EXHIBIT 10.80
ADVANCED VIRAL RESEARCH CORP.
PLACEMENT AGENT AGREEMENT
Dated as of: April 28, 2003
The undersigned, ADVANCED VIRAL RESEARCH CORP., a Delaware corporation
(the "COMPANY"), hereby agrees with Katalyst Securities LLC, a Delaware limited
liability company (the "PLACEMENT AGENT") and CORNELL CAPITAL PARTNERS, LP, a
Delaware Limited Partnership (the "INVESTOR") as follows:
1. OFFERING. The Company hereby engages the Placement Agent to act as
its exclusive placement agent in connection with the Equity Line of Credit
Agreement dated the date hereof, (the "EQUITY LINE OF CREDIT Agreement")
pursuant to which the Company shall issue and sell to the Investor, from time to
time, and the Investor shall purchase from the Company (the "OFFERING") up to
Fifty Million Dollars ($50,000,000) of the Company's common stock (the
"COMMITMENT AMOUNT"), par value $0.00001 per share (the "COMMON STOCK"), at
price per share equal to the Purchase Price, as that term is defined in the
Equity Line of Credit Agreement. Pursuant to the terms hereof, the Placement
Agent shall render consulting services to the Company with respect to the Equity
Line of Credit Agreement and shall be available for consultation in connection
with the advances to be requested by the Company pursuant to the Equity Line of
Credit Agreement.
All capitalized terms used herein and not otherwise defined herein
shall have the same meaning ascribed to them as in the Equity Line of Credit
Agreement. The Investor will be granted certain registration rights with respect
to the Common Stock as more fully set forth in the Registration Rights Agreement
between the Company and the Investor dated the date hereof (the "REGISTRATION
RIGHTS AGREEMENT"). The documents to be executed and delivered in connection
with the Offering, including, but not limited, to this Agreement, the Equity
Line of Credit Agreement, the Registration Rights Agreement, and the Escrow
Agreement, are referred to sometimes hereinafter collectively as the "OFFERING
MATERIALS." The Company's Common Stock to be purchased by the Investor hereunder
is sometimes referred to hereinafter as the "SECURITIES." The Placement Agent
shall not be obligated to sell any Securities."
2. COMPENSATION.
A. Upon the execution of this Agreement the Company shall
issue to the Placement Agent or its designee shares of the Company's Common
Stock in an amount equal to Ten Thousand Dollars ($10,000) divided by the
Closing Bid Price of the Company's Common Stock on the date hereof
(collectively, the "PLACEMENT AGENT'S SHARES"). The Placement Agent shall be
entitled to "piggy-back" registration rights with respect to the Placement
Agent's Shares in connection with any registration of any shares of Common Stock
for or on behalf of the Investor pursuant to the Registration Rights Agreement
dated the date hereof.
3. Representations, Warranties and Covenants of the Placement Agent.
A. The Placement Agent represents, warrants and covenants as
follows:
(i) The Placement Agent has the necessary corporate
power to enter into this Agreement and to consummate the transactions
contemplated hereby.
(ii) The execution and delivery by the Placement
Agent of this Agreement and the consummation of the transactions contemplated
herein will not result in any violation of, or be in conflict with, or
constitute a default under, any agreement or instrument to which the Placement
Agent is a party or by which the Placement Agent or its properties are bound, or
any judgment, decree, order or, to the Placement Agent's knowledge, any statute,
rule or regulation applicable to the Placement Agent. This Agreement when
executed and delivered by the Placement Agent, will constitute the legal, valid
and binding obligations of the Placement Agent, enforceable in accordance with
their respective terms, except to the extent that (a) the enforceability hereof
or thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect and affecting the rights of
creditors generally, (b) the enforceability hereof or thereof is subject to
general principles of equity, or (c) the indemnification provisions hereof may
be held to be in violation of public policy.
(iii) Upon receipt and execution of this Agreement
the Placement Agent will promptly forward copies of this Agreement to the
Company or its counsel and the Investor or its counsel.
(iv) The Placement Agent will not intentionally take
any action that it reasonably believes would cause the Offering to violate the
provisions of the Securities Act of 1933, as amended (the "1933 ACT"), the
Securities Exchange Act of 1934 (the "1934 ACT"), the respective rules and
regulations promulgated there under (the "RULES AND REGULATIONS") or applicable
"Blue Sky" laws of any state or jurisdiction.
