CEL-SCI CORPORATION
Common Stock
At Market Issuance Sales Agreement
December 10, 2010
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & Vlak LLC
The Graybar Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
CEL-SCI Corporation, a Delaware corporation (the "Company"), confirms its
agreement (this "Agreement") with ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & Vlak LLC (the "MLV"), as
follows:
1. Issuance and Sale of Shares. The Company agrees that, from time to time
during the term of this Agreement, on the terms and subject to the conditions
set forth herein, it may issue and sell through MLV, shares (the "Placement
Shares") of the Company's common stock, (the "Common Stock") provided however,
that in no event shall the Company issue or sell through MLV such number of
Shares that (a) exceeds the number of shares of Common Stock registered on the
effective Registration Statement (as defined below) pursuant to which the
offering is being made, or (b) exceeds the number of authorized but unissued
shares of the Company's Common Stock (the lesser of (a) and (b), the "Maximum
Amount"). Notwithstanding anything to the contrary contained herein, the parties
hereto agree that compliance with the limitations set forth in this Section 1 on
the amount of Placement Shares issued and sold under this Agreement shall be the
sole responsibility of the Company and that MLV shall have no obligation in
connection with such compliance. The issuance and sale of Placement Shares
through MLV will be effected pursuant to the Registration Statement (as defined
below) filed by the Company and declared effective by the Securities and
Exchange Commission (the "Commission"), although nothing in this Agreement shall
be construed as requiring the Company to use the Registration Statement to issue
Common Stock.
The Company has filed, in accordance with the provisions of the Securities
Act of 1933, as amended (the "Securities Act") and the rules and regulations
thereunder (the "Securities Act Regulations"), with the Commission a
registration statement on Form S-3 (File No. 333-162792), including a base
prospectus, relating to certain securities, including the Placement Shares to be
issued from time to time by the Company, and which incorporates by reference
documents that the Company has filed or will file in accordance with the
provisions of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder (the "Exchange Act
Regulations"). The Company has prepared a prospectus supplement specifically
relating to the Placement Shares (the "Prospectus Supplement") to the base
prospectus included as part of such registration statement. The Company will
furnish to MLV, for use by MLV, copies of the prospectus included as part of
such registration statement, as supplemented by the Prospectus Supplement,
relating to the Placement Shares. Except where the context otherwise requires,
such registration statement, including all documents filed as part thereof or
incorporated by reference therein, and including any information contained in a
Prospectus (as defined below) subsequently filed with the Commission pursuant to
Rule 424(b) under the Securities Act Regulations or deemed to be a part of such
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registration statement pursuant to Rule 430B of the Securities Act Regulations,
is herein called the "Registration Statement." The base prospectus, including
all documents incorporated therein by reference, included in the Registration
Statement, as it may be supplemented by the Prospectus Supplement, in the form
in which such prospectus and/or Prospectus Supplement have most recently been
filed by the Company with the Commission pursuant to Rule 424(b) under the
Securities Act Regulations, together with the then issued Issuer Free Writing
Prospectus(es), is herein called the "Prospectus." Any reference herein to the
Registration Statement, the Prospectus or any amendment or supplement thereto
shall be deemed to refer to and include the documents incorporated by reference
therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement or the Prospectus shall
be deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference therein.
Any reference herein to the Registration Statement, any Prospectus
Supplement, Prospectus or any Issuer Free Writing Prospectus (defined below)
shall be deemed to refer to and include the documents, if any, incorporated by
reference therein (the "Incorporated Documents"), including, unless the context
otherwise requires, the documents, if any, filed as exhibits to such
Incorporated Documents. Any reference herein to the terms "amend," "amendment"
or "supplement" with respect to the Registration Statement, any Prospectus
Supplement, the Prospectus or any Issuer Free Writing Prospectus shall be deemed
to refer to and include the filing of any document under the Exchange Act on or
after the date hereof that is incorporated by reference into the Registration
Statement. For purposes of this Agreement, all references to the Registration
Statement, the Prospectus or to any amendment or supplement thereto shall be
deemed to include the most recent copy filed with the Commission pursuant to its
Electronic Data Gathering Analysis and Retrieval System, or if applicable, the
Interactive Data Electronic Application system when used by the Commission
(collectively, "▇▇▇▇▇").
2. Placements. Each time that the Company wishes to issue and sell
Placement Shares hereunder (each, a "Placement"), it will notify MLV by email
notice (or other method mutually agreed to in writing by the Parties) of the
number of Placement Shares, the time period during which sales are requested to
be made, any limitation on the number of Placement Shares that may be sold in
any one day and any minimum price below which sales may not be made (a
"Placement Notice"), the form of which is attached hereto as Schedule 1. The
Placement Notice shall originate from any of the individuals from the Company
set forth on Schedule 3 (with a copy to each of the other individuals from the
Company listed on such schedule), and shall be addressed to each of the
individuals from MLV set forth on Schedule 3, as such Schedule 3 may be amended
from time to time. The Placement Notice shall be effective unless and until (i)
MLV declines to accept the terms contained therein for any reason, in its sole
discretion, (ii) the entire amount of the Placement Shares thereunder have been
sold, (iii) the Company suspends or terminates the Placement Notice or (iv) the
Agreement has been terminated under the provisions of Section 12. The amount of
any discount, commission or other compensation to be paid by the Company to MLV
in connection with the sale of the Placement Shares shall be calculated in
accordance with the terms set forth in Schedule 2. It is expressly acknowledged
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and agreed that neither the Company nor MLV will have any obligation whatsoever
with respect to a Placement or any Placement Shares unless and until the Company
delivers a Placement Notice to MLV and MLV does not decline such Placement
Notice pursuant to the terms set forth above, and then only upon the terms
specified therein and herein. In the event of a conflict between the terms of
this Agreement and the terms of a Placement Notice, the terms of the Placement
Notice will control.
3. Sale of Placement Shares by MLV. Subject to the provisions of Section
5(a), MLV, for the period specified in the Placement Notice, will use its
commercially reasonable efforts consistent with its normal trading and sales
practices and applicable state and federal laws, rules and regulations and the
rules of the NYSE Amex (the "Exchange"), to sell the Placement Shares up to the
amount specified, and otherwise in accordance with the terms of such Placement
Notice. MLV will provide written confirmation to the Company no later than the
opening of the Trading Day (as defined below) immediately following the Trading
Day on which it has made sales of Placement Shares hereunder setting forth the
number of Placement Shares sold on such day, the compensation payable by the
Company to MLV pursuant to Section 2 with respect to such sales, and the Net
Proceeds (as defined below) payable to the Company, with an itemization of the
deductions made by MLV (as set forth in Section 5(b)) from the gross proceeds
that it receives from such sales. Subject to the terms of the Placement Notice,
MLV may sell Placement Shares by any method permitted by law deemed to be an "at
the market" offering as defined in Rule 415 of the Securities Act Regulations,
including without limitation sales made directly on the Exchange, on any other
existing trading market for the Common Stock or to or through a market maker.
Subject to the terms of a Placement Notice, MLV may also sell Placement Shares
by any other method permitted by law, including but not limited to in privately
negotiated transactions. "Trading Day" means any day on which Common Stock are
purchased and sold on the Exchange.
4. Suspension of Sales. The Company or MLV may, upon notice to the other
party in writing (including by email correspondence to each of the individuals
of the other Party set forth on Schedule 3, if receipt of such correspondence is
actually acknowledged by any of the individuals to whom the notice is sent,
other than via auto-reply) or by telephone (confirmed immediately by verifiable
facsimile transmission or email correspondence to each of the individuals of the
other Party set forth on Schedule 3), suspend any sale of Placement Shares;
provided, however, that such suspension shall not affect or impair any party's
obligations with respect to any Placement Shares sold hereunder prior to the
receipt of such notice. Each of the parties agrees that no such notice under
this Section 4 shall be effective against any other party unless it is made to
one of the individuals named on Schedule 3 hereto, as such Schedule may be
amended from time to time.
5. Sale and Delivery to MLV; Settlement.
(a) Sale of Placement Shares. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, upon MLV's acceptance of the terms of a Placement Notice, and unless the
sale of the Placement Shares described therein has been declined, suspended, or
otherwise terminated in accordance with the terms of this Agreement, MLV, for
the period specified in the Placement Notice, will use its commercially
reasonable efforts consistent with its normal trading and sales practices to
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sell such Placement Shares up to the amount specified, and otherwise in
accordance with the terms of such Placement Notice. The Company acknowledges and
agrees that (i) there can be no assurance that MLV will be successful in selling
Placement Shares, (ii) MLV will incur no liability or obligation to the Company
or any other person or entity if it does not sell Placement Shares for any
reason other than a failure by MLV to use its commercially reasonable efforts
consistent with its normal trading and sales practices and applicable law and
regulations to sell such Placement Shares as required under this Agreement and
(iii) MLV shall be under no obligation to purchase Placement Shares on a
principal basis pursuant to this Agreement, except as otherwise agreed by MLV
and the Company.
(b) Settlement of Placement Shares. Unless otherwise specified in the
applicable Placement Notice, settlement for sales of Placement Shares will occur
on the third (3rd) Trading Day (or such earlier day as is industry practice for
regular-way trading) following the date on which such sales are made (each, a
"Settlement Date"). The amount of proceeds to be delivered to the Company on a
Settlement Date against receipt of the Placement Shares sold (the "Net
Proceeds") will be equal to the aggregate sales price received by MLV, after
deduction for (i) MLV's commission, discount or other compensation for such
sales payable by the Company pursuant to Section 2 hereof, and (ii) any
transaction fees imposed by any governmental or self-regulatory organization in
respect of such sales.
(c) Delivery of Placement Shares. On or before each Settlement Date, the
Company will, or will cause its transfer agent to, electronically transfer the
Placement Shares being sold by crediting MLV's or its designee's account
(provided MLV shall have given the Company written notice of such designee prior
to the Settlement Date) at The Depository Trust Company through its Deposit and
Withdrawal at Custodian System or by such other means of delivery as may be
mutually agreed upon by the parties hereto which in all cases shall be freely
tradable, transferable, registered shares in good deliverable form. On each
Settlement Date, MLV will deliver the related Net Proceeds in same day funds to
an account designated by the Company on, or prior to, the Settlement Date. The
Company agrees that if the Company, or its transfer agent (if applicable),
defaults in its obligation to deliver Placement Shares on a Settlement Date, the
Company agrees that in addition to and in no way limiting the rights and
obligations set forth in Section 10(a) hereto, it will (i) hold MLV harmless
against any loss, claim, damage, or expense (including reasonable legal fees and
expenses), as incurred, arising out of or in connection with such default by the
Company or its transfer agent (if applicable) and (ii) pay to MLV any
commission, discount, or other compensation to which it would otherwise have
been entitled absent such default.
(d) Denominations; Registration. Certificates for the Placement Shares, if
any, shall be in such denominations and registered in such names as MLV may
request in writing at least one Business Day (as defined below) before the
Settlement Date. The certificates for the Placement Shares, if any, will be made
available by the Company for examination and packaging by MLV in The City of New
York not later than noon (New York time) on the Business Day prior to the
Settlement Date.
