Exhibit 4.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement"), entered into effective
this ___ day of __________ 200__, by and among Generex Biotechnology
Corporation, a Delaware corporation, with headquarters located at 00 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx X0X 0X0 (the "Company"), and the investors
signatory hereto (each, severally, the "Buyer" ).
WHEREAS:
A. The Company and the Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506 of
Regulation D ("Regulation D") promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act");
B. The Buyer wishes to purchase, upon the terms and conditions stated in this
Agreement, units of securities of the Company (the "Units") consisting of shares
of the Company's Common Stock ("Company Common Stock"), par value $.001 per
share (the "Shares") and warrants in substantially the same form attached hereto
as Exhibit A to acquire shares of Company Common Stock (the "Warrants"), each
Unit to consist of one Share and a Warrant to purchase __________ (0.___) shares
of the Company's Common Stock upon exercise of the Warrant ("Warrant Shares");
and
C. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit B (the "Registration Rights
Agreement") pursuant to which the Company has agreed to register the Shares and
the Warrant Shares under the 1933 Act and SEC rules and regulations promulgated
thereunder.
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF COMMON SHARES AND WARRANTS.
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Purchase of Shares and Warrants. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 5 and 6 below, the Company shall issue and sell
to the Buyer and the Buyer agrees to purchase from the Company at the Closing,
as hereinafter defined), that number of Units set forth on the signature page
hereto (the "Committed Units"), at a price per Unit equal to __________ dollars
and ______________ cents (US$__________) (the "Unit Purchase Price").
The Buyer understands that, contemporaneously with its offer of Units to the
Buyer, the Company is offering additional Units to other purchasers (the "Other
Purchasers") in reliance on Regulation D and/or Regulation S promulgated under
the 1933 Act. Buyer consents to such contemporaneous offers and sale of Units to
Other Purchasers provided that (i) offers to Other Purchasers shall only be made
to one or more qualified institutional buyers as that term is defined by Rule
144A promulgated under the 1933 Act or accredited investors as that term is
defined by Rule 501(a) promulgated under the 1933 Act, on substantially similar
terms to those set forth in this Agreement, and (ii) the aggregate number of
Units (including the Shares and the Warrant Shares) sold to Buyer and the Other
Purchasers shall not exceed 19.9% of the total number of shares of Company
Common Stock outstanding prior to the first of such sales.
Subject to the satisfaction (or waiver) of the conditions contained in Sections
5 and 6, the Buyer shall pay the Units Purchase Price for the Committed Units to
the Company on the Closing Date by wire transfer of immediately available funds
in accordance with the Company's written wire instructions, and the Company
shall thereupon issue and deliver or cause to be issued and delivered to such
Buyer certificates in such denominations as the Buyer shall request representing
the Shares and Warrants comprising the Committed Units purchased by the Buyer,
duly executed on behalf of the Company and registered in the name of the Buyer
or its designee (the "Units Certificates"). The Closing Date, shall be such date
as the Company and the Buyer shall agree upon, but in no event later than
_______________, 2003(such date being hereinafter referred to as "Closing
Date"). The term "Closing" as used herein shall mean the delivery of the Units
Certificates, the payment of the Unit Purchase Price for the Committed Units,
and the delivery of such other documents and taking of such other actions as are
required to be delivered or taken at the Closing pursuant to this Agreement.