(v) The Placement Agent is a member of the National
Association of Securities Dealers, Inc., and is a broker-dealer registered as
such under the 1934 Act and under the securities laws of the states in which the
Securities will be offered or sold by the Placement Agent unless an exemption
for such state registration is available to the Placement Agent. The Placement
Agent is in compliance in all material respects with all material rules and
regulations applicable to the Placement Agent generally and applicable to the
Placement Agent's participation in the Offering.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
A. The Company represents and warrants as follows:
(i) The execution, delivery and performance of each
of this Agreement, the Equity Line of Credit Agreement, the Escrow Agreement,
and the Registration Rights Agreement has been or will be duly and validly
authorized by the Company and is, or with respect to this Agreement, the Equity
Line of Credit Agreement, the Escrow Agreement, and the Registration Rights
Agreement will be, a valid and binding agreement of the Company, enforceable in
accordance with its respective terms, except to the extent that (a) the
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enforceability hereof or thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect and
affecting the rights of creditors generally, (b) the enforceability hereof or
thereof is subject to general principles of equity or (c) the indemnification
provisions hereof or thereof may be held to be in violation of public policy.
The Securities to be issued pursuant to the transactions contemplated by this
Agreement and the Equity Line of Credit Agreement have been duly authorized and,
when issued and paid for in accordance with (x) this Agreement, the Equity Line
of Agreement and the certificates/instruments representing such Securities, (y)
will be valid and binding obligations of the Company, enforceable in accordance
with their respective terms, except to the extent that (1) the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect and affecting the rights of creditors
generally, and (2) the enforceability thereof is subject to general principles
of equity. All corporate action required to be taken for the authorization,
issuance and sale of the Securities has been duly and validly taken by the
Company.
(ii) The Company has a duly authorized, issued and
outstanding capitalization as set forth herein and in the Equity Line of Credit
Agreement. The Company is not a party to or bound by any instrument, agreement
or other arrangement providing for it to issue any capital stock, rights,
warrants, options or other securities, except for this Agreement, the agreements
described herein and as described in the Equity Line of Credit Agreement, dated
the date hereof and the agreements described therein. All issued and outstanding
securities of the Company, have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights of rescission
or preemptive rights with respect thereto and are not subject to personal
liability solely by reason of being security holders; and none of such
securities were issued in violation of the preemptive rights of any holders of
any security of the Company. As of the date hereof, the authorized capital stock
of the Company consists of 1,000,000,000 shares of Common Stock, par value
$0.00001 per share of which 474,042,609 shares of Common Stock were issued and
outstanding as of the date thereof.
(iii) The Common Stock to be issued in accordance
with this Agreement and the Equity Line of Credit Agreement has been duly
authorized and when issued and paid for in accordance with this Agreement, the
Equity Line of Credit Agreement and the certificates/instruments representing
such Common Stock, will be validly issued, fully-paid and non-assessable; the
holders thereof will not be subject to personal liability solely by reason of
being such holders; such Securities are not and will not be subject to the
preemptive rights of any holder of any security of the Company.
(iv) The Company has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and personal
property necessary to conduct its business (including, without limitation, any
real or personal property stated in the Offering Materials to be owned or leased
by the Company), free and clear of all liens, encumbrances, claims, security
interests and defects of any material nature whatsoever, other than those set
forth in the Offering Materials and liens for taxes not yet due and payable.
(v) There is no litigation or governmental proceeding
pending or, to the best of the Company's knowledge, threatened against, or
involving the properties or business of the Company, except as set forth in the
Offering Materials.
