutes the entire agreement between Piper
Jaffray and the Company, and supersedes any prior agreements and understandings,
with respect to the subject matter of this Agreement.

16.           Counterparts.  This Agreement may be executed in any number of
counterparts.

17.
No Brokers.  The Company acknowledges and agrees that there are no brokers,
agents, representatives or other parties that have an interest in compensation
paid or payable to Piper Jaffray hereunder.

18.
Governing Law and Jurisdiction.
This Agreement will be governed by and construed in accordance with the laws of
Delaware, without regard to its conflict of law principles.  You and we hereby
waive all right to trial by jury in any action, proceeding, or counterclaim
(whether based upon contract, tort or otherwise) in connection with any dispute
arising out of this Agreement or any matters contemplated by this Agreement.

We are pleased to accept this engagement and look forward to working with the
Company.  Please confirm that the foregoing correctly and completely sets forth
our understanding by signing and returning to us the enclosed duplicate of this
engagement letter, which shall thereupon constitute a binding Agreement.

 
Sincerely,

PIPER JAFFRAY & CO.

 
By  /s/ David Stadinski                                                        
David Stadinski
Managing Director

 
 

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Palatin Technologies, Inc.
December 22, 2014
Page 9

 
Agreed and accepted as of the date hereof.

 
PALATIN TECHNOLOGIES, INC.

By  /s/ Stephen T. Wills                                                     
  Stephen T. Wills
  Chief Financial Officer

 
 

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Annex A to Engagement Letter

You agree to (i) indemnify and hold harmless us, our affiliates (within the
meaning of the Securities Act of 1933, as amended), and each of our respective
partners, directors, officers, agents, consultants, employees and controlling
persons (within the meaning of the Securities Act of 1933, as amended) (each of
Piper Jaffray and such other person or entity is hereinafter referred to as an
“Indemnified Person”), from and against any and all losses, claims, damages,
liabilities and expenses, joint or several, and all actions, inquiries,
proceedings and investigations in respect thereof, to which any Indemnified
Person may become subject arising in any manner out of or in connection with our
engagement or any matter referred to in the agreement to which this Annex A is
attached and of which this Annex A forms a part (the “Agreement”), regardless of
whether any of such Indemnified Persons is a party thereto, and (ii) immediately
upon request reimburse an Indemnified Person for such person’s legal and other
expenses as they are incurred in connection with investigating, preparing,
defending, paying, settling or compromising any such action, inquiry, proceeding
or investigation (including without limitation, usual and customary pr diem
compensation for any Indemnified Person’s involvement in discovery proceedings
or testimony), whether or not such action, inquiry, proceeding or investigation
is initiated or brought by you, your creditors or stockholders, or any other
person.  You are not responsible under clause (i) of the foregoing sentence for
any losses, claims, damages, liabilities or expenses to the extent that such
loss, claim, damage, liability or expense has been finally judicially determined
to have resulted primarily and directly from actions taken or omitted to be
taken by such Indemnified Person due to such person’s gross negligence or
willful misconduct.  To the extent that any prior payment you made to an
Indemnified Person is determined to have been improper by reason of such
Indemnified Person’s gross negligence or willful misconduct, such Indemnified
Person will promptly pay you such amount.
 
If the indemnity or reimbursement referred to above is, for any reason
whatsoever, unenforceable, unavailable or otherwise insufficient to hold each
Indemnified Person harmless, you agree to pay to or on behalf of each
Indemnified Person contributions for losses, claims, damages, liabilities or
expenses so that each Indemnified Person ultimately bears only a portion of such
losses, claims, damages, liabilities or expenses as is appropriate (i) to
reflect the relative benefits received by each such Indemnified Person,
respectively, on the one hand and you and your stockholders on the other hand in
connection with the Placement, or (ii) if the allocation on that basis is not
permitted by applicable law, to reflect not only the relative benefits referred
to in clause (i) above, but also the relative fault of each such Indemnified
Person, respectively, and you as well as any other relevant equitable
considerations; provided, however, that in no event will the aggregate
contribution of all Indemnified Persons to all losses, claims, expenses,
damages, liabilities or expenses in connection with any Placement exceed the
amount of the fee actually received by us pursuant to this Agreement.  The
respective relative benefits received by us and you in connection with any
Placement will be deemed to be in the same proportion as the aggregate fee paid
or proposed to be paid to Piper Jaffray in connection with the Placement bears
to the aggregate consideration paid or proposed to be paid in the Placement,
whether or not consummated.
 
