Exhibit 10.2
August 21, 2009
Mr. Richard A. Franco,
Sr.
Chief Executive Officer
DARA BioSciences, Inc.
8601 Six Forks Road
Suite 160
Raleigh, NC 27615
Dear Richard:
This letter (the “
Agreement ”) constitutes the agreement between Moody
Capital Solutions, Inc. (“ Moody ” or the
“ Placement Agent ”) and DARA BioSciences, Inc.
(the “ Company ”), that Moody shall serve as the
non-exclusive placement agent for the Company, on a
“reasonable best efforts” basis, in connection with the
proposed placement (the “ Placement ”) of
registered securities (the “ Securities ”) of
the Company, including shares (the “ Shares ”)
of the Company’s common stock, par value $0.01 per share (the
“ Common Stock ”) and warrants to purchase
shares of Common Stock. With the agreement of the Company, the
Securities may include convertible preferred stock instead of
Common Stock. The terms of such Placement and the Securities shall
be mutually agreed upon by the Company and the purchasers (each, a
“ Purchaser ” and collectively, the “
Purchasers ”) and nothing herein constitutes that
Moody would have the power or authority to bind the Company or any
Purchaser or an obligation for the Company to issue any Securities
or complete the Placement. This Agreement and the documents
executed and delivered by the Company and the Purchasers in
connection with the Placement shall be collectively referred to
herein as the “ Transaction Documents .” The
date of the closing of the Placement shall be referred to herein as
the “ Closing Date .” The Company expressly
acknowledges and agrees that Moody’s obligations hereunder
are on a reasonable best efforts basis only and that the execution
of this Agreement does not constitute a commitment by Moody to
purchase the Securities and does not ensure the successful
placement of the Securities or any portion thereof or the success
of Moody with respect to securing any other financing on behalf of
the Company.
SECTION 1 . COMPENSATION .
As compensation for the services
provided by Moody hereunder, the Company agrees to pay to Moody a
cash fee payable immediately upon the closing of the Placement
equal to 8% of the aggregate gross proceeds raised by Moody in the
Placement, provided such closing occurs within 120 days of the date
of this Agreement.
SECTION 2 . REGISTRATION STATEMENT .
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.333-150150) under
the Securities Act of 1933, as amended (the
“Securities Act”), which became effective on
April 18, 2008, for the registration under the Securities Act
of the Shares. 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 and has advised the Placement
Agent of all further information (financial and other) with respect
to the Company required to be set forth therein. 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.” Any
reference in this Agreement to the Registration Statement, the Base
Prospectus or the Prospectus Supplement shall be deemed to refer to
and include the documents incorporated by reference therein (the
“Incorporated Documents”) pursuant to Item 12 of
Form S-3 which were filed under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), on or before the
date of this Agreement, or the issue date of the Base Prospectus or
the Prospectus Supplement, as the case may be; and any reference in
this Agreement to the terms “amend,”
“amendment” or “supplement” with respect to
the Registration Statement, the Base Prospectus or the Prospectus
Supplement shall be deemed to refer to and include the filing of
any document under the Exchange Act after the date of this
Agreement, or the issue date of the Base Prospectus or the
Prospectus Supplement, as the case may be, deemed to be
incorporated therein by reference. All references in this Agreement
to financial statements and schedules and other information which
is “contained,” “included,”
“described,” “referenced,” “set
forth” or “stated” in the Registration Statement,
the Base Prospectus or the Prospectus Supplement (and all other
references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information which
is or is deemed to be incorporated by reference in the Registration
Statement, the Base Prospectus or the Prospectus Supplement, as the
case may be. No stop order suspending the effectiveness of the
Registration Statement or the use of the Base Prospectus or the
Prospectus Supplement has been issued, and no proceeding for any
such purpose is pending or has been initiated or, to the
Company’s knowledge, is threatened by the Commission. For
purposes of this Agreement, “free writing prospectus”
has the meaning set forth in Rule 405 under the Securities Act and
the “Time of Sale Prospectus” means the preliminary
prospectus, if any, together with the free writing prospectuses, if
any, used in connection with the Placement, including any documents
incorporated by reference therein.