d. The Buyer shall be entitled to purchase in exempt offerings
of Company Common Stock or units of securities that include Company Common Stock
issued within 6 months after the date of this Agreement for the purpose of
financing by the Company (the "New Securities"). In the event the Company
proposes to issue New Securities, it shall give the Buyer written notice of its
intention, describing the type of New Securities, the price, the maximum amount
of financing sought and the general terms upon which the Company proposes to
issue the same. The Buyer shall be given 5 days from the receipt of such notice
to agree to purchase or subscribe for such New Securities, at the same price and
on the same terms as all other purchasers of the New Securities. The Buyers
shall be required to commit in writing, at the time they exercise their right to
purchase the New Securities, the amount of shares they agree to purchase. If the
Buyer and the Other Purchasers commit to purchase in the aggregate more New
Securities than the Company desires to sell, the New Securities shall be
allocated among the Buyer and the Other Purchasers pro rata according to the
amount of New Securities they have committed to purchase.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
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Buyer represents and warrants that:
a. Investment Purpose. Buyer is acquiring the Shares and Warrants comprising the
Units, purchased hereunder, and any Warrant Shares subsequently purchased (such
Shares, Warrants and Warrant Shares being hereinafter sometimes referred to as
the "Securities ") for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to an effective registration statement under the 1933
Act or an exemption from registration the 1933 Act; provided, however, that by
making the representations herein, such Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption from registration under the 1933 Act.
b. Investor Status. Buyer is a "qualified institutional buyer" as defined in
Rule 144A under the 1933 Act and/or an "accredited investor" as that term is
defined in Rule 501 of Regulation D.
c. Reliance on Exemptions. Buyer understands that the Securities are being
offered and sold to it in reliance on Regulation D and that the Company is
relying upon the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of Regulation
D and the eligibility of the Buyer to acquire such Securities.
d. Information. Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities which have been
requested by the Buyer. Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by the Buyer or its advisors, if
any, or its representatives shall modify, amend or affect the Buyer's right to
rely on the Company's representations and warranties contained in Section 3
below. The Buyer understands that its investment in the Securities involves a
high degree of risk. The Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.
e. No Governmental Review. Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.
f. Transfer or Resale. Buyer understands that except as provided in the
Registration Rights Agreement, the Securities have not been and are not being
registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (i) subsequently
registered thereunder, (ii) such Buyer shall have delivered to the Company an
opinion of counsel, in a form reasonably acceptable to Company counsel, to the
effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred without registration under the 1933 Act and in
compliance with an applicable exemption from such registration.
g. Securities. Buyer understands that the certificates or other instruments
representing the Securities, except as set forth below, shall bear a restrictive
legend in substantially the following form (and the Company shall be required to
issue a stop-transfer order against transfer of such stock certificates if the
Securities are not transferred in accordance with the following legend):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR ANY STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT OR (2) IN A TRANSACTION THAT MAY
BE EFFECTED WITHOUT REGISTRATION UNDER THE 1933 ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for sale under the 1933 Act and the Buyer has sold the
Securities and has fulfilled the applicable prospectus delivery requirements (a
"prospectus sale"), (ii) in connection with any transaction other than a
prospectus sale, such holder provides the Company with an opinion of counsel, in
a form reasonably acceptable to Company counsel, to the effect that a public
sale, assignment or transfer of the Securities has been or will be made without
registration under the 1933 Act.
h. Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of such Buyer and is a valid and binding
agreement of such Buyer enforceable against such Buyer in accordance with its
terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency. Buyer certifies that it resides or has a bona fide place of
business at its address set forth on Schedule 1.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to each of the Buyer that:
a. Organization and Qualification. The Company and its "Subsidiaries" (which for
purposes of this Agreement means any entity in which the Company, directly or
indirectly, owns a controlling position of capital stock or holds a controlling
position of an equity or similar interest) are corporations duly organized and
validly existing in good standing under the laws of the jurisdiction in which
they are incorporated, and have the requisite corporate power and authorization
to own their properties and to carry on their business as now being conducted.