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(vi) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware. Except as set forth in the Offering Materials, the Company does not
own or control, directly or indirectly, an interest in any other corporation,
partnership, trust, joint venture or other business entity. The Company is duly
qualified or licensed and in good standing as a foreign corporation in each
jurisdiction in which the character of its operations requires such
qualification or licensing and where failure to so qualify would have a material
adverse effect on the Company. The Company has all requisite corporate power and
authority, and all material and necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies (domestic and foreign) to conduct its businesses (and
proposed business) as described in the Offering Materials. Any disclosures in
the Offering Materials concerning the effects of foreign, federal, state and
local regulation on the Company's businesses as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact. The Company has all corporate power and authority to enter into
this Agreement, the Equity Line of Credit Agreement, the Registration Rights
Agreement, and the Escrow Agreement, to carry out the provisions and conditions
hereof and thereof, and all consents, authorizations, approvals and orders
required in connection herewith and therewith have been obtained. No consent,
authorization or order of, and no filing with, any court, government agency or
other body is required by the Company for the issuance of the Securities or
execution and delivery of the Offering Materials except for applicable federal
and state securities laws. The Company, since its inception, has not incurred
any liability arising under or as a result of the application of any of the
provisions of the 1933 Act, the 1934 Act or the Rules and Regulations.
(vii) There has been no material adverse change in
the condition or prospects of the Company, financial or otherwise, from the
latest dates as of which such condition or prospects, respectively, are set
forth in the Offering Materials, and the outstanding debt, the property and the
business of the Company conform in all material respects to the descriptions
thereof contained in the Offering Materials.
(viii) Except as set forth in the Offering Materials,
the Company is not in breach of, or in default under, any term or provision of
any material indenture, mortgage, deed of trust, lease, note, loan or Equity
Line of Credit Agreement or any other material agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or
instrument to which it is a party or by which it or any of its properties may be
bound or affected. The Company is not in violation of any provision of its
charter or by-laws or in violation of any franchise, license, permit, judgment,
decree or order, or in violation of any material statute, rule or regulation.
Neither the execution and delivery of the Offering Materials nor the issuance
and sale or delivery of the Securities, nor the consummation of any of the
transactions contemplated in the Offering Materials nor the compliance by the
Company with the terms and provisions hereof or thereof, has conflicted with or
will conflict with, or has resulted in or will result in a breach of, any of the
terms and provisions of, or has constituted or will constitute a default under,
or has resulted in or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or pursuant to
the terms of any indenture, mortgage, deed of trust, note, loan or any other
agreement or instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company may be bound or to which any
of the property or assets of the Company is subject except (a) where such
default, lien, charge or encumbrance would not have a material adverse effect on
the Company and (b) as
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described in the Offering Materials; nor will such action result in any
violation of the provisions of the charter or the by-laws of the Company or,
assuming the due performance by the Placement Agent of its obligations
hereunder, any material statute or any material order, rule or regulation
applicable to the Company of any court or of any foreign, federal, state or
other regulatory authority or other government body having jurisdiction over the
Company.
(ix) Subsequent to the dates as of which information
is given in the Offering Materials, and except as may otherwise be indicated or
contemplated herein or therein and the securities offered pursuant to the
Securities Purchase Agreement dated the date hereof, the Company has not (a)
issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, or (b) entered into any transaction other than
in the ordinary course of business, or (c) declared or paid any dividend or made
any other distribution on or in respect of its capital stock. Except as
described in the Offering Materials, the Company has no outstanding obligations
to any officer or director of the Company.
(x) There are no claims for services in the nature of
a finder's or origination fee with respect to the sale of the Common Stock or
any other arrangements, agreements or understandings that may affect the
Placement Agent's compensation, as determined by the National Association of
Securities Dealers, Inc.
(xi) The Company owns or possesses, free and clear of
all liens or encumbrances and rights thereto or therein by third parties, the
requisite licenses or other rights to use all trademarks, service marks,
copyrights, service names, trade names, patents, patent applications and
licenses necessary to conduct its business (including, without limitation, any
such licenses or rights described in the Offering Materials as being owned or
possessed by the Company) and, except as set forth in the Offering Materials,
there is no claim or action by any person pertaining to, or proceeding, pending
or threatened, which challenges the exclusive rights of the Company with respect
to any trademarks, service marks, copyrights, service names, trade names,
patents, patent applications and licenses used in the conduct of the Company's
businesses (including, without limitation, any such licenses or rights described
in the Offering Materials as being owned or possessed by the Company) except any
claim or action that would not have a material adverse effect on the Company;
the Company's current products, services or processes do not infringe or will
not infringe on the patents currently held by any third party.
