EXHIBIT 1.1
8,800,000 SHARES OF COMMON STOCK
AND 2,200,000 WARRANTS TO PURCHASE COMMON STOCK
OF
CEL-SCI CORPORATION
UNDERWRITING AGREEMENT
April 14, 2014
▇▇▇▇▇▇ ▇▇▇▇▇ Securities, Inc.
▇▇▇▇▇▇▇ & Company (UK) Ltd.
As the Representatives of the
several underwriters named in Schedule I hereto c/o ▇▇▇▇▇▇ ▇▇▇▇▇ Securities,
Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, CEL-SCI Corporation, a company incorporated under the
laws of the State of Colorado (collectively with its subsidiaries and
affiliates, including, without limitation, all entities disclosed or described
in the Registration Statement as being subsidiaries or affiliates of CEL-SCI
Corporation, the "Company"), hereby confirms its agreement (this "Agreement")
with the several underwriters (such underwriters, including the Representatives
(as defined below), the "Underwriters" and each an "Underwriter") named in
Schedule I hereto for which ▇▇▇▇▇▇ ▇▇▇▇▇ Securities, Inc. and ▇▇▇▇▇▇▇ & Company
(UK) Ltd. are acting as representatives to the several Underwriters (the
"Representatives" and if there are no Underwriters other than the
Representatives, references to multiple Underwriters shall be disregarded and
the term Representatives as used herein shall have the same meaning as
Underwriter) on the terms and conditions set forth herein.
It is understood that the several Underwriters are to make a "best
efforts" public offering of the Public Securities as soon as the Representatives
deems it advisable to do so. The Public Securities are to be initially offered
to the public at the public offering price set forth in the Prospectus. The
Representatives may from time to time thereafter change the public offering
price and other selling terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Closing Securities in
accordance with this Agreement.
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ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:
"Action" shall have the meaning ascribed to such term in Section
3.1(k).
"Affiliate" means with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person as such terms are used
in and construed under Rule 405 under the Securities Act.
"Board of Directors" means the board of directors of the Company.
"Business Day" means any day except any Saturday, any Sunday, any day
which is a federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or required by law
or other governmental action to close.
"Closing" means the closing of the purchase and sale of the Closing
Securities pursuant to Section 2.1.
"Closing Date" means the hour and the date on the Trading Day on which
all conditions precedent to (i) the Underwriters' obligations to pay the Closing
Purchase Price and (ii) the Company's obligations to deliver the Closing
Securities, in each case, have been satisfied or waived, but in no event later
than 10:00 a.m. Eastern time on the third Trading Day following the date hereof
or at such earlier time as shall be agreed upon by the Representatives and the
Company.
"Closing Purchase Price" shall have the meaning ascribed to such term
in Section 2.1(b), which aggregate purchase price shall be net of underwriting
commissions.
"Closing Securities" shall have the meaning ascribed to such term in
Section 2.1(a)(ii).
"Closing Shares" shall have the meaning ascribed to such term in
Section 2.1(a)(i).
"Closing Warrants" shall have the meaning ascribed to such term in
Section 2.1(a)(ii).
"Combined Purchase Price" shall have the meaning ascribed to such term
in Section 2.1(b).
"Closing Securities" shall have the meaning ascribed to such term in
Section 2.1(a)(ii).
"Commission" means the United States Securities and Exchange Commission.
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"Common Stock" means the common stock of the Company, par value $0.01
per share, and any other class of securities into which such securities may
hereafter be reclassified or changed.
"Common Stock Equivalents" means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
"Company Auditor" means BDO USA LLP, with offices located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
"Company Counsel" means ▇▇▇▇ & ▇▇▇▇ LLC, with offices located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Contributing Party" shall have the meaning ascribed to such term in
Section 6.4(b).
"Disclosure Schedules" means the Disclosure Schedules of the Company
delivered concurrently herewith.
"Effective Date" shall have the meaning ascribed to such term in
Section 3.1(f).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Execution Date" shall mean the date on which the parties execute and
enter into this Agreement.
"Exempt Issuance" means the issuance of (a) shares of Common Stock or
options to employees, officers or directors of the Company pursuant to any stock
or option plan duly adopted for such purpose, by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, and (c) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person (or to the equity holders of a Person) which is, itself or
through its subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.
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"FCPA" means the Foreign Corrupt Practices Act of 1977, as amended.
"FINRA" means the Financial Industry Regulatory Authority.
"GAAP" shall have the meaning ascribed to such term in Section 3.1(i).
"Indebtedness" means (a) any liabilities for borrowed money or amounts
owed in excess of $50,000 (other than trade accounts payable incurred in the
ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others, whether or not the
same are or should be reflected in the Company's consolidated balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business, and (c) the present value of any lease payments in excess of $50,000
due under leases required to be capitalized in accordance with GAAP.
"Intellectual Property Rights" shall have the meaning ascribed to such
term in Section 3.1(p).
"IP Company Counsel" means ▇▇▇▇ & ▇▇▇▇▇▇ PLLC, with offices located at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
"Lien" means a lien, charge, pledge, security interest, encumbrance, right
of first refusal, preemptive right or other restriction.
"Lock-Up Agreements" shall mean the lock-up agreements, in the form of
Exhibit E attached hereto, delivered at the Closing by each of the Company's
officers, directors and each of their respective Affiliates and associated
partners.
"Material Adverse Effect" means (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company's ability to perform in any material respect on a timely basis its
obligations under any Transaction Document.
"Material Permit" shall have the meaning ascribed to such term in
Section 3.1(n).
"Offering" shall have the meaning ascribed to such term in Section
2.1(c).
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
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"Preliminary Prospectus" means, if any, any preliminary prospectus
relating to the Securities included in the Registration Statement or filed with
the Commission pursuant to Rule 424(b).
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
"Prospectus" means the final prospectus filed for the Registration
Statement with respect to the Securities and the Underwriters' Securities.
"Prospectus Supplement" means any supplement to the Prospectus
complying with Rule 424(b) of the Securities Act that is filed with the
Commission.
"Public Securities" means, collectively, the Closing Securities.
"Registration Statement" means the registration statement prepared by
the Company on Form S-3 (File No. 333-186103) with respect to the Securities, as
amended as of the date hereof, including the Prospectus and Prospectus
Supplement, if any, the Preliminary Prospectus, if any, and all exhibits filed
with or incorporated by reference into such registration statement.
"Required Approvals" shall have the meaning ascribed to such term in
Section 3.1(e).
"Road Show Materials" shall have the meaning ascribed to such term in
Section 6.1.
"Rule 424" means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
"SEC Reports" shall have the meaning ascribed to such term in Section
3.1(i).
"Securities" means the Closing Securities.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Shares" means, collectively, the shares of Common Stock delivered to
the Underwriters in accordance with Section 2.1(a)(i).
"▇▇▇▇▇▇ ▇▇▇▇▇▇" means ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, with offices located at ▇▇▇ ▇
▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
"Subsidiary" means any subsidiary of the Company and shall, where
applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
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"Trading Day" means a day on which the principal Trading Market is open
for trading.
"Trading Market" means any of the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or
any successors to any of the foregoing).
"Transaction Documents" means this Agreement, the Warrant Agreement,
the Underwriters' Warrants and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
"Transfer Agent" means Computershare Investor Services, the current
transfer agent of the Company, with a mailing address of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and a facsimile number of (▇▇▇) ▇▇▇-▇▇▇▇, and
any successor transfer agent of the Company.
"Underwriter Free Writing Prospectus" shall have the meaning ascribed
to such term in Section 4.22(a).
"Underwriters' Securities" shall have the meaning ascribed to such term
in Section 2.4.
"Underwriters' Warrants" shall have the meaning ascribed to such term
in Section 2.4.
"VWAP" means, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if the Common Stock is not then listed or quoted for trading on the
OTC Bulletin Board and if prices for the Common Stock are then reported in the
"Pink Sheets" published by Pink OTC Markets, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (c) in all other cases, the
fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Representatives and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the
Company.
"Warrant Purchase Price" shall have the meaning ascribed to such term
in Section 2.1(b).
"Warrants" means, collectively, the Common Stock purchase warrants
delivered to the Underwriters in accordance with Section 2.1(a)(ii), which shall
be exercisable immediately, have a term of exercise equal to six (6) months, and
have an exercise price of $1.58, subject to adjustment as provided therein, in
the form of warrant included in the warrant agreement ("Warrant Agreement")
attached as Exhibit F attached hereto.
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"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Closing Warrants.
ARTICLE II
PURCHASE AND SALE
2.1 Closing.
(a) Upon the terms and subject to the conditions set forth herein, the
Company agrees to sell, in the aggregate, up to 8,800,000 shares of Common Stock
and Warrants to purchase 2,200,000 shares of Common Stock, and each Underwriter
agrees to purchase, severally and not jointly, at the Closing, the following
securities of the Company:
(i) such number of shares as may be specified by the
Underwriter, not to exceed the number of shares of Common Stock to be sold set
forth opposite the name of such Underwriter on Schedule I hereof (the "Closing
Shares"); and
(ii) Warrants to purchase such number of Warrant Shares as may
be specified by the Underwriter, not to exceed the number of Warrants Shares to
be sold set forth opposite the name of such Underwriter on Schedule I hereof
(the "Closing Warrants") (the "Closing Warrants" and, collectively with the
Closing Shares, the "Closing Securities").