Each of the Company and its Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, "Material Adverse Effect" means any material adverse
effect on the business, properties, assets, operations, results or operations,
financial condition or prospects of the Company and its Subsidiaries, if any,
taken as a whole, or on the transactions contemplated hereby or by the
agreements and instruments to be entered into in connection herewith, or on the
authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined below).
b. Authorization; Enforcement; Validity. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Registration Rights Agreement, the Warrants and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "Transaction Documents"), and
to issue the Securities in accordance with the terms hereof and thereof, (ii)
the execution and delivery of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Shares and the Warrants and the
reservation for issuance and the issuance of the Warrant Shares issuable upon
exercise thereof, have been duly authorized by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) the Transaction Documents have been duly
executed and delivered by the Company, and (iv) the Transaction Documents
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.
c. Issuance of Securities. The Shares are duly authorized and, upon issuance in
accordance with the terms hereof, shall be (i) validly issued, fully paid and
non-assessable and (ii) free from all taxes, liens and charges with respect to
the issue thereof. The shares of Common Stock issued pursuant to this Agreement
have been duly authorized and reserved for issuance upon exercise of the
Warrants. Upon exercise in accordance with the Warrants, the Warrant Shares will
be validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof, with the holders being entitled
to all rights accorded to a holder of Company Common Stock.
d. No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the Company's
issuance of the Common Shares and the reservation for issuance and issuance of
the Warrant Shares) will not (i) result in a violation of the Company's
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "Certificate of Incorporation") or the Company's By-laws, as amended and as
in effect on the date hereof (the "By-laws") or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the Principal Market (as defined below)) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected. Neither the Company nor
its Subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation, or By-laws or their organizational charter or
by-laws, respectively. Neither the Company or any of its Subsidiaries is in
violation or any term of or in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except for
possible conflicts, defaults, terminations, amendments which would not have a
Material Adverse Effect. The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any law, ordinance,
regulation of any governmental entity, except for possible violations the
sanctions for which either individually or in the aggregate would not have a
Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the 1933 Act, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents in accordance with the terms hereof or
thereof. All consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company is not in violation of the listing
requirements of the Principal Market (as defined below).
e. SEC Documents; Financial Statements. As of the Closing, the Company has filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, 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 light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyer which is not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made, not
misleading. Neither the Company nor any of its Subsidiaries or any of their
officers, directors, employees or agents have provided the Buyer with any
material, nonpublic information.
f. Absence of Certain Changes. Since the most recent filing by the Company with
the SEC, except as publicly announced by the Company through generally
recognized financial reporting services, there has been no material adverse
change and no material adverse development in the business, properties,
operations, financial condition, results of operations or prospects of the
Company or its Subsidiaries. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings.
g. Absence of Litigation. Except as set forth in the SEC Documents, there is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company or any of its Subsidiaries, threatened
against or affecting the Company, the Company's common stock, the Common Shares
or any of the Company's Subsidiaries or any of the Company's or the Company's
Subsidiaries' officers or directors in their capacities as such that would have
a Material Adverse Effect.
h. No Integrated Offering. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of any of the Securities
under the 1933 Act or cause this offering of the Securities to be integrated
with prior offerings by the Company to third parties other than the Buyer and
Other Purchasers for purposes of the 1933 Act so as to render invalid the
exemption from registration provided under Regulation D or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated, nor will the Company or
any of its Subsidiaries take any action or steps that would require registration
of any of the Securities under the 1933 Act or cause the offering of the
Securities to be integrated with other offerings so as to render invalid the
exemption from registration provided under Regulation D.
i. No Undisclosed Events, Liabilities, Developments or Circumstances. No event,
liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Company or its Subsidiaries or their
respective business, properties, prospects, operations or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws on a registration statement filed with the SEC relating to an
issuance and sale by the Company of the Company Common Stock and which has not
been publicly announced.
j. No General Solicitation. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the 0000 Xxx) in connection with the offer or sale of the Securities.
k. Employee Relations. Neither the Company nor any of its Subsidiaries is
involved in any union labor dispute nor, to the knowledge of the Company or any
of its Subsidiaries, is any such dispute threatened.
l. Intellectual Property Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all trademarks, trade names, service marks,
service xxxx registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now conducted. None
of the Company's trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated, or are expected to
expire or terminate within two years from the date of this Agreement. Except as
set forth in the SEC Documents, the Company and its Subsidiaries do not have any
knowledge of any infringement or misappropriation or alleged infringement or
misappropriation by the Company or its Subsidiaries of trademark, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service xxxx registrations, trade secret or other similar rights
of others, or of any such development of similar or identical trade secrets or
technical information by others and the Company and its Subsidiaries are unaware
of any facts or circumstances which might give rise to any of the foregoing. The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties.
m. Environmental Laws. The Company and its Subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
n. Title. The Company and its Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in the SEC Documents or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and any of its Subsidiaries.