(xii) Except as described in the Offering Materials,
the Company is not under any obligation to pay royalties or fees of any kind
whatsoever to any third party with respect to any trademarks, service marks,
copyrights, service names, trade names, patents, patent applications, licenses
or technology it has developed, uses, employs or intends to use or employ, other
than to their respective licensors.
(xiii) Subject to the performance by the Placement
Agent of its obligations hereunder, the offer and sale of the Securities comply,
and will continue to comply in all material respects with the requirements of
Rule 506 of Regulation D promulgated by the SEC pursuant to the 1933 Act and any
other applicable federal and state laws, rules, regulations and executive
orders. Neither the Offering Materials nor any amendment or supplement thereto
nor any documents prepared by the Company in connection with the Offering will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or
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necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. All statements of material facts in the
Offering Materials are true and correct as of the date of the Offering
Materials.
(xiv) All material taxes which are due and payable
from the Company have been paid in full or adequate provision has been made for
such taxes on the books of the Company except for those taxes disputed in good
faith the Company does not have any tax deficiency or claim outstanding assessed
or proposed against it.
(xv) None of the Company nor any of its officers,
directors, employees or agents, nor any other person acting on behalf of the
Company, has, directly or indirectly, given or agreed to give any money, gift or
similar benefit (other than legal price concessions to customers in the ordinary
course of business) to any customer, supplier, employee or agent of a customer
or supplier, or official or employee of any governmental agency or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or other person who is or may be
in a position to help or hinder the business of the Company (or assist it in
connection with any actual or proposed transaction) which (A) might subject the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, or (B) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of the Company
as reflected in any of the financial statements contained in the Offering
Materials, or (C) if not continued in the future, might adversely affect the
assets, business, operations or prospects of the Company in the future.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR.
A. The Investor represents, warrants and covenants as follows:
(i) The Investor has the necessary power to enter
into this Agreement and to consummate the transactions contemplated hereby .
(ii) The execution and delivery by the Investor of
this Agreement and the consummation of the transactions contemplated herein will
not result in any violation of, or be in conflict with, or constitute a default
under, any agreement or instrument to which the Investor is a party or by which
the Investor or its properties are bound, or any judgment, decree, order or, to
the Investor's knowledge, any statute, rule or regulation applicable to the
Investor. This Agreement when executed and delivered by the Investor, will
constitute the legal, valid and binding obligations of the Investor, enforceable
in accordance with their respective terms, except to the extent that (a) the
enforceability hereof or thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect and
affecting the rights of creditors generally, (b) the enforceability hereof or
thereof is subject to general principles of equity, or (c) the indemnification
provisions hereof or thereof may be held to be in violation of public policy.
(iii) The Investor will promptly forward copies of
any and all due diligence questionnaires compiled by the Investor to the
Placement Agent.
(iv) The Investor is an Accredited Investor (as
defined under the 1933 Act).
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(v) The Investor is acquiring the Securities for the
Inventor's own account as principal, not as a nominee or agent, for investment
purposes only, and not with a view to, or for, resale, distribution or
fractionalization thereof in whole or in part and no other person has a direct
or indirect beneficial interest in such Securities. Further, the Investor does
not have any contract, undertaking, agreement or arrangement with any personal
to sell, transfer or grant participations to such person or to any third person,
with respect to any of the Securities.
(vi) The Investor acknowledges the Investor's
understanding that the offering and sale of the Securities is intended to be
exempt from registration under the 1933 Act by virtue of Section 3(b) of the
1933 Act and the provisions of Regulation D promulgated thereunder ("Regulation
D"). In furtherance thereof, the Investor represents and warrants as follows:
(a) The Investor realizes that the basis for
the Regulation D exemption may not be present, if, notwithstanding such
representations, the Investor has in mind merely acquiring Securities for a
fixed or determinable period in the future, or for a market rise, or for sale if
the market does not rise. The Investor does not have any such intentions;
(b) The Investor has the financial ability
to bear the economic risk of the Investor's investment, has adequate means for
providing for the Inventor's current needs and personal contingencies and has no
need for liquidity with respect to the Investor's investment in the Company; and
(c) The Investor has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of the prospective investment. The Inventor also represents it
has not been organized for the purpose of acquiring the Securities.
