EXHIBIT 10.25

 

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May 7, 2015

 

CONFIDENTIAL

 

Mr. Hojabr Alimi

Chief Executive Officer

Ruthigen, Inc.

2455 Bennett Valley Rd., Suite C116

Santa Rosa, California 95404

 

Re:           PIPE Offering

 

Dear Hojabr:

 

The purpose of this engagement letter is to outline our agreement pursuant to
which Dawson James Securities, Inc. (“Dawson”) will act as the lead or managing
placement agent on a best efforts, agency basis in connection with the proposed
PIPE (Private Placement Into Public Equity) offering (the “Offering”) pursuant
to Rule 506 of Regulation D primulgated under the Securities Act of 1933 (the
“Securities Act”) and limited to “accredited investors” (as that term is defined
under Rule 501 of Regulation D by Ruthigen, Inc. (collectively, with its
subsidiaries and affiliates, the “Company”) of its equity or equity-linked
securities. This engagement letter (this “Agreement”) sets forth certain
conditions and assumptions upon which the Offering is premised. However, except
as expressly provided herein, this engagement letter is not intended to be a
binding legal document, as the agreement between the parties hereto on the
matters relating to the Offering will be embodied in the Placement Agency
Agreement (as defined below). The terms of the Offering and the Securities (as
defined below) shall be mutually agreed upon by the Company and the investors
and nothing herein implies that Dawson would have the power or authority to bind
the Company or an obligation for the Company to issue any Securities or complete
the Offering. The Company expressly acknowledges and agrees that the execution
of this Agreement does not constitute a commitment by Dawson to purchase the
Securities and does not ensure the successful placement of the Securities or any
portion thereof or the success of Dawson with respect to securing any other
financing on behalf of the Company.

 

The terms of our agreement in principle are as follows:

 

1.          Engagement. The Company hereby engages Dawson, for the period
beginning on the date hereof and ending five business days before the closing of
the merger described in the Company’s S-4 Registration Statement filed with the
Securities and Exchange Commission on April 15, 2015 (the “S-4”) (“Merger”),
unless sooner terminated pursuant to the terms of this engagement letter (the
“Engagement Period”), to act as the Company’s exclusive financial advisor, lead
or managing placement agent and/or book runner and investment banker in
connection with the proposed Offering or any other financing. During the
Engagement Period or until the consummation of the Offering, and as long as
Dawson is proceeding in good faith with preparations for the Offering, the
Company agrees not to solicit, negotiate with or enter into any agreement with
any other source of financing (whether equity, debt or otherwise; whether
private or public), any underwriter, potential underwriter, placement agent,
financial advisor, investment banking firm or any other person or entity in
connection with an offering of the Company’s debt or equity securities or any
other financing by the Company.

 

1 North Federal Highway • Suite 500 • Boca Raton, FL 33432 • Toll Free
866.928.0928 • Main 561.391.5555 • Fax 561.391.5757 • www.dawsonjames.com Member
FINRA/SIPC

 

 

 

 

2.          The Offering. The Offering, the closing of which is not contingent
on the closing of the Merger, will consist of the offer for sale of up to
948,555 shares of common stock at not less than $2.75 pre share (the
“Securities”). The purpose of the Offering is to enable the Company to satisfy
its net cash requirements as described in a certain Merger Agreement filed as an
exhibit to the S-4. It is understood that the net proceeds to the Company after
deduction and payment of all offering and related expenses must be not less than
$2,100,000. The Offering proceeds will be held in escrow and will be released
contemporaneously with the closing of the Merger (as described in the Merger
Agreement). Dawson will act as the lead or managing placement agent for the
Offering, subject to, among other matters referred to herein and additional
customary conditions, completion of Dawson’s due diligence examination of the
Company and its affiliates, and the execution of a Placement Agency Agreement
between the Company and Dawson in connection with the Offering (the “Placement
Agency Agreement”). Dawson may: (i) with the Company’s approval (not to be
unreasonably withheld, conditioned or delayed), create selling group for the
Offering comprised of broker-dealers who are members of the Financial Industry
Regulatory Authority (“FINRA”), (ii) rely on soliciting dealers who are FINRA
members to participate in placing a portion of the Offering, and/or (iii) offer
Securities in foreign jurisdictions. The actual size of the Offering, the
precise number of Securities to be offered by the Company and the offering price
will be the subject of continuing negotiations between the Company and Dawson
and will depend upon, among other factors: (i) the capitalization of the Company
at the time of the Offering, (ii) market and general economic conditions and
changes in the prospects and/or forecasts of the Company, (iii) the preparation
and Dawson’s review of the Company’s financial statements, (iv) Dawson’s
determination of the Company’s pre-money valuation (based upon the information
provided to Dawson by the Company) and (v) other factors determined by Dawson.
The Company shall be responsible for any and all compliance with the securities
laws applicable to it, including Regulation D and the Securities Act, and Rule
506 promulgated thereunder, and unless otherwise agreed in writing, all state
securities (“blue sky”) laws. Dawson agrees to cooperate with counsel to the
Company in that regard.

