EXHIBIT 10(bb)
CEL-SCI CORPORATION
Up to 7,000,000 Shares of Common Stock
PLACEMENT AGENCY AGREEMENT
May 4, 2004
Wachovia Capital Markets, LLC
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Ladies and Gentlemen:
CEL-SCI Corporation, a Colorado corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell up to
7,000,000 shares (the "Shares") of common stock, par value $0.001 per share (the
"Common Stock"), to certain investors (collectively, the "Investors"). The
Company desires to engage as its Placement Agent Wachovia Capital Markets, LLC
(the "Placement Agent") in connection with such issuance and sale. The Shares
are described more fully in the Registration Statement (as hereinafter defined).
The Company hereby confirms as follows its agreements with the Placement
Agent:
1. Agreement to Act as Placement Agent; Placement of Shares. On the basis
of the representations, warranties and agreements of the Company herein
contained, and the subject to all the terms and conditions of this Agreement:
(a) The Company hereby authorizes the Placement Agent to act as its
exclusive agent to solicit offers for the purchase of all or part of the Shares
from the Company in connection with the proposed offering of the Shares (the
"Offering"). So long as this Agreement shall remain in effect, the Company shall
not, without the prior consent of the Placement Agent, solicit or accept offers
to purchase Shares otherwise than through the Placement Agent.
(b) The Placement Agent agrees, as agent of the Company, to use its
commercially reasonable efforts to solicit offers to purchase the Shares from
the Company on the terms and subject to the conditions set forth in the Base
Prospectus (as defined below), any Preliminary Prospectus (as defined below) and
the Final Prospectus (as defined below). The Placement Agent shall make
commercially reasonable efforts to assist the Company in obtaining performance
by each Investor whose offer to purchase Shares has been solicited by the
Placement Agent and accepted by the Company, but the Placement Agent shall not,
except as otherwise provided in this Agreement, be obligated to disclose the
identity of any potential purchaser or have any liability to the Company in the
event any such purchase is not consummated for any reason. Under no
circumstances will the Placement Agent be obligated to purchase any Shares for
its own account and, in soliciting purchases of Shares, the Placement Agent
shall act solely as the Company's agent and not as principal. Notwithstanding
the foregoing and except as otherwise provided in Section 1(c), it is understood
and agreed that the Placement Agent (or its respective affiliates) may, solely
at its principal discretion and without any obligation to do so, purchase Shares
as principal so long as the fact that such Placement Agent (or its affiliate) is
a Investor is fully disclosed to the Company and the Company approves such
purchase of Shares in accordance with Section 1(c).
(c) Subject to the provisions of this Section 1, offers for the purchase
of Shares may be solicited by the Placement Agent as agent for the Company at
such times and in such amounts as the Placement Agent deems advisable. The
Placement Agent shall communicate to the Company, orally or in writing, each
reasonable offer to purchase Shares received by it as agent of the Company. The
Company shall have the sole right to accept offers to purchase the Shares and
may reject any such offer, in whole or in part. The Placement Agent shall have
the right, in its discretion reasonable exercised, subject to providing prior
notice to the Company, to reject any offer to purchase Shares received by it, in
whole or in part, and any such rejection shall not be deemed a breach of its
agreement contained herein.
(d) The purchases of the Shares by the Investors shall be evidenced by the
execution of Subscription Agreements, each substantially in the form attached
hereto as Exhibit A, by each of the parties hereto.
(e) As compensation for services rendered, on the Closing Date (as defined
below) the Company shall pay to the Placement Agent, by wire transfer of
immediately available funds to an account or accounts designated by the
Placement Agent, an amount equal to six percent (6%) of the gross proceeds
received by the Company from the sale of the Shares on the Closing Date. In
addition to the cash fees payable to the Placement Agent hereunder, the Company
shall deliver to the Placement Agent, at and as a condition to closing of any
Offering, warrants, substantially in the form attached hereto as Exhibit B (the
"Offering Warrants"), pursuant to which the Placement Agent has the right to
purchase Shares having an aggregate value equal to two percent (2%) of the
aggregate gross proceeds raised in the Offering. The Offering Warrants shall:
(i) have an exercise price per share equal to one hundred twenty percent (120%)
of the five (5) day volume weighted average price per share of the Common Stock
for the five day period immediately prior to the Closing, subject to customary
adjustments for splits, combinations, stock dividends and the like, which as of
April 29, 2004 such exercise price was $1.36 per share; provided, however, that
in no event will the exercise price exceed $2.00 per share, (ii) have a term of
five years and be non-cancellable, (iii) upon exercise provide for the same
rights and privileges as the Shares issued in the Offering and (iv) provide for
a "net issuance" exercise feature and standard anti-dilution protections.
(f) No Shares which the Company has agreed to sell pursuant to this
Agreement shall be deemed to have been purchased and paid for, or sold by the
Company, until such Shares shall have been delivered to the Investor thereof
against payment by such Investor. If the Company shall default in its
obligations to deliver Shares to a Investor whose offer it has accepted, the
Company shall indemnify and hold the Placement Agent harmless against any loss,
claim or damage arising from or as a result of such default by the Company.
Certificates evidencing the Shares, if requested by the Placement Agent,
shall be in definitive form and shall be registered in such names and in such
denominations as the Placement Agent shall request by written notice to the
Company. In the absence of any request, the Shares shall be delivered in
electronic form.
2. Delivery and Payment. Delivery of and payment for the Shares shall be
made at such time on such date as mutually agreed upon by the Placement Agent
and the Company (such date and time of delivery and payment for the Shares being
herein called the "Closing Date"). Delivery of the Shares shall be made to the
Investors against payment therefor of the respective aggregate purchase prices
of the Shares being sold by the Company by wire transfer payable in same-day
funds to the accounts specified by the Company. Delivery of the Shares shall be
made through the facilities of The Depository Trust Company unless the Placement
Agent shall otherwise instruct.
3. Representations and Warranties of the Company. The Company represents
and warrants to the Placement Agent that:
(a) Registration Statement. The Company has filed with the Securities and
Exchange Commission (the "Commission") a "shelf" registration statement on Form
S-3 (Registration No. 333-111357), which has become effective, relating to the
Shares, under the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations (collectively referred to as the "Rules and Regulations") of the
Commission promulgated thereunder. The registration statement, as amended at the
time it became effective, including the exhibits and information (if any) deemed
to be part of the registration statement at the time of effectiveness pursuant
to Rule 430A or Rule 434(d) under the Act, is hereinafter referred to as the
"Registration Statement." No stop order suspending the effectiveness of the
Registration Statement has been issued and, to the Company's knowledge, no
proceeding for that purpose has been initiated or threatened by the Commission.
The Company proposes to file the Final Prospectus (as defined below) with the
Commission pursuant to Rule 424(b) of the Rules and Regulations. The Final
Prospectus, in the form in which it is to be filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations, and which shall be deemed to
include, the Prospectus in the form included as part of the Registration
Statement at the time the Registration Statement became effective (the "Base
Prospectus"), is hereinafter referred to as the "Final Prospectus," except that
if any revised prospectus or prospectus supplement shall be provided to the
Placement Agent by the Company for use in connection with the offering and sale
of the Shares which differs from the Final Prospectus (whether or not such
revised prospectus or prospectus supplement is required to be filed by the
Company pursuant to Rule 424(b) of the Rules and Regulations), the term "Final
Prospectus" shall be deemed to include such revised prospectus or prospectus
supplement, as the case may be, from and after the time it is first provided to
the Placement Agent for such use. Any preliminary prospectus or prospectus
subject to completion included in the Registration Statement or filed with the
Commission pursuant to Rule 424 under the Act is hereafter called a "Preliminary
Prospectus." Any reference herein to the Registration Statement, the Base
Prospectus, any Preliminary Prospectus or the Final Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein 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 last to occur of the
effective date of the Registration Statement, the date of the Preliminary
Prospectus, or the date of the Final Prospectus, and any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the Registration
Statement, the Base Prospectus any Preliminary Prospectus or the Final
Prospectus shall be deemed to refer to and include (i) the filing of any
document under the Exchange Act after the effective date of the Registration
Statement, the date of such Preliminary Prospectus or the date of the Final
Prospectus, as the case may be, and on or before the Closing Date, which is
incorporated therein by reference and (ii) any such document so filed.