(e) Limitations on Offering Size. Under no circumstances shall the Company
cause or request the offer or sale of any Placement Shares if, after giving
effect to the sale of such Placement Shares, the aggregate gross sales proceeds
of Placement Shares sold pursuant to this Agreement would exceed the lesser of
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(A) together with all sales of Placement Shares under this Agreement, the
Maximum Amount, (B) the amount available for offer and sale under the currently
effective Registration Statement and (C) the amount authorized from time to time
to be issued and sold under this Agreement by the Company's board of directors,
a duly authorized committee thereof or a duly authorized executive committee,
and notified to MLV in writing. Under no circumstances shall the Company cause
or request the offer or sale of any Placement Shares pursuant to this Agreement
at a price lower than the minimum price authorized from time to time by the
Company's board of directors, a duly authorized committee thereof or a duly
authorized executive committee, and notified to MLV in writing. Further, under
no circumstances shall the Company cause or permit the aggregate offering amount
of Placement Shares sold pursuant to this Agreement to exceed the Maximum
Amount.
6. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with MLV that as of the date of this Agreement and
as of each Applicable Time (as defined below), unless such representation,
warranty or agreement specifies a different time or time:
(a) Registration Statement and Prospectus. The Company and, assuming no act
or omission on the part of MLV that would make such statement untrue, the
transactions contemplated by this Agreement meet the requirements for and comply
with the conditions for the use of Form S-3 under the Securities Act. The
Registration Statement has been filed with the Commission and has been declared
effective under the Securities Act. The Prospectus Supplement will name MLV as
the agent in the section entitled "Plan of Distribution." The Company has not
received, and has no notice of, any order of the Commission preventing or
suspending the use of the Registration Statement, or threatening or instituting
proceedings for that purpose. The Registration Statement and the offer and sale
of Placement Shares as contemplated hereby meet the requirements of Rule 415
under the Act and comply in all material respects with said Rule. Any statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been so described or filed. Copies of the
Registration Statement, the Prospectus, and any such amendments or supplements
and all documents incorporated by reference therein that were filed with the
Commission on or prior to the date of this Agreement have been delivered, or are
available through ▇▇▇▇▇, to MLV and its counsel. The Company has not distributed
and, prior to the later to occur of each Settlement Date and completion of the
distribution of the Placement Shares, will not distribute any offering material
in connection with the offering or sale of the Placement Shares other than the
Registration Statement and the Prospectus and any Issuer Free Writing Prospectus
(as defined below) to which MLV has consented. The Common Stock is currently
quoted on the Exchange under the trading symbol "CVM". Except as disclosed in
the Registration Statement, including the Incorporated Documents, the Company
has not, in the 12 months preceding the date hereof, received notice from the
Exchange to the effect that the Company is not in compliance with the listing or
maintenance requirements. Except as disclosed in the Registration Statement,
including the Incorporated Documents, or the Prospectus, the Company has no
reason to believe that it will not in the foreseeable future continue to be in
compliance with all such listing and maintenance requirements.
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(b) No Misstatement or Omission. The Registration Statement, when it became
effective, and the Prospectus, and any amendment or supplement thereto, on the
date of such Prospectus or amendment or supplement, conformed and will conform
in all material respects with the requirements of the Securities Act. At each
Settlement Date, the Registration Statement and the Prospectus, as of such date,
will conform in all material respects with the requirements of the Securities
Act. The Registration Statement, when it became or becomes effective, did not,
and will not, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus and any amendment and supplement thereto,
on the date thereof and at each Applicable Time (defined below), did not or will
not include an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The documents incorporated by
reference in the Prospectus or any Prospectus Supplement did not, and any
further documents filed and incorporated by reference therein will not, when
filed with the Commission, contain an untrue statement of a material fact or
omit to state a material fact required to be stated in such document or
necessary to make the statements in such document, in light of the circumstances
under which they were made, not misleading. The foregoing shall not apply to
statements in, or omissions from, any such document made in reliance upon, and
in conformity with, information furnished to the Company by MLV specifically for
use in the preparation thereof.
(c) Conformity with Securities Act and Exchange Act. The Registration
Statement, the Prospectus, any Issuer Free Writing Prospectus or any amendment
or supplement thereto, and the documents incorporated by reference in the
Registration Statement, the Prospectus or any amendment or supplement thereto,
when such documents were or are filed with the Commission under the Securities
Act or the Exchange Act or became or become effective under the Securities Act,
as the case may be, conformed or will conform in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable.
(d) Financial Information. The consolidated financial statements of the
Company included or incorporated by reference in the Registration Statement, the
Prospectus and the Issuer Free Writing Prospectuses, if any, together with the
related notes and schedules, present fairly, in all material respects, the
consolidated financial position of the Company and the Subsidiaries as of the
dates indicated and the consolidated results of operations, cash flows and
changes in stockholders' equity of the Company for the periods specified and
have been prepared in compliance with the requirements of the Securities Act and
Exchange Act, as applicable, and in conformity with GAAP (as defined below)
applied on a consistent basis (except for such adjustments to accounting
standards and practices as are noted therein) during the periods involved; the
other financial and statistical data with respect to the Company and the
Subsidiaries contained or incorporated by reference in the Registration
Statement, the Prospectus and the Issuer Free Writing Prospectuses, if any, are
accurately and fairly presented and prepared on a basis consistent with the
financial statements and books and records of the Company; there are no
financial statements (historical or pro forma) that are required to be included
or incorporated by reference in the Registration Statement, or the Prospectus
that are not included or incorporated by reference as required; the Company and
the Subsidiaries (as defined below) do not have any material liabilities or
obligations, direct or contingent (including any off-balance sheet obligations),
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not described in the Registration Statement (excluding the exhibits thereto and
Incorporated Documents), and the Prospectus which are required to be described
in the Registration Statement or the Prospectus (including Exhibits thereto and
Incorporated Documents); and all disclosures contained or incorporated by
reference in the Registration Statement, the Prospectus and the Issuer Free
Writing Prospectuses, if any, regarding "non-GAAP financial measures" (as such
term is defined by the rules and regulations of the Commission) comply with
Regulation G of the Exchange Act and Item 10 of Regulation S-K under the
Securities Act, to the extent applicable;
(e) Conformity with ▇▇▇▇▇ Filing. The Prospectus delivered to MLV for use
in connection with the sale of the Placement Shares pursuant to this Agreement
will be identical to the versions of the Prospectus transmitted to the
Commission for filing via ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(f) Organization. The Company and each of its Subsidiaries are, and 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 each
of its Subsidiaries are, and will be, duly licensed or 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 license or
qualification, and 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 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 the assets,
business, operations, earnings, properties, condition (financial or otherwise),
prospects, stockholders' equity or results of operations of the Company and the
Subsidiaries (as defined below) taken as a whole, or prevent or materially
interfere with consummation of the transactions contemplated hereby (a "Material
Adverse Effect").
(g) Subsidiaries. The subsidiaries set forth on Schedule 4 (collectively,
the "Subsidiaries"), are the Company's only significant subsidiaries (as such
term is defined in Rule 1-02 of Regulation S-X promulgated by the Commission).
Except as set forth in the Registration Statement and in the Prospectus, the
Company owns, directly or indirectly, all of the equity interests of the
Subsidiaries free and clear of any lien, charge, security interest, encumbrance,
right of first refusal or other restriction, and all the equity interests of the
Subsidiaries are validly issued and are fully paid, nonassessable and free of
preemptive and similar rights.
(h) No Violation or Default. Neither the Company nor any of its
Subsidiaries is (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 any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound or to which any of the
property or assets of the Company or any of 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,
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reasonably be expected to have a Material Adverse Effect. Except as described in
the Prospectus, the Prospectus Supplement or the Incorporated Documents, to the
Company's knowledge, no other party under any material contract or other
agreement to which it or any of its Subsidiaries is a party is in default in any
respect thereunder where such default would reasonably be expected to have a
Material Adverse Effect.
(i) No Material Adverse Change. Subsequent to the respective dates as of
which information is given in the Registration Statement, the Prospectus and the
Free Writing Prospectuses, if any (including any document deemed incorporated by
reference therein), there has not been (i) any Material Adverse Effect, or any
development involving a prospective Material Adverse Effect, in or affecting the
business, properties, management, financial, condition (financial or otherwise),
results of operations, or prospects of the Company and the Subsidiaries taken as
a whole, (ii) any transaction which is material to the Company and the
Subsidiaries taken as a whole, (iii) any obligation or liability, direct or
contingent (including any off-balance sheet obligations), incurred by the
Company or any Subsidiary, which is material to the Company and the Subsidiaries
taken as a whole, (iv) any material change in the capital stock (other than as a
result of the sale of Placement Shares or other than as described in a proxy
statement filed on Schedule 14A or a Registration Statement on Form S-4 and
otherwise publicly announced) or outstanding long-term indebtedness of the
Company or any of its Subsidiaries or (v) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company or any
Subsidiary, other than in each case above in the ordinary course of business or
as otherwise disclosed in the Registration Statement or Prospectus (including
any document deemed incorporated by reference therein);
(j) 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 the Registration Statement or the Prospectus, are not
subject to any preemptive rights, rights of first refusal or similar rights. The
Company has an authorized, issued and outstanding capitalization as set forth in
the Registration Statement and the 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 Common Stock of the
Company due to the issuance of shares upon the exercise or conversion of
securities exercisable for, or convertible into, Common Stock outstanding on the
date hereof or as a result of the issuance of Placement Shares) and such
authorized capital stock conforms to the description thereof set forth in the
Registration Statement and the Prospectus. The description of the Common Stock
in the Registration Statement and the Prospectus is complete and accurate in all
material respects. Except as disclosed in or contemplated by the Registration
Statement or the 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.
(k) Authorization; Enforceability. The Company has full legal right, power
and authority to enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable in accordance with its terms, except to the extent that (i)
enforceability may be limited by bankruptcy, insolvency, reorganization,
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moratorium or similar laws affecting creditors' rights generally and by general
equitable principles and (ii) the indemnification and contribution provisions of
Section 10 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof.
(l) Authorization of Placement Shares. The Placement Shares, when issued
and delivered pursuant to the terms approved by the board of directors of the
Company or a duly authorized committee thereof, or a duly authorized executive
committee, against payment therefor as provided herein, will be duly and validly
authorized and issued and fully paid and nonassessable, free and clear of any
pledge, lien, encumbrance, security interest or other claim (other than any
pledge, lien, encumbrance, security interest or other claim arising from an act
or omission of MLV or a purchaser), including any statutory or contractual
preemptive rights, resale rights, rights of first refusal or other similar
rights, and will be registered pursuant to Section 12 of the Exchange Act. The
Placement Shares, when issued, will conform in all material respects to the
description thereof set forth in or incorporated into the Prospectus.