 

3.          Placement Agent Compensation. The Company will pay to Dawson a
placement agent fee of 8% of the gross proceeds received in the Offering. Dawson
will also be entitled to a non-accountable expense allowance equal to 1% of the
gross proceeds received in the Offering.

 

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4.          Private Placement Memorandum. The Company will, as soon as
practicable following the date of this Agreement, prepare a private placement
memorandum (the “Private Placement Memorandum”) covering the private offer and
sale of the Securities to be offered and sold in the Offering. The Private
Placement Memorandum, and all amendments and supplements thereto, will be in
form reasonably satisfactory to Dawson and counsel to Dawson and will contain:
(i) all audited financial statements of the Company and such interim and other
financial statements and schedules as may be required by the Securities Act and
rules and regulations promulgated thereunder, including without limitation
Regulation D, and (ii) a description of the business of the Company and such
other disclosures regarding the Company and its officers and directors as may be
required by the Securities Act and rules and regulations of the Securities and
Exchange Commission (the “Commission”) thereunder. The Company will be solely
responsible for the contents of its Private Placement Memorandum and any and all
other written or oral communications provided by or on behalf of the Company to
any actual or prospective investor of the Securities, and the Company represents
and warrants that such materials and such other communications will not, as of
the date of the offer or sale of the Securities, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If at any time prior
to the completion of the offer and sale of the Securities an event occurs which
would cause the Private Placement Memorandum (as supplemented or amended) to
contain an untrue statement of a material fact or to omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Company will
notify Dawson immediately of such event and Dawson will suspend solicitations of
the prospective purchasers of the Securities until such time as the Company
shall prepare a supplement or amendment to the Private Placement Memorandum
which corrects such statement or omission. The Private Placement Memorandum will
include a description of the Placement Agency Agreement. The Placement Agency
Agreement will be in form satisfactory to Dawson and will include
indemnification provisions and other terms and conditions customarily found in
placement agency agreements for PIPE offerings.

 

5.          Left Blank Intentionally

 

6.          Left Blank Intentionally

 

6.          Expenses. The Company will be responsible for and will pay all
expenses relating to the Offering, including, without limitation, (a) all filing
fees and expenses relating to the registration of the Securities with the
Commission; (b) all fees and expenses relating to the listing of the Company’s
common stock on the Nasdaq Stock Market or the NYSE MKT or on such other stock
exchanges as the Company and Dawson together determine; (c) all fees, expenses
and disbursements relating to background checks of the Company’s officers and
directors; (d) all fees, expenses and disbursements required under the “blue
sky” securities laws of such states and other jurisdictions as Dawson may
reasonably designate; (e) all fees, expenses and disbursements relating to the
registration, qualification or exemption of the Securities under the securities
laws of such foreign jurisdictions as Dawson may reasonably designate; (f) the
costs of all mailing and printing of the Offering documents; (g) the costs
associated with bound volumes of the offering materials as well as commemorative
mementos and lucite tombstones, each of which the Company or its designee will
provide within a reasonable time after the Closing in such quantities as Dawson
may reasonably request; (h) the fees and expenses of the Company’s accountants;
(i) the fees and expenses of the Company’s legal counsel and other agents and
representatives; and (j) up to $25,000 of Dawson’s legal and additional
diligence expenses not covered by the provisions and terms of this Section 6
herein.