(b) Registration Statement and Final Prospectus. When the Registration
Statement became effective, upon the filing or first delivery to the Investors
of the Final Prospectus, as of the date hereof, and at the Closing Date, the
Registration Statement (and any post-effective amendment thereto) and the Final
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement to the Registration Statement or the
Prospectus), complied and will comply in all material respects with the Act and
the Rules and Regulations, and did not and will not contain any untrue statement
of a material fact or omit to state any 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, in the case of the Final Prospectus)
not misleading, and each Preliminary Prospectus, as of the date filed with the
Commission, did not include any untrue statement of a material fact or omit to
state any 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; except that no representation or warranty is made in this
Section 3(b) with respect to statements or omissions made in reliance upon and
in conformity with written information furnished to the Company by any of the
Placement Agent expressly for inclusion in any Preliminary Prospectus, the
Registration Statement, or the Final Prospectus, or any amendment or supplement
thereto, as stated in Section 7(b) hereof. The Company has not distributed and
will not distribute any offering material in connection with the offering and
sale of the Shares, other than the Registration Statement, the Preliminary
Prospectus and the Final Prospectus.
(c) Financial Statements. The consolidated financial statements and the
related notes thereto included or incorporated by reference in the Registration
Statement and the Final Prospectus comply in all material respects with the
applicable requirements of the Act and the Exchange Act, as applicable, and
present fairly, in all material respects the financial position of the Company
and its Subsidiaries as of the dates indicated and the results of their
operations and the changes in their consolidated cash flows for the periods
specified; such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby (except as otherwise stated therein and
subject, in the case of unaudited financial statements, to the absence of
footnotes and normal year end adjustments), and the other financial information
included or incorporated by reference in the Registration Statement and the
Final Prospectus has been derived from the accounting records of the Company and
its Subsidiaries and presents fairly the information shown thereby.
(d) No Material Adverse Change. Except as set forth in or otherwise
contemplated by the Registration Statement (exclusive of any amendment thereof)
or the Final Prospectus (exclusive of any supplement thereto), since the date of
the most recent financial statements of the Company included or incorporated by
reference in the Registration Statement and the Final Prospectus and prior to
Closing, (i) there has not been any change in the capital stock of the Company
(except for changes in the number of outstanding shares of Common Shares of the
Company due to the issuance of shares upon the exercise or conversion of
securities exercisable for, or convertible into, shares of Common Stock
outstanding on the date hereof) or long-term debt of the Company or of its
Subsidiaries or any dividend or distribution of any kind declared, set aside for
payment, paid or made by the Company on any class of capital stock, or any
material adverse change, or any development that would reasonably be expected to
result in a material adverse change, in or affecting the business, properties,
management, consolidated financial position, stockholders' equity, or results of
operations of the Company and its Subsidiaries taken as a whole (a "Material
Adverse Change"); (ii) neither the Company nor its Subsidiaries have entered
into any transaction or agreement, not in the ordinary course of business, that
is material to the Company and its Subsidiaries taken as a whole or incurred or
will incur any liability or obligation, direct or contingent, not in the
ordinary course of business, that is material to the Company and its
Subsidiaries taken as a whole; and (iii) neither the Company nor its
Subsidiaries have sustained any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor disturbance or dispute or any action, order or
decree of any court or arbitrator or governmental or regulatory authority,
except in each case as otherwise disclosed in the Registration Statement and the
Prospectus.
(e) Organization. The Company and its Subsidiaries are, and at the Closing
Date will be, duly organized, validly existing as a corporation and in good
standing under the laws of their respective jurisdictions of organization. The
Company and its Subsidiaries are, and will be at the Closing Date, duly
qualified as a foreign corporation for transaction of business and in good
standing under the laws of each other jurisdiction in which their respective
ownership or lease of property or the conduct of their respective businesses
requires such qualification, and have, and at the Closing Date will have, all
corporate power and authority necessary to own or hold their respective
properties and to conduct their respective businesses as described in the
Registration Statement and the Final Prospectus, except where the failure to be
so qualified or in good standing or have such power or authority would not,
individually or in the aggregate, have a material adverse effect or would
reasonably be expected to have a material adverse effect on or affecting the
business, properties, management, consolidated financial position, stockholders'
equity or results of operations of the Company and its Subsidiaries taken as a
whole (a "Material Adverse Effect").
(f) Capitalization. The issued and outstanding shares of capital stock of
the Company have been validly issued, are fully paid and nonassessable and,
other than as disclosed in or contemplated by the Registration Statement or the
Final Prospectus, are not subject to any preemptive or similar rights. The
Company has an authorized, issued and outstanding capitalization as set forth in
the Registration Statement and the Final Prospectus as of the dates referred to
therein (other than the grant of additional options under the Company's existing
stock option plans, or changes in the number of outstanding shares of Common
Stock of the Company due to the issuance of shares upon the exercise or
conversion of securities exercisable for, or convertible into, shares of Common
Stock outstanding on the date hereof) and such authorized capital stock conforms
to the description thereof set forth in the Registration Statement and the Final
Prospectus. The description of the securities of the Company in the Registration
Statement and the Final Prospectus is, and at the Closing Date will be, complete
and accurate in all material respects. Except as disclosed in or contemplated by
the Registration Statement or the Final Prospectus, as of the date referred to
therein, the Company did not have outstanding any options to purchase, or any
rights or warrants to subscribe for, or any securities or obligations
convertible into, or exchangeable for, or any contracts or commitments to issue
or sell, any shares of capital stock or other securities.
(g) Due Authorization and Enforceability. The Company has full legal power
and authority to enter into this Agreement and the Subscription Agreements and
to issue the Offering Warrants (together, the "Transaction Documents") and to
consummate the transactions contemplated hereby and thereby. The Transaction
Documents have been duly authorized, executed and delivered by the Company and
constitute legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except as rights
to indemnity and contribution thereunder may be limited by federal or state
securities laws and matters of public policy and except as such enforceability
may be subject to the effect of applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and
equitable principles of general applicability.
(h) The Shares. The Shares have been duly authorized by the Company and
will be validly issued, fully paid and nonassessable and will conform to the
descriptions thereof in the Final Prospectus; and the issuance of the Shares is
not subject to any preemptive or similar rights.
(i) No Violation or Default. Neither the Company nor its Subsidiaries are
(i) in violation of its charter or by-laws or similar organizational documents;
(ii) in default, and no event has occurred that, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance of
any term, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
its Subsidiaries are a party or by which the Company or its Subsidiaries are
bound or to which any of the property or assets of the Company or its
Subsidiaries are subject; or (iii) in violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental
or regulatory authority, except, in the case of each of clauses (ii) and (iii)
above, for any such violation or default that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(j) No Conflicts. The execution, delivery and performance by the Company
of each of the Transaction Documents, the issuance and sale by the Company of
the Shares and the consummation by the Company of the transactions contemplated
by the Transaction Documents will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or its Subsidiaries pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or its Subsidiaries are a party or by which the
Company or its Subsidiaries are bound or to which any of the property or assets
of the Company or its Subsidiaries are subject; (ii) result in any violation of
the provisions of the charter or by-laws or similar organizational documents of
the Company or its Subsidiaries; or (iii) result in the violation of any law or
statute or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except, in the case of each of clauses (i)
and (iii) above, for any such conflict, breach, violation, default, lien, charge
or encumbrance that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(k) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company of each of the Transaction Documents, the issuance and sale by
the Company of the Shares and the consummation by the Company of the
transactions contemplated by the Transaction Documents, except for the
registration of the Shares under the Act and such consents, approvals,
authorizations, orders and registrations or qualifications as may be required
under applicable state securities laws or by the by-laws and rules of the
National Association of Securities Dealers, Inc. ("NASD") in connection with the
distribution of the Shares by the Placement Agent.
(l) Legal Proceedings. There are no legal, governmental or regulatory
actions, suits or proceedings pending, nor, to the Company's knowledge, any
legal, governmental or regulatory investigations pending, to which the Company
or its Subsidiaries are a party or to which any property of the Company or its
Subsidiaries are the subject that, individually or in the aggregate, if
determined adversely to the Company or its Subsidiaries, would reasonably be
expected to have a Material Adverse Effect or materially and adversely affect
the ability of the Company to perform its obligations under the Transaction
Documents; to the Company's knowledge, no such actions, suits or proceedings are
threatened or contemplated by any governmental or regulatory authority or
threatened by others; and (i) to the Company's knowledge, there are no current
or pending legal, governmental or regulatory investigations, actions, suits or
proceedings that are required under the Act to be described in the Final
Prospectus that are not so described; and (ii) there are no contracts or other
documents that are required under the Act to be filed as exhibits to the
Registration Statement that are not so filed.