(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, complied in all material
respects with the Securities Act and the Exchange Act and the
applicable Rules and Regulations 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 therein not
misleading. The Base
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Prospectus, the Time of Sale Prospectus, if any,
and the Prospectus Supplement, each as of its respective date,
comply in all material respects with the Securities Act and the
Exchange Act and the applicable Rules and Regulations. Each of the
Base Prospectus, the Time of Sale Prospectus, if any, and the
Prospectus Supplement, as amended or supplemented, did not and will
not contain as of the date thereof any untrue statement of a
material fact or 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 Incorporated Documents,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the applicable
Rules and Regulations, and none of such documents, when they were
tiled with the Commission, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements therein (with respect to Incorporated Documents
incorporated by reference in the Base Prospectus or Prospectus
Supplement), in light of the circumstances under which they were
made not misleading; and any further documents so filed and
incorporated by reference in the Base Prospectus, the Time of Sale
Prospectus, if any, or Prospectus Supplement, when such documents
are filed with the commission, will conform in all material
respects to the requirements of the Exchange Act and the applicable
rules and Regulations, as applicable, and will not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. No
post-effective amendment to the Registration Statement reflecting
any facts or events arising after the date thereof which represent,
individually or in the aggregate, a fundamental change in the
information set forth therein is required to be filed with the
Commission. 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. There are no contracts or other documents required to
be described in the Base Prospectus, the Time of Sale Prospectus,
if any, or Prospectus Supplement, or to be filed as exhibits or
schedules to the Registration Statement, which have not been
described or filed as required.
(C) The Company is eligible to use
free writing prospectuses in connection with the Placement pursuant
to Rules 164 and 433 under the Securities Act. Any free writing
prospectus that the Company is required to file pursuant to Rule
433(d) under the Securities Act has been, or will be, filed with
the Commission in accordance with the requirements of the
Securities Act and the applicable rules and regulations of the
Commission thereunder. Each free writing prospectus that the
Company has filed, or is required to file, pursuant to Rule 433(d)
under the Securities Act or that was prepared by or behalf of or
used by the Company complies or will comply in all material
respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder. The
Company will not, without the prior consent of the Placement Agent,
prepare, use or refer to, any free writing prospectus.
(D) The Company has delivered, or
will as promptly as practicable deliver, to the Placement Agent
complete conformed copies of the Registration Statement and of each
consent and certificate of experts, as applicable, filed as a part
thereof, and conformed copies of the Registration Statement
(without exhibits), the Base Prospectus, the Time of Sale
Prospectus, if any, and the Prospectus Supplement, as amended or
supplemented, in such quantities and at such places as the
Placement Agent reasonably requests. Placement Agent acknowledges
that all such materials as exist on the date of this letter are
available on EDGAR. Neither the Company nor
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any of its directors and officers has
distributed and none of them will distribute, prior to the Closing
Date, any offering material in connection with the offering and
sale of the Shares pursuant to the Placement other than the Base
Prospectus, the Time of Sale Prospectus, if any, the Prospectus
Supplement, the Registration Statement, copies of the documents
incorporated by reference therein and any other materials permitted
by the Securities Act.
SECTION 3 . REPRESENTATIONS AND WARRANTIES
.
Except as set forth under the
corresponding section of the Disclosure Schedules (it being agreed
that disclosure of any item in any section or subsection of the
Disclosure Schedules shall be deemed to be disclosed with respect
to any other section or subsection thereof or hereof to which the
relevance of such disclosure is readily apparent), which Disclosure
Schedules shall be deemed a part hereof, and except as otherwise
disclosed in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2008, any company Quarterly Report on
Form 10-Q filed since the filing date of such Annual Report, or any
of the Company’s Current Reports on Form 8-K filed since the
filing date of such Annual Report (including any exhibit thereto
and document incorporated by reference therein), the Company hereby
makes the representations and warranties set forth below to the
Placement Agent.
(A) Organization and
Qualification . All of the direct and indirect subsidiaries
(individually, a “ Subsidiary ”) of the Company
are set forth on Schedule 3(A). Except as set forth on Schedule
3(A), the Company owns, directly or indirectly, all of the capital
stock or other equity interests of each Subsidiary free and clear
of any “ Liens ” (which for purposes of this
Agreement shall mean a lien, charge, Security interest,
encumbrance, right of first refusal, preemptive right or other
restriction), and all the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and arc fully paid,
non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not have
or reasonably be expected to result in (i) a material adverse
effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the
results of operations, assets, business, prospects or condition
(financial or otherwise) of the company and the Subsidiaries, taken
as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a
timely basis its obligations under any Transaction Document (any of
(i), (ii) or (iii), a “ Material Adverse Effect
”) and no “ Proceeding ” (which for
purposes of this Agreement shall mean any action, claim, suit,
investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether
commenced or threatened) has been instituted in any
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such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.