 

7.          Left Blank Intentionally

 

8.          Left Blank Intentionally

 

9.          Survival. Except as provided in Paragraphs 1, 9, 10, 11, 13, 14, 15,
and 16 hereof (which Paragraphs are intended to be legally binding and
enforceable on and against the Company and Dawson), this engagement letter is
not intended to be a binding legal document nor a legal commitment on the part
of Dawson to provide any financing to the Company, as the agreement between the
parties hereto on these matters will be embodied in the Placement Agency
Agreement. Until the Placement Agency Agreement has been finally negotiated and
signed, the Company or Dawson may at any time terminate their further
participation in the proposed transactions contemplated hereby and the
engagement by the Company of Dawson, and the party so terminating will have no
liability to the other on account of any matters provided for herein, except as
provided for in this Agreement.

 

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10.         Termination. Regardless of which party elects to terminate their
further participation in the proposed transactions contemplated hereby and the
engagement by the Company of Dawson, upon such termination, the Company will
reimburse Dawson for, or otherwise pay and bear, the expenses and fees to be
paid and borne by the Company as provided for in Paragraph 6 above and to
reimburse Dawson for the full amount of its actual accountable expenses incurred
to such date for all such expenses (which expenses will include, but will not be
limited to, all reasonable fees and disbursements of Dawson’s counsel, travel,
lodging and other “road show” expenses, mailing, printing and reproduction
expenses, and any expenses incurred by Dawson in conducting its due diligence,
including background checks of the Company’s officers and directors), less
amounts, if any, previously paid to Dawson in reimbursement for such expenses.

 

11.         No Other Agreements. The Company represents and warrants to Dawson
that the entry into this engagement letter or any other action of the Company in
connection with the proposed Offering will not violate any agreement between the
Company and any other broker-dealer, underwriter or financial advisor.

 

12.         Publicity. The Company agrees that it will not issue press releases
or engage in any other publicity, without Dawson’s prior written consent (which
shall not be unreasonably withheld), commencing on the date hereof and
continuing for a period of thirty (30) days from final Closing of the Offering.

 

13.         Information. During the Engagement Period or until the final
Closing, the Company agrees to cooperate with Dawson and to furnish, or cause to
be furnished, to Dawson, any and all information and data concerning the
Company, and the Offering that Dawson deems appropriate (the “Information”). The
Company will provide Dawson reasonable access during normal business hours from
and after the date of execution of this engagement letter until the date of the
Closing to all of the Company’s assets, properties, books, contracts,
commitments and records and to the Company’s officers, directors, employees,
appraisers, independent accountants, legal counsel and other consultants and
advisors. Except as contemplated by the terms hereof or as required by
applicable law, Dawson will keep strictly confidential all non-public
Information concerning the Company provided to Dawson. No obligation of
confidentiality will apply to Information that: (a) is in the public domain as
of the date hereof or hereafter enters the public domain without a breach by
Dawson, (b) was known or became known by Dawson prior to the Company’s
disclosure thereof to Dawson as demonstrated by the existence of its written
records, (c) becomes known to Dawson from a source other than the Company, and
other than by the breach of an obligation of confidentiality owed to the
Company, (d) is disclosed by the Company to a third party without restrictions
on its disclosure or (e) is independently developed by Dawson.

 

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14.         No Third Party Beneficiaries; No Fiduciary Obligations. This
engagement letter does not create, and shall not be construed as creating rights
enforceable by any person or entity not a party hereto, except those entitled
hereto by virtue of the indemnification provisions hereof. The Company
acknowledges and agrees that: (i) Dawson is not and shall not be construed as a
fiduciary of the Company and shall have no duties or liabilities to the equity
holders or the creditors of the Company or any other person by virtue of this
engagement letter or the retention of Dawson hereunder, all of which are hereby
expressly waived; and (ii) Dawson is a full service securities firm engaged in a
wide range of businesses and from time to time, in the ordinary course of its
business, Dawson or its affiliates may hold long or short positions and trade or
otherwise effect transactions for its own account or the account of its
customers in debt or equity securities or loans of the companies which may be
the subject of the transactions contemplated by this Agreement. During the
course of Dawson engagement with the Company, Dawson may have in its possession
material, non-public information regarding other companies that could
potentially be relevant to the Company or the transactions contemplated herein
but which cannot be shared due to an obligation of confidence to such other
companies.