(m) Independent Accountants. Deloitte & Touche LLP, who have certified
certain financial statements of the Company and its Subsidiaries, are
independent public accountants (the "Accountants") with respect to the Company
and its Subsidiaries as required by the Act.
(n) Title to Real and Personal Property. The Company and its Subsidiaries
have good and marketable title in fee simple to all items of real property and
good and marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and claims except those that (i) do
not materially interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries or (ii) would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
Any real property leased by the Company and its Subsidiaries are held by them
under valid, existing and enforceable leases, without any liens, restrictions,
encumbrances or claims, except those that (A) do not materially interfere with
the use made or proposed to be made of such property by the Company or its
Subsidiaries or (B) would not be reasonably expected, individually or in the
aggregate, to have a Material Adverse Effect.
(o) Title to Intellectual Property. To the best of the Company's
knowledge, the Company and its Subsidiaries own or possess adequate rights to
use all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) (collectively,
the "Intellectual Property"), necessary for the conduct of their respective
businesses as conducted as of the date hereof, except to the extent that the
failure to own or possess adequate rights to use such Intellectual Property
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and the Company and its Subsidiaries have not received
any written notice of any claim of infringement or conflict which asserted
Intellectual Property rights of others, which infringement or conflict, if the
subject of an unfavorable decision, would result in a Material Adverse Effect.
(p) No Undisclosed Relationships. No relationship, direct or indirect,
exists between or among the Company or its Subsidiaries, on the one hand, and
the directors, officers, stockholders, customers or suppliers of the Company or
its Subsidiaries, on the other, which is required by the Act to be disclosed in
the Registration Statement and the Final Prospectus and is not so disclosed.
(q) Investment Company Act. The Company is not and, after giving effect to
the offering and sale of the Shares to be sold by the Company and the
application of the proceeds thereof as described in the Final Prospectus, will
not be an "investment company" or an entity "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations of the Commission promulgated thereunder.
(r) Taxes. The Company and its Subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and paid all
taxes shown thereon through the date hereof, to the extent that such taxes have
become due and are not being contested in good faith; and, except as otherwise
disclosed in or contemplated by the Registration Statement or the Final
Prospectus, no tax deficiency has been determined adversely to the Company or
its Subsidiaries which has had, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(s) Licenses and Permits. The Company and its Subsidiaries possess or have
obtained all licenses, certificates, permits and other authorizations issued by,
and have made all declarations and filings with, the appropriate federal, state,
local or foreign governmental or regulatory authorities that are necessary for
the ownership or lease of their respective properties or the conduct of their
respective businesses as described in the Registration Statement and the Final
Prospectus (the "Permits"), except where the failure to possess, obtain or make
the same would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and except as disclosed in or contemplated by
the Registration Statement or the Final Prospectus, neither the Company nor its
Subsidiaries have received written notice of any proceeding relating to
revocation or modification of any such Permit or has any reason to believe that
such Permit will not be renewed in the ordinary course, except where such
revocation or modification of any such Permit or the failure to obtain any such
renewal would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(t) No Labor Disputes. No labor disturbance by or dispute with employees
of the Company or its Subsidiaries exist or, to the knowledge of the Company, is
threatened which would reasonably be expected to result in a Material Adverse
Effect.
(u) Compliance With Environmental Laws. The Company and its Subsidiaries
(i) are in compliance with any and all applicable federal, state, local and
foreign laws, rules, regulations, decisions and orders relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, "Environmental
Laws"); (ii) have received and are in compliance with all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses as described in the Registration Statement and the
Final Prospectus; and (iii) have not received notice of any actual or potential
liability for the investigation or remediation of any disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants, except, in
the case of any of clauses (i), (ii) or (iii) above, for any such failure to
comply or failure to receive required permits, licenses, or other approvals or
any such liability as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(v) Compliance With ERISA. Each material employee benefit plan, within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), that is maintained, administered or contributed to by the
Company or any of its affiliates for employees or former employees of the
Company and its Subsidiaries have been maintained in material compliance with
its terms and the requirements of any applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Internal Revenue Code of
1986, as amended (the "Code"); no prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code, has occurred which would
result in a material liability to the Company with respect to any such plan
excluding transactions effected pursuant to a statutory or administrative
exemption; and for each such plan that is subject to the funding rules of
Section 412 of the Code or Section 302 of ERISA, no "accumulated funding
deficiency" as defined in Section 412 of the Code has been incurred, whether or
not waived, and the fair market value of the assets of each such plan (excluding
for these purposes accrued but unpaid contributions) exceeds the present value
of all benefits accrued under such plan determined using reasonable actuarial
assumptions.
(w) Accounting Controls. The Company and its Subsidiaries maintain systems
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) for the Company
and designed such disclosure controls and procedures to ensure that material
information relating to the Company and its Subsidiaries are made known to the
certifying officers by others within those entities, particularly during the
period in which the Company's Annual Report on Form 10-K or Quarterly Report on
Form 10-Q, as the case may be, is being prepared. The Company's certifying
officers have evaluated the effectiveness of the Company's disclosure controls
and procedures as of the quarter ended December 31, 2003 (such date, the
"Evaluation Date"). The Company presented in its Form 10-Q for the quarter ended
December 31, 2003 the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no significant changes in the Company's internal control over financial
reporting (as such term is defined in Exchange Act Rules 13a-15 and 15d-15) or,
to the Company's knowledge, in other factors that could significantly affect the
Company's internal controls.
(x) Insurance. The Company and its Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as the Company reasonably
believes are adequate for the conduct of its businesses as described in the
Registration Statement and the Final Prospectus and the value of its properties
or as is customary for companies engaged in similar businesses in similar
industries.
(y) No Unlawful Payments. Neither the Company nor its Subsidiaries has at
any time during the last five years (i) used any corporate funds for any
unlawful contribution to any candidate for public office; or (ii) made any
payment to any federal or state government officer or official or other person
charged with similar public duties, other than payments required or permitted by
the laws of the United States or any jurisdiction thereof.
(z) No Broker's Fees. Neither the Company nor its Subsidiaries are a party
to any contract, agreement or understanding with any person (other than this
Agreement) that would give rise to a valid claim against the Company or its
Subsidiaries or the Placement Agent for a brokerage commission, finder's fee or
like payment in connection with the offering and sale of the Shares.
(aa) No Registration Rights. No person has the right to require the
Company or its Subsidiaries to register any securities for sale under the Act by
reason of the filing of the Registration Statement with the Commission or by
reason of the issuance and sale of the Shares, except for rights which have been
waived.
(bb) No Stabilization. The Company has not taken, directly or indirectly,
any action designed to or that could reasonably be expected to cause or result
in any stabilization or manipulation of the price of the Shares.
(cc) Forward-Looking Statements. No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) (a "Forward Looking Statement") contained in the Registration Statement and
the Final Prospectus has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith. The Forward Looking Statements
incorporated by reference in the Registration Statement and the Final Prospectus
from the Company's Annual Report on Form 10-K for the year ended September 30,
2003 (i) are within the coverage of the safe harbor for forward looking
statements set forth in Section 27A of the Act, Rule 175(b) under the Act,
Section 21E of the Exchange Act or Rule 3b-6 under the Exchange Act, as
applicable, (ii) were made by the Company with a reasonable basis and in good
faith and reflect the Company's good faith reasonable best estimate of the
matters described therein, and (iii) have been prepared in accordance with Item
10 of Regulation S-K under the Act.
(dd) Contracts. All material contracts to which the Company is a party
have been duly authorized, executed and delivered by the Company, constitute
valid and binding agreements of the Company, assuming the due authorization,
execution and delivery by the counterparties thereto, and are enforceable
against the Company in accordance with the terms thereof, subject to the effect
of applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and equitable principles of general applicability.
(ee) Certificates. No statement, representation or warranty made in the
certificate to be delivered to the Placement Agent pursuant to Section 6(g)
below will be, when made, inaccurate, untrue or incorrect in any material
respect.