This is strictly a "best efforts" offering. It is understood between
the parties that there is no firm commitment by the Underwriters to purchase any
or all of the Closing Securities.
(b) The aggregate purchase price for the Closing Securities to be
purchased by each of the Underwriters shall equal up to the amount set forth
opposite the name of such Underwriter on Schedule I hereto, provided that to the
extent any Underwriter sells fewer Closing Securities and therefore determines
to purchase fewer Closing Securities, such amount shall be reduced on a pro rata
basis based on the number of Closing Securities actually purchased (the "Closing
Purchase Price"). The Underwriters shall notify the Company of the number of
Closing Securities they intend to purchase at Closing on the business day
preceding Closing, provided that such notification shall not be binding upon the
Underwriters. The combined purchase price for one (1) Closing Share and Warrant
to purchase 0.25 Shares shall be $1.40 (the "Combined Purchase Price") which
shall be allocated as $1.39 per share (the "Share Purchase Price") and $0.01 per
Warrant (the "Warrant Purchase Price").
(c) On the Closing Date, each Underwriter shall deliver or cause to be
delivered to the Company, via wire transfer, immediately available funds equal
to such Underwriter's Closing Purchase Price and the Company shall deliver to,
or as directed by, such Underwriter its respective Closing Securities and the
Company shall deliver the other items required pursuant to Section 2.2
deliverable at the Closing. Upon satisfaction of the covenants and conditions
set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇ or such other location as the Company and Representatives shall
mutually agree. The Closing Securities are to be offered to the public at the
offering price set forth on the cover page of the Prospectus Supplement (the
"Offering").
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2.2 Deliveries. The Company shall deliver or cause to be delivered to
each Underwriter (if applicable) the following:
(i) On the Closing Date, the Closing Shares and Closing
Warrants, which Shares and Warrants shall be delivered via The Depository Trust
Company Deposit or Withdrawal at Custodian system for the accounts of the
several Underwriters;
(ii) On the Closing Date, a legal opinion of Company Counsel
addressed to the Underwriters, including, without limitation, a negative
assurance letter, substantially in the form of Exhibit A attached hereto, in
form and substance reasonably satisfactory to the Representatives;
(iii) Contemporaneously herewith, a cold comfort letter from
the Company Auditor, addressed to the Underwriters and in form and substance
satisfactory in all respects to the Representatives, dated as of the date of
this Agreement, and a bring-down letter dated as of the Closing Date from the
Company Auditor, addressed to the Underwriters and in form and substance
satisfactory in all respects to the Representatives;
(iv) On the Closing Date, a letter from IP Company Counsel
addressed to the Underwriters, substantially in the form of Exhibit B attached
hereto in form and substance reasonably satisfactory to the Representatives;
(v) On the Closing Date, the duly executed and delivered
Officer's Certificate, substantially in the form required by Exhibit C attached
hereto;
(vi) Contemporaneously herewith, the duly executed and
delivered Lock-Up Agreements; and
(vii) On the Closing Date, the duly executed and delivered
Secretary's Certificate, substantially in the form required by Exhibit D
attached hereto.
(viii) On the Closing Date, the duly executed and delivered
Underwriters' Warrants, in form and substance reasonably satisfactory to the
Representatives.
(ix) Contemporaneously herewith, the duly executed Warrant
Agreement.
2.3 Closing Conditions. The respective obligations of each Underwriter
hereunder in connection with the Closing are subject to the following conditions
being met (or being waived by the Representatives):
(i) the accuracy in all material respects (other than
representations and warranties of the Company already qualified by materiality,
which shall be true and correct in all respects), when made and on the Closing
Date (unless as of a specific date therein), of the representations and
warranties of the Company contained herein;
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(ii) all obligations, covenants and agreements of the Company
required to be performed at or prior to the Closing Date shall have been
performed;
(iii) the delivery by the Company of the items set forth in
Section 2.2 of this Agreement;
(iv) the Registration Statement shall be effective on the date
of this Agreement, and at the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued or, to the
Company's knowledge, no proceedings for that purpose shall have been instituted
or shall be pending or contemplated by the Commission and any request on the
part of the Commission for additional information shall have been complied with
to the reasonable satisfaction of the Representatives;
(v) by the Execution Date, if required by FINRA, the
Underwriters shall have received clearance from FINRA as to the amount of
compensation allowable or payable to the Underwriters as described in the
Registration Statement;
(vi) the Closing Shares, the Warrant Shares and the Common
Stock underlying the Underwriters' Warrants shall have been approved for listing
on the Trading Market; and
(vii) prior to the Closing Date: (i) there shall have been no
material adverse change or development involving a prospective material adverse
change in the condition or prospects or the business activities, financial or
otherwise, of the Company from the latest dates as of which such condition is
set forth in the Registration Statement and Prospectus; (ii) no action, suit or
proceeding, at law or in equity, shall have been pending or threatened against
the Company or any Affiliate of the Company before or by any court or federal or
state commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may materially adversely affect the business,
operations, prospects or financial condition or income of the Company, except as
set forth in the Registration Statement and Prospectus; (iii) no stop order
shall have been issued under the Securities Act and no proceedings therefor
shall have been initiated or threatened by the Commission; and (iv) the
Registration Statement and the Prospectus and any amendments or supplements
thereto shall contain all material statements which are required to be stated
therein in accordance with the Securities Act and the rules and regulations
thereunder and shall conform in all material respects to the requirements of the
Securities Act and the rules and regulations thereunder, and neither the
Registration Statement nor the Prospectus nor any amendment or supplement
thereto shall contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
2.4 Representatives' Warrants. As additional consideration, the Company
hereby agrees to issue and sell to the Representatives (and/or their respective
designees) on the Closing Date, their pro rata portion (based on the Closing
Securities purchased) of warrants (the "Underwriters' Warrants") for the
purchase of an aggregate of up to 550,000 shares of Common Stock (5% of the
number of Closing Shares plus 5% of the number of Warrant Shares) for an
aggregate purchase price of $100.00. The Underwriters' Warrants shall be
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exercisable, in whole or in part, commencing on the date that is six months from
the Closing Date and expiring on the three-year anniversary of the initial
exercise date at an initial exercise price per share equal to 125% of the
Closing Purchase Price. The Underwriters' Warrants shall be in a form reasonably
acceptable to the Representatives. The Underwriters' Warrants and Common Stock
issuable upon exercise of the Underwriters' Warrants are hereinafter referred to
collectively as the "Underwriters' Securities."
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth
in the Registration Statement, the Preliminary Prospectus, the SEC Reports or
the Disclosure Schedules, the Company represents and warrants to the
Underwriters as of the Execution Date and as of the Closing Date as follows:
(a) Subsidiaries. All of the direct and indirect Subsidiaries of the
Company are set forth in the Company's most recent Annual Report on Form 10-K,
as modified by any subsequent SEC Report. The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities. If the Company has no Subsidiaries, all other references
to the Subsidiaries or any of them in the Transaction Documents shall be
disregarded.
(b) Organization and Qualification. The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, except where the failure of a Subsidiary to be in
good standing could not reasonably be expected to result in a Material Adverse
Effect. The Company and each of the Subsidiaries has the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in a Material Adverse Effect and, to the knowledge of the Company, no Proceeding
has been instituted in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or qualification.
(c) Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and its stockholders and no further action is required by
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the Company or its stockholders in connection therewith other than in connection
with the Required Approvals (as defined below). Each Transaction Document has
been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms thereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Securities at
the Closing and the consummation by the Company of the other transactions
contemplated thereby do not and will not (i) conflict with or violate any
provision of the Company's or any Subsidiary's certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, violate or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any
Subsidiary pursuant to, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement (written or oral), credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected, except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization, approval or order of, give any notice
to, or make any filing or registration with, any court or other federal, state,
local or other governmental authority having jurisdiction over the Company or
its Subsidiaries, its stockholders or the Trading Market in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
including the issuance and listing or quotation (as applicable) of the
Securities on the Trading Market, other than: (i) the filing with the Commission
of the Prospectus Supplement, (ii) filings with the Trading Market and (iii)
such filings as are required to be made under applicable state securities laws
(collectively, the "Required Approvals").
(f) Registration Statement. The Company has filed with the Commission the
Registration Statement under the Securities Act, which became effective on
February 28, 2013 (the "Effective Date"), for the registration under the
Securities Act of the Securities and the Underwriters' Securities. At the time
of such filing and at the time of the filing of the Company's Form 10-K for the
year ended September 30, 2013, the Company met the requirements of Form S-3
under the Securities Act. The Registration Statement meets the requirements set
forth in Rule 415(a)(1)(x) under the Securities Act and complies with said Rule
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and the Prospectus Supplement will meet the requirements set forth in Rule
424(b). The Company has advised the Representatives of all further information
(financial and other) with respect to the Company required to be set forth
therein in the Registration Statement and Prospectus Supplement. If the Company
has filed an abbreviated registration statement to register additional
securities pursuant to Rule 462(b) under the Securities Act (the "462(b)
Registration Statement"), then any reference herein to the Registration
Statement shall also be deemed to include such 462(b) Registration Statement.