(vii) The Investor has been given the opportunity for
a reasonable time prior to the date hereof to ask questions of, and receive
answers from, the Company or its representatives concerning the terms and
conditions of the Offering, and other matters pertaining to this investment, and
has been given the opportunity for a reasonable time prior to the date hereof to
obtain such additional information in connection with the Company in order for
the Investor to evaluate the merits and risks of purchase of the Securities, to
the extent the Company possesses such information or can acquire it without
unreasonable effort or expense. The Investor is not relying on the Placement
Agent or any of its affiliates with respect to the accuracy or completeness of
the Offering Materials or for any economic considerations involved in this
investment.
6. CERTAIN COVENANTS AND AGREEMENTS OF THE COMPANY.
The Company covenants and agrees at its expense and without any expense
to the Placement Agent as follows:
A. To advise the Placement Agent and the Investor of any
material adverse change in the Company's financial condition, prospects or
business or of any development materially affecting the Company or rendering
untrue or misleading any material statement in the
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Offering Materials occurring at any time as soon as the Company is either
informed or becomes aware thereof.
B. To use its commercially reasonable efforts to cause the
Common Stock issuable in connection with the Equity Line of Credit to be
qualified or registered for sale on terms consistent with those stated in the
Registration Rights Agreement and under the securities laws of such
jurisdictions as the Placement Agent and the Investor shall reasonably request.
Qualification, registration and exemption charges and fees shall be at the sole
cost and expense of the Company.
C. Upon written request, to provide and continue to provide
the Placement Agent and the Investor copies of all quarterly financial
statements and audited annual financial statements prepared by or on behalf of
the Company, other reports prepared by or on behalf of the Company for public
disclosure and all documents delivered to the Company's stockholders.
D. To deliver, during the registration period of the Equity
Line Credit Agreement, to the Investor upon the Investor's request, within forty
five (45) days, a statement of its income for each such quarterly period, and
its balance sheet and a statement of changes in stockholders' equity as of the
end of such quarterly period, all in reasonable detail, certified by its
principal financial or accounting officer; (ii) within ninety (90) days after
the close of each fiscal year, its balance sheet as of the close of such fiscal
year, together with a statement of income, a statement of changes in
stockholders' equity and a statement of cash flow for such fiscal year, such
balance sheet, statement of income, statement of changes in stockholders' equity
and statement of cash flow to be in reasonable detail and accompanied by a copy
of the certificate or report thereon of independent auditors if audited
financial statements are prepared; and (iii) a copy of all documents, reports
and information furnished to its stockholders at the time that such documents,
reports and information are furnished to its stockholders.
E. To comply with the terms of the Offering Materials.
F. To ensure that any transactions between or among the
Company, or any of its officers, directors and affiliates be on terms and
conditions that are no less favorable to the Company, than the terms and
conditions that would be available in an "arm's length" transaction with an
independent third party.
7. INDEMNIFICATION.
A. The Company hereby agrees that it will indemnify and hold
the Placement Agent and each officer, director, shareholder, employee or
representative of the Placement Agent and each person controlling, controlled by
or under common control with the Placement Agent within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act or the SEC's Rules and
Regulations promulgated there under (the "RULES AND REGULATIONS"), harmless from
and against any and all loss, claim, damage, liability, cost or expense
whatsoever (including, but not limited to, any and all reasonable legal fees and
other expenses and disbursements incurred in connection with investigating,
preparing to defend or defending any action, suit or proceeding, including
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any inquiry or investigation, commenced or threatened, or any claim whatsoever
or in appearing or preparing for appearance as a witness in any action, suit or
proceeding, including any inquiry, investigation or pretrial proceeding such as
a deposition) to which the Placement Agent or such indemnified person of the
Placement Agent may become subject under the 1933 Act, the 1934 Act, the Rules
and Regulations, or any other federal or state law or regulation, common law or
otherwise, arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in (a) Section 4 of this
Agreement, (b) the Offering Materials (except those written statements relating
to the Placement Agent given by the Placement Agent for inclusion therein), (c)
any application or other document or written communication executed by the
Company or based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Common Stock under the securities laws
thereof, or any state securities commission or agency; (ii) the omission or
alleged omission from documents described in clauses (a), (b) or (c) above of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; or (iii) the breach of any representation, warranty,
covenant or agreement made by the Company in this Agreement. The Company further
agrees that upon demand by an indemnified person, at any time or from time to
time, it will promptly reimburse such indemnified person for any loss, claim,
damage, liability, cost or expense actually and reasonably paid by the
indemnified person as to which the Company has indemnified such person pursuant
hereto. Notwithstanding the foregoing provisions of this Paragraph 7(A), any
such payment or reimbursement by the Company of fees, expenses or disbursements
incurred by an indemnified person in any proceeding in which a final judgment by
a court of competent jurisdiction (after all appeals or the expiration of time
to appeal) is entered against the Placement Agent or such indemnified person
based upon specific finding of fact that the Placement Agent or such indemnified
person's gross negligence or willful misfeasance will be promptly repaid to the
Company.