Any real property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
Subsidiaries.
o. Insurance. The Company and each of its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged and the Company
does not have any reason to believe it will not be able to renew its existing
insurance coverage under substantially similar terms for the next two (2) years.
p. Regulatory Permits. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as presently conducted, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
q. Tax Status. The Company and each of its Subsidiaries has made or filed all
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only to the
extent that the Company and each of its Subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
s. Transactions With Affiliates. Except as set forth in the SEC Documents filed
at least ten days prior to the date hereof, none of the officers, control
parties, control entities, directors, or employees of the Company is presently a
party to any transaction with the Company or any of its Subsidiaries (other than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
t. Eligibility. The Company is currently eligible to register the resale of the
Shares and Warrant Shares on a registration statement on Form S-3 under the 1933
Act.
u. The authorized capital stock of the company consists of 50,000,000 shares of
Common Stock, $0.001 par value per share, of which 19,994,000 shares were issued
and outstanding at January 31, 2003. As of April 30, 2003, approximately
9,800,000 shares of Company Common Stock were reserved for issuance upon the
exercise of outstanding options and warrants at an average exercise price of
approximately $$6.89 per share. In addition, the Company has 1,000,000 shares of
preferred stock, $0.001 par value per share, of which 2,123 shares were issued
and outstanding at January 31, 2003, including 1,000 shares of Special Voting
Rights Preferred Stock and 1,123 shares of Series A Preferred Stock
(collectively, the "Preferred Stock"). All of the outstanding shares of the
Company's Common Stock and Preferred Stock have been duly and validly authorized
and are fully-paid and non-assessable. Except as disclosed in this Agreement,
the Registration Rights Agreement and/or the SEC Documents, there are no
options, warrants, contracts, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares of the
capital stock of the Company or options, securities or rights convertible into
shares of capital stock of the Company.
4. COVENANTS.
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a. Best Efforts. Each party shall use its best efforts timely to satisfy each of
the conditions to be satisfied by it as provided in Sections 5 and 6 of this
Agreement.
b. Reporting Status. Until the earlier of (i) the date which is one year after
the date as of which the Investors (as that term is defined in the Registration
Rights Agreement) may sell all of the Shares or Warrant Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which the Investors shall have sold all the Shares
and Warrant Shares (the "Registration Period"), the Company shall file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination.
c. Listing. The Company shall promptly secure the listing of all of the
Registrable Securities (as that term is defined in the Registration Rights
Agreement) on Nasdaq and shall use its best efforts to maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents. Neither the Company nor any of its Subsidiaries shall take any action
which would be reasonably expected to result in the delisting or suspension of
Company Common Stock on Nasdaq. The Company shall promptly, and in no event
later than the following business day, provide to the Buyer copies of any
notices it receives from the Nasdaq regarding the continued eligibility of
Company common stock for listing on such automated quotation system or
securities exchange. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section 4(c).
d. Reservation of Shares. The Company shall take all action necessary to at all
times have authorized, and reserved for the purpose of issuance, no less than
100% of the number of shares of Common Stock needed to provide for the issuance
of the Warrant Shares upon exercise of all outstanding Warrants.
e. Independent Auditors. The Company shall, until at least three (3) years after
the Closing Date, maintain as its independent auditors an accounting firm
authorized to practice before the SEC.
f. Corporate Existence and Taxes. The Company shall, until at least the later of
(i) the date that is three (3) years after the Closing Date or (ii) the sale of
all of the Common Shares purchased pursuant to this Agreement, maintain its
corporate existence in good standing (provided, however, that the foregoing
covenant shall not prevent the Company from entering into any merger or
corporate reorganization as long as the surviving entity in such transaction, if
not the Company, has common stock listed for trading on Nasdaq, the New York
Stock Exchange or the American Stock Exchange; and (iii) shall pay all its taxes
when due except for taxes which the Company disputes).