The offer and sale of the Securities and the Underwriters' Securities have been
registered under the Registration Statement, and the Registration Statement
remains effective and no stop order has been issued. Any reference in this
Agreement to the Registration Statement, the Prospectus or the Prospectus
Supplement shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Exchange Act, on or before the date of this Agreement, or the issue date of the
Prospectus or the Prospectus Supplement, as the case may be; and any reference
in this Agreement to the terms "amend," "amendment" or "supplement" with respect
to the Registration Statement, the Prospectus or the Prospectus Supplement shall
be deemed to refer to and include the filing of any document under the Exchange
Act after the date of this Agreement, or the issue date of the Prospectus or the
Prospectus Supplement, as the case may be, deemed to be incorporated therein by
reference. All references in this Agreement to financial statements and
schedules and other information which is "contained," "included," "described,"
"referenced," "set forth" or "stated" in the Registration Statement, the
Prospectus or the Prospectus Supplement (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement, the Prospectus or the Prospectus
Supplement, as the case may be. No stop order suspending the effectiveness of
the Registration Statement or the use of the Prospectus or the Prospectus
Supplement has been issued, and no proceeding for any such purpose is pending or
has been initiated or, to the Company's knowledge, is threatened by the
Commission. For purposes of this Agreement, "free writing prospectus" has the
meaning set forth in Rule 405 under the Securities Act. The Company will not,
without the prior consent of the Representatives, prepare, use or refer to, any
free writing prospectus.
(g) Issuance of Securities. The Closing Shares, Warrant Shares and
shares of Common Stock underlying the Underwriters' Warrants are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens. The Warrants and Underwriters' Warrants are duly
authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and free and
clear of all Liens. The Company has reserved from its duly authorized capital
stock the maximum number of shares of Common Stock issuable pursuant to the
Transaction Documents. The holder of the Securities and Underwriters' Securities
will not be subject to personal liability by reason of being such holders. The
Securities and Underwriters' Securities are not and will not be subject to the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. All corporate action required to be
taken for the authorization, issuance and sale of the Securities and
Underwriters' Securities has been duly and validly taken. The Securities and
Underwriters' Securities conform in all material respects to all statements with
respect thereto contained in the Registration Statement.
12
(h) Capitalization. The capitalization of the Company is as set forth
in the Registration Statement. No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by the Transaction Documents. Except as set forth
in the Prospectus, there are no outstanding options, warrants, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock Equivalents. Except as
set forth on Schedule 3.1(h), the issuance and sale of the Securities and
Underwriters' Securities will not obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Underwriters) and will
not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under any of such securities. All
of the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and nonassessable and have been issued in compliance
with all federal and state securities laws and the requirements of the Trading
Market, and none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities. The
authorized shares of the Company conform in all material respects to all
statements relating thereto contained in the Registration Statement and the
Prospectus. The offers and sales of the Company's securities were, at the time
effected, either registered under the Securities Act and the applicable state
securities or Blue Sky laws or, based in part on the representations and
warranties of the purchasers, exempt from such registration requirements. No
further approval or authorization of any stockholder or the Board of Directors
is required for the issuance and sale of the Securities and Underwriters'
Securities. There are no stockholders agreements, voting agreements or other
similar agreements with respect to the Company's capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any of
the Company's stockholders.
(i) SEC Reports; Financial Statements. The Company has filed or furnished
all reports, schedules, forms, statements and other documents (and exhibits
thereto) required to be filed or furnished by the Company under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof
(the foregoing materials, as the same may be amended, including the exhibits
thereto and documents incorporated by reference therein, being collectively
referred to herein as the "SEC Reports") and any notices, reports or other
filings pursuant to applicable requirements of the Trading Market for a period
of 12 months preceding the date of the filing of its most recent Form 10-K on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports and notices, reports or other filings pursuant to
applicable requirements of the Trading Market prior to the expiration of any
such extension. As of their respective dates, the SEC Reports complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as applicable, and the rules and regulations of the Commission
promulgated thereunder. None of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
13
regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements (i) have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved ("GAAP"), except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and (ii)
fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
The agreements and documents described in the Registration Statement, the
Prospectus, the Prospectus Supplement and the SEC Reports conform to the
descriptions thereof contained therein and there are no agreements or other
documents required by the Securities Act and the rules and regulations
thereunder to be described in the Registration Statement, the Prospectus, the
Prospectus Supplement or the SEC Reports or to be filed with the Commission as
exhibits to the Registration Statement, that have not been so described or
filed. Each agreement or other instrument (however characterized or described)
to which the Company is a party or by which it is or may be bound or affected
and (i) that is referred to in the Registration Statement, the Prospectus, the
Prospectus Supplement or the SEC Reports, or (ii) is material to the Company's
business, has been duly authorized and validly executed by the Company, is in
full force and effect in all material respects and is enforceable against the
Company and, to the Company's knowledge, the other parties thereto, in
accordance with its terms, except (x) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (y) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (z)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefore may be brought. None of such
agreements or instruments has been assigned by the Company, and neither the
Company nor, to the best of the Company's knowledge, any other party is in
default thereunder and, to the best of the Company's knowledge, no event has
occurred that, with the lapse of time or the giving of notice, or both, would
constitute a default thereunder. To the best of the Company's knowledge,
performance by the Company of the material provisions of such agreements or
instruments will not result in a violation of any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any of its assets
or businesses, including, without limitation, those relating to environmental
laws and regulations.
(j) Material Changes; Undisclosed Events, Liabilities or Developments.
Since the date of the latest audited financial statements included within the
SEC Reports, except as specifically disclosed in a subsequent SEC Report filed
prior to the date hereof, (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) that are material to the Company or its Subsidiaries other than (A)
trade payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company's financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Company has not altered
its method of accounting in any material respect except as otherwise required
pursuant to GAAP, (iv) the Company has not declared or made any dividend or
14
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock, (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans,
and (vi) no officer or director of the Company has resigned from any position
with the Company. The Company does not have pending before the Commission any
request for confidential treatment of information. Other than the issuance of
the Securities as contemplated by this Agreement, there is no event, liability,
fact, circumstance, occurrence or development that has occurred or which exists
or is reasonably expected to occur or exist with respect to the Company or its
Subsidiaries or their respective businesses, prospects, properties, operations,
assets or financial condition that is required to be disclosed by the Company
under applicable securities laws on the date that this representation is made or
deemed to be made that has not already been publicly disclosed at least 1
Trading Day prior to the date that this representation is made or deemed to be
made. Unless otherwise disclosed in an SEC Report filed prior to the date
hereof, the Company has not: (i) issued any securities or incurred any liability
or obligation, direct or contingent, for borrowed money; or (ii) declared or
paid any dividend or made any other distribution on or in respect to its capital
stock.
(k) Litigation. There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their
respective officers or directors (in any such officer's or director's capacity
as such) or their properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an "Action") which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Securities, (ii) could, if there were an unfavorable decision, ruling or
finding, have or reasonably be expected to result in a Material Adverse Effect
or (iii) involves a claim or violation of, or liability under, any federal or
state securities law or which involves a claim of breach of fiduciary duty.
There has not been and, to the knowledge of the Company, there is not currently
pending or contemplated, any investigation by the Commission involving the
Company or any Subsidiary or any current or former director or officer of the
Company or any Subsidiary (in his or her capacity as such). The Commission has
not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act and, to the Company's knowledge, no proceeding for
such purpose is pending before or threatened by the Commission.
(l) Labor Relations. No labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company, which
could reasonably be expected to result in a Material Adverse Effect. None of the
Company's or its Subsidiaries' employees is a member of a union that relates to
such employee's relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that their relationships
with their employees are good. To the knowledge of the Company, no executive
officer of the Company or any Subsidiary, is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or
any other contract or agreement or any restrictive covenant in favor of any
third party, and the continued employment of each such executive officer does
not subject the Company or any of its Subsidiaries to any liability with respect
15
to any of the foregoing matters. The Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(m) Compliance. Neither the Company nor any Subsidiary: (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, could reasonably be expected
to result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any judgment, decree or order of any court,
arbitrator or other governmental authority or (iii) is in violation of any
statute, rule, ordinance or regulation of any governmental authority or the
Trading Market, including without limitation all foreign, federal, state and
local laws applicable to its business, including without limitation, in
connection with taxes, environmental protection, occupational health and safety,
product quality and safety and employment and labor matters, except in each case
as would not have or reasonably be expected to result in a Material Adverse
Effect.
(n) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to own or lease their
respective properties and to conduct their respective businesses as described in
the SEC Reports, except where the failure to possess such permits could not
reasonably be expected to result in a Material Adverse Effect (each, a "Material
Permit"), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the limitation, revocation, cancellation, suspension,
modification or non-renewal of any Material Permit. The disclosures in the
Registration Statement concerning the effects of federal, state, local and all
foreign regulation on the Company's business as currently conducted and
contemplated are correct in all material respects.