B. The Placement Agent hereby agrees that it will indemnify
and hold the Company and each officer, director, shareholder, employee or
representative of the Company, and each person controlling, controlled by or
under common control with the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act or the Rules and Regulations, harmless
from and against any and all loss, claim, damage, liability, cost or expense
whatsoever (including, but not limited to, any and all reasonable legal fees and
other expenses and disbursements incurred in connection with investigating,
preparing to defend or defending any action, suit or proceeding, including any
inquiry or investigation, commenced or threatened, or any claim whatsoever or in
appearing or preparing for appearance as a witness in any action, suit or
proceeding, including any inquiry, investigation or pretrial proceeding such as
a deposition) to which the Company or such indemnified person of the Company may
become subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or
any other federal or state law or regulation, common law or otherwise, arising
out of or based upon (i) (i) the material breach of any representation,
warranty, covenant or agreement made by the Placement Agent in this Agreement
(ii) any false or misleading information provided to the Company in writing by
one of the Placement Agent's indemnified persons specifically for inclusion in
the Offering Materials or.
C. The Investor hereby agrees that it will indemnify and hold
the Placement Agent and each officer, director, shareholder, employee or
representative of the Placement Agent, and each person controlling, controlled
by or under common control with the Placement Agent within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act or the Rules and
Regulations, harmless from and against any and all loss, claim, damage,
liability, cost
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or expense whatsoever (including, but not limited to, any and all reasonable
legal fees and other expenses and disbursements incurred in connection with
investigating, preparing to defend or defending any action, suit or proceeding,
including any inquiry or investigation, commenced or threatened, or any claim
whatsoever or in appearing or preparing for appearance as a witness in any
action, suit or proceeding, including any inquiry, investigation or pretrial
proceeding such as a deposition) to which the Placement Agent or such
indemnified person of the Placement Agent may become subject under the 1933 Act,
the 1934 Act, the Rules and Regulations, or any other federal or state law or
regulation, common law or otherwise, arising out of or based upon (i) the
conduct of the Investor or its officers, employees or representatives in its
acting as the Investor for the Offering or (ii) the material breach of any
representation, warranty, covenant or agreement made by the Investor in the
Offering Materials (iii) any false or misleading information provided to the
Placement Agent by one of the Investor's indemnified persons or.
D. The Placement Agent hereby agrees that it will indemnify
and hold the Investor and each officer, director, shareholder, employee or
representative of the Investor, and each person controlling, controlled by or
under common control with the Investor within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act or the Rules and Regulations, harmless
from and against any and all loss, claim, damage, liability, cost or expense
whatsoever (including, but not limited to, any and all reasonable legal fees and
other expenses and disbursements incurred in connection with investigating,
preparing to defend or defending any action, suit or proceeding, including any
inquiry or investigation, commenced or threatened, or any claim whatsoever or in
appearing or preparing for appearance as a witness in any action, suit or
proceeding, including any inquiry, investigation or pretrial proceeding such as
a deposition) to which the Investor or such indemnified person of the Investor
may become subject under the 1933 Act, the 1934 Act, the Rules and Regulations,
or any other federal or state law or regulation, common law or otherwise,
arising out of or based upon (i) the material breach of any representation,
warranty, covenant or agreement made by the Placement Agent in this Agreement or
..