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
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The obligation of the Company hereunder to issue and sell the Common Shares and
Warrants to the Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing the Buyer with prior
written notice thereof:
a. The Buyer shall have executed each of the Transaction Documents to which it
is a party and delivered the same to Company.
b. The representations and warranties of the Buyer shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date), and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyer at or prior to the Closing Date.
c. The Buyer shall have delivered to the Company such other documents relating
to the transactions as are contemplated by this Agreement.
d. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or issued by any court
or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by, or materially and
adversely affect the rights and/or obligations of the Company arising under this
Agreement.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
-------------------------------------------------
The obligation of the Buyer hereunder to purchase the Units at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Buyer's sole
benefit and may be waived by the Buyer at any time in its sole discretion by
providing the Company with prior written notice thereof:
a. The Company shall have executed each of the Transaction Documents and
delivered the same to the Buyer.
b. The Company's common stock shall be authorized for quotation on Nasdaq and
trading in Company common stock shall not have been suspended by the SEC or
Nasdaq.
c. The representations and warranties of the Company shall be true and correct
as of the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Closing Date.
d. The Company shall have delivered to Buyer the opinion of the Company's
counsel dated as of the Closing Date, in substantially the form of Exhibit C
attached hereto.
e. The Company shall have made all filings, other than those contemplated by the
Registration Rights Agreement, under all applicable federal and state securities
laws necessary to consummate the issuance of the Securities pursuant to this
Agreement in compliance with such laws.
f. The Company shall have delivered to the Buyer such other documents relating
to the transactions as are contemplated by this Agreement.
g. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or issued by any court
or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by, or materially and
adversely affect the rights and/or obligations of the Buyer arising under this
Agreement.
7. INDEMNIFICATION.
----------------
In consideration of Buyer's execution and delivery of the Transaction Documents
and acquiring the Securities thereunder and in addition to all of the Company's
other obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless the Buyer and each other holder of the
Securities and all of their stockholders, officers, directors, employees and
direct or indirect investors and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (d) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Securities or (e) the status of such Buyer or holder of the
Securities as an investor in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.
8. LIQUIDATED DAMAGES.
-------------------
The Company agrees that Buyer will suffer damages if the Company violates any
provision of or fails to fulfill any of its obligations or duties pursuant to
the Transaction Documents (other than the Registration Rights Agreement) and
such violation or failure directly or indirectly restricts Buyer from selling,
transferring or disposing of its Common Shares (a "Company Violation"), and that
it would not be possible to ascertain the extent of such damages. Accordingly,
in the event of such Company Violation, the Company hereby agrees to pay
liquidated damages ("Liquidated Damages") to such Buyer following the occurrence
of such Company Violation in an amount determined by multiplying (i) one and
one-half percent (1 1/2%) of the Units Purchase Price per Common Share then held
by such Buyer by (ii) the percentage derived by dividing (A) the actual number
of days elapsed from the first day of the date that an uncured Company Violation
occurred or the end of the prior 30-day period, as applicable, to the day all
Company Violations have been completely cured, by (B) 30. Liquidated Damages
shall be paid in cash. The Liquidated Damages payable pursuant hereto shall be
payable within five (5) business days from the end of the 30-day period
commencing on the first 30-day period in which the Company Violation occurs.
Notwithstanding anything to the contrary herein, no Liquidated Damages shall be
payable under this paragraph in respect of any Company Violation which also
constitutes a Registration Default under the Registration Rights Agreement
entered into by Buyer and the Company as of the date of this Agreement.