(o) Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to, or have valid and marketable rights to lease
or otherwise use, all real property and all personal property that is material
to the business of the Company and the Subsidiaries, in each case free and clear
of all Liens, except for (i) Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Company and the Subsidiaries and (ii) Liens for the
payment of federal, state or other taxes, for which appropriate reserves have
been made in accordance with GAAP, and the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in
compliance.
(p) Intellectual Property. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, know-how,
copyrights, licenses and other intellectual property rights and similar rights
16
necessary or required for use in connection with their respective businesses as
described in the SEC Reports and which the failure to so have could have a
Material Adverse Effect (collectively, the "Intellectual Property Rights"). None
of, and neither the Company nor any Subsidiary has received a notice (written or
otherwise) that any of, the Intellectual Property Rights has expired, terminated
or been abandoned, or is expected to expire or terminate or be abandoned, within
two (2) years from the date of this Agreement. Neither the Company nor any
Subsidiary has received, since the date of the latest audited financial
statements included within the SEC Reports, a written notice of a claim or
otherwise has any knowledge that the Intellectual Property Rights violate or
infringe upon the rights of any Person. To the knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing
infringement or misappropriation by another Person of any of the Intellectual
Property Rights. To the Company's knowledge, it has not infringed or
misappropriated the Intellectual Property Rights of any third parties, which
infringement or misappropriation would, if the subject of an unfavorable
decision, ruling or finding, have a Material Adverse Effect. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property Rights, except
where failure to do so could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(q) Insurance. The Company and the Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and
officers insurance coverage. Neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.
(r) Transactions With Affiliates and Employees. Except as shown on
Schedule 3.1(r), none of the officers or directors of the Company or any
Subsidiary and, to the knowledge of the Company, none of the employees of the
Company or any Subsidiary is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, providing for the borrowing of money from or lending of
money to or otherwise requiring payments to or from, any officer, director or
such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee, stockholder, member or partner, in each case in
excess of $100,000 other than for (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the
Company and (iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.
(s) ▇▇▇▇▇▇▇▇-▇▇▇▇▇. The Company and the Subsidiaries are in compliance with
any and all applicable requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 that are
effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the Commission thereunder that are effective as of
the date hereof and as of the Closing Date.
17
(t) Certain Fees. Except as set forth in the Prospectus Supplement, no
brokerage or finder's fees or commissions are or will be payable by the Company,
any Subsidiary or Affiliate of the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by the Transaction Documents. To
the Company's knowledge, there are no other arrangements, agreements or
understandings of the Company or, to the Company's knowledge, any of its
stockholders that may affect the Underwriters' compensation, as determined by
FINRA. The Company has not made any direct or indirect payments (in cash,
securities or otherwise) to: (i) any person, as a finder's fee, consulting fee
or otherwise, in consideration of such person raising capital for the Company or
introducing to the Company persons who raised or provided capital to the
Company; (ii) any FINRA member; or (iii) other than to the Representatives or as
set forth on Schedule 3.1(t) hereto, any person or entity that has any direct or
indirect affiliation or association with any FINRA member, within the twelve
months prior to the Execution Date. None of the net proceeds of the Offering
will be paid by the Company to any participating FINRA member or its affiliates,
except as specifically authorized herein. The Underwriters shall have no
obligation or liability with respect to any fees or with respect to any claims
made by or on behalf of other Persons for fees of a type contemplated in this
Section that may be or become due in connection with the transactions
contemplated by the Transaction Documents.
(u) Investment Company. The Company is not, and is not an Affiliate of,
and immediately after receipt of payment for the Securities will not be or be an
Affiliate of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become an "investment company" subject to
registration under the Investment Company Act of 1940, as amended.
(v) Registration Rights. No Person has any right to cause the Company
or any Subsidiary to effect the registration under the Securities Act of any
securities of the Company or any Subsidiary.
(w) Listing and Maintenance Requirements. The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration. Except as set forth on Schedule
3.1(w), the Company has not, in the 12 months preceding the date hereof or the
Closing Date, received notice from any Trading Market on which the Common Stock
is or has been listed or quoted (as applicable) to the effect that the Company
is not in compliance with the listing or quotation (as applicable) or
maintenance requirements of such Trading Market.
(x) Application of Takeover Protections. The Company and the Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's certificate of incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable as a result of the Underwriters and the Company
fulfilling their obligations or exercising their rights under the Transaction
18
Documents, including, without limitation, the Company's issuance of the
Securities and the Underwriters' ownership of the Securities.
(y) Disclosure; 10b-5. The Company confirms that, as of the date hereof and
as of the Closing Date, neither the Company nor any officer, director or
employee of the Company acting on its behalf (as such term is used in Regulation
FD) has provided or will provide the Underwriters or their agents or counsel
with any information that the Company believes may constitute material,
non-public information except insofar as the existence and terms of the proposed
transactions hereunder may constitute such information. The Company understands
and confirms that the Underwriters will rely on the foregoing representations
and covenants in effecting transactions in securities of the Company. The
Registration Statement (and any further documents to be filed with the
Commission) contains all exhibits and schedules as required by the Securities
Act. Each of the Registration Statement and any post-effective amendment
thereto, if any, at the time it became effective, complied in all material
respects with the Securities Act and the Exchange Act and the applicable rules
and regulations under the Securities Act and did not and, as amended or
supplemented, if applicable, will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus and the
Prospectus Supplement, each as of its respective date, comply in all material
respects with the Securities Act and the Exchange Act and the applicable rules
and regulations. Each of the Prospectus and the Prospectus Supplement, as
amended or supplemented, did not and will not contain as of the date thereof any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The SEC Reports, when they were filed with
the Commission, conformed in all material respects to the requirements of the
Exchange Act and the applicable rules and regulations, and none of such
documents, when they were filed with the Commission, contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein (with respect to the SEC Reports incorporated by
reference in the Prospectus or Prospectus Supplement), in light of the
circumstances under which they were made not misleading; and any further
documents so filed and incorporated by reference in the Prospectus or Prospectus
Supplement, when such documents are filed with the Commission, will conform in
all material respects to the requirements of the Exchange Act and the applicable
rules and regulations, as applicable, and will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made not
misleading. No post-effective amendment to the Registration Statement reflecting
any facts or events arising after the date thereof which represent, individually
or in the aggregate, a fundamental change in the information set forth therein
is required to be filed with the Commission. There are no documents required to
be filed with the Commission in connection with the transaction contemplated
hereby that (x) have not been filed as required pursuant to the Securities Act
or (y) will not be filed within the requisite time period. There are no
contracts or other documents required to be described in the Prospectus or
Prospectus Supplement, or to be filed as exhibits or schedules to the
Registration Statement, which have not been described or filed as required. The
press releases disseminated by the Company during the twelve months preceding
19
the date of this Agreement taken as a whole do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made and when made, not misleading.
(z) No Integrated Offering. Neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of
any applicable shareholder approval provisions of any Trading Market on which
any of the securities of the Company are listed or designated.
(aa) Solvency. Based on the consolidated financial condition of the
Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder, (i) the fair
saleable value of the Company's assets exceeds the amount that will be required
to be paid on or in respect of the Company's existing debts and other
liabilities (including known contingent liabilities) as they mature, (ii) the
Company's assets do not constitute unreasonably small capital to carry on its
business as now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of the business
conducted by the Company, consolidated and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its liabilities when such
amounts are required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt). The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date.
The SEC Reports sets forth as of the date of such reports all outstanding
secured and unsecured Indebtedness of the Company or any Subsidiary, or for
which the Company or any Subsidiary has commitments.
(bb) Tax Status. Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state,
local and foreign income and franchise tax returns and has paid or accrued all
taxes shown as due thereon. The Company has no knowledge of a tax deficiency
which has been asserted or threatened against the Company or any Subsidiary.
(cc) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor
to the knowledge of the Company or any Subsidiary, any agent or other person
acting on behalf of the Company or any Subsidiary, has (i) directly or
indirectly, used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by the
Company or any Subsidiary (or made by any person acting on its behalf of which
the Company is aware) which is in violation of law, or (iv) violated in any
material respect any provision of FCPA. The Company has taken reasonable steps
20
to ensure that its accounting controls and procedures are sufficient to cause
the Company to comply in all material respects with the FCPA.
(dd) Accountants. To the knowledge and belief of the Company, the
Company Auditor (i) is an independent registered public accounting firm as
required by the Exchange Act and (ii) shall express its opinion with respect to
the financial statements to be included in the Company's Annual Report for the
fiscal year ending September 30, 2014. Except as disclosed in the SEC Reports,
the Company Auditor has not, during the periods covered by the financial
statements included in the Prospectus, provided to the Company any non-audit
services, as such term is used in Section 10A(g) of the Exchange Act.