 
 

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Palatin Technologies, Inc.
December 22, 2014
Page 2
 
Promptly after its receipt of notice of the commencement of any action or
proceeding, any Indemnified Person will, if a claim in respect thereof is to be
made against you pursuant to this letter, notify you in writing of the
commencement thereof; but omission so to notify you will not relieve you from
any liability which you may have to any Indemnified Person, except your
obligation to indemnify for losses, claims, damages, liabilities or expenses to
the extent that you suffer actual prejudice as a result of such failure, but
will not relieve you from your obligation to provide reimbursement of expenses
and any liability which you may have to an Indemnified Person otherwise than
hereunder.  If you so elect, you may assume the defense of such action or
proceeding in a timely manner, including the employment of counsel (reasonably
satisfactory to us) and payment of expenses, provided you permit an Indemnified
Person and counsel retained by an Indemnified Person at its expense to
participate in such defense.  Notwithstanding the foregoing, in the event (i)
you fail promptly to assume the defense and employ counsel reasonably
satisfactory to us, or (ii) the Indemnified Person has been advised by counsel
that there exist actual or potential conflicting interests between you or your
counsel and such Indemnified Person, an Indemnified Person may employ separate
counsel (in addition to any local counsel) to represent or defend such
Indemnified Person in such action or proceeding, and you agree to pay the fees
and disbursements of such separate counsel as incurred; provided however, that
you will not, in connection with any one such action or proceeding, or separate
but substantially similar actions or proceedings arising out of the same general
allegations, be liable for fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel).

You will not, without our prior written consent, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
under this Agreement, unless such settlement, compromise or consent includes an
express, complete and unconditional release of us and each other Indemnified
Person from all liability and obligations arising therefrom. Without your prior
written consent, which will not be unreasonably withheld, delayed or
conditioned, no Indemnified Person will settle or compromise any claim for which
indemnification or contribution may be sought hereunder.  Notwithstanding the
foregoing sentence, if at any time an Indemnified Person requests that you
reimburse the Indemnified Person for fees and expenses as provided in this
Agreement, you agree that you will be liable for any settlement of any
proceeding effected without your prior written consent if (i) such settlement is
entered into more than 30 days after receipt by you of the request for
reimbursement, and (ii) you will not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement.
 
 
 

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Palatin Technologies, Inc.
December 22, 2014
Page 3
 
You also agree that no Indemnified Person will have any liability to you or your
affiliates, directors, officers, employees, agents, creditors or stockholders,
directly or indirectly, related to or arising out of the Agreement or the
services performed thereunder, except losses, claims, damages, liabilities and
expenses you incur which have been finally judicially determined to have
resulted primarily and directly from actions taken or omitted to be taken by
such Indemnified Person due to such person’s gross negligence or willful
misconduct.  In no event, regardless of the legal theory advanced, will any
Indemnified Person be liable for any consequential, indirect, incidental or
special damages of any nature.  Your indemnification, reimbursement, exculpation
and contribution obligations in this Annex A will be in addition to any rights
that any Indemnified Person may have at common law or otherwise.

You acknowledge that the indemnity, reimbursement and contribution obligations
under this Annex A shall be in addition to, and shall no way limit or otherwise
adversely affect any rights that any Indemnified Person may have at law or
equity.

Capitalized terms used, but not defined in this Annex A, have the meanings
assigned to such terms in the Agreement.
 

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