4. Further Agreements of the Company. The Company covenants and agrees
with the Placement Agent that:
(a) Effectiveness. The Registration Statement has become effective and the
Company will file the Final Prospectus pursuant to Rule 424(b) within the
prescribed time period and will provide a copy of such filing to the Placement
Agent promptly following such filing.
(b) Amendments or Supplements. The Company will not, during such period as
the Final Prospectus would be required by law to be delivered in connection with
sales of the Shares by an underwriter or dealer in connection with the offering
contemplated by this Agreement, file any amendment or supplement to the
Registration Statement or the Final Prospectus, except as required by law,
unless a copy thereof shall first have been submitted to the Placement Agent
within a reasonable period of time prior to the filing thereof and the Placement
Agent shall not have reasonably objected thereto in good faith.
(c) Notice to Placement Agent. The Company will notify the Placement Agent
promptly, and will, if requested, confirm such notification in writing, (1) when
any post-effective amendment to the Registration Statement becomes effective,
but only during the period mentioned in Section 4(b); (2) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Final Prospectus or for additional information relating to or
in connection with the sale of the Shares, but only during the period mentioned
in Section 4(b); (3) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof, but only during the
period mentioned in Section 4(b); (4) of becoming aware of the occurrence of any
event during the period mentioned in Section 4(b) that in the judgment of the
Company makes any statement made in the Registration Statement or the Final
Prospectus untrue in any material respect or that requires the making of any
changes in the Registration Statement or the Final Prospectus in order to make
the statements therein, in light of the circumstances in which they are made,
not misleading; and (5) of receipt by the Company of any notification with
respect to any suspension of the qualification of the Shares for offer and sale
in any jurisdiction. If at any time the Commission shall issue any order
suspending the effectiveness of the Registration Statement in connection with
the offering contemplated hereby, the Company will make every reasonable effort
to obtain the withdrawal of any such order at the earliest possible moment. If
the Company has omitted any information from the Registration Statement,
pursuant to Rule 430A, it will use its best efforts to comply with the
provisions of and make all requisite filings with the Commission pursuant to
said Rule 430A and to notify the Placement Agent promptly of all such filings.
(d) Ongoing Compliance of the Prospectus. If, at any time when a Final
Prospectus relating to the Shares is required to be delivered under the Act, the
Company becomes aware of the occurrence of any event as a result of which the
Final Prospectus, as then amended or supplemented, would, in the reasonable
judgment of counsel to the Company or counsel to the Placement Agent, include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or the Registration
Statement, as then amended or supplemented, would, in the reasonable judgment of
counsel to the Company or counsel to the Placement Agent, include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading, or if for any other reason it is
necessary, in the reasonable judgment of counsel to the Company or counsel to
the Placement Agent, at any time to amend or supplement the Final Prospectus or
the Registration Statement to comply with the Act or the Rules and Regulations,
the Company will promptly notify the Placement Agent and, subject to Section
4(b) hereof, will promptly prepare and file with the Commission, at the
Company's expense, an amendment to the Registration Statement or an amendment or
supplement to the Final Prospectus that corrects such statement or omission or
effects such compliance and will deliver to the Placement Agent, without charge,
copies thereof in compliance with Section 4(e) below. The Company consents to
the use of the Final Prospectus or any amendment or supplement thereto by the
Placement Agent, and the Placement Agent agrees to provide to each Investor,
prior to the Closing, a copy of the Final Prospectus and any amendments or
supplements thereto.
(e) Delivery of Copies. The Company will furnish to the Placement Agent
and its counsel, without charge in New York City (i) one copy of the
Registration Statement, including financial statements and schedules, and all
exhibits thereto and (ii) so long as a prospectus relating to the Shares is
required to be delivered under the Act, as many copies of each Preliminary
Prospectus or the Final Prospectus or any amendment or supplement thereto as the
Placement Agent may reasonably request.
(f) Compliance with Undertakings. The Company will comply with all of the
undertakings contained in the Registration Statement.
(g) Blue Sky Compliance. Prior to the sale of the Shares to the Investors,
the Company will cooperate with the Placement Agent and its counsel in
connection with the registration or qualification of the Shares for offer and
sale under the state securities or Blue Sky laws of such jurisdictions as the
Placement Agent may reasonably request; provided, that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.
(h) Use of Proceeds. The Company will apply the net proceeds from the
offering and sale of the Shares in the manner set forth in the Final Prospectus
under the caption "Use of Proceeds."
(i) American Stock Exchange. The Company will use its best efforts to
ensure that the Shares are listed on the American Stock Exchange at the time of
the Closing.
(j) Reports. For a period of three years from the Closing Date, the
Company will furnish to the Placement Agent, as soon as they are available,
copies of all reports or other communications (financial or other) furnished to
holders of the Shares, other than any such reports or communications filed with
the Commission pursuant to the Commission's XXXXX system.
(k) Clear Market. For a period of 60 days after the date hereof, the
Company will not (1) offer, pledge, announce the intention to sell, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock;
or (2) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise, without
the prior written consent of the Placement Agent, other than (i) the Shares to
be sold hereunder, (ii) securities required to be issued pursuant to contractual
obligations of the Company in effect as of the date hereof and disclosed to the
Placement Agent or its counsel prior to the Closing; (iii) securities issued on
a pro rata basis to all holders of a class of outstanding equity securities of
the Company; (iv) securities issued in connection with strategic alliances or
similar agreements; (v) equity securities issued pursuant to employee benefit or
purchase plans in effect as of the date hereof; and (vi) options issued to new
employees of the Company pursuant to the provisions of AMEX Rule 711(a).
(l) Future Transactions. If, for a period of one (1) year following the
Closing, the Company or any of its subsidiaries (i) decides to finance or
refinance any indebtedness, the Placement Agent (or any affiliate designated by
the Placement Agent) shall have the right to act as lead manager, placement
agent or lead agent with respect to such financing or refinancing; or (ii)
determines to raise funds by means of a public offering or a private placement
of equity or debt securities, the Placement Agent shall have the right to act as
lead book-running underwriter, initial purchaser or placement agent for such
financing. Any decision by the Placement Agent or its affiliates to act as
financial advisor in connection with any such disposition or acquisition or
other such transaction, or as lead manager, lead underwriter, initial purchaser,
placement agent or lead agent with respect to such financings or refinancings
would be contained in separate agreements, which agreements would contain, among
other things, provisions for customary fees for transactions of similar size and
nature and indemnification of the Placement Agent. The agreements with respect
to financings and refinancings would also include such conditions precedent as
due diligence, current conditions and approval by requisite committees, as well
as customary representations and warranties by the Company.
5. Expenses. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay
all costs and expenses incident to the performance of the obligations of the
Company under this Agreement, including but not limited to costs and expenses of
or relating to (i) the preparation, and filing of the Registration Statement
(including each pre- and post-effective amendment thereto) and exhibits thereto,
each Preliminary Prospectus, the Final Prospectus and any amendment or
supplement to the Final Prospectus, and the photocopying of copies thereof, (ii)
the preparation and delivery of certificates representing the Shares, (iii)
furnishing (including costs of shipping and mailing) such copies of the
Registration Statement (including all pre- and post-effective amendments
thereto), the Final Prospectus and any Preliminary Prospectus, and all
amendments and supplements to the Final Prospectus, as may be requested for use
in connection with the direct placement of the Shares, (iv) the listing of the
Shares on the American Stock Exchange, (v) the registration or qualification of
the Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions designated pursuant to Section 4(g), including the reasonable
fees, disbursements and other charges of counsel to the Placement Agent in
connection therewith and the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, (vi) fees, disbursements and other
charges of counsel to the Company, (vii) fees and disbursements of the
Accountants incurred in delivering the letter(s) described in Section 6(g) of
this Agreement, (viii) the fees of the Escrow Agent and (ix) reasonable fees of
counsel to the Placement Agent, with such fees not to exceed $75,000. In the
event this Agreement is terminated, the Company shall reimburse the Placement
Agent, upon request by the Placement Agent, for all of the Placement Agent's
reasonable out-of-pocket costs and expenses in excess of $25,000.