(ee) FDA. As to each product subject to the jurisdiction of the U.S. Food
and Drug Administration ("FDA") under the Federal Food, Drug and Cosmetic Act,
as amended, and the regulations thereunder ("FDCA") that is manufactured,
packaged, labeled, tested, distributed, sold, and/or marketed by the Company or
any of its Subsidiaries (each such product, a "Pharmaceutical Product"), such
Pharmaceutical Product is being manufactured, packaged, labeled, tested,
distributed, sold and/or marketed by the Company in compliance with all
applicable requirements under FDCA and similar laws, rules and regulations
relating to registration, investigational use, premarket clearance, licensure,
or application approval, good manufacturing practices, good laboratory
practices, good clinical practices, product listing, quotas, labeling,
advertising, record keeping and filing of reports, except where the failure to
be in compliance would not have a Material Adverse Effect. There is no pending,
completed or, to the Company's knowledge, threatened, action (including any
lawsuit, arbitration, or legal or administrative or regulatory proceeding,
charge, complaint, or investigation) against the Company or any of its
Subsidiaries, and none of the Company or any of its Subsidiaries has received
any notice, warning letter or other communication from the FDA or any other
governmental entity, which (i) contests the premarket clearance, licensure,
registration, or approval of, the uses of, the distribution of, the
manufacturing or packaging of, the testing of, the sale of, or the labeling and
promotion of any Pharmaceutical Product, (ii) withdraws its approval of,
requests the recall, suspension, or seizure of, or withdraws or orders the
withdrawal of advertising or sales promotional materials relating to, any
Pharmaceutical Product, (iii) imposes a clinical hold on any clinical
investigation by the Company or any of its Subsidiaries, (iv) enjoins production
at any facility of the Company or any of its Subsidiaries, (v) enters or
proposes to enter into a consent decree of permanent injunction with the Company
or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of its Subsidiaries, and which,
either individually or in the aggregate, would have a Material Adverse Effect.
The properties, business and operations of the Company have been and are being
conducted in all material respects in accordance with all applicable laws, rules
and regulations of the FDA. The Company has not been informed by the FDA that
the FDA will prohibit the marketing, sale, license or use in the United States
of any product proposed to be developed, produced or marketed by the Company nor
has the FDA expressed any concern as to approving or clearing for marketing any
product being developed or proposed to be developed by the Company.
21
(ff) FINRA Affiliation. No officer, director or any beneficial owner of
5% or more of the Company's securities has any direct or indirect affiliation or
association with any FINRA member (as determined in accordance with the rules
and regulations of FINRA).
(gg) Officers' Certificate. Any certificate signed by any duly
authorized officer of the Company and delivered to the Representatives or to
▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be deemed a representation and warranty by the Company to
the Underwriters as to the matters covered thereby.
(hh) Board of Directors. The Board of Directors is comprised of the
persons set forth in the SEC Reports. The qualifications of the persons serving
as board members and the overall composition of the Board of Directors comply
with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules promulgated thereunder
applicable to the Company and the rules of the Trading Market. At least one
member of the Board of Directors qualifies as a "financial expert" as such term
is defined under the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules promulgated
thereunder and the rules of the Trading Market. In addition, at least a majority
of the persons serving on the Board of Directors qualify as "independent" as
defined under the rules of the Trading Market.
(ii) Regulation M Compliance. The Company has not, and to its knowledge
no one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased or paid any compensation for
soliciting purchases of any of the Securities or (iii) paid or agreed to pay to
any Person any compensation for soliciting another to purchase any other
securities of the Company.
(jj) Minute Book. The minute books of the Company and each Subsidiary
have been made available to the Underwriters and counsel for the Underwriters,
and such books (i) contain a complete summary of all meetings and actions of the
board of directors (including each board committee) and stockholders of the
Company and each Subsidiary since the time of its respective incorporation or
organization through the date of the latest meeting and action, and (ii)
accurately in all material respects reflect all transactions referred to in such
minutes.
(kk) Forward looking Statements; Market Data. No forward-looking
statement (within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act) contained in either the Prospectus Supplement or the
Prospectus has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith. The statistical and market related data
included or incorporated by reference in the Registration Statement, the
Prospectus Supplement and the Prospectus are based on or derived from sources
that the Company believes to be reliable and accurate, and such data agree with
the sources from which they are derived.
(ll) Clinical Trials. All preclinical and clinical studies conducted by or
on behalf of the Company that are material to the Company and the Subsidiaries,
taken as a whole, are or have been adequately described in the Registration
Statement, the Prospectus Supplement and the Prospectus in all material
respects. To the Company's knowledge, after reasonable inquiry, the clinical and
preclinical studies conducted by or on behalf of the Company and its
Subsidiaries that are described in the Registration Statement, the Prospectus
Supplement and the Prospectus or the results of which are referred to in the
22
Registration Statement, the Prospectus Supplement and the Prospectus were and,
if still ongoing, are being conducted in material compliance with all laws and
regulations applicable thereto in the jurisdictions in which they are being
conducted and with all laws and regulations applicable to preclinical and
clinical studies from which data will be submitted to support marketing
approval. The descriptions in the Registration Statement, the Prospectus
Supplement and the Prospectus of the results of such studies are accurate and
complete in all material respects and fairly present the data derived from such
studies, and the Company has no knowledge of any large well-controlled clinical
study the aggregate results of which are inconsistent with or otherwise call
into question the results of any clinical study conducted by or on behalf of the
Company that are described in the Registration Statement, the Prospectus
Supplement and the Prospectus or the results of which are referred to in the
Registration Statement, the Prospectus Supplement and the Prospectus. Except as
disclosed in the Registration Statement, the Prospectus Supplement and the
Prospectus, the Company has not received any written notices or statements from
the FDA, the European Medicines Agency ("EMEA") or any other governmental agency
or authority imposing, requiring, requesting or suggesting a clinical hold,
termination, suspension or material modification for or of any clinical or
preclinical studies that are described in the Registration Statement, the
Prospectus Supplement and the Prospectus or the results of which are referred to
in the Registration Statement, the Prospectus Supplement and the Prospectus and
the Prospectus.
(mm) Integration. Neither the Company, nor any of its affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause the Offering of the Securities to be
integrated with prior offerings by the Company for purposes of the Securities
Act which would require the registration of any such securities under the
Securities Act.
(nn) NYSE MKT Compliance. The Company is in compliance with all
applicable corporate governance requirements set forth in the NYSE Rules that
are now in effect and is actively taking steps to ensure that it will be in
compliance with other applicable corporate governance requirements set forth in
the NYSE Rules not currently in effect upon and all times after the
effectiveness of such requirements.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Amendments to Registration Statement. The Company has delivered, or
will as promptly as practicable deliver, to the Underwriters complete conformed
copies of the Registration Statement and of each consent and certificate of
experts, as applicable, filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits), the Prospectus and any Prospectus
Supplement, as amended or supplemented, in such quantities and at such places as
an Underwriter reasonably requests. Neither the Company nor any of its directors
and officers has distributed and none of them will distribute, prior to the
Closing Date, any offering material in connection with the offering and sale of
the Securities other than the Prospectus, the Preliminary Prospectus, the
23
Registration Statement, and copies of the documents incorporated by reference
therein. The Company shall not file any such amendment or supplement to which
the Representatives shall reasonably object in writing.
4.2 Federal Securities Laws.
(a) Compliance. During the time when a Prospectus is required to be
delivered under the Securities Act, the Company will use its commercially
reasonable efforts to comply with all requirements imposed upon it by the
Securities Act and the rules and regulations thereunder and the Exchange Act and
the rules and regulations thereunder, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and the Prospectus. If at any time when a
Prospectus relating to the Securities is required to be delivered under the
Securities Act, any event shall have occurred as a result of which, in the
opinion of counsel for the Company or counsel for the Underwriters, the
Prospectus, as then amended or supplemented, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to amend
the Prospectus to comply with the Securities Act, the Company will notify the
Underwriters promptly and prepare and file with the Commission, subject to
Section 4.1 hereof, an appropriate amendment or supplement in accordance with
Section 10 of the Securities Act.
(b) Filing of Final Prospectus. The Company will file the Prospectus
(in form and substance satisfactory to the Representatives) with the Commission
pursuant to the requirements of Rule 424.
(c) Exchange Act Registration. For a period of three years from the
Execution Date, the Company will use its commercially reasonable efforts to
maintain the registration of the Common Stock under the Exchange Act. The
Company will not deregister the Common Stock under the Exchange Act without the
prior written consent of the Representatives.
(d) Free Writing Prospectuses. The Company represents and agrees that
it has not made and will not make any offer relating to the Securities that
would constitute an issuer free writing prospectus, as defined in Rule 433 of
the rules and regulations under the Securities Act, without the prior consent of
the Representatives. Any such free writing prospectus consented to by the
Representatives is hereinafter referred to as a "Permitted Free Writing
Prospectus." The Company represents that it will treat each Permitted Free
Writing Prospectus as an "issuer free writing prospectus" as defined in the
rules and regulations under the Securities Act, and has complied and will comply
with the applicable requirements of Rule 433 of the Securities Act, including
timely Commission filing where required, legending and record keeping.
4.3 Delivery to the Underwriters of Prospectuses. The Company will
deliver to the Underwriters, without charge, from time to time during the period
when the Prospectus is required to be delivered under the Securities Act or the
Exchange Act such number of copies of each Prospectus as the Underwriters may
reasonably request.