E. Promptly after receipt by an indemnified party of notice of
commencement of any action covered by Section 7(A), (B), (C) or (D), the party
to be indemnified shall, within five (5) business days, notify the indemnifying
party of the commencement thereof; the omission by one (1) indemnified party to
so notify the indemnifying party shall not relieve the indemnifying party of its
obligation to indemnify any other indemnified party that has given such notice
and shall not relieve the indemnifying party of any liability outside of this
indemnification if not materially prejudiced thereby. In the event that any
action is brought against the indemnified party, the indemnifying party will be
entitled to participate therein and, to the extent it may desire, to assume and
control the defense thereof with counsel chosen by it which is reasonably
acceptable to the indemnified party. After notice from the indemnifying party to
such indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under such
Section 7(A), (B), (C), or (D) for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof, but
the indemnified party may, at its own expense, participate in such defense by
counsel chosen by it, without, however, impairing the indemnifying party's
control of the defense. Subject to the proviso of this sentence and
notwithstanding any other statement to the contrary contained herein, the
indemnified party or parties shall have the right to choose its or their own
counsel and control the defense of any
10
action, all at the expense of the indemnifying party if, (i) the employment of
such counsel shall have been authorized in writing by the indemnifying party in
connection with the defense of such action at the expense of the indemnifying
party, or (ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel shall be borne by
the indemnifying party; provided, however, that the indemnifying party shall
not, in connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstance, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties. No settlement of any action or proceeding against an indemnified party
shall be made without the consent of the indemnifying party.
F. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 7(A) or 7(B)
is due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Company and the Placement
Agent shall contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with the
investigation or defense of same) which the other may incur in such proportion
so that the Placement Agent shall be responsible for such percent of the
aggregate of such losses, claims, damages and liabilities as shall equal the
percentage of the gross proceeds paid to the Placement Agent and the Company
shall be responsible for the balance; provided, however, that no person guilty
of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933
Act shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7(F), any person
controlling, controlled by or under common control with the Placement Agent, or
any partner, director, officer, employee, representative or any agent of any
thereof, shall have the same rights to contribution as the Placement Agent and
each person controlling, controlled by or under common control with the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
and each officer of the Company and each director of the Company shall have the
same rights to contribution as the Company. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against the other party under this Section 7(D), notify such party from
whom contribution may be sought, but the omission to so notify such party shall
not relieve the party from whom contribution may be sought from any obligation
they may have hereunder or otherwise if the party from whom contribution may be
sought is not materially prejudiced thereby. The indemnity and contribution
agreements contained in this Section 7 shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
indemnified person or any termination of this Agreement.
11
8. PAYMENT OF EXPENSES.
The Company hereby agrees to bear all of the expenses in connection
with the Offering, including, but not limited to the following: filing fees,
printing and duplicating costs, advertisements, postage and mailing expenses
with respect to the transmission of Offering Materials, registrar and transfer
agent fees, escrow agent fees and expenses, fees of the Company's counsel and
accountants, issue and transfer taxes, if any.
9. CONDITIONS OF CLOSING.
The Closing shall be held at the offices of the Investor or its
counsel. The obligations of the Placement Agent hereunder shall be subject to
the continuing accuracy of the representations and warranties of the Company and
the Investor herein as of the date hereof and as of the Date of Closing (the
"CLOSING DATE") with respect to the Company and the Investor, as the case may
be, as if it had been made on and as of such Closing Date; the accuracy on and
as of the Closing Date of the statements of the officers of the Company made
pursuant to the provisions hereof; and the performance by the Company and the
Investor on and as of the Closing Date of its covenants and obligations
hereunder and to the following further conditions:
A. Upon the effectiveness of a registration statement covering
the Equity Line of Credit Agreement, the Investor and the Placement Agent shall
receive the opinion of Counsel to the Company, dated as of the date thereof,
which opinion shall be in form and substance reasonably satisfactory to the
Investor, their counsel and the Placement Agent.