 

15.         Indemnification, Advancement & Contribution.

 

(a) Indemnification. The Company agrees to indemnify and hold harmless Dawson,
its affiliates and each person controlling Dawson (within the meaning of Section
15 of the Securities Act), and the directors, officers, agents and employees of
Dawson, its affiliates and each such controlling person (Dawson, and each such
entity or person hereafter is referred to as an “Indemnified Person”) from and
against any losses, claims, damages, judgments, assessments, costs and other
liabilities (collectively, the “Liabilities”), and shall reimburse each
Indemnified Person for all fees and expenses (including the reasonable fees and
expenses of counsel for the Indemnified Persons) (collectively, the “Expenses”)
and agrees to advance payment of such Expenses as they are incurred by an
Indemnified Person in investigating, preparing, pursuing or defending any
actions, whether or not any Indemnified Person is a party thereto, arising out
of the Offering or based upon or arising out of alleged any untrue statement or
alleged untrue statement of a material fact contained in (i) the Private
Placement Memorandum, or any other offering documents (as from time to time each
may be amended and supplemented); (ii) any materials or information provided to
investors by, or with the approval of, the Company in connection with the
marketing of the Offering, including any “road show” or investor presentations
made to investors by the Company (whether in person or electronically); or (iii)
any application or other document or written communication (collectively called
“application”) executed by the Company or based upon written information
furnished by the Company in any jurisdiction in order to qualify the Securities
under the securities laws thereof or to file for an exemption from such
requirement or filed with the Commission, any state securities commission or
agency, any national securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, information provided to the Company by Dawson in
writing specifically for use in the Private Placement Memorandum, or any other
offering documents. The Company also agrees to advance and to reimburse each
Indemnified Person for all Expenses as they are incurred in connection with such
Indemnified Person’s enforcement of his or its rights under this Section 15.

 

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(b)          Procedure. Upon receipt by an Indemnified Person of actual notice
of an action against such Indemnified Person with respect to which indemnity may
reasonably be expected to be sought under this Section 15, such Indemnified
Person shall promptly notify the Company in writing; provided that failure by
any Indemnified Person so to notify the Company shall not relieve the Company
from any obligation or liability which the Company may have on account of this
Section 15 or otherwise to such Indemnified Person. The Company shall, if
requested by Dawson, assume the defense of any such action (including the
employment of counsel designated by Dawson and reasonably satisfactory to the
Company). Any Indemnified Person shall have the right to employ separate counsel
in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless: (i) the Company has failed promptly to assume the defense and employ
separate counsel designated by Dawson for the benefit of Dawson and the other
Indemnified Persons or (ii) such Indemnified Person shall have been advised that
in the opinion of counsel that there is an actual or potential conflict of
interest that prevents (or makes it imprudent for) the counsel designated by
Dawson and engaged by the Company for the purpose of representing the
Indemnified Person, to represent both such Indemnified Person and any other
person represented or proposed to be represented by such counsel. The Company
shall not be liable for any settlement of any action effected without its
written consent (which shall not be unreasonably withheld). In addition, the
Company shall not, without the prior written consent of Dawson, settle,
compromise or consent to the entry of any judgment in or otherwise seek to
terminate any pending or threatened action in respect of which advancement,
reimbursement, indemnification or contribution may be sought hereunder (whether
or not such Indemnified Person is a party thereto) unless such settlement,
compromise, consent or termination (i) includes an unconditional release of each
Indemnified Person, acceptable to such Indemnified Party, from all Liabilities
arising out of such action for which indemnification or contribution may be
sought hereunder and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act, by or on behalf of any Indemnified
Person. The advancement, reimbursement, indemnification and contribution
obligations of the Company required hereby shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as every
Liability and Expense is incurred and is due and payable, and in such amounts as
fully satisfy each and every Liability and Expense as it is incurred (and in no
event later than 30 days following the date of any invoice therefore).