24
4.4 Effectiveness and Events Requiring Notice to the Underwriters. The
Company will use its commercially reasonable efforts to cause the Registration
Statement to remain effective with a current prospectus until the later of nine
(9) months from the Execution Date and the date on which the Warrants or
Underwriters' Warrants are no longer outstanding and will notify the
Underwriters and the holders of the Warrants or Underwriters' Warrants
immediately and confirm the notice in writing: (i) of the issuance by the
Commission of any stop order or of the initiation, or the threatening, of any
proceeding for that purpose; (ii) of the issuance by any state securities
commission of any proceedings for the suspension of the qualification of the
Securities or Underwriters' Securities for offering or sale in any jurisdiction
or of the initiation, or the threatening, of any proceeding for that purpose;
(iii) of the mailing and delivery to the Commission for filing of any amendment
or supplement to the Registration Statement or Prospectus under the Securities
Act in respect of the Securities or Underwriters' Securities; (iv) of the
receipt of any comments or request for any additional information from the
Commission; and (v) of the happening of any event during the period described in
this Section 4.4 that, in the judgment of the Company, makes any statement of a
material fact made in the Registration Statement, the Prospectus or any
Prospectus Supplement untrue or that requires the making of any changes in the
Registration Statement, the Prospectus or any Prospectus Supplement in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. If the Commission or any state securities commission shall
enter a stop order or suspend such qualification at any time, the Company will
make commercially reasonable efforts to obtain promptly the lifting of such
order.
4.5 Review of Financial Statements. For a period of five (5) years from
the Execution Date, the Company, at its expense, shall cause its regularly
engaged independent certified public accountants to review (but not audit) the
Company's financial statements for each of the first three fiscal quarters prior
to the announcement of quarterly financial information.
4.6 Reports to the Underwriters.
(a) Periodic Reports, etc. For a period of three years from the
Execution Date, the Company will furnish to the Underwriters copies of such
financial statements and other periodic and special reports as the Company from
time to time furnishes generally to holders of any class of its securities and
also promptly furnish to the Underwriters: (i) a copy of each periodic report
the Company has filed with the Commission; (ii) a copy of each Form 8-K prepared
and filed by the Company; and (iii) a copy of each registration statement filed
by the Company under the Securities Act, provided that documents filed with the
Commission pursuant to its ▇▇▇▇▇ system shall be deemed to have been delivered
to the Underwriters pursuant to this Section.
(b) General Expenses Related to the Offering. The Company hereby agrees to
pay on the Closing Date, all expenses incident to the performance of the
obligations of the Company under this Agreement, including, but not limited to:
(a) all filing fees and communication expenses relating to the registration of
the Closing Securities to be sold in the Offering with the Commission; (b) all
actual FINRA filing fees associated with the review of the Offering by FINRA;
(c) all fees and expenses relating to the listing of the Closing Shares, Warrant
Shares and Common Stock underlying the Underwriters' Warrants on the NYSE MKT;
(d) all actual fees, expenses and disbursements relating to background checks of
the Company's officers and directors in an amount not to exceed $2,000 per
individual and $6,000 in the aggregate such expenses to be documented prior to
25
being reimbursed; (e) all fees, expenses and disbursements relating to the
registration or qualification of such securities to be sold hereunder under the
"blue sky" securities laws of such states and other jurisdictions as the
Representatives may reasonably designate (including, without limitation, all
filing and registration fees)); (f) all fees, expenses and disbursements
relating to the registration, qualification or exemption of such securities to
be sold hereunder under the securities laws of such foreign jurisdictions as the
Representatives may reasonably designate; (g) the costs of all mailing and
printing of the underwriting documents (including, without limitation, this
Underwriting Agreement, any Blue Sky Surveys and, if appropriate, any Agreement
Among Underwriters, Selected Dealers' Agreement, Underwriters' Questionnaire and
Power of Attorney), Registration Statements, Prospectuses and all amendments,
supplements and exhibits thereto and as many preliminary and final Prospectuses
as the Representatives may reasonably deem necessary; (h) the costs of
preparing, printing and delivering certificates representing any of the
securities to be sold hereunder; (i) fees and expenses of the transfer agent for
the Common Stock or warrant agent for the Warrants; (j) stock transfer and/or
stamp taxes, if any, payable upon the transfer of securities from the Company to
the Representatives; (k) the fees and expenses of the Company's accountants; and
(l) the fees and expenses of the Company's legal counsel and other agents and
representatives. The Underwriters may also deduct from the net proceeds of the
Offering payable to the Company on the Closing Date the expenses set forth
herein to be paid by the Company to the Underwriters.
(c) Non-accountable Expenses. The Company further agrees that, in
addition to the expenses payable pursuant to Section 4.6(b), on the Closing Date
it shall pay to the Representatives, by deduction from the net proceeds of the
Offering contemplated herein, a non-accountable expense allowance equal to one
percent (1.0%) of the gross proceeds received by the Company from the sale of
the Closing Securities.
4.7 Application of Net Proceeds. The Company will apply the net
proceeds from the Offering received by it in a manner consistent with the
application described under the caption "Use Of Proceeds" in the Prospectus.
4.8 Delivery of Earnings Statements to Security Holders. The Company
will make generally available to its security holders as soon as practicable,
but not later than 405 days or, if the fourth quarter following the fiscal
quarter that includes the Effective Date is the last fiscal quarter of the
Company's fiscal year, 440 days after the end of the Company's current fiscal
quarter following the Execution Date, an earnings statement (which need not be
certified by independent public or independent certified public accountants
unless required by the Securities Act or the rules and regulations under the
Securities Act, but which shall satisfy the provisions of Rule 158(a) under
Section 11(a) of the Securities Act) covering a period of at least twelve
consecutive months beginning after the Execution Date. Such earnings statement
filed with the Commission pursuant to its ▇▇▇▇▇ system shall be deemed to have
been made available to the security holders pursuant to this Section.
4.9 Stabilization. Neither the Company, nor, to its knowledge, any of its
employees, directors or shareholders (without the consent of the
Representatives) has taken or will take, directly or indirectly, any action
designed to or that has constituted or that might reasonably be expected to
26
cause or result in, under the Exchange Act, or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities.
4.10 Internal Controls. The Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with GAAP and to maintain
accountability for assets; (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 existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
4.11 Accountants. For a period of three (3) years following the
Execution Date, the Company shall continue to retain a nationally recognized
independent certified public accounting firm. The Underwriters acknowledge that
the Company Auditor is acceptable to the Underwriters.
4.12 FINRA. The Company shall advise the Underwriters (who shall make
an appropriate filing with FINRA) if it is aware that any 5% or greater
shareholder of the Company becomes an affiliate or associated person of a FINRA
member firm.
4.13 No Fiduciary Duties. The Company acknowledges and agrees that the
Underwriters' responsibility to the Company is solely contractual and commercial
in nature, based on arms-length negotiations and that neither the Underwriters
nor their affiliates or any Selected Dealer shall be deemed to be acting in a
fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any
of its affiliates in connection with the Offering and the other transactions
contemplated by this Agreement. Notwithstanding anything in this Agreement to
the contrary, the Company acknowledges that the Underwriters may have financial
interests in the success of the Offering that are not limited to the difference
between the price to the public and the purchase price paid to the Company by
the Underwriters for the shares and the Underwriters have no obligation to
disclose, or account to the Company for, any of such additional financial
interests. The Company hereby waives and releases, to the fullest extent
permitted by law, any claims that the Company may have against the Underwriters
with respect to any breach or alleged breach of fiduciary duty.
4.14 Board Composition and Board Designations. The Company shall ensure
that: (i) the qualifications of the persons serving as board members and the
overall composition of the Board of Directors comply with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002 and the rules promulgated thereunder and with the listing requirements
of the Trading Market and (ii) if applicable, at least one member of the Board
of Directors qualifies as a "financial expert" as such term is defined under the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules promulgated thereunder.
4.15 Securities Laws Disclosure; Publicity. At the request of the
Representatives, at 9:00 a.m. Eastern time on the date hereof, the Company shall
issue a press release disclosing the material terms of the Offering. The Company
and the Representatives shall consult with each other in issuing any other press
27
releases with respect to the Offering, and neither the Company nor any
Underwriter shall issue any such press release nor otherwise make any such
public statement without the prior consent of the Company, with respect to any
press release of such Underwriter, or without the prior consent of such
Underwriter, with respect to any press release of the Company, which consent
shall not unreasonably be withheld or delayed, except if such disclosure is
required by law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or communication.
4.16 Shareholder Rights Plan. No claim will be made or enforced by the
Company or, with the consent of the Company, by any other Person, that any
Underwriter of the Securities is an "Acquiring Person" under any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or similar anti-takeover plan or arrangement in effect or
hereafter adopted by the Company, or that any Underwriter of Securities could be
deemed to trigger the provisions of any such plan or arrangement, by virtue of
receiving Securities.
4.17 Reservation of Common Stock. As of the date hereof, the Company
has reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue the Warrant Shares and the
shares underlying the Underwriters' Warrants upon the exercise of the
Underwriters' Warrants.