(m) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or any
governmental or regulatory authority is required for the execution, delivery and
performance by the Company of this Agreement, and the issuance and sale by the
Company of the Placement Shares as contemplated hereby, except for 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 Financial Industry Regulatory Authority ("FINRA") or the Exchange
in connection with the sale of the Placement Shares by MLV.
(n) No Preferential Rights. Except as set forth in the Registration
Statement and the Prospectus, (i) no person, as such term is defined in Rule
1-02 of Regulation S-X promulgated under the Securities Act (each, a "Person"),
has the right, contractual or otherwise, to cause the Company to issue or sell
to such Person any Common Stock or shares of any other capital stock or other
securities of the Company (other than upon the exercise of options or warrants
to purchase Common Stock or upon the exercise of options that may be granted
from time to time under the Company's stock option plans), (ii) no Person has
any preemptive rights, rights of first refusal, or any other rights (whether
pursuant to a "poison pill" provision or otherwise) to purchase any Common Stock
or shares of any other capital stock or other securities of the Company from the
Company which have not been duly waived with respect to the offering
contemplated hereby, (iii) no Person has the right to act as an underwriter or
as a financial advisor to the Company in connection with the offer and sale of
the Common Stock, and (iv) except as disclosed in the Company's filings with the
Securities and Exchange Commission, no Person has the right, contractual or
otherwise, to require the Company to register under the Securities Act any
Common Stock or shares of any other capital stock or other securities of the
Company, or to include any such shares or other securities in the Registration
Statement or the offering contemplated thereby, whether as a result of the
filing or effectiveness of the Registration Statement or the sale of the
Placement Shares as contemplated thereby or otherwise.
(o) Independent Public Accountant. BDO USA, LLP (the "Accountants"), whose
report on the consolidated financial statements of the Company is filed with the
Commission as part of the Company's most recent Annual Report on Form 10-K filed
with the Commission and incorporated into the Registration Statement,
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are and, during the periods covered by their report, were independent public
accountants within the meaning of the Securities Act and the Public Company
Accounting Oversight Board (United States). To the Company's knowledge, after
due inquiry, the Accountants are not in violation of the auditor independence
requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act") with
respect to the Company.
(p) Enforceability of Agreements. All agreements between the Company and
third parties expressly referenced in the Prospectus, other than such agreements
that have expired by their terms or whose termination is disclosed in documents
filed by the Company on ▇▇▇▇▇, are legal, valid and binding obligations of the
Company enforceable in accordance with their respective terms, except to the
extent that (i) enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by general equitable principles and (ii) the indemnification provisions of
certain agreements may be limited be federal or state securities laws or public
policy considerations in respect thereof, except for any unenforceability that,
individually or in the aggregate, would not unreasonably be expected to have a
Material Adverse Effect.
(q) No Litigation. Except as set forth in the Registration Statement or the
Prospectus, there are no legal, governmental or regulatory actions, suits or
proceedings pending, nor, to the Company's knowledge, any legal, governmental or
regulatory investigations, to which the Company or a Subsidiary is a party or to
which any property of the Company or any of its Subsidiaries is the subject
that, individually or in the aggregate, if determined adversely to the Company
or any of 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 this Agreement; 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 that, individually
or in the aggregate, if determined adversely to the Company or any of its
Subsidiaries, would reasonably be expected to have a Material Adverse Effect; or
and (i) 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 Prospectus that are not described in the Prospectus
including any Incorporated Document; and (ii) there are no contracts or other
documents that are required under the Securities Act to be filed as exhibits to
the Registration Statement that are not so filed.
(r) Licenses and Permits. Except as set forth in the Registration Statement
or the Prospectus, the Company and each of its Subsidiaries possess or have
obtained, all licenses, certificates, consents, orders, approvals, 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 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. Except as
disclosed in the Registration Statement or the Prospectus, neither the Company
nor any of its Subsidiaries have received written notice of any proceeding
relating to revocation or modification of any such Permit or has any reason to
10
believe that such Permit will not be renewed in the ordinary course, except
where the failure to obtain any such renewal would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(s) No Material Defaults. Neither the Company nor any of the Subsidiaries
has defaulted on any installment on indebtedness for borrowed money or on any
rental on one or more long-term leases, which defaults, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect. The
Company has not filed a report pursuant to Section 13(a) or 15(d) of the
Exchange Act since the filing of its last Annual Report on Form 10-K, indicating
that it (i) has failed to pay any dividend or sinking fund installment on
preferred stock or (ii) has defaulted on any installment on indebtedness for
borrowed money or on any rental on one or more long-term leases, which defaults,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(t) Certain Market Activities. Neither the Company, nor any of the
Subsidiaries, nor any of their respective directors, officers or controlling
persons has taken, directly or indirectly, any action designed, or that has
constituted or might reasonably be expected to cause or result in, under the
Exchange Act or otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Placement
Shares.
(u) Broker/Dealer Relationships. Neither the Company nor any of the
Subsidiaries or any related entities (i) is required to register as a "broker"
or "dealer" in accordance with the provisions of the Exchange Act or (ii)
directly or indirectly through one or more intermediaries, controls or is a
"person associated with a member" or "associated person of a member" (within the
meaning set forth in the FINRA Manual). No officer, director or holder of 5% or
more of the Company's Common Stock is an associated person of a FINRA registered
broker-dealer firm.
(v) No Reliance. The Company has not relied upon MLV or legal counsel for
MLV for any legal, tax or accounting advice in connection with the offering and
sale of the Placement Shares.
(w) Taxes. The Company and each of 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, except where
the failure to do so would not reasonably be expected to have a Material Adverse
Effect. Except as otherwise disclosed in or contemplated by the Registration
Statement or the Prospectus, no tax deficiency has been determined adversely to
the Company or any of its Subsidiaries which has had, or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
The Company has no knowledge of any federal, state or other governmental tax
deficiency, penalty or assessment which has been or might be asserted or
threatened against it which could have a Material Adverse Effect.
(x) Title to Real and Personal Property. Except as set forth in the
Registration Statement or the Prospectus, the Company and its Subsidiaries have
good and valid title in fee simple to all items of real property and good and
valid title to all personal property described in the Registration Statement or
11
Prospectus as being owned by them that are material to the businesses of the
Company or such Subsidiary, 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 any of
its Subsidiaries or (ii) would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect. Any real property described in
the Registration Statement or Prospectus as being leased by the Company and any
of its Subsidiaries is held by them under valid, existing and enforceable
leases, except those that (A) do not materially interfere with the use made or
proposed to be made of such property by the Company or any of its Subsidiaries
or (B) would not be reasonably expected, individually or in the aggregate, to
have a Material Adverse Effect.
(y) Intellectual Property. Except as set forth in the Registration
Statement or the Prospectus, the Company and its Subsidiaries own or possess
adequate enforceable rights to use all patents, patent applications, trademarks
(both registered and unregistered), service marks, trade names, trademark
registrations, service ▇▇▇▇ 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; except as disclosed in writing to MLV, the Company and
any of 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; there are no pending, or to the Company's
knowledge, threatened judicial proceedings or interference proceedings
challenging the Company's or its Subsidiaries' rights in or to or the validity
of the scope of any of the Company's or its Subsidiaries' patents, patent
applications or proprietary information; no other entity or individual has any
right or claim in any of the Company's or its Subsidiaries' patents, patent
applications or any patent to be issued therefrom by virtue of any contract,
license or other agreement entered into between such entity or individual and
the Company or a Subsidiary or by any non-contractual obligation, other than by
written licenses granted by the Company or a Subsidiary; the Company and its
Subsidiaries have not received any written notice of any claim challenging the
rights of the Company or a Subsidiary in or to any Intellectual Property owned,
licensed or optioned by the Company or such Subsidiary which claim, if the
subject of an unfavorable decision would result in a Material Adverse Effect.
(z) Environmental Laws. Except as set forth in the Registration Statement
or the Prospectus, 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 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
12
required permits, licenses, other approvals or liability as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(aa) Disclosure Controls. The Company and each of its Subsidiaries maintain
systems of internal accounting controls designed 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 is not aware of any material weaknesses
in its internal control over financial reporting (other than as set forth in the
Prospectus). Since the date of the latest audited financial statements of the
Company included in the Prospectus, there has been no change in the Company's
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting (other than as set forth in the Prospectus). 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 each
of its Subsidiaries is 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 controls and procedures as of a date within 90
days prior to the filing date of the Form 10-K for the fiscal year most recently
ended (such date, the "Evaluation Date"). The Company presented in its Form 10-K
for the fiscal year most recently ended 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 controls (as such
term is defined in Item 307(b) of Regulation S-K under the Act) or, to the
Company's knowledge, in other factors that could significantly affect the
Company's internal controls. To the knowledge of the Company, the Company's
"internal controls over financial reporting" and "disclosure controls and
procedures" are effective.
(bb) ▇▇▇▇▇▇▇▇-▇▇▇▇▇. There is and has been no failure on the part of the
Company or, to the knowledge of the Company, any of the Company's directors or
officers, in their capacities as such, to comply with any applicable provisions
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations promulgated thereunder.
Each of the principal executive officer and the principal financial officer of
the Company (or each former principal executive officer of the Company and each
former principal financial officer of the Company as applicable) has made all
certifications required by Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act with
respect to all reports, schedules, forms, statements and other documents
required to be filed by it or furnished by it to the Commission. For purposes of
the preceding sentence, "principal executive officer" and "principal financial
officer" shall have the meanings given to such terms in the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(cc) Finder's Fees. Neither the Company nor any of the Subsidiaries has
incurred any liability for any finder's fees, brokerage commissions or similar
13
payments in connection with the transactions herein contemplated, except as may
otherwise exist with respect to MLV pursuant to this Agreement.
(dd) Labor Disputes. No labor disturbance by or dispute with employees of
the Company or any of its Subsidiaries exists or, to the knowledge of the
Company, is threatened which would reasonably be expected to result in a
Material Adverse Effect
(ee) Investment Company Act. Neither the Company nor any of the
Subsidiaries is or, after giving effect to the offering and sale of the
Placement Shares, will be an "investment company" or an entity "controlled" by
an "investment company," as such terms are defined in the Investment Company Act
of 1940, as amended (the "Investment Company Act").
(ff) Operations. The operations of the Company and its Subsidiaries are and
have been conducted at all times in compliance with applicable financial record
keeping and reporting requirements of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, the money laundering statutes of all
jurisdictions to which the Company or its Subsidiaries are subject, the rules
and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the "Money Laundering Laws"), except as would not reasonably be
expected to result in a Material Adverse Effect; and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its Subsidiaries with respect to
the Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.
(gg) Off-Balance Sheet Arrangements. There are no transactions,
arrangements and other relationships between and/or among the Company, and/or,
to the knowledge of the Company, any of its affiliates and any unconsolidated
entity, including, but not limited to, any structural finance, special purpose
or limited purpose entity (each, an "Off Balance Sheet Transaction") that could
reasonably be expected to affect materially the Company's liquidity or the
availability of or requirements for its capital resources, including those Off
Balance Sheet Transactions described in the Commission's Statement about
Management's Discussion and Analysis of Financial Conditions and Results of
Operations (Release Nos. 33-8056; 34-45321; FR-61), required to be described in
the Prospectus which have not been described as required.