6. Conditions of the Obligations of the Placement Agent. The obligations
of the Placement Agent hereunder are subject to the following conditions:
(a) (i) No stop order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceedings for that purpose shall be pending or threatened by any securities or
other governmental authority (including, without limitation, the Commission),
(ii) any request for additional information on the part of the staff of any
securities or other governmental authority (including, without limitation, the
Commission) shall have been complied with to the satisfaction of the staff of
the Commission or such authorities and (iii) after the date hereof no amendment
or supplement to the Registration Statement or the Final Prospectus shall have
been filed unless a copy thereof was first submitted to the Placement Agent and
the Placement Agent did not reasonably object thereto in good faith.
(b) Since the respective dates as of which information is given in the
Registration Statement (exclusive of any amendment thereof) and the Final
Prospectus (exclusive of any supplement thereto), (i) there shall not have been
a Material Adverse Change, whether or not arising from transactions in the
ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement (exclusive of any amendment thereof)
or the Final Prospectus (exclusive of any supplement thereto), and (ii) the
Company shall not have sustained any material loss or interference with its
business or properties from fire, explosion, flood or other casualty, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree, which is not set forth in the
Registration Statement (exclusive of any amendment thereof) or the Prospectus
(exclusive of any supplement thereto), if in the judgment of the Placement Agent
any such development makes it impracticable or inadvisable to consummate the
sale and delivery of the Shares to Investors at the public offering price.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Final Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
officers or directors in their capacities as such, before or by any federal,
state or local court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, which litigation or proceeding is
reasonably expected by management to have a Material Adverse Effect.
(d) Each of the representations and warranties of the Company contained
herein shall be true and correct at the Closing Date, as if made on such date,
and all covenants and agreements herein contained to be performed on the part of
the Company and all conditions herein contained to be fulfilled or complied with
by the Company at or prior to the Closing Date shall have been duly performed,
fulfilled or complied with.
(e) The Placement Agent shall have received an opinion, dated the Closing
Date, of counsel to the Company substantially in the form attached hereto as
Exhibit C.
(f) Concurrently with the date of the Final Prospectus (but prior to the
delivery thereof to any investor), the Accountants shall have furnished to the
Placement Agent a letter, dated the date of its delivery (the "Original
Letter"), addressed to the Placement Agent and in form and substance reasonably
satisfactory to the Placement Agent containing statements and information of the
type customarily included in accountants' "comfort letters" to underwriters. At
the Closing Date, the Accountants shall have furnished to the Placement Agent a
letter, dated the date of its delivery, which shall confirm, on the basis of a
review in accordance with the procedures set forth in the Original Letter, that
nothing has come to their attention during the period from the date of the
Original Letter referred to in the prior sentence to a date (specified in the
letter) not more than five days prior to the Closing Date which would require
any change in the Original Letter if it were required to be dated and delivered
at the Closing Date.
(g) At the Closing Date, there shall be furnished to the Placement Agent a
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, each in his
capacity as such, in form and substance reasonably satisfactory to the Placement
Agent to the effect that each signer has carefully examined the Registration
Statement and the Final Prospectus and that to each of such person's knowledge:
(i) (A) As of the date of such certificate, (x) the Registration
Statement does not 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 not misleading and (y) the Final Prospectus does not
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 and (B) no event has occurred as a result of which it is necessary to
amend or supplement the Final Prospectus in order to make the statements therein
not untrue or misleading in any material respect.
(ii) Each of the representations and warranties of the Company
contained in this Agreement are true and correct as if such representations and
warranties were made on the Closing Date.
(iii) Each of the covenants and agreements required in this
Agreement to be performed by the Company on or prior to the Closing Date and
each condition required herein to be fulfilled or complied with by the Company
on or prior to the Closing Date has been duly performed, fulfilled or complied
with, in all material respects.
(iv) No stop order suspending the effectiveness of the Registration
Statement or of any part thereof has been issued and no proceedings for that
purpose have been instituted or are contemplated by the Commission.
(v) Subsequent to the date of the most recent financial statements
in the Final Prospectus, there has been no material adverse change in the
financial position or results of operations of the Company, except as set forth
in or contemplated by the Prospectus.
(h) The Shares shall be qualified for sale in such states as the Placement
Agent may reasonably request and each such qualification shall be in effect and
not subject to any stop order or other proceeding on the Closing Date; provided
that in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to taxation or general service of process in any jurisdiction where
it is not now so subject.
(i) The Company shall have furnished or caused to be furnished to the
Placement Agent such certificates, in addition to those specifically mentioned
herein, as the Placement Agent may have reasonably requested as to the accuracy
and completeness, at the Closing Date, of any statement in the Registration
Statement or the Final Prospectus, as to the accuracy, at the Closing Date, of
the representations and warranties of the Company, as to the performance by the
Company of its obligations hereunder, or as to the fulfillment of the conditions
concurrent and precedent to the obligations hereunder of the Placement Agent.
7. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless the Placement Agent as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or arising out of any untrue statement or alleged untrue
statement of a material fact included in any Preliminary Prospectus or the Final
Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 7(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Placement Agent), reasonably
incurred in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above,
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Placement Agent expressly for use in the Registration Statement (or any
amendment thereto), or in any Preliminary Prospectus or the Final Prospectus (or
any amendment or supplement thereto);
(b) Indemnification by the Placement Agent. The Placement Agent severally
agrees to indemnify and hold harmless the Company, its directors, each of its
officers who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section
7, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto), or any Preliminary Prospectus or the Final Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by the Placement Agent expressly
for use in the Registration Statement (or any amendment thereto) or such
Preliminary Prospectus or the Final Prospectus (or any amendment or supplement
thereto).
(c) Actions against Parties; Notification. Each indemnified party shall give
notice as promptly as reasonably practicable to each indemnifying party of any
action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. Counsel to the indemnified parties shall be selected as follows:
counsel to the Placement Agent shall be selected by the Placement Agent; and,
counsel to the Company, its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall be
selected by the Company. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
the Placement Agent, and the fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for the Company,
its directors, each of its officers who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act, in each case in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 7 or Section 8 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim 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 party.
(d) Settlement Without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
8. Contribution. (a) If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Placement Agent on the other hand from the offering of the Shares
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Placement Agent on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
(b) The relative benefits received by the Company on the one hand and the
Placement Agent on the other hand in connection with the offering of the Shares
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Shares pursuant
to this Agreement (before deducting expenses) received by the Company and the
total underwriting discounts and commissions received by the Placement Agent, in
each case as set forth on the cover of the Final Prospectus Supplement, bear to
the aggregate initial public offering price of the Shares as set forth on such
cover. The relative fault of the Company on the one hand and the Placement Agent
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Placement Agent and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(c) The Company and the Placement Agent agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Placement Agent was treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
(d) Notwithstanding the provisions of this Section 8, the Placement Agent
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which the Placement
Agent has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
(e) No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(f) For purposes of this Section 8, each person, if any, who controls the
Placement Agent within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Placement
Agent, and each director of the Company, each officer of the Company who signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company.
9. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Placement Agent or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Shares to the Placement Agent.
10. Termination of Agreement.
(a) Termination by the Placement Agent. The Placement Agent may terminate
this Agreement at any time and for any reason upon written notice to the
Company.
(b) Termination by the Company. The Company may terminate this Agreement
for any reason upon 30 days prior written notice to the Placement Agent.
(c) Liabilities. If this Agreement is terminated pursuant to this Section
10, such termination shall be without liability of any party to any other party
except as provided in Section 5 hereof, and provided further that Sections 1, 7,
8 and 9 hereof shall survive such termination and remain in full force and
effect.
11. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company and the Placement
Agent set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement shall remain in full force and effect, regardless of
(i) any investigation made by or on behalf of the Company, any of its officers
or directors, the Placement Agent or any controlling person referred to in
Section 8 hereof and (ii) delivery of and payment for the Shares. The respective
agreements, covenants, indemnities and other statements set forth in Sections 7,
8 and 9 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
12. Successors. This Agreement shall inure to the benefit of and shall be
binding upon the Placement Agent, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the
indemnification and contribution contained in Sections 7(a) and (d) of this
Agreement shall also be for the benefit of the directors, officers, employees
and agents of the Placement Agent and any person or persons who control the
Placement Agent within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnification and contribution contained in Sections
7 and 8 of this Agreement shall also be for the benefit of the directors of the
Company, the officers of the Company who have signed the Registration Statement,
its employees and agents, and any person or persons who control the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act.
No purchaser of Shares shall be deemed to be a successor Investor by reason
merely of such purchase.