4.18 Listing of Common Stock. For a period of three (3) years from the
Execution Date, the Company hereby agrees to use commercially reasonable efforts
to maintain the listing of the Common Stock on the Trading Market on which it is
currently listed and, concurrently with the execution of this Agreement, the
Company shall apply to list or quote all of the Closing Shares, Warrant Shares
and shares underlying the Underwriters' Warrants on such Trading Market and on
or before the Closing shall secure the listing of all of the Closing Shares,
Warrants Shares and shares underlying the Underwriters' Warrants on such Trading
Market. The Company further agrees that, if the Company applies to have the
Common Stock listed or quoted on any other Trading Market, it will then include
in such application all of the Closing Shares, Warrant Shares and shares
underlying the Underwriters' Warrants, and will take such other action as is
necessary to cause all of the Closing Shares, Warrant Shares and shares
underlying the Underwriters' Warrants to be listed or quoted on such other
Trading Market as promptly as possible.
4.19 Subsequent Equity Sales. From the date hereof until 60 days
following the Closing Date, neither the Company nor any Subsidiary shall issue,
enter into any agreement to issue or announce the issuance or proposed issuance
of any shares of Common Stock or Common Stock Equivalents, provided that this
Section 4.19 shall not apply in respect of an Exempt Issuance and shall not
apply commencing on the date after the VWAP equals or exceeds $4.00 (subject to
adjustment for reverse and forward stock splits, recapitalizations and other
similar transactions after the date hereof) on 5 consecutive Trading Days.
4.20 Research Independence. In addition, the Company acknowledges that each
Underwriter's research analysts and research departments, if any, are required
to be independent from their respective investment banking divisions and are
subject to certain regulations and internal policies, and that such
28
Underwriter's research analysts may hold and make statements or investment
recommendations and/or publish research reports with respect to the Company
and/or the offering that differ from the views of its investment bankers. The
Company acknowledges that the Representatives are each a full service securities
firm and as such from time to time, subject to applicable securities laws, may
effect transactions for its own account or the account of its customers and hold
long or short position in debt or equity securities of the Company.
4.21 Certain Agreements of the Underwriters. The Underwriters hereby
represent and agree that:
(a) They have not used, authorized use of, referred to or participated
in the planning for use of, and will not use, authorize use of, refer to or
participate in the planning for use of, any "free writing prospectus", as
defined in Rule 405 under the Securities Act (which term includes use of any
written information furnished to the Commission by the Company and not
incorporated by reference into the Registration Statement and any press release
issued by the Company) other than (i) a free writing prospectus that contains no
"issuer information" (as defined in Rule 433(h)(2) under the Securities Act)
that was not included (including through incorporation by reference) in the
Preliminary Prospectus or a previously filed issuer free writing prospectus, as
defined in Rule 433 of the rules and regulations under the Securities Act, or
(ii) any Permitted Free Writing Prospectus prepared pursuant to Section 4.2(d)
above (including any electronic road show), or (iii) any free writing prospectus
prepared by an Underwriter and approved by the Company in advance in writing
(each such free writing prospectus referred to in clauses (i) or (iii), an
"Underwriter Free Writing Prospectus");
(b) They have not and will not, without the prior written consent of
the Company, use any free writing prospectus that contains the final terms of
the Securities unless such terms have previously been included in a free writing
prospectus filed with the Commission, provided that the Underwriters may use a
term sheet with the consent of the Company; provided, further, that the
Underwriters using such term sheet shall notify the Company, and provide a copy
of such term sheet to the Company, prior to, or substantially concurrently with,
the first use of such term sheet; and
(c) They are not subject to any pending proceeding under Section 8A of
the Securities Act with respect to the Offering (and will promptly notify the
Company if any such proceeding against them is initiated during the period when
the Prospectus is required to be delivered under the Securities Act or the
Exchange Act).
4.22 Warrant Shares. If all or any portion of a Warrant or the
Underwriters' Warrants is exercised at a time when there is an effective
registration statement to cover the issuance of the Warrant Shares or shares
underling the or the Underwriters' Warrants or if the Warrants or the
Underwriters' Warrants are exercised via cashless exercise at a time when such
Warrant Shares or shares underlying the Underwriters' Warrants would be eligible
for resale under Rule 144 by a non-affiliate of the Company, the Warrant Shares
or shares underlying the Underwriters' Warrants issued pursuant to any such
exercise shall be issued free of all restrictive legends. If at any time
following the date hereof the Registration Statement (or any subsequent
registration statement registering the sale or resale of the Warrant Shares or
29
shares underlying the Underwriters' Warrants) is not effective or is not
otherwise available for the sale of the Warrant Shares or shares underlying the
Underwriters' Warrants, the Company shall immediately notify the holders of the
Warrants or Underwriters' Warrants, as applicable, in writing that such
registration statement is not then effective and thereafter shall promptly
notify such holders when the registration statement is effective again and
available for the sale of the Warrant Shares or shares underlying the
Underwriters' Warrants (it being understood and agreed that the foregoing shall
not limit the ability of the Company to issue, or any holder thereof to sell,
any of the Warrant Shares or shares underlying the Underwriters' Warrants in
compliance with applicable federal and state securities laws).
4.23 Warrant Solicitation Fee. To the extent permitted pursuant to
FINRA Rule 5110(f)(K) with respect to either of the Representatives, the Company
shall pay the applicable Representative a cash fee payable within 48 hours of
(but only in the event of) the receipt by the Company of any cash proceeds from
the exercise of the Warrants equal to 6.5% of the aggregate cash exercise price
received by the Company upon such exercise.
ARTICLE V
INDEMNIFICATION
6.1 Indemnification of the Underwriters. Subject to the conditions set
forth below, the Company agrees to indemnify and hold harmless the Underwriters,
and each dealer selected by each Underwriter that participates in the offer and
sale of the Securities (each a "Selected Dealer") and each of their respective
directors, officers and employees and each person, if any, who controls such
Underwriter or any Selected Dealer ("Controlling Person") within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
and all loss, liability, claim, damage and expense whatsoever (including but not
limited to any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, whether arising out of any action between
such Underwriter and the Company or between such Underwriter and any third party
or otherwise), and the Company agrees to advance all such expenses as such
expenses are reasonably incurred by such Underwriter, Selected Dealer or
Controlling Person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability or expense to
which they or any of them may become subject under the Securities Act, the
Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in (i) any Preliminary
Prospectus, if any, the Registration Statement or the Prospectus (as from time
to time each may be amended and supplemented); or (ii) any materials or
information provided to investors by, or with the approval of, the Company in
connection with the marketing of the offering of the Securities, including any
"road show" or investor presentations made to investors by the Company (whether
in person or electronically) (collectively, the "Road Show Materials"); or the
omission or alleged omission therefrom of a 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, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company by any Underwriter expressly for use in any Preliminary
Prospectus, if any, the Registration Statement or Prospectus, or any amendment
30
or supplement thereof, or in any Road Show Materials, as the case may be. With
respect to any untrue statement or omission or alleged untrue statement or
omission made in the Preliminary Prospectus, if any, the indemnity agreement
contained in this Section 6.1 shall not inure to the benefit of an Underwriter
to the extent that any loss, liability, claim, damage or expense of such
Underwriter results from the fact that a copy of the Prospectus was not given or
sent to the Person asserting any such loss, liability, claim or damage at or
prior to the written confirmation of sale of the Securities to such Person as
required by the Securities Act and the rules and regulations thereunder, and if
the untrue statement or omission has been corrected in the Prospectus, unless
such failure to deliver the Prospectus was a result of non-compliance by the
Company with its obligations under this Agreement. The Company agrees promptly
to notify each Underwriter of the commencement of any litigation or proceedings
against the Company or any of its officers, directors or Controlling Persons in
connection with the issue and sale of the Securities or in connection with the
Registration Statement or Prospectus.
6.2 Procedure. If any action is brought against an Underwriter, a Selected
Dealer or a Controlling Person in respect of which indemnity may be sought
against the Company pursuant to Section 6.1, such Underwriter, such Selected
Dealer or Controlling Person, as the case may be, shall promptly notify the
Company in writing of the institution of such action and the Company shall
assume the defense of such action, including the employment and fees of counsel
(selected by such Underwriter or such Selected Dealer, as the case may be, and
reasonably acceptable to the Company) and payment of actual expenses. Such
Underwriter, such Selected Dealer or Controlling Person shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such Underwriter, such Selected Dealer
or Controlling Person unless (i) the employment of such counsel at the expense
of the Company shall have been authorized in writing by the Company in
connection with the defense of such action, or (ii) the Company shall not have
employed counsel to have charge of the defense of such action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to the Company (in which case the Company shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events the reasonable fees and expenses of not more
than one additional firm of attorneys selected by such Underwriter (in addition
to local counsel), Selected Dealer and/or Controlling Person, taken together as
a group, shall be borne by the Company. In no event shall the Company be liable
for fees and expenses of more than one firm of attorneys (in additional to any
local counsel) separate from its own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall (x) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld,
conditioned or delayed), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding and 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, or (y) be liable for any settlement of any
31
such action effected without its written consent (which consent shall not be
unreasonably withheld, conditioned or delayed), but if settled with the consent
of the indemnifying party or if there be a final judgment for the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by reason of such
settlement or judgment.