(hh) Underwriter Agreements. Except as disclosed in the Company's filings
with the Securities and Exchange Commission the Company is not a party to any
agreement with an agent or underwriter for any other "at-the-market" or
continuous equity transaction.
(ii) ERISA. To the knowledge of the Company, 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 any of its Subsidiaries has 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
14
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.
(jj) 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 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 Prospectus from
the Company's Annual Report on Form 10-K for the fiscal year most recently ended
(i) except for any Forward Looking Statement included in any financial
statements and notes thereto, are within the coverage of the safe harbor for
forward looking statements set forth in Section 27A of the Securities Act, Rule
175(b) under the Securities 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 commercially 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.
(kk) Margin Rules. Neither the issuance, sale and delivery of the Placement
Shares nor the application of the proceeds thereof by the Company as described
in the Registration Statement and the Prospectus will violate Regulation T, U or
X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board of Governors.
(ll) Insurance. The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as the Company and
each of its Subsidiaries reasonably believe are adequate for the conduct of
their properties and as is customary for companies of similar size engaged in
similar businesses in similar industries.
(mm) No Improper Practices. (i) Neither the Company nor, to the Company's
knowledge, the Subsidiaries, nor to the Company's knowledge, any of their
respective executive officers has, in the past five years, made any unlawful
contributions to any candidate for any political office (or failed fully to
disclose any contribution in violation of law) or made any contribution or other
payment to any official of, or candidate for, any federal, state, municipal, or
foreign office or other person charged with similar public or quasi-public duty
in violation of any law or of the character required to be disclosed in the
Prospectus; (ii) no relationship, direct or indirect, exists between or among
the Company or, to the Company's knowledge, any Subsidiary or any affiliate of
any of them, on the one hand, and the directors, officers and stockholders of
the Company or, to the Company's knowledge, any Subsidiary, on the other hand,
that is required by the Securities Act to be described in the Registration
Statement and the Prospectus that is not so described; (iii) no relationship,
direct or indirect, exists between or among the Company or any Subsidiary or any
affiliate of them, on the one hand, and the directors, officers, stockholders or
directors of the Company or, to the Company's knowledge, any Subsidiary, on the
other hand, that is required by the rules of FINRA to be described in the
15
Registration Statement and the Prospectus that is not so described; (iv) except
as described in the Prospectus, there are no material outstanding loans or
advances or material guarantees of indebtedness by the Company or, to the
Company's knowledge, any Subsidiary to or for the benefit of any of their
respective officers or directors or any of the members of the families of any of
them; and (v) the Company has not offered, or caused any placement agent to
offer, Common Stock to any person with the intent to influence unlawfully (A) a
customer or supplier of the Company or any Subsidiary to alter the customer's or
supplier's level or type of business with the Company or any Subsidiary or (B) a
trade journalist or publication to write or publish favorable information about
the Company or any Subsidiary or any of their respective products or services,
and, (vi) neither the Company nor any Subsidiary nor, to the Company's
knowledge, any employee or agent of the Company or any Subsidiary has made any
payment of funds of the Company or any Subsidiary or received or retained any
funds in violation of any law, rule or regulation (including, without
limitation, the Foreign Corrupt Practices Act of 1977), which payment, receipt
or retention of funds is of a character required to be disclosed in the
Registration Statement or the Prospectus.
(nn) Status Under the Securities Act. The Company was not and is not an
ineligible issuer as defined in Rule 405 under the Securities Act at the times
specified in Rules 164 and 433 under the Act in connection with the offering of
the Placement Shares.
(oo) No Misstatement or Omission in an Issuer Free Writing Prospectus. Each
Issuer Free Writing Prospectus, as of its issue date and as of each Applicable
Time (as defined in Section 24 below), did not, does not and will not include
any information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement or the Prospectus, including any
incorporated document deemed to be a part thereof that has not been superseded
or modified. The foregoing sentence does not apply to statements in or omissions
from any Issuer Free Writing Prospectus based upon and in conformity with
written information furnished to the Company by MLV specifically for use
therein.
(pp) No Conflicts. Neither the execution of this Agreement, nor the
issuance, offering or sale of the Placement Shares, nor the consummation of any
of the transactions contemplated herein and therein, nor the compliance by the
Company with the terms and provisions hereof and thereof will conflict with, 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 pursuant to the terms of any contract or other
agreement to which the Company may be bound or to which any of the property or
assets of the Company is subject, except (i) such conflicts, breaches or
defaults as may have been waived and (ii) such conflicts, breaches and defaults
that would not reasonably be expected to have a Material Adverse Effect; nor
will such action result (x) in any violation of the provisions of the
organizational or governing documents of the Company, or (y) in any material
violation of the provisions of any statute or any order, rule or regulation
applicable to the Company or of any court or of any federal, state or other
regulatory authority or other government body having jurisdiction over the
Company, except where such violation would not reasonably be expected to have a
Material Adverse Effect.
16
(qq) Clinical Studies. The clinical, pre-clinical and other studies and
tests conducted by or, to the knowledge of the Company, on behalf of the Company
were, and, if still pending, are being, conducted in accordance in all material
respects with all statutes, laws, rules and regulations, as applicable
(including, without limitation, those administered by the FDA or by any foreign,
federal, state or local governmental or regulatory authority performing
functions similar to those performed by the FDA). Except as set forth in the
Registration Statement and Prospectus, the Company has not received any written
notices or other written correspondence from the FDA or any other foreign,
federal, state or local governmental or regulatory authority performing
functions similar to those performed by the FDA requiring the Company to
terminate or suspend any ongoing clinical or pre-clinical studies or tests.
(rr) Compliance Program. Except as disclosed in the Registration Statement
and the Prospectus, the Company has established and administers a compliance
program applicable to the Company, to assist the Company and the directors,
officers and employees of the Company in complying with applicable regulatory
guidelines (including, without limitation, those administered by the FDA and any
other foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA); except where such
noncompliance would not reasonably be expected to have a Material Adverse
Effect.
(ss) OFAC. (i) The Company represents that, neither the Company nor any of
its Subsidiaries (collectively, the "Entity") or any director, officer,
employee, agent, affiliate or representative of the Entity, is a government,
individual, or entity (in this paragraph (tt), "Person") that is, or is owned or
controlled by a Person that is:
(A) the subject of any sanctions administered or enforced by the
U.S. Department of Treasury's Office of Foreign Assets Control
("OFAC"), the United Nations Security Council ("UNSC"), the European
Union ("EU"), Her Majesty's Treasury ("HMT"), or other relevant
sanctions authority (collectively, "Sanctions"), nor
(B) located, organized or resident in a country or territory that
is the subject of Sanctions (including, without limitation,
Burma/Myanmar, Cuba, Iran, North Korea, Sudan and Syria).
(ii) The Entity represents and covenants that it will not, directly
or indirectly, use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture
partner or other Person:
(A) to fund or facilitate any activities or business of or
with any Person or in any country or territory that, at the time of
such funding or facilitation, is the subject of Sanctions; or
(B) in any other manner that will result in a violation of
Sanctions by any Person (including any Person participating in the
offering, whether as underwriter, advisor, investor or otherwise).
(iii) The Entity represents and covenants that, except as detailed
in the Prospectus, for the past 5 years, it has not knowingly engaged in, is
17
not now knowingly engaged in, and will not engage in, any dealings or
transactions with any Person, or in any country or territory, that at the time
of the dealing or transaction is or was the subject of Sanctions.
(tt) Stock Transfer Taxes. On each Settlement Date, all stock transfer or
other taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Placement Shares to be sold
hereunder will be, or will have been, fully paid or provided for by the Company
and all laws imposing such taxes will be or will have been fully complied with.
Any certificate signed by an officer of the Company and delivered to MLV
or to counsel for MLV pursuant to or in connection with this Agreement shall be
deemed to be a representation and warranty by the Company, as applicable, to MLV
as to the matters set forth therein.
7. Covenants of the Company. The Company covenants and agrees with MLV
that:
(a) Registration Statement Amendments. After the date of this Agreement and
during any period in which a Prospectus relating to any Placement Shares is
required to be delivered by MLV under the Securities Act (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 under
the Securities Act), (i) the Company will notify MLV promptly of the time when
any subsequent amendment to the Registration Statement, other than documents
incorporated by reference, has been filed with the Commission and/or has become
effective or any subsequent supplement to the Prospectus has been filed and of
any request by the Commission for any amendment or supplement to the
Registration Statement or Prospectus or for additional information, (ii) the
Company will prepare and file with the Commission, promptly upon MLV's request,
any amendments or supplements to the Registration Statement or Prospectus that,
in MLV's reasonable opinion, may be necessary or advisable in connection with
the distribution of the Placement Shares by MLV (provided, however, that the
failure of MLV to make such request shall not relieve the Company of any
obligation or liability hereunder, or affect MLV's right to rely on the
representations and warranties made by the Company in this Agreement and
provided, further, that the only remedy MLV shall have with respect to the
failure to make such filing shall be to cease making sales under this Agreement
until such amendment or supplement is filed); (iii) the Company will not file
any amendment or supplement to the Registration Statement or Prospectus relating
to the Placement Shares or a security convertible into the Placement Shares
unless a copy thereof has been submitted to MLV within a reasonable period of
time before the filing and MLV has not objected thereto (provided, however, that
the failure of MLV to make such objection shall not relieve the Company of any
obligation or liability hereunder, or affect MLV's right to rely on the
representations and warranties made by the Company in this Agreement and
provided, further, that the only remedy MLV shall have with respect to the
failure by the Company to obtain such consent shall be to cease making sales
under this Agreement) and the Company will furnish to MLV at the time of filing
thereof a copy of any document that upon filing is deemed to be incorporated by
reference into the Registration Statement or Prospectus, except for those
documents available via ▇▇▇▇▇; and (iv) the Company will cause each amendment or
supplement to the Prospectus to be filed with the Commission as required
pursuant to the applicable paragraph of Rule 424(b) of the Securities Act or, in
the case of any document to be incorporated therein by reference, to be filed
18
with the Commission as required pursuant to the Exchange Act, within the time
period prescribed (the determination to file or not file any amendment or
supplement with the Commission under this Section 7(a), based on the Company's
reasonable opinion or reasonable objections, shall be made exclusively by the
Company).
(b) Notice of Commission Stop Orders. The Company will advise MLV, promptly
after it receives notice or obtains knowledge thereof, of the issuance or
threatened issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, of the suspension of the
qualification of the Placement Shares for offering or sale in any jurisdiction,
or of the initiation or threatening of any proceeding for any such purpose; and
it will promptly use its commercially reasonable efforts to prevent the issuance
of any stop order or to obtain its withdrawal if such a stop order should be
issued. The Company will advise MLV promptly after it receives any request by
the Commission for any amendments to the Registration Statement or any amendment
or supplements to the Prospectus or any Issuer Free Writing Prospectus or for
additional information related to the offering of the Placement Shares or for
additional information related to the Registration Statement, the Prospectus or
any Issuer Free Writing Prospectus.