9. GOVERNING LAW; MISCELLANEOUS.
-----------------------------
a. Governing Law; Jurisdiction; Jury Trial. This Agreement shall be governed by
and construed in all respects by the internal laws of the State of Delaware
(except for the proper application of the United States federal securities
laws), without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of Delaware or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
Delaware. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of
Philadelphia. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
b. Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which 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; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.
c. Headings. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
d. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes all other prior oral
or written agreements between the Buyer, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
Buyer, and no provision hereof may be waived other than by an instrument in
writing signed by the party against whom enforcement is sought.
f. Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); (iii) upon receipt, when sent by e-mail (provided that the
transmission is electronically tracked and the results of tracking kept on file
by the sending party); or (iv) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The mailing addresses, facsimile numbers and e-mail
addresses for such communications shall be as set forth below, or at such other
mailing address, facsimile number and/or e-mail address, and/or to the attention
of such other person, as the recipient party has specified by written notice
given to each other party five days prior to the effectiveness of such change:
If to the Company:
Generex Biotechnology Corporation
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxxx@xxxxxxx.xxx
Attention: Xxxx Xxxxx
With a copy to:
Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxx@xxxx.xxx
Attention: Xxxx X. Xxxxxx, Esq.
If to a Buyer:
to it at the mailing address, facsimile number or e-mail address set forth
on Schedule 1 with copies to such Buyer's representatives as set forth on
Schedule 1.
g. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including
any Assignee of Securities. The Company shall not assign this Agreement or any
rights or obligations hereunder without the prior written consent of the Buyer.
Buyer may assign some or all of its rights hereunder without the consent of the
Company, provided, however, that any such assignment shall not release Buyer
from its obligations hereunder unless such obligations are assumed by such
assignee and the Company has consented to such assignment and assumption.
h. No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.
i. Survival. Unless this Agreement is terminated under Section 9(k), the
agreements and covenants set forth in Sections 4, 5 and 9, the indemnification
provisions set forth in Section 7, and the liquidated damages provisions set
forth in Section 8 shall survive the Closing. The Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
j. Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
Termination. If Closing does not occur due to the Company's or Buyer's failure
to satisfy the conditions set forth in Sections 5 or 6 above (and the
non-breaching party's failure to waive such unsatisfied condition(s)), the
nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party.
l. Placement Agent or Finder. The Company shall be responsible for the payment
of any fees or broker's commissions due to The Shemano Group, Inc. or any other
party relating to or arising out of the transactions contemplated hereby as a
result of any engagement or undertaking made by the Company with the persons
claiming such fees or commissions, and shall pay, and hold the Buyer harmless
against, any liability, loss or expense (including, without limitation,
attorneys' fees and out of pocket expenses) arising in connection with any such
engagement or undertaking by the Company.
m. No Strict Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
n. Remedies. The Buyer and each holder of the Securities shall have all rights
and remedies set forth in the Transaction Documents and all rights and remedies
which such holders have been granted at any time under any other agreement or
contract and all of the rights which such holders have under any law. Any Person
having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights granted by law.
o. Payment Set Aside. To the extent that the Company makes a payment or payments
to the Buyer hereunder or pursuant to the Transaction Documents or the Buyer
enforces or exercise its rights hereunder or thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
IN WITNESS WHEREOF, the Buyer and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY:
GENEREX BIOTECHNOLOGY
CORPORATION
By:
Name:
Title:
BUYER:
By:
SCHEDULE 1: SECURITIES PURCHASED/BUYER DATA
Buyer's Name Buyer's Mailing Purchase Number of Number of Buyer's
Address, Price Common Shares Warrant Shares Representatives'
Facsimile Number and Mailing Address,
E-mail Address Facsimile Number
and
E-mail Address
----------------------------- ------------------------ ---------------- ------------------- ------------------ --------------------
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EXHIBITS
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Exhibit A Form of Warrant
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Company Counsel Opinion