B. At or prior to the Closing, the Investor and the Placement
Agent shall have been furnished such documents, certificates and opinions as it
may reasonably require for the purpose of enabling them to review or pass upon
the matters referred to in this Agreement and the Offering Materials, or in
order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
C. At and prior to the Closing, (i) there shall have been no
material adverse change nor development involving a prospective change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in the
Offering Materials; (ii) there shall have been no transaction, not in the
ordinary course of business except the transactions pursuant to the Securities
Purchase Agreement entered into by the Company which has not been disclosed in
the Offering Materials or to the Placement Agent in writing; (iii) except as set
forth in the Offering Materials, the Company shall not be in default under any
provision of any instrument relating to any outstanding indebtedness for which a
waiver or extension has not been otherwise received; (iv) except as set forth in
the Offering Materials, the Company shall not have issued any securities (other
than those to be issued as provided in the Offering Materials) or declared or
paid any dividend or made any distribution of its capital stock of any class and
there shall not have been any change in the indebtedness (long or short term) or
liabilities or obligations of the Company (contingent or otherwise) and trade
payable debt; (v) no material amount of the assets of the Company shall have
been pledged or mortgaged, except as indicated in the Offering Materials; and
(v) no action, suit or proceeding, at law or in equity, against the Company or
affecting any of its properties or businesses shall be pending or threatened
before or by any court or federal or
12
state commission, board or other administrative agency, domestic or foreign,
wherein an unfavorable decision, ruling or finding could materially adversely
affect the businesses, prospects or financial condition or income of the
Company, except as set forth in the Offering Materials.
D. At Closing, the Investor and the Placement Agent shall
receive a certificate of the Company signed by an executive officer and chief
financial officer, dated as of the applicable Closing, to the effect that the
conditions set forth in subparagraph (C) above have been satisfied and that, as
of the applicable closing, the representations and warranties of the Company set
forth herein are true and correct.
E. The Placement Agent shall have no obligation to insure that
(x) any check, note, draft or other means of payment for the Common Stock will
be honored, paid or enforceable against the Investor in accordance with its
terms, or (y) subject to the performance of the Placement Agent's obligations
and the accuracy of the Placement Agent's representations and warranties
hereunder, (1) the Offering is exempt from the registration requirements of the
1933 Act or any applicable state "Blue Sky" law or (2) the Investor is an
Accredited Investor.
10. TERMINATION.
This Agreement shall be co-terminus with, and terminate upon the same
terms and conditions as those set forth in, the Equity Line of Credit Agreement.
The rights of the Investor and the obligations of the Company under the
Registration Rights Agreement, and the rights of the Placement Agent and the
obligations of the Company shall survive the termination of this Agreement
unabridged.
11. MISCELLANEOUS.
A. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all which
shall be deemed to be one and the same instrument.
B. Any notice required or permitted to be given hereunder
shall be given in writing and shall be deemed effective when deposited in the
United States mail, postage prepaid, or when received if personally delivered or
faxed (upon confirmation of receipt received by the sending party), addressed as
follows:
If to Placement Agent, to: Katalyst Securities LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
13
If to the Company, to: Advanced Viral Research Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor: Cornell Capital Partners, LP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇,
Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With Copies to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇. ▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address of which written notice is given to the others.
C. This Agreement shall be governed by and construed in all
respects under the laws of the State of Delaware, without reference to its
conflict of laws rules or principles. Any suit, action, proceeding or litigation
arising out of or relating to this Agreement shall be brought and prosecuted in
such federal or state court or courts located within the State of New York as
provided by law. The parties hereby irrevocably and unconditionally consent to
the jurisdiction of each such court or courts located within the State of New
York and to service of process by registered or certified mail, return receipt
requested, or by any other manner provided by applicable law, and hereby
irrevocably and unconditionally waive any right to claim that any suit, action,
proceeding or litigation so commenced has been commenced in an inconvenient
forum.
D. This Agreement and the other agreements referenced herein
contain the entire understanding between the parties hereto and may not be
modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
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E. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COMPANY:
ADVANCED VIRAL RESEACH CORP.
By: /s/ SHALOM Z. HIRCSHMAN
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
PLACEMENT AGENT:
KATALYST SECURITIES LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: PRESIDENT
INVESTOR:
CORNELL CAPITAL PARTNERS, LP
BY: YORKVILLE ADVISORS, LLC
-------------------------------------
ITS: GENERAL PARTNER
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Portfolio Manager
16