(c) Delivery of Prospectus; Subsequent Changes. During any period in which
a Prospectus relating to the Placement Shares is required to be delivered by MLV
under the Securities Act with respect to the offer and sale of the Placement
Shares, (including in circumstances where such requirement may be satisfied
pursuant to Rule 172 under the Securities Act), the Company will comply with all
requirements imposed upon it by the Securities Act, as from time to time in
force, and to file on or before their respective due dates all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any other
provision of or under the Exchange Act. If the Company has omitted any
information from the Registration Statement pursuant to Rule 430A under the Act,
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
MLV promptly of all such filings. If during such period any event occurs as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances then existing,
not misleading, or if during such period it is necessary to amend or supplement
the Registration Statement or Prospectus to comply with the Securities Act, the
Company will promptly notify MLV to suspend the offering of Placement Shares
during such period and the Company will promptly amend or supplement the
Registration Statement or Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.
(d) Listing of Placement Shares. During any period in which the Prospectus
relating to the Placement Shares is required to be delivered by MLV under the
Securities Act with respect to the offer and sale of the Placement Shares, the
Company will use its reasonable best efforts to cause the Placement Shares to be
listed on the Exchange and to qualify the Placement Shares for sale under the
securities laws of such jurisdictions as MLV reasonably designates and to
continue such qualifications in effect so long as required for the distribution
of the Placement Shares; provided, however, that the Company shall not be
19
required in connection therewith to qualify as a foreign corporation or dealer
in securities or file a general consent to service of process in any
jurisdiction.
(e) Delivery of Registration Statement and Prospectus. The Company will
furnish to MLV and its counsel (at the expense of the Company) copies of the
Registration Statement, the Prospectus (including all documents incorporated by
reference therein) and all amendments and supplements to the Registration
Statement or Prospectus that are filed with the Commission during any period in
which a Prospectus relating to the Placement Shares is required to be delivered
under the Securities Act (including all documents filed with the Commission
during such period that are deemed to be incorporated by reference therein), in
each case as soon as reasonably practicable and in such quantities as MLV may
from time to time reasonably request and, at MLV's request, will also furnish
copies of the Prospectus to each exchange or market on which sales of the
Placement Shares may be made; provided, however, that the Company shall not be
required to furnish any document (other than the Prospectus) to MLV to the
extent such document is available on ▇▇▇▇▇.
(f) Earnings Statement. The Company will make generally available to its
security holders as soon as practicable, but in any event not later than 15
months after the end of the Company's current fiscal quarter, an earnings
statement covering a 12-month period that satisfies the provisions of Section
11(a) and Rule 158 of the Securities Act.
(g) Use of Proceeds. The Company will use the Net Proceeds as described in
the Prospectus in the section entitled "Use of Proceeds."
(h) Notice of Other Sales. Without the prior written consent of MLV, the
Company will not, directly or indirectly, offer to sell, sell, contract to sell,
grant any option to sell or otherwise dispose of any Common Stock (other than
the Placement Shares offered pursuant to this Agreement) or securities
convertible into or exchangeable for Common Stock, warrants or any rights to
purchase or acquire, Common Stock during the period beginning on the fifth (5th)
Trading Day immediately prior to the date on which any Placement Notice is
delivered to MLV hereunder and ending on the fifth (5th) Trading Day immediately
following the final Settlement Date with respect to Placement Shares sold
pursuant to such Placement Notice (or, if the Placement Notice has been
terminated or suspended prior to the sale of all Placement Shares covered by a
Placement Notice, the date of such suspension or termination); provided,
however, that such restrictions will not be required in connection with the
Company's issuance or sale of (i) Common Stock, options to purchase Common Stock
or Common Stock issuable upon the exercise of options, pursuant to any employee
or director stock option or benefits plan, stock ownership plan or dividend
reinvestment plan (but not Common Stock subject to a waiver to exceed plan
limits in its dividend reinvestment plan) of the Company whether now in effect
or hereafter implemented; (ii) Common Stock issuable upon conversion of
securities or the exercise of warrants, options or other rights in effect or
outstanding, and disclosed in filings by the Company available on ▇▇▇▇▇ or
otherwise in writing to MLV and (iii) Common Stock, or securities convertible
into or exercisable for Common Stock, offered and sold in a privately negotiated
transaction to vendors, customers, strategic partners or potential strategic
partners who are qualified institutional buyers and not more than three persons
20
that are "accredited investors" within the meaning of such term under paragraph
(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) of Rule 501 under the Securities Act
and otherwise conducted in a manner so as not to be integrated with the offering
of Common Stock hereby.
(i) Change of Circumstances. The Company will, at any time during the
pendency of a Placement Notice advise MLV promptly after it shall have received
notice or obtained knowledge thereof, of any information or fact that would
alter or affect in any material respect any opinion, certificate, letter or
other document required to be provided to MLV pursuant to this Agreement.
(j) Due Diligence Cooperation. The Company will cooperate with any
reasonable due diligence review conducted by MLV or its representatives in
connection with the transactions contemplated hereby, including, without
limitation, providing information and making available documents and senior
corporate officers, during regular business hours and at the Company's principal
offices, as MLV may reasonably request.
(k) Required Filings Relating to Placement of Placement Shares. The Company
agrees that on such dates as the Securities Act shall require, the Company will
(i) file a prospectus supplement with the Commission under the applicable
paragraph of Rule 424(b) under the Securities Act (each and every filing under
Rule 424(b), a "Filing Date"), which prospectus supplement will set forth,
within the relevant period, the amount of Placement Shares sold through MLV, the
Net Proceeds to the Company and the compensation payable by the Company to MLV
with respect to such Placement Shares, and (ii) deliver such number of copies of
each such prospectus supplement to each exchange or market on which such sales
were effected as may be required by the rules or regulations of such exchange or
market.
(l) Representation Dates; Certificate. On the date of this Agreement and
each time the Company:
(i) files the Prospectus relating to the Placement Shares or amends or
supplements (other than a prospectus supplement relating solely to an
offering of securities other than the Placement Shares) the Registration
Statement or the Prospectus relating to the Placement Shares by means of a
post-effective amendment, sticker, or supplement but not by means of
incorporation of documents by reference into the Registration Statement or
the Prospectus relating to the Placement Shares;
(ii) files an annual report on Form 10-K under the Exchange Act (including
any Form 10-K/A containing amended financial information or a material
amendment to the previously filed Form 10-K);
(iii) files its quarterly reports on Form 10-Q under the Exchange Act; or
(iv) files a current report on Form 8-K containing amended financial
information (other than information "furnished" pursuant to Items 2.02 or
7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form
8-K relating to the reclassification of certain properties as discontinued
operations in accordance with Statement of Financial Accounting Standards
No. 144) under the Exchange Act;
21
(Each date of filing of one or more of the documents referred to in
clauses (i) through (iv) shall be a "Representation Date.")
the Company shall furnish MLV (but in the case of clause (iv) above only if MLV
reasonably determines that the information contained in such Form 8-K is
material) with a certificate, in the form attached hereto as Exhibit 7(l). The
requirement to provide a certificate under this Section 7(l) shall be waived for
any Representation Date occurring at a time at which no Placement Notice is
pending, which waiver shall continue until the earlier to occur of the date the
Company delivers a Placement Notice hereunder (which for such calendar quarter
shall be considered a Representation Date) and the next occurring Representation
Date; provided, however, that such waiver shall not apply for any Representation
Date on which the Company files its annual report on Form 10-K. Notwithstanding
the foregoing, if the Company subsequently decides to sell Placement Shares
following a Representation Date when the Company relied on such waiver and did
not provide MLV with a certificate under this Section 7(l), then before the
Company delivers the Placement Notice or MLV sells any Placement Shares, the
Company shall provide MLV with a certificate, in the form attached hereto as
Exhibit 7(l), dated the date of the Placement Notice.
(m) Legal Opinion. No later than (1) ten (10) Trading Days after the date
of this Agreement and (2) five (5) Trading Days after each Representation Date
following the date of this Agreement with respect to which the Company is
obligated to deliver a certificate in the form attached hereto as Exhibit 7(l)
for which no waiver is applicable, the Company shall cause to be furnished to
MLV written opinions of ▇▇▇▇ & Trinen LLP ("Company Counsel"), or other counsel
satisfactory to MLV, in form and substance satisfactory to MLV and its counsel,
which collectively address the legal opinions and negative assurance requests
set forth in Exhibit 7(m), modified, as necessary, to relate to the Registration
Statement and the Prospectus as then amended or supplemented, and with customary
assumptions and exceptions; provided, however, the Company shall be required to
furnish to MLV no more than one opinion hereunder per calendar quarter;
provided, further, that in lieu of such opinions for subsequent periodic filings
under the Exchange Act, counsel may furnish MLV with a letter (a "Reliance
Letter") to the effect that MLV may rely on a prior opinion delivered under this
Section 7(m) to the same extent as if it were dated the date of such letter
(except that statements in such prior opinion shall be deemed to relate to the
Registration Statement and the Prospectus as amended or supplemented as of the
date of the Reliance Letter).
(n) Comfort Letter. No later than (1) ten (10) Trading Days after the date
of this Agreement and (2) five (5) Trading Days after each Representation Date
following the date of this Agreement, other than pursuant to Section 7(l)(iii),
with respect to which the Company is obligated to deliver a certificate in the
form attached hereto as Exhibit 7(l) for which no waiver is applicable, the
Company shall cause its independent accountants to furnish MLV letters (the
"Comfort Letters"), dated the date the Comfort Letter is delivered, which shall
meet the requirements set forth in this Section 7(n); provided, that if
requested by MLV, the Company shall cause a Comfort Letter to be furnished to
MLV within ten (10) Trading Days of the date of occurrence of any material
transaction or event, including the restatement of the Company's financial
statements. The Comfort Letter from the Company's independent accountants shall
22
be in a form and substance satisfactory to MLV, (i) confirming that they are an
independent public accounting firm within the meaning of the Securities Act and
the PCAOB, (ii) stating, as of such date, the conclusions and findings of such
firm with respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in connection with
registered public offerings (the first such letter, the "Initial Comfort
Letter") and (iii) updating the Initial Comfort Letter with any information that
would have been included in the Initial Comfort Letter had it been given on such
date and modified as necessary to relate to the Registration Statement and the
Prospectus, as amended and supplemented to the date of such letter.
(o) Market Activities. The Company will not, directly or indirectly, (i)
take any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of Common
Stock or (ii) sell, bid for, or purchase Common Stock in violation of Regulation
M, or pay anyone any compensation for soliciting purchases of the Placement
Shares other than MLV. Further, the Company shall not request or accept any
drawdown under its equity line of credit.