 

(c)          Contribution. In the event that a court of competent jurisdiction
makes a finding that indemnity is unavailable to an Indemnified Person, the
Company shall contribute to the Liabilities and Expenses paid or payable by such
Indemnified Person in such proportion as is appropriate to reflect (i) the
relative benefits to the Company, on the one hand, and to Dawson and any other
Indemnified Person, on the other hand, of the matters contemplated by this
Section 15 or (ii) if the allocation provided by the immediately preceding
clause is not permitted by applicable law, not only such relative benefits but
also the relative fault of the Company, on the one hand, and Dawson and any
other Indemnified Person, on the other hand, in connection with the matters as
to which such Liabilities or Expenses relate, as well as any other relevant
equitable considerations; provided that in no event shall the Company contribute
less than the amount necessary to ensure that all Indemnified Persons, in the
aggregate, are not liable for any Liabilities and Expenses in excess of the
amount of commissions actually received by Dawson in the Offering. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or Dawson on the other and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and Dawson agree that it would not be just
and equitable if contributions pursuant to this subsection (c) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this subsection
(c). For purposes of this paragraph, the relative benefits to the Company, on
the one hand, and to Dawson on the other hand, of the matters contemplated by
this Section 15 shall be deemed to be in the same proportion as: (a) the total
value received by the Company in the Offering, whether or not such Offering is
consummated, bears to (b) the commissions paid to Dawson under this Agreement.
Notwithstanding the above, no person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the Securities Act shall be entitled to
contribution from a party who was not guilty of fraudulent misrepresentation.

 

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(d)          Limitation. The Company also agrees that no Indemnified Person
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company for or in connection with advice or services rendered
or to be rendered by any Indemnified Person pursuant to this engagement letter,
the transactions contemplated thereby or any Indemnified Person’s actions or
inactions in connection with any such advice, services or transactions, except
to the extent that a court of competent jurisdiction has made a finding that
Liabilities (and related Expenses) of the Company have resulted exclusively from
such Indemnified Person’s gross negligence or willful misconduct in connection
with any such advice, actions, inactions or services.

 

16.         Governing Law; Venue. This engagement letter will be deemed to have
been made and delivered in the State of Florida and both the binding provisions
of this Agreement and the transactions contemplated hereby and by the
Underwriting Agreement will be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of Florida, without regard to the conflict of laws principles thereof. Each of
Dawson and the Company: (i) agrees that any legal suit, action or proceeding
arising out of or relating to this engagement letter and/or the transactions
contemplated hereby will be instituted exclusively in the courts located in the
county of Palm Beach, Florida (ii) waives any objection which it may have or
hereafter to the venue of any such suit, action or proceeding, and (iii)
irrevocably consents to the jurisdiction of the courts located in the county of
Palm Beach, Florida, in any such suit, action or proceeding. Each of Dawson and
the Company further agrees to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding in such
courts and agrees that service of process upon the Company mailed by certified
mail to the Company’s address will be deemed in every respect effective service
of process upon the Company, in any such suit, action or proceeding, and service
of process upon Dawson mailed by certified mail to Dawson’s address will be
deemed in every respect effective service process upon Dawson, in any such suit,
action or proceeding. Notwithstanding any provision of this engagement letter to
the contrary, the Company agrees that neither Dawson nor its affiliates, and the
respective officers, directors, employees, agents and representatives of Dawson,
its affiliates and each other person, if any, controlling Dawson or any of its
affiliates, will have any liability (whether direct or indirect, in contract or
tort or otherwise) to the Company for or in connection with the engagement and
transaction described herein except for any such liability for losses, claims,
damages or liabilities incurred by the Company that are finally judicially
determined to have resulted from the bad faith or gross negligence of such
individuals or entities. Dawson will act under this engagement letter as an
independent contractor with duties to the Company.

 

If you are in agreement with the foregoing, please sign and return to us one
copy of this engagement letter together with a payment to Dawson James
Securities, Inc. in the amount of the Advance. This engagement letter may be
executed in counterparts (including facsimile or .pdf counterparts), each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.

 

  Very truly yours,       DAWSON JAMES SECURITIES, INC.

 

  By       Name:           Title:

 

Accepted and agreed as of   the date first written above:       RUTHIGEN, Inc.  

 

By       Name:           Title:  

 

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