13. Applicable Law. The validity and interpretations of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the conflicts of laws provisions thereof.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto as to the matters covered hereby and supersedes all
prior understandings, written or oral, relating to such subject matter.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Placement Agent.
Very truly yours,
CEL-SCI CORPORATION
By:
------------------------
Name:
Title:
Confirmed as of the date first above mentioned:
WACHOVIA CAPITAL MARKETS, LLC
By:
------------------------
Name:
Title:
Exhibit A
SUBSCRIPTION AGREEMENT
CEL-SCI Corporation
0000 Xxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
The undersigned (the "Investor") hereby confirms its agreement with you as
follows:
1. This Subscription Agreement is made as of the date set forth below between
CEL-SCI Corporation, a Colorado corporation (the "Company"), and the
Investor.
2. The Company has authorized the sale and issuance of up to ______________
shares (the "Shares") of the common stock of the Company, $.001 par value
per share (the "Common Stock").
3. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor _______ Shares
at a purchase price of $____ per Share, or an aggregate purchase price of
$____________________ (the "Purchase Price"), subject to the terms and
conditions contained in the Placement Agent Agreement, dated as of April
___, 2004, between the Company and Wachovia Capital Markets, LLC. Unless
otherwise requested by the Investor, certificates representing the Shares
purchased by the Investor will be registered in the Investor's name and
address as set forth below.
Dated as of: April ___, 2004
[Investor Name]
By:
---------------------------------
Name:
Title:
Address:
----------------------------
Agreed and Accepted:
CEL-SCI CORPORATION
By: ____________________________
Name:
Title:
7
Exhibit B
THESE SECURITIES HAVE BEEN ISSUED PURSUANT TO EXEMPTIONS FOR NONPUBLIC OFFERINGS
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, THESE SECURITIES MAY NOT
BE SOLD, PLEDGED OR OTHERWISE DISPOSED OF UNLESS, IN THE OPINION OF COUNSEL FOR
OR SATISFACTORY TO THE ISSUER, REGISTRATION UNDER THE APPLICABLE FEDERAL OR
STATE SECURITIES LAWS IS NOT REQUIRED OR COMPLIANCE IS MADE WITH SUCH
REGISTRATION REQUIREMENTS.
Void after 5:00 p.m. New York Time, on May 4, 2009
WARRANT TO PURCHASE 76,642 SHARES OF COMMON STOCK
OF
CEL-SCI CORPORATION
No. WCM-1
This is to certify that, FOR VALUE RECEIVED, Wachovia Capital Markets, LLC
or its registered assigns pursuant to Section (d) hereof ("Holder"), is entitled
to purchase, subject to the provisions of this Warrant, from CEL- SCI, a
Colorado corporation (the "Company"), 76,642 fully paid, validly issued and
nonassessable shares of Common Stock, par value $.001 per share, of the Company
("Common Stock"), at the exercise price of $1.37 per share until May 4, 2009.
The number of shares of Common Stock to be received upon the exercise of this
Warrant and the price to be paid for each share of Common Stock may be adjusted
from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares," and the exercise price of
a share of Common Stock as adjusted from time to time is hereinafter sometimes
referred to as the "Exercise Price."
(a) EXERCISE OF WARRANT; NOTIFICATION OF EXPIRATION DATE OF WARRANT. The
Warrant may be exercised as to a minimum of 25,000 Warrant Shares at any time or
from time to time, until 5:00 P.M. New York time on May 4, 2009 (the "Expiration
Date"); provided, however, that if such day is a day on which banking
institutions in the State of New York are authorized by law to close, then on
the next succeeding day which shall not be such a day. The Warrant may be
exercised by presentation and surrender hereof to the Company at its principal
office, or at the office of its stock transfer agent, if any, with the Purchase
Form annexed hereto duly executed (with signature guaranteed if required by the
Company or its stock transfer agent) and accompanied by payment of the Exercise
Price for the number of Warrant Shares specified in such form and any applicable
taxes. The purchase price for any Warrant Shares purchased pursuant to the
exercise of this Warrant shall be paid in full upon such exercise in cash or by
certified or bank check payable to the order of the Company or if at the time of
such exercise, the Company's common stock has been registered pursuant to an
effective Registration Statement under the Securities Act of 1933, as amended
(the "Act"), pursuant to a cashless exercise procedure whereby the Warrant
Shares issued upon exercise of this Warrant will be sold with Holder receiving
the difference between the Exercise Price and the sale price, in cash, and the
Company receiving the Exercise Price for the Warrant Shares, in cash, or any
combination of the foregoing methods of paying the Exercise Price. In the
alternative, the Warrant may be exchanged for Warrant Shares as described in
Section (j). As soon as practicable after each such exercise of the Warrants,
but not later than ten (10) business days from the Date of Exercise (as defined
below), the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise, registered in
the name of the Holder or the Holder's designee, except in the case of a
cashless exercise. If the Warrant should be exercised in part only, the Company
shall, upon surrender of the Warrant for cancellation, execute and deliver a new
Warrant evidencing the rights of the Holder thereof to purchase the balance of
the Warrant Shares purchasable thereunder, subject to the provisions of Section
(c). In the event of a cash exercise, upon the date of receipt (the "Date of
Exercise") by the Company of the Warrant at its office, or by the stock transfer
agent of the Company at its office, in proper form for exercise, together with
the exercise price thereof and taxes as aforesaid in cash or certified or bank
check and the investment letter described below, the Holder shall be deemed to
be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such shares of Common Stock
shall not then be physically delivered to the Holder. In order to assure the
availability of an exemption from registration under the federal or applicable
state securities laws, the Company may condition the exercise of the Warrant
upon the Holder delivering to the Company an investment letter in the form as
customarily used by the Company from time to time in connection with the
exercise of non-registered options and warrants which are issued by the Company.
It is further understood that certificates for the Warrant Shares, if any, to be
issued upon exercise of the Warrant may contain a restrictive legend in
accordance with Section (h) hereof.
(b) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrants and shall also list that number of shares required for issuance and
delivery upon exercise of the Warrants on the American Stock Exchange.
(c) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of the Warrant. With respect
to any fraction of a share called for upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied by
the "current market value of a share," which shall be the last reported sale
price of the Common Stock on the American Stock Exchange on the last business
day prior to the Date of Exercise of this Warrant or if no such sale is made on
such day, the average closing bid and asked prices for such day on the American
Stock Exchange.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. The Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
Holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Subject to Section (h) hereof, the Holder may
transfer or assign the Warrant, in whole or in part and from time to time;
provided, however, that the Warrant shall not be sold, transferred, assigned or
hypothecated for a period of 180 days from May 4, 2004 except to officers or
partners (not directors) of the Holder. Upon surrender of this Warrant to the
Company at its principal office or at the office of its stock transfer agent, if
any, with the Assignment Form annexed hereto duly executed (with signature
guaranteed, if required by the Company or its stock transfer agent) and funds
sufficient to pay any transfer tax, the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee or assignees named in such
instrument of assignment and this Warrant shall promptly be canceled. This
Warrant may be divided by or combined with other Warrants which carry the same
rights upon presentation hereof at the principal office of the Company or at the
office of its stock transfer agent, if any, together with a written notice
specifying the names and denominations in which new Warrants are to be issued
and signed by the Holder hereof. The term "Warrant" as used herein includes any
Warrants into which this Warrant may be divided or exchanged. Upon receipt by
the Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and in the case of loss, theft or destruction, of
reasonable satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor, date and amount. Any such new Warrant executed and delivered
shall constitute an additional contractual obligation on the part of the
Company, whether or not the original Warrant shall be at any time enforceable by
anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
(f) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock, or (ii) if the Company shall offer to the holders of
Common Stock for subscription or purchase by them any shares of any class or any
other rights, or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder or any holder of a Warrant executed
and/or delivered pursuant to Section (a) or Section (d), at least 15 days prior
to the date specified in (x) or (y) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such dividend, distribution
or rights, or (y) such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation or winding up is to take place and
the date, if any is to be fixed, as of which the holders of Common Stock or
other securities shall receive cash or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
(g) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification or capital reorganization of outstanding shares of Common Stock
of the Company, or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger with another corporation in which
merger the Company is the continuing corporation and which does not result in
any reclassification or capital reorganization of outstanding shares of Common
Stock of the class issuable upon exercise of this Warrant) or in case of any
sale, lease or conveyance to another corporation of the property of the Company
as an entirety, the Company shall, as a condition precedent to such transaction,
cause effective provisions to be made so that the Holder or any holder of a
Warrant executed and/or delivered pursuant to Section (a) or Section (d) shall
have the right thereafter by exercising the Warrant at any time prior to the
expiration of the Warrant, to purchase the kind and amount of shares of stock
and other securities and property receivable by a holder of the number of shares
of Common Stock for which this Warrant would have been exercisable immediately
prior to such reclassification or capital reorganization and consolidation,
merger, sale or conveyance. Any such provision shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in the Warrant. The foregoing provisions of this
Section (g) shall similarly apply to successive reclassifications or capital
reorganizations of shares of Common Stock and to successive consolidations,
mergers, sales or conveyances.