(p) Investment Company Act. The Company will conduct its affairs in such a
manner so as to reasonably ensure that neither it nor any of its Subsidiaries
will be or become, at any time prior to the termination of this Agreement, an
"investment company," as such term is defined in the Investment Company Act.
(q) No Offer to Sell. Other than any Prospectus approved in advance by the
Company and MLV in its capacity as agent hereunder, neither MLV nor the Company
(including its agents and representatives, other than MLV in their capacity as
such) will make, use, prepare, authorize, approve or refer to any written
communication (as defined in Rule 405 under the Act), required to be filed with
the Commission, that constitutes an offer to sell or solicitation of an offer to
buy Placement Shares hereunder.
(r) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Company and the Subsidiaries will maintain and
keep accurate books and records reflecting their assets and maintain internal
accounting controls in a manner designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and including those policies and procedures that (i)
pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the Company,
(ii) provide reasonable assurance that transactions are recorded as necessary to
permit the preparation of the Company's consolidated financial statements in
accordance with generally accepted accounting principals, (iii) that receipts
and expenditures of the Company are being made only in accordance with
management's and the Company's directors' authorization, and (iv) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company's assets that could have a
material effect on its financial statements. The Company and the Subsidiaries
will maintain such controls and other procedures, including, without limitation,
those required by Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and the
applicable regulations thereunder that are designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Commission's rules and forms, including,
23
without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company's
management, including its principal executive officer and principal financial
officer, or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure and to ensure that material information
relating to the Company or the Subsidiaries is made known to them by others
within those entities, particularly during the period in which such periodic
reports are being prepared.
8. Representations and Covenants of MLV. MLV represents, warrants, and
covenants that:
(a) It is duly registered as a broker-dealer under FINRA, the Exchange Act
and the applicable statutes and regulations of each state in which the Placement
Shares will be offered and sold, except such states in which MLV is exempt from
registration or such registration is not otherwise required. MLV shall continue,
for the term of this Agreement, to be duly registered as a broker-dealer under
FINRA, the Exchange Act and the applicable statutes and regulations of each
state in which the Placement Shares will be offered and sold, except such states
in which MLV is exempt from registration or such registration is not otherwise
required, during the term of this Agreement.
(b) Neither it, nor any of its affiliates or subsidiaries, shall engage in
(i) any short sale of any security of the Company or (ii) any sale of any
security of the Company that MLV does not own or any sale which is consummated
by the delivery of a security of the Company borrowed by, or for the account of,
MLV.
(c) Neither it, nor any of its affiliates or subsidiaries, engages in any
proprietary trading or trading for MLV's (or its affiliates' or subsidiaries')
own account.
9. Payment of Expenses.
(a) The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the preparation, filing,
including any fees required by the Commission, and printing of the Registration
Statement (including financial statements and exhibits) as originally filed and
of each amendment and supplement thereto and each Free Writing Prospectus, in
such number as MLV shall deem necessary, (ii) the printing and delivery to MLV
of this Agreement and such other documents as may be required in connection with
the offering, purchase, sale, issuance or delivery of the Placement Shares,
(iii) the preparation, issuance and delivery of the certificates, if any, for
the Placement Shares to MLV, including any stock or other transfer taxes and any
capital duties, stamp duties or other duties or taxes payable upon the sale,
issuance or delivery of the Placement Shares to MLV, (iv) the fees and
disbursements of the counsel, accountants and other advisors to the Company, (v)
the fees and expenses of the transfer agent and registrar for the Common Stock,
(vi) the filing fees incident to any review by FINRA of the terms of the sale of
the Placement Shares, and (vii) the fees and expenses incurred in connection
with the listing of the Placement Shares on the Exchange.
(b) If Placement Shares having aggregate proceeds of 1/2 of the Maximum
Amount or more have not been offered and sold under this Agreement by January 1,
2012 (or such earlier date at which the Company terminates this Agreement), and
24
provided this Agreement has not been terminated pursuant to Section 13(c), the
Company shall reimburse MLV for its reasonable out-of-pocket expenses, including
the reasonable fees and disbursements of a counsel for MLV incurred by it in
connection with the transactions contemplated by this Agreement. The amount of
expenses reimbursable shall be calculated by multiplying a fraction, whereby the
numerator is one-half of the Maximum Amount less the number of Placement Shares
sold by January 1, 2012, and the denominator is one-half of the Maximum Amount,
times the total amount of out-of-pocket expenses.
(c) If this Agreement is terminated by MLV in accordance with the
provisions of Section 13(a)(1) hereof, the Company shall reimburse MLV for all
of its out-of-pocket expenses, including the reasonable fees and disbursements
of counsel for MLV (less any amounts paid under clause (b) above).
10. Conditions to MLV's Obligations. The obligations of MLV hereunder with
respect to a Placement will be subject to the continuing accuracy and
completeness of the representations and warranties made by the Company herein,
to the due performance by the Company of its obligations hereunder, to the
completion by MLV of a due diligence review satisfactory to it in its reasonable
judgment, and to the continuing satisfaction (or waiver by MLV in its sole
discretion) of the following additional conditions:
(a) Registration Statement Effective. The Registration Statement shall have
become effective and shall be available for the (i) resale of all Placement
Shares issued to MLV and not yet sold by MLV and (ii) sale of all Placement
Shares contemplated to be issued by any Placement Notice.
(b) No Material Notices. None of the following events shall have occurred
and be continuing: (i) receipt by the Company of any request for additional
information from the Commission or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement, the
response to which would require any post-effective amendments or supplements to
the Registration Statement or the Prospectus; (ii) the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Placement Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; or (iv) the occurrence of any event that makes any material statement
made in the Registration Statement or the Prospectus or any material document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in the Registration
Statement, the Prospectus or documents so that, in the case of the Registration
Statement, it will not contain any materially 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 not misleading and, that in the case of
the Prospectus, it will not contain any materially 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.
25
(c) No Misstatement or Material Omission. MLV shall not have advised the
Company that the Registration Statement or Prospectus, or any amendment or
supplement thereto, contains an untrue statement of fact that in MLV's
reasonable opinion is material, or omits to state a fact that in MLV's opinion
is material and is required to be stated therein or is necessary to make the
statements therein not misleading.
(d) Material Changes. Except as contemplated in the Prospectus, or
disclosed in the Company's reports filed with the Commission, there shall not
have been any material adverse change, on a consolidated basis, in the
authorized capital stock of the Company or any Material Adverse Effect, or any
development that could reasonably be expected to cause a Material Adverse
Effect, or a downgrading in or withdrawal of the rating assigned to any of the
Company's securities (other than asset backed securities) by any rating
organization or a public announcement by any rating organization that it has
under surveillance or review its rating of any of the Company's securities
(other than asset backed securities), the effect of which, in the case of any
such action by a rating organization described above, in the reasonable judgment
of MLV (without relieving the Company of any obligation or liability it may
otherwise have), is so material as to make it impracticable or inadvisable to
proceed with the offering of the Placement Shares on the terms and in the manner
contemplated in the Prospectus.
(e) Legal Opinion. MLV shall have received the opinions of Company Counsel
required to be delivered pursuant Section 7(m) on or before the date on which
such delivery of such opinions are required pursuant to Section 7(m).
(f) Comfort Letter. MLV shall have received the Comfort Letter required to
be delivered pursuant Section 7(n) on or before the date on which such delivery
of such letter is required pursuant to Section 7(n).
(g) Representation Certificate. MLV shall have received the certificate
required to be delivered pursuant to Section 7(l) on or before the date on which
delivery of such certificate is required pursuant to Section 7(l).
(h) No Suspension. Trading in the Common Stock shall not have been
suspended on the Exchange and the Common Stock shall not have been delisted from
the Exchange.
(i) Other Materials. On each date on which the Company is required to
deliver a certificate pursuant to Section 7(l), the Company shall have furnished
to MLV such appropriate further information, certificates and documents as MLV
may reasonably request. All such opinions, certificates, letters and other
documents will be in compliance with the provisions hereof. The Company will
furnish MLV with such conformed copies of such opinions, certificates, letters
and other documents as MLV shall reasonably request.
(j) Securities Act Filings Made. All filings with the Commission required
by Rule 424 under the Securities Act to have been filed prior to the issuance of
any Placement Notice hereunder shall have been made within the applicable time
period prescribed for such filing by Rule 424.
26
(k) Approval for Listing. The Placement Shares shall either have been
approved for listing on the Exchange, subject only to notice of issuance, or the
Company shall have filed an application for listing of the Placement Shares on
the Exchange at, or prior to, the issuance of any Placement Notice.
(l) No Termination Event. There shall not have occurred any event that
would permit MLV to terminate this Agreement pursuant to Section 13(a).
11. Indemnification and Contribution.
(a) Company Indemnification. The Company agrees to indemnify and hold
harmless MLV, its partners, members, directors, officers, employees and agents
and each person, if any, who controls MLV within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, joint or several, arising out of or based upon 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 related Issuer Free Writing Prospectus or the
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, joint or several, 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 11(d) below) any such settlement is effected with the written
consent of the Company, which consent shall not unreasonably be delayed or
withheld; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel), 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 solely in
reliance upon and in conformity with written information furnished to the
Company by MLV expressly for use in the Registration Statement (or any amendment
thereto), or in any related Issuer Free Writing Prospectus or the Prospectus (or
any amendment or supplement thereto).
27
(b) MLV Indemnification. MLV agrees to indemnify and hold harmless the
Company and its directors and each officer of the Company who signed the
Registration Statement, and each person, if any, who (i) controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act or (ii) is controlled by or is under common control with the
Company against any and all loss, liability, claim, damage and expense described
in the indemnity contained in Section 11(c), as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendments thereto) or the Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity with
information relating to MLV and furnished to the Company in writing by MLV
expressly for use therein.