(B) Authorization;
Enforcement . The Company has the requisite corporate power and
authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. The execution
and delivery of each of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of
the Company and no further action is required by the Company, its
board of directors or its stockholders in connection therewith
other than in connection with the “ Required Approvals
” (as defined in subsection 3(D) below). Each Transaction
Document has been (or upon delivery will have been) duly executed
by the Company and, when delivered in accordance with the terms
hereof and thereof, will constitute the valid and binding
obligation of he Company enforceable against the Company in
accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency. reorganization, moratorium and other laws
of general application affecting enforcement of creditors’
rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other
equitable remedies.
(C) No Conflicts . The
execution, delivery and performance of the Transaction Documents by
the Company, the issuance and sale of the Securities and the
consummation by the Company of the other transactions contemplated
hereby and thereby do not and will not (i) conflict with or
violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict
with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the
Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or
asset of the Company or any subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and
regulations), or by which all property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.
(D) Filings, Consents and
Approvals . The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state,
local or other governmental authority or other “
Person ” (defined as an individual or corporation,
partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of
any kind, including, without limitation, any Trading Market) in
connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than such filings as
are required to be made under applicable
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Federal and state securities laws and a Listing
of Additional Shares application with the Nasdaq Stock Market, Inc.
(collectively, the “ Required Approvals
”).
(E) Issuance of the Securities;
Registration . The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction
Documents. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable
pursuant to the Transaction Document. The issuance by the Company
of the Securities has been registered under the Securities Act and
all of the Securities are freely transferable and tradable by the
Purchasers without restriction (other than any restrictions arising
solely from an act, omission or status of a Purchaser). The
Securities are being issued pursuant to the Registration Statement
and the issuance of the Securities has been registered by the
Company under the Securities Act. The Registration Statement is
effective and available for the issuance of the securities
thereunder and the Company has not received any notice that the
Commission has issued or intends to issue a stop-order with respect
to the Registration Statement or that the Commission otherwise has
suspended or withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, or intends or has
threatened in writing to do so. The “Plan of
Distribution” section under the Registration statement
permits the issuance and sale of the Securities hereunder. Upon
receipt of the Securities, the purchasers will have good and
marketable title to such Securities and the Securities will be
freely tradable on the Trading Market” (which, for purposes
of this Agreement shall mean means the following markets or
exchanges on which the Common Stock is listed or quoted for trading
on the date in question: the Nasdaq Capital Market, the NYSE Amex,
the New York Stock Exchange, the Nasdaq National Market or the OTC
Bulletin Board).
(F) Capitalization . The
capitalization of the Company is as set forth on Schedule 3(F).
[Except as set forth on Schedule 3(F)], the Company has not issued
any capital stock since its most recently filed periodic report
under the Exchange Act, other than pursuant to the exercise of
employee stock options under the Company’s stock plans, the
issuance of shares of Common Stock to employees pursuant to the
Company’s employee stock plan and pursuant to the conversion
or exercise of securities exercisable, exchangeable or convertible
into Common Stock (“ Common Stock Equivalents
”). No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate
in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the securities,
there are no outstanding options (other than employee, director and
consultant stock options), warrants, script rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe
for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of
Common Stock or Common Stock Equivalents. The issuance and sale of
the Securities will not obligate the Company to issue shares of
Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset
price under such securities. All of the outstanding shares of
capital stock of the Company are validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
state securities
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laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. No further approval or
authorization of any stockholder, the Board of Directors of the
Company or others is required for the issuance and sale of the
Securities. There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s
capital stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s
stockholders.
(G) SEC Reports: Financial
Statements . The Company has complied in all material respects
with requirements to file all reports, schedules, forms, statements
and other documents required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a)
or 15(d) thereof, since February 12, 2008) (the foregoing
materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to
herein as the “ SEC Reports ”) on a timely basis
or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities
Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent
basis during the periods involved (“ GAAP ”),
except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present
in all material respects the financial position of the Company and
its consolidated subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(H) Material Changes: Undisclosed
Events, Liabilities or Developments . Since the date of the
latest audited financial statements included within the SEC
Reports, except as specifically disclosed in the SEC Reports,
(i) there has been no event, occurrence or development that
has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial
statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered
its method of accounting, (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer,
director or “ Affiliate ” (defined as any Person
that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under