(h) SECURITIES LAW COMPLIANCE
(1) The Holder of the Warrant, by acceptance hereof, acknowledges
that the Warrant and the shares of Common Stock to be issued upon exercise
hereof or conversion hereof are being acquired solely for the Holder's own
account and not as a nominee for any other party, and for investment, and that
the Holder will not offer, sell, transfer, assign or otherwise dispose of this
Warrant or any shares of Common Stock to be issued upon exercise hereof or
conversion hereof except upon receipt by the Company of an opinion of counsel
reasonably acceptable to the Company that registration under the Act or
applicable state securities laws is not required or that compliance has been
made with such registration requirements. Upon exercise of the Warrant, the
Holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the shares of Common Stock so purchased are
being acquired solely for the Holder's own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or resale.
(2) If appropriate, the Warrant and any Warrants issued upon
exercise or substitution or upon assignment or transfer pursuant to Section (a)
or Section (d), as the case may be, and all shares of Common Stock issued upon
exercise hereof or conversion hereof shall be stamped or imprinted with legends
setting forth the restrictions on transfer arising under applicable federal and
state securities laws.
(i) REGISTRATION RIGHTS UNDER THE SECURITIES ACT OF 1933
(1) From the date of this Warrant and terminating on the seventh
(7th) anniversary hereof, the Company shall advise the Holder of the Warrant or
of the Warrant Shares or any then Holder of Warrants or Warrant Shares (such
persons being collectively referred to in this Section (i) as "Holders") by
written notice at least 21 days prior to the filing of any registration
statement (other than on Form S-4 or Form S-8 or any similar successor form not
available for registration of the Warrant Shares) (a "Registration Statement")
under the Act, covering an underwritten public offering of equity securities of
the Company for sale to the public and shall use its reasonable best efforts to
register in any such Registration Statement the number of Warrant Shares that
the Holder shall notify the Company it desires to register within ten (10)
business days after receipt of such notice and shall include in any such
Registration Statement such information as may be required to permit a public
offering of such Warrant Shares by the Company's underwriter(s); provided,
however, that if the Company does not give the required notice, the Company
shall be obligated to register on the Registration Statement all of the Warrant
Shares then held by the Holders. The Company shall supply prospectuses and other
documents as the Holder may reasonably request in order to facilitate the public
sale or other disposition of the Warrant Shares. The Company shall bear the
entire cost and expense of a registration of securities initiated by it under
this Paragraph (1). The Holder shall, however, bear the fees of its own counsel
and any transfer taxes and underwriting discounts or commissions applicable to
the Warrant Shares sold by it. The Company may include other securities in any
such Registration Statement. The Company shall do any and all other reasonable
acts and things requested by Holder which may be necessary to enable the Holder
to consummate the public sale or other disposition of the Warrant Shares, and
furnish indemnification in the manner as set forth in Paragraph (2) (a) of this
Section (i), but shall not be required to qualify as a foreign corporation or
consent to service of process to qualify the Warrant Shares for sale under the
securities laws of any state. The Holder shall furnish information and
indemnification as set forth in Paragraph (2) (b) of this Section (i). All
decisions as to whether and when to proceed with any Registration Statement
shall be made solely by the Company.
Notwithstanding the foregoing paragraph, in the event that there is
an underwritten offering of the Company's securities offered pursuant to said
Registration Statement, the Holder's shares shall be offered and sold upon such
terms as the managing underwriter may determine and the underwriter(s) shall
have the right to refuse to permit any Warrant Shares, or to limit the amount of
Warrant Shares, to be sold by the Holder to such underwriter(s) as such
underwriter(s) may determine in its (their) discretion, and the Holder shall
refrain from selling such remainder of its Warrant Shares covered by such
Registration Statement for the period of 180 days following the effective date
and shall also refrain at any time when notified by the Company that an
amendment or supplement to the prospectus is required. The Company shall not be
obligated to keep any Registration Statement effective for a total of more than
90 days. The managing underwriter may condition any Holder's participation in
such an underwritten public offering upon such Holder's execution of an
underwriting agreement containing customary terms and conditions.
(2) (a) Whenever pursuant to this Section (i) a Registration
Statement relating to the Warrant Shares is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Holder of
Warrant Shares covered by such Registration Statement, amendment or supplement
(such Holder being hereinafter called the "Distributing Holder"), and each
person, if any who controls (within the meaning of the Act) the Distributing
Holder, against any losses, claims, damages or liabilities, joint or several, to
which the Distributing Holder or any such controlling person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any such Registration Statement or any preliminary prospectus or final
prospectus constituting a part thereof or any amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and, subject to Section 2(d), will reimburse the Distributing Holder
and each such controlling person for any legal or other expenses reasonably
incurred by the Distributing Holder and each controlling person for any legal or
other expenses reasonably incurred by the Distributing Holder or such
controlling person or underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable (i) in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said Registration Statement, preliminary prospectus, final prospectus or
amendment or supplement, in reliance upon and in conformity with written
information furnished by the Distributing Holder, controlling person or
underwriter for use in the preparation thereof and (ii) for amounts paid in
settlement of any such losses, claims, damages, or liabilities (or actions in
respect thereof) if such settlement is effected without the consent of the
Company.
(b) The Distributing Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed said Registration
Statement and such amendments and supplements thereto, each person, if any, who
controls the Company (within the meaning of the Act) and the Company's
underwriter(s) and each person, if any, who controls such underwriter(s) (within
the meaning of the Act) against any losses, claims, damages or liabilities to
which the Company or any such director, officer, underwriter or controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in said Registration Statement, preliminary prospectus, final
prospectus, or amendment or supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in said
Registration Statement, preliminary prospectus, final prospectus or amendment or
supplement, in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or underwriter or any such director, officer or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by an indemnified party under this Paragraph 2
of notice of the commencement of any action, such indemnified party hereunder
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party written notice of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Paragraph 2, except to the extent that such indemnifying party is
prejudiced by such omission.
(d) In case any such action is brought against any indemnified party, and
it notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, the extent that it may wish,
jointly with any other indemnifying party similarly notified to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Paragraph 2 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(e) Except as otherwise provided in this Warrant, the Company's agreements
with respect to Warrant Shares in this Section (i) shall continue in effect
regardless of the exercise or surrender of the Warrant; provided, however, that
these registration rights shall only inure to the benefit of a transferee of at
least 20% of the total Warrant Shares evidenced by this Warrant.
(f) A Holder shall not be entitled to exercise its registration rights
hereunder if all Warrant Shares beneficially owned by that Holder may be sold
pursuant to Rule 144(k) under the Act.
(j) RIGHT TO CONVERT WARRANT INTO COMMON STOCK.
(1) Right to Convert. The Holder shall have the right to require the
Company to convert this Warrant as provided in this Section (j), into common
stock (the "Net Conversion Right"). Upon exercise of the Net Conversion Right,
the Company shall deliver to the Holder (without payment by the Holder of any
Exercise Price or of any other cash or consideration) that number of shares of
Common Stock equal to the quotient obtained by dividing (x) the value of this
Warrant at the time the Conversion Right is exercised (determined by subtracting
the aggregate Exercise Price in effect immediately prior to the exercise of the
Conversion Right from the aggregate "current market value of the shares" of
Common Stock issuable upon exercise of this Warrant by (y) the "current market
value of shares" of Common Stock.