(c) Procedure. Any party that proposes to assert the right to be
indemnified under this Section 11 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 11, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve the indemnifying party from (i) any liability that it might
have to any indemnified party otherwise than under this Section 11 and (ii) any
liability that it may have to any indemnified party under the foregoing
provision of this Section 11 unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party will
be entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation incurred by the indemnified party in
connection with the defense. The indemnified party will have the right to employ
its own counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such indemnified party unless (1) the
employment of counsel by the indemnified party has been authorized in writing by
the indemnifying party, (2) the indemnified party has reasonably concluded
(based on advice of counsel) that there may be legal defenses available to it or
other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict exists
(based on advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed counsel to assume
the defense of such action within a reasonable time after receiving notice of
the commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties. All such
fees, disbursements and other charges will be reimbursed by the indemnifying
28
party promptly after the indemnifying party receives a written invoice relating
to fees, disbursements and other charges in reasonable detail. An indemnifying
party will not, in any event, be liable for any settlement of any action or
claim effected without its written consent. No indemnifying party shall, without
the prior written consent of each indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding relating to the matters contemplated by this Section 11 (whether
or not any indemnified party is a party thereto), unless such settlement,
compromise or consent (1) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (2) 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 an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for reasonable fees and expenses of counsel for which it is entitled to be
reimbursed under this Section 11, such indemnifying party agrees that it shall
be liable for any settlement of the nature contemplated by Section 11(a)(ii)
effected without its written consent if (1) such settlement is entered into more
than 45 days after receipt by such indemnifying party of the aforesaid request,
(2) 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 (3)
such indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 11 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or MLV, the Company and
MLV will contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than MLV, such as persons who control
the Company within the meaning of the Securities Act, officers of the Company
who signed the Registration Statement and directors of the Company, who also may
be liable for contribution) to which the Company and MLV may be subject in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company on the one hand and MLV on the other hand. The relative benefits
received by the Company on the one hand and MLV on the other hand shall be
deemed to be in the same proportion as the total net proceeds from the sale of
the Placement Shares (before deducting expenses) received by the Company bear to
the total compensation received by MLV (before deducting expenses) from the sale
of Placement Shares on behalf of the Company. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault of the Company, on the one hand, and MLV, on the other
hand, with respect to the statements or omission that resulted in such loss,
claim, liability, expense or damage, or action in respect thereof, as well as
any other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to, among other things, whether
the 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 MLV, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and MLV agree that it would not be just and equitable if
contributions pursuant to this Section 11(e) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense, or
damage, or action in respect thereof, referred to above in this Section 11(e)
shall be deemed to include, for the purpose of this Section 11(e), any legal or
29
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim to the extent consistent
with Section 11(c) hereof. Notwithstanding the foregoing provisions of this
Section 11(e), MLV shall not be required to contribute any amount in excess of
the commissions received by it under this Agreement and no person found guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 11(e),
any person who controls a party to this Agreement within the meaning of the
Securities Act, and any officers, directors, partners, employees or agents of
MLV, will have the same rights to contribution as that party, and each officer
and director of the Company who signed the Registration Statement will have the
same rights to contribution as the Company, subject in each case to the
provisions hereof. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action against such party in respect of which a
claim for contribution may be made under this Section 11(e), will notify any
such party or parties from whom contribution may be sought, but the omission to
so notify will not relieve that party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 11(e)
except to the extent that the failure to so notify such other party materially
prejudiced the substantive rights or defenses of the party from whom
contribution is sought. Except for a settlement entered into pursuant to the
last sentence of Section 11(c) hereof, no party will be liable for contribution
with respect to any action or claim settled without its written consent if such
consent is required pursuant to Section 11(c) hereof.
12. Representations and Agreements to Survive Delivery. The indemnity and
contribution agreements contained in Section 11 of this Agreement and all
representations and warranties of the Company or MLV herein or in certificates
delivered pursuant hereto shall survive, as of their respective dates,
regardless of (i) any investigation made by or on behalf of MLV, any controlling
persons, or the Company (or any of their respective officers, directors or
controlling persons), (ii) delivery and acceptance of the Placement Shares and
payment therefor or (iii) any termination of this Agreement.
13. Termination.
(a) MLV may terminate this Agreement, by notice to the Company, as
hereinafter specified at any time (1) if there has been, since the time of
execution of this Agreement or since the date as of which information is given
in the Prospectus, any change, or any development or event involving a
prospective change, in the condition, financial or otherwise, or in the
business, properties, earnings, results of operations or prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, which individually or in the
aggregate, in the sole judgment of MLV is material and adverse and makes it
impractical or inadvisable to market the Placement Shares or to enforce
30
contracts for the sale of the Placement Shares, (2) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of MLV, impracticable or inadvisable to market the Placement Shares or
to enforce contracts for the sale of the Placement Shares, (3) if trading in the
Common Stock has been suspended or limited by the Commission or the Exchange, or
if trading generally on the Exchange has been suspended or limited, or minimum
prices for trading have been fixed on the Exchange, (4) if any suspension of
trading of any securities of the Company on any exchange or in the
over-the-counter market shall have occurred and be continuing, (5) if a major
disruption of securities settlements or clearance services in the United States
shall have occurred and be continuing, or (6) if a banking moratorium has been
declared by either U.S. Federal or New York authorities. Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 9 (Expenses), Section 11 (Indemnification), Section 12
(Survival of Representations), Section 18 (Applicable Law; Waiver of Jury Trial)
and Section 19 (Consent to Jurisdiction) hereof shall remain in full force and
effect notwithstanding such termination. If MLV elects to terminate this
Agreement as provided in this Section 13(a), MLV shall provide the required
notice as specified in Section 14 (Notices).
(b) The Company shall have the right, by giving ten (10) days notice as
hereinafter specified to terminate this Agreement in its sole discretion at any
time after the date of this Agreement. Any such termination shall be without
liability of any party to any other party except (i) with respect to any pending
sale through MLV for the Company, the obligations of the Company, including in
respect of compensation of MLV, shall remain in full force and effect
notwithstanding such termination and (ii) that the provisions of Section 9,
Section 11, Section 12, Section 18 and Section 19 hereof shall remain in full
force and effect notwithstanding such termination.
(c) MLV shall have the right, by giving ten (10) days notice as hereinafter
specified, to terminate this Agreement in its sole discretion at any time after
the date of this Agreement. Any such termination shall be without liability of
any party to any other party except, (i) with respect to any pending sale
through MLV for the Company, the obligations of MLV, including the remittance of
any sale proceeds received by MLV to the Company, shall remain in full force and
effect notwithstanding such termination, and (ii) that the provisions of Section
9, Section 11, Section 12, Section 18 and Section 19 hereof shall remain in full
force and effect notwithstanding such termination.
(d) Unless earlier terminated pursuant to this Section 13, this Agreement
shall automatically terminate upon the issuance and sale of all of the Placement
Shares through MLV on the terms and subject to the conditions set forth herein
except that the provisions of Section 9(a), Section 11, Section 11, Section 12,
Section 18 and Section 19 hereof shall remain in full force and effect
notwithstanding such termination.
(e) This Agreement shall remain in full force and effect unless terminated
pursuant to Sections 13(a), (b), (c), or (d) above or otherwise by mutual
agreement of the parties; provided, however, that any such termination by mutual
agreement shall in all cases be deemed to provide that Section 9(a), Section 11,
Section 12, Section 18 and Section 19 shall remain in full force and effect.
Upon termination of this Agreement, the Company shall not have any liability to
MLVs for any discount, commission or other compensation with respect to any
Shares not otherwise sold by MLVs under this Agreement.
31
(f) Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided, however, that such
termination shall not be effective until the close of business on the date of
receipt of such notice by MLV or the Company, as the case may be. If such
termination shall occur prior to the Settlement Date for any sale of Placement
Shares, such Placement Shares shall settle in accordance with the provisions of
this Agreement.
14. Notices. All notices or other communications required or permitted to
be given by any party to any other party pursuant to the terms of this Agreement
shall be in writing, unless otherwise specified, and if sent to MLV, shall be
delivered to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & Vlak LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
LeClairRyan LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and if to the Company, shall be delivered to:
CEL-SCI Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇. #▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each party to this Agreement may change such address for notices by sending
to the parties to this Agreement written notice of a new address for such
purpose. Each such notice or other communication shall be deemed given (i) when
32
delivered personally or by verifiable facsimile transmission (with an original
to follow) on or before 4:30 p.m., New York City time, on a Business Day or, if
such day is not a Business Day, on the next succeeding Business Day, (ii) on the
next Business Day after timely delivery to a nationally-recognized overnight
courier and (iii) on the Business Day actually received if deposited in the U.S.
mail (certified or registered mail, return receipt requested, postage prepaid).
For purposes of this Agreement, "Business Day" shall mean any day on which the
Exchange and commercial banks in the City of New York are open for business.
An electronic communication ("Electronic Notice") shall be deemed written
notice for purposes of this Section 14 if sent to the electronic mail address
specified by the receiving party under separate cover. Electronic Notice shall
be deemed received at the time the party sending Electronic Notice receives
confirmation of receipt by the receiving party. Any party receiving Electronic
Notice may request and shall be entitled to receive the notice on paper, in a
nonelectronic form ("Nonelectronic Notice") which shall be sent to the
requesting party within ten (10) days of receipt of the written request for
Nonelectronic Notice.
15. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company and MLV and their respective successors and the
affiliates, controlling persons, officers and directors referred to in Section
11 hereof. References to any of the parties contained in this Agreement shall be
deemed to include the successors and permitted assigns of such party. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. Neither party may
assign its rights or obligations under this Agreement without the prior written
consent of the other party.
16. Adjustments for Stock Splits. The parties acknowledge and agree that
all share-related numbers contained in this Agreement shall be adjusted to take
into account any share consolidation, stock split, stock dividend, corporate
domestication or similar event effected with respect to the Placement Shares.
17. Entire Agreement; Amendment; Severability. This Agreement (including
all schedules and exhibits attached hereto and Placement Notices issued pursuant
hereto) constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, among the
parties hereto with regard to the subject matter hereof. Neither this Agreement
nor any term hereof may be amended except pursuant to a written instrument
executed by the Company and MLV. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable as written by a court of competent
jurisdiction, then such provision shall be given full force and effect to the
fullest possible extent that it is valid, legal and enforceable, and the
remainder of the terms and provisions herein shall be construed as if such
invalid, illegal or unenforceable term or provision was not contained herein,
but only to the extent that giving effect to such provision and the remainder of
the terms and provisions hereof shall be in accordance with the intent of the
parties as reflected in this Agreement.
33
18. GOVERNING LAW AND TIME; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME. THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
19. CONSENT TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY
OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH ANY TRANSACTION CONTEMPLATED HEREBY, AND HEREBY
IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH
COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM
OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS
BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF
(CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED) TO SUCH PARTY AT THE
ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
20. Use of Information. MLV may not use any information gained in
connection with this Agreement and the transactions contemplated by this
Agreement, including due diligence, to advise any party with respect to
transactions not expressly approved by the Company.
21. 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. Delivery of an executed
Agreement by one party to the other may be made by facsimile transmission.
22. Effect of Headings.
The section and Exhibit headings herein are for convenience only and shall
not affect the construction hereof.
34
23. Permitted Free Writing Prospectuses.
The Company represents, warrants and agrees that, unless it obtains the
prior consent of MLV, and MLV represents, warrants and agrees that, unless it
obtains the prior consent of the Company, it has not made and will not make any
offer relating to the Placement Shares that would constitute an Issuer Free
Writing Prospectus, or that would otherwise constitute a "free writing
prospectus," as defined in Rule 405, required to be filed with the Commission.
Any such free writing prospectus consented to by MLV or by the Company, as the
case may be, is hereinafter referred to as a "Permitted Free Writing
Prospectus." The Company represents and warrants that it has treated and agrees
that it will treat each Permitted Free Writing Prospectus as an "issuer free
writing prospectus," as defined in Rule 433, and has complied and will comply
with the requirements of Rule 433 applicable to any Permitted Free Writing
Prospectus, including timely filing with the Commission where required,
legending and record keeping.