6.3 Indemnification of the Company. Each Underwriter severally and not
jointly agrees to indemnify and hold harmless the Company, its directors,
officers and employees and agents who control the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all loss, liability, claim, damage and expense described in the foregoing
indemnity from the Company to such Underwriter, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions made in any Preliminary Prospectus, if any, the Registration Statement
or Prospectus or any amendment or supplement thereto or in any Road Show
Materials, in reliance upon, and in strict conformity with, written information
furnished to the Company with respect to such Underwriter by or on behalf of
such Underwriter expressly for use in such Preliminary Prospectus, if any, the
Registration Statement or Prospectus or any amendment or supplement thereto or
in any such Road Show Materials. In case any action shall be brought against the
Company or any other Person so indemnified based on any Preliminary Prospectus,
if any, the Registration Statement or Prospectus or any amendment or supplement
hereto or any Road Show Materials, and in respect of which indemnity may be
sought against such Underwriter, such Underwriter shall have the rights and
duties given to the Company, and the Company and each other Person so
indemnified shall have the rights and duties given to such Underwriter by the
provisions of this Article VI. Notwithstanding the provisions of this Section
6.3, no Underwriter shall be required to indemnify the Company for any amount in
excess of the underwriting commissions applicable to the Securities purchased by
such Underwriter. The Underwriters' obligations in this Section 6.3 to indemnify
the Company are several in proportion to their respective underwriting
obligations and not joint.
6.4 Contribution.
(a) Contribution Rights. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) any Person
entitled to indemnification under this Article VI makes a claim for
indemnification pursuant hereto but it is judicially determined (by the entry of
a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Article VI provides for indemnification in such case, or (ii)
contribution under the Securities Act, the Exchange Act or otherwise may be
required on the part of any such Person in circumstances for which
indemnification is provided under this Article VI, then, and in each such case,
the Company and each Underwriter, severally and not jointly, shall contribute to
the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Company and such
Underwriter, as incurred, in such proportions that such Underwriter is
responsible for that portion represented by the percentage that the underwriting
commission appearing on the cover page of the Prospectus bears to the initial
offering price appearing thereon and the Company is responsible for the balance,
32
provided that no Person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each director, officer and
employee of such Underwriter or the Company, as applicable, and each Person, if
any, who controls such Underwriter or the Company, as applicable, within the
meaning of Section 15 of the Securities Act shall have the same rights to
contribution as such Underwriter or the Company, as applicable. Notwithstanding
the provisions of this Section 6.4, no Underwriter shall be required to
contribute any amount in excess of the underwriting commissions applicable to
the Securities purchased by such Underwriter. The Underwriters' obligations in
this Section 6.4 to contribute are several in proportion to their respective
underwriting obligations and not joint.
(b) Contribution Procedure. Within fifteen (15) days after receipt by
any party to this Agreement (or its representative) of notice of the
commencement of any action, suit or Proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party
("Contributing Party"), notify the Contributing Party of the commencement
thereof, but the failure to so notify the Contributing Party will not relieve it
from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or Proceeding is brought
against any party, and such party notifies a Contributing Party or its
representative of the commencement thereof within the aforesaid fifteen (15)
days, the Contributing Party will be entitled to participate therein with the
notifying party and any other Contributing Party similarly notified. Any such
Contributing Party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding affected by such
party seeking contribution without the written consent of such Contributing
Party. The contribution provisions contained in this Section 6.4 are intended to
supersede, to the extent permitted by law, any right to contribution under the
Securities Act, the Exchange Act or otherwise available.
ARTICLE VII
MISCELLANEOUS
7.1 Termination.
(a) Termination Right. The Representatives shall have the right to
terminate this Agreement at any time prior to any Closing Date, (i) if any
domestic or international event or act or occurrence has materially disrupted,
or in its opinion will in the immediate future materially disrupt, general
securities markets in the United States, or (ii) if trading on any Trading
Market shall have been suspended or materially limited, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required by FINRA or by order of the Commission or
any other government authority having jurisdiction, or (iii) if the United
States shall have become involved in a new war or an increase in major
hostilities, or (iv) if a banking moratorium has been declared by a New York
State or federal authority, or (v) if a moratorium on foreign exchange trading
has been declared which materially adversely impacts the United States
securities markets, or (vi) if the Company shall have sustained a material loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, which will, in the Representatives' opinion, make it inadvisable to
33
proceed with the delivery of the Securities, or (vii) if the Company is in
material breach of any of its representations, warranties or covenants
hereunder, or (viii) if the Representatives shall have become aware after the
date hereof of such a material adverse change in the conditions or prospects of
the Company, or such adverse material change in general market conditions, as in
the Representatives' judgment would make it impracticable to proceed with the
offering, sale and/or delivery of the Securities or to enforce contracts made by
the Underwriters for the sale of the Securities.
(b) Expenses. In the event this Agreement shall be terminated pursuant
to Section 7.1(a), within the time specified herein or any extensions thereof
pursuant to the terms herein, the Company shall be obligated to pay to the
Representatives its actual and accountable out of pocket expenses related to the
transactions contemplated herein then due and payable (excluding the fees and
disbursements of counsel to the Underwriters) up to $25,000.
(c) Indemnification. Notwithstanding any contrary provision contained
in this Agreement, any election hereunder or any termination of this Agreement,
and whether or not this Agreement is otherwise carried out, the provisions of
Article VI shall not be in any way effected by such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
7.2 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, the Preliminary Prospectus and the Prospectus,
contain the entire understanding of the parties with respect to the subject
matter hereof and thereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules.
7.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New
York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.
7.4 Amendments; Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Representatives. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right.
34
7.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
7.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
7.7 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the 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 herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any action, suit or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding. 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 via
registered or certified mail or overnight delivery (with evidence of delivery)
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 other manner permitted by law. If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then, in addition to the obligations of the Company
under Article VI, the prevailing party in such action, suit or proceeding shall
be reimbursed by the other party for its reasonable attorneys' fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.
7.8 Survival. The representations and warranties contained herein shall
survive the Closing and the delivery of the Securities.
7.9 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to each other party, it being understood that the
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a ".pdf" format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or ".pdf" signature page were an original
thereof.
35
7.10 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
7.11 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the
Underwriters and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and
not to assert in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.
7.12 Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right
may be exercised on the next succeeding Business Day.
7.13 Construction. The parties agree that each of them and/or their
respective counsel have reviewed and had an opportunity to revise the
Transaction Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any
amendments thereto. In addition, each and every reference to share prices and
shares of Common Stock in any Transaction Document shall be subject to
adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.
7.14 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE
LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVE FOREVER
ANY RIGHT TO TRIAL BY JURY.
(Signature Pages Follow)
36
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
the Company and the several Underwriters in accordance with its terms.
Very truly yours,
CEL-SCI CORPORATION
By: /s/ Geert ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: Geert ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
Address for Notice:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇ & ▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
ACCEPTED ON THE DATE FIRST ABOVE WRITTEN.
As the Representatives of the several
Underwriters listed on Schedule I
▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES, INC. ▇▇▇▇▇▇▇ & COMPANY (UK) LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------- ------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Name: ▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer Title: Executive Director
Address for Notice: Address for Notice:
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
37
SCHEDULE I
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Closing Closing Purchase
Underwriter Closing Shares Warrants Price*
----------- -------------- --------- ----------------
▇▇▇▇▇▇ ▇▇▇▇▇ Securities, Inc. 4,400,000 1,100,000 $ 5,759,600
▇▇▇▇▇▇▇ & Company (UK) Ltd. 4,400,000 1,100,000 $ 5,759,600
-----------
Total $11,519,200
* Represents Combined Purchase Price less commissions. Does not include
non-accountable expense allowance set forth in Section 4.6(c). Assumes
maximum offering.
38
CEL-SCI CORPORATION
UNDERWRITER'S AGREEMENT
SCHEDULES
Schedule 3.1(h): None.
Schedule 3.1(r): Between December 2008 and June 2009, the Company's
President, and a director, Maximilian de ▇▇▇▇▇, loaned the
Company $1,104,057. The loan from Mr. de ▇▇▇▇▇ bears interest
at 15% per year and is secured by a lien on substantially all
of the Company's assets. The Company does not have the right
to prepay the loan without Mr. de Clara's consent. The loan
was initially payable at the end of March 2009, but was
extended. At the time the loan was originally due, and in
accordance with the loan agreement, the Company issued Mr. de
▇▇▇▇▇ warrants to purchase 164,824 shares of the Company's
common stock at a price of $4.00 per share. The warrants are
exercisable at any time prior to December 24, 2014. In June
2009, the loan with Mr. de ▇▇▇▇▇ was extended for the second
time to July 6, 2014, but, at Mr. de Clara's option, the loan
may be converted into shares of the Company's common stock.
The number of shares which will be issued upon any conversion
will be determined by dividing the amount to be converted by
$