(2) Method of Exercise. The Net Conversion Right may be exercised by
the Holder by the surrender of this Warrant at the principal office of the
Company together with a written statement specifying that the Holder thereby
intends to exercise the Net Conversion Right. Certificates for the shares of
Common Stock issuable upon exercise of the Net Conversion Right shall be
delivered to the Holder within ten (10) business days following the Company's
receipt of this Warrant together with the aforesaid written statement.
(3) Determination of Fair Market Value. For purposes of this Section
(j), current market value of a share of Common Stock as of a particular date
(the "Determination Date") shall be determined in accordance with Section (c) of
this Warrant.
(k) AMENDMENTS. Neither the Warrant nor any term hereof may be changed,
waived, discharged or terminated without the prior written consent of the
Holder.
(l) NO IMPAIRMENT. The Company will not avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such
action as may be reasonably necessary in order to protect the rights of any
Holder.
(m) GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of Delaware.
(n) NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by first class mail, postage
prepaid, addressed (a) if to the Holder, to Wachovia Capital Markets, LLC, 000
X. Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx, Attention: _________ or (b) if to
the Company, to 0000 Xxxxx Xxxx., Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, or at such
other address as to the Company shall have furnished to the Holder in writing.
[EXECUTION SIGNATURE ON FOLLOWING PAGE]
IN WITNESS WHEREOF, CEL-SCI Corporation has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: May ___, 2004
CEL-SCI CORPORATION
By:
------------------------------------
PURCHASE FORM
Dated _______________, 200__
The undersigned hereby irrevocably elects to exercise its rights pursuant
to this Warrant to the extent of purchasing ______ shares of Common Stock of
CEL-SCI Corporation, and hereby makes payment of $___________, in cash, in
payment of the exercise price thereof.
[The undersigned hereby irrevocably elects to exercise its rights pursuant
to this Warrant to the extent of purchasing _____ shares of Common Stock and
hereby authorizes you to deliver such shares of Common Stock for sale to
___________, and to retain from the proceeds of such sale $__________, in cash,
in payment of the exercise price thereof and to remit to the undersigned the
balance of such proceeds.]
-----------------
SECTION 1. INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
-------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address
----------------------------------------------------------------------
Signature
--------------------------------------------------------------------
ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________________________________ hereby sells,
assigns and transfers unto
Name -----------------------------------------------------------------
(Please typewrite or print in block letters)
Address
----------------------------------------------------------------------
the right to purchase Common Stock of CEL SCI Corporation(the "Company"),
represented by this Warrant to the extent of _________ shares as to which such
right is exercisable and does hereby irrevocably constitute and appoint
________________________ as Attorney, to transfer the same on the books of the
Company with full power of substitution in the premises.
Date ___________, 200__
Signature
---------------------------
Exhibit C
The Company shall have requested and caused Xxxx & Trinen, L.L.P., counsel
for the Company, to have furnished to the Placement Agent their opinion, dated
the Closing Date and addressed to the Placement Agent, to the effect that:
(a) each of the Company and its Subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full corporate power
and authority to own or lease, as the case may be, and to operate its properties
and conduct its business as described in the Final Prospectus, and is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification, in which the
failure to so qualify would have a Material Adverse Effect;
(b) the Company's authorized equity capitalization is as set forth in the
Final Prospectus; the capital stock of the Company conforms in all material
respects to the description thereof contained in the Final Prospectus; the
outstanding shares of Common Stock have been duly and validly authorized and
issued and are fully paid and nonassessable; the Shares to be issued and sold by
the Company have been duly and validly authorized, and, when issued and
delivered to and paid for by the Placement Agent pursuant to this Agreement,
will be fully paid and nonassessable; the Shares are duly listed, and admitted
and authorized for trading, subject, in the case of the Shares to be issued and
sold by the Company, to official notice of issuance, on the American Stock
Exchange; the certificates for the Shares are in valid and sufficient form; and
the holders of outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to subscribe for the Shares; and, except
as set forth in the Final Prospectus, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital stock of or
ownership interests in the Company are outstanding;
(c) to the knowledge of such counsel, there is no pending or threatened
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or the Subsidiary or
their property of a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Final Prospectus, and there
is no franchise, contract or other document of a character required to be
described in the Registration Statement or Final Prospectus, or to be filed as
an exhibit thereto, which is not described or filed as required; and the
statements included or incorporated by reference in the Final Prospectus under
"Business" and "Legal Proceedings" insofar as such statements summarize legal
matters, agreements, documents or proceedings discussed therein, are accurate
and fair summaries of such legal matters, agreements, documents or proceedings;
(d) the Company and its Subsidiaries own, possess, license or have other
rights to use, on reasonable terms, all patents, patent applications, trade and
service marks, trade and service xxxx registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, know-how and other intellectual
property (collectively, the "Intellectual Property") necessary for the conduct
of the Company's business as now conducted or as proposed in the Final
Prospectus to be conducted;
(e) to such counsel's knowledge (A) there are no rights of third parties
to any Intellectual Property except as disclosed in the documents filed by the
Company with the Securities and Exchange Commission; (B) there is no material
infringement by third parties of any Intellectual Property; (C) there is no
pending or threatened action, suit, proceeding or claim by others challenging
the Company's rights in or to any Intellectual Property, and such counsel is
unaware of any facts which would form a reasonable basis for any such claim; (D)
there is no pending or threatened action, suit, proceeding or claim by others
challenging the validity or scope of any Intellectual Property, and such counsel
is unaware of any facts which would form a reasonable basis for any such claim;
(E) there is no pending or threatened action, suit, proceeding or claim by
others that the Company infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and such counsel
is unaware of any other fact which would form a reasonable basis for any claim;
(F) there is no U.S. patent which contains claims that dominate any material
Intellectual Property described in the Final Prospectus as being owned by or
licensed to the Company or that interferes with any material issued or pending
claims of any Intellectual Property; and (G) there is no prior art of which such
counsel is aware that may render any U.S. patent held by the Company invalid or
any U.S. patent application held by the Company unpatentable which has not been
disclosed to the U.S. Patent and Trademark Office;
(f) the Registration Statement has become effective under the Act; any
required filing of the Base Prospectus, any Preliminary Prospectus and the Final
Prospectus, and any supplements thereto, pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b); to the
knowledge of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that purpose have
been instituted or threatened and the Registration Statement and the Final
Prospectus (other than the financial statements and other financial information
contained therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the applicable requirements of the Act and
the Exchange Act and the respective rules thereunder; and such counsel has no
reason to believe that on the date the Registration Statement was last deemed
amended or on the date the Registration Statement became effective, the
Registration Statement contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Final Prospectus as of
its date and on the Closing Date included or includes any untrue statement of a
material fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (in each case, other than the financial statements and
other financial information contained therein, as to which such counsel need
express no opinion);
(g) the Placement Agent Agreement and the Offering Warrants have been duly
authorized, executed and delivered by the Company;
(h) the Company is not and, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Final Prospectus, will not be an "investment company" as defined in the
Investment Company Act of 1940, as amended;
(i) no consent, approval, authorization, filing with or order of any court
or governmental agency or body is required in connection with the transactions
contemplated herein, except such as have been obtained under the Act and such as
may be required by the American Stock Exchange and under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of the Shares
by the Placement Agent in the manner contemplated in the Placement Agent
Agreement and in the Final Prospectus and such other approvals (specified in
such opinion) as have been obtained;
(j) neither the issue and sale of the Shares by the Company, nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation of or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or the Subsidiary pursuant to, (1) the charter or
by-laws of the Company or the Subsidiary, (2) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which the
Company or the Subsidiary is a party or bound or to which its or their property
is subject and which is filed as an exhibit to the Company's reports under the
Exchange Act or (3) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company or the Subsidiary of any court, regulatory
body, administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or its subsidiaries or any of its or their
properties; except in all cases for conflicts, defaults, terminations,
amendments, acceleration, cancellations, liens, encumbrances and violations
would not, individually or in the aggregate, have a Material Adverse Effect; and
(k) no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
For purposes of this opinion, the term "Material Adverse Effect" means any
adverse effect on the business, operations, properties, prospects or financial
condition of the Company and which is material to the Company or other entities
controlling or controlled by the Company or which is likely to materially hinder
the performance by the Company of its obligations under the Placement Agent
Agreement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Colorado, the State of Colorado or the Federal laws of the United States, to the
extent they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Placement Agent and (B) as to matters of fact,
to the extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Final Prospectus include any
supplements thereto at the Closing Date.