24. Absence of Fiduciary Relationship.
The Company acknowledges and agrees that:
(a) MLV is acting solely as agent in connection with the public offering of
the Placement Shares and in connection with each transaction contemplated by
this Agreement and the process leading to such transactions, and no fiduciary or
advisory relationship between the Company or any of its respective affiliates,
stockholders (or other equity holders), creditors or employees or any other
party, on the one hand, and MLV, on the other hand, has been or will be created
in respect of any of the transactions contemplated by this Agreement,
irrespective of whether or not MLV has advised or is advising the Company on
other matters, and MLV has no obligation to the Company with respect to the
transactions contemplated by this Agreement except the obligations expressly set
forth in this Agreement;
(b) it is capable of evaluating and understanding, and understands and
accepts, the terms, risks and conditions of the transactions contemplated by
this Agreement;
(c) MLV has not provided any legal, accounting, regulatory or tax advice
with respect to the transactions contemplated by this Agreement and it has
consulted its own legal, accounting, regulatory and tax advisors to the extent
it has deemed appropriate;
(d) it is aware that MLV and its affiliates are engaged in a broad range of
transactions which may involve interests that differ from those of the Company
and MLV has no obligation to disclose such interests and transactions to the
Company by virtue of any fiduciary, advisory or agency relationship or
otherwise; and
(e) it waives, to the fullest extent permitted by law, any claims it may
have against MLV for breach of fiduciary duty or alleged breach of fiduciary
duty in connection with the sale of Placement Shares under this Agreement and
agrees that MLV shall not have any liability (whether direct or indirect, in
contract, tort or otherwise) to it in respect of such a fiduciary duty claim or
to any person asserting a fiduciary duty claim on its behalf or in right of it
or the Company, employees or creditors of Company, other than in respect of
MLV's obligations under this Agreement and to keep information provided by the
Company to MLV and MLV's counsel confidential to the extent not otherwise
publicly-available.
35
25. Definitions.
As used in this Agreement, the following terms have the respective
meanings set forth below:
"Applicable Time" means (i) each Representation Date and (ii) the time of
each sale of any Placement Shares pursuant to this Agreement.
"Issuer Free Writing Prospectus" means any "issuer free writing
prospectus," as defined in Rule 433, relating to the Placement Shares that (1)
is required to be filed with the Commission by the Company, (2) is a "road show"
that is a "written communication" within the meaning of Rule 433(d)(8)(i)
whether or not required to be filed with the Commission, or (3) is exempt from
filing pursuant to Rule 433(d)(5)(i) because it contains a description of the
Placement Shares or of the offering that does not reflect the final terms, in
each case in the form filed or required to be filed with the Commission or, if
not required to be filed, in the form retained in the Company's records pursuant
to Rule 433(g) under the Securities Act Regulations.
"Rule 163," "Rule 164," "Rule 172," "Rule 405," "Rule 415," "Rule 424,"
"Rule 424(b)," "Rule 430B," and "Rule 433" refer to such rules under the
Securities Act Regulations.
All references in this Agreement to financial statements and schedules and
other information that is "contained," "included" or "stated" in the
Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information that is incorporated by reference in the
Registration Statement or the Prospectus, as the case may be.
All references in this Agreement to the Registration Statement, the
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to ▇▇▇▇▇; all
references in this Agreement to any Issuer Free Writing Prospectus (other than
any Issuer Free Writing Prospectuses that, pursuant to Rule 433, are not
required to be filed with the Commission) shall be deemed to include the copy
thereof filed with the Commission pursuant to ▇▇▇▇▇; and all references in this
Agreement to "supplements" to the Prospectus shall include, without limitation,
any supplements, "wrappers" or similar materials prepared in connection with any
offering, sale or private placement of any Placement Shares by MLV outside of
the United States.
36
If the foregoing correctly sets forth the understanding between the
Company and MLV, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the
Company and MLV.
Very truly yours,
CEL-SCI CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
ACCEPTED as of the date first-above
written:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & VLAK LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
37
SCHEDULE 1
---------------------------------
FORM OF PLACEMENT NOTICE
---------------------------------
From: CEL-SCI Corporation
To: ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & Vlak LLC
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Subject: At Market Issuance--Placement Notice
Gentlemen:
Pursuant to the terms and subject to the conditions contained in the At
Market Issuance Sales Agreement between CEL-SCI Corporation, a Delaware
corporation (the "Company") and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & Vlak LLC ("MLV"), dated
December 10, 2010, the Company hereby requests that MLV sell up to ____________
of the Company's Common Stock, no par value per share, at a minimum market price
of $_______ per share, during the time period beginning [month, day, time] and
ending [month, day, time].
SCHEDULE 2
--------------------------
Compensation
--------------------------
The Company shall pay to MLV in cash, upon each sale of Placement Shares
pursuant to this Agreement, an amount equal to the greater of (a) 3.0% of the
gross proceeds from each sale of Placement Shares or (b) $0.025 per Placement
Share sold hereunder; provided, that, in no event shall MLV receive greater than
8.0% of gross proceeds.
SCHEDULE 3
--------------------------
Notice Parties
--------------------------
The Company
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
MLV
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SCHEDULE 4
--------------------------
Subsidiaries
--------------------------
Viral Technologies, Inc.
EXHIBIT 7(l)
Form of Representation Date Certificate
This Officers Certificate (this "Certificate") is executed and delivered in
connection with Section 7(l) of the At Market Issuance Sales Agreement (the
"Agreement"), dated December 10, 2010, and entered into between CEL-SCI
Corporation (the "Company") and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & Vlak LLC. All capitalized
terms used but not defined herein shall have the meanings given to such terms in
the Agreement.
The undersigned, a duly appointed and authorized officer of the Company,
having made reasonable inquiries to establish the accuracy of the statements
below and having been authorized by the Company to execute this certificate on
behalf of the Company, hereby certifies as follows:
1. As of the date of this Certificate, (i) 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 (ii) neither the Registration Statement nor the
Prospectus 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 (iii) no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading for (i) and (ii) to be true.
2. Each of the representations and warranties of the Company contained in
the Agreement were, when originally made, and are, as of the date of this
Certificate, true and correct in all material respects.
3. Except as waived by MLV in writing, each of the covenants required to
be performed by the Company in the Agreement on or prior to the date of the
Agreement, this Representation Date, and each such other date prior to the date
hereof as set forth in the Agreement, has been duly, timely and fully performed
in all material respects and each condition required to be complied with by the
Company on or prior to the date of the Agreement, this Representation Date, and
each such other date prior to the date hereof as set forth in the Agreement has
been duly, timely and fully complied with in all material respects.
4. Subsequent to the date of the most recent financial statements in the
Prospectus, and except as described in the Prospectus, including Incorporated
Documents, there has been no material adverse change.
5. 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 pending or threatened by any securities or
other governmental authority (including, without limitation, the Commission).
38
6. No order suspending the effectiveness of the Registration Statement or
the qualification or registration of the Placement Shares under the securities
or Blue Sky laws of any jurisdiction are in effect and no proceeding for such
purpose is pending before, or threatened, to the Company's knowledge or in
writing by, any securities or other governmental authority (including, without
limitation, the Commission).
The undersigned has executed this Officer's Certificate as of the date
first written above.
CEL-SCI CORPORATION
By:
Name: _______________________________
Title: _______________________________
EXHIBIT 7(m)
1. The Company is a corporation duly formed and validly existing in good
standing under the laws of the State of Colorado.
2. The Company has the corporate power to own its properties and engage in its
business as described in the Registration Statement and the Prospectus
Supplement.
3. The issuance and sale by the Company of the Placement Shares will not violate
the Company's articles of incorporation or by-laws.
4. The execution and delivery by the Company of, and the performance by the
Company of its obligations under the Sales Agreement has been duly authorized by
all necessary corporate action on the part of the Company.
5. No authorization or consent of or notice to any governmental authority is
required in connection with the issue and sale of the Placement Shares.
6. There are no pre-emptive or other rights to subscribe for or purchase, or any
restriction on the voting or transfer of, the common shares of the Company
pursuant to the Company's certificate and articles of incorporation or by-laws,
except for the provision in the Company's by-laws that provides that the Company
may refuse to register a transfer of all or part of the shares held by a
shareholder where that shareholder has defaulted in the payment of any interest
and/or principal due in respect of any indebtedness owing by such shareholder to
the Company when same becomes due and payable and continues in such default for
a period of 30 days after notice in writing thereof has been given by the
Company to such shareholder.
7. The Placement Shares have been validly created and allotted and, when issued
to the Purchasers in accordance with the terms of the Sales Agreement, will be
validly issued and outstanding as fully paid and non-assessable common shares of
the Company.
8. The Company is duly qualified to do business as a foreign corporation in each
jurisdiction in which the Company owns any material property or conducts any
material business or in which the failure to be qualified as a foreign
corporation would have a Material Adverse Effect.
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9. The issuance and sale by the Company of the Placement Shares will not (i)
breach or result in a default by the Company under any agreement included as an
exhibit to the Registration Statement or as an exhibit to any report filed by
the Company with the Commission pursuant to the Securities and Exchange ▇▇▇ ▇▇▇▇
(the "Exchange Act") and expressly incorporated by reference into the
Registration Statement; or (ii) violate any applicable U.S. statute, law, rule
or regulation, or any decree, judgment or order specifically naming the Company
(other than state and foreign securities or blue sky laws of the various
jurisdictions in which the Placement Shares may be offered) except in the case
of clause (ii) for such violations that individually or in the aggregate could
not be reasonably expected to have a Material Adverse Effect.
10. To our knowledge, there is no indenture, contract, lease, mortgage, deed of
trust, note agreement, loan or other agreement or instrument of a character
required to be filed as an exhibit to the Registration Statement, which is not
filed as required by the Securities Act and the rules and regulations
thereunder.
11. No approval, authorization or other action by or filing with any
governmental authority is required on the part of the Company to permit the
Company to issue and sell the Placement Shares, except for such as have been
duly obtained or made or as may be required under the Securities Act, the
Exchange Act, blue sky laws of any state, the NYSE Amex rules, or the rules and
regulations of the Financial Industry Regulatory Authority ("FINRA").
12. To our knowledge, except as described in the Registration Statement, the
Prospectus Supplement or the Incorporated Documents, including the exhibits
filed in connection therewith, there are no persons with registration rights or
other similar rights to have any securities of the Company registered pursuant
to the Registration Statement.
13. The Registration Statement, Base Prospectus and the Prospectus Supplement
(other than the financial statements and schedules and other financial data
included or incorporated by reference therein, as to which we express no
opinion), as of their respective effective and issue dates, complied as to form
in all material respects with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder.
14. Each Transaction Document executed by the Company constitutes the valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
15. The Company is not subject to regulation as an "investment company" under
the Investment Company Act of 1940, as amended.
16. [Intellectual Property/FDA opinions - subject to due diligence review]
The opinion of counsel will be accompanied by a negative assurances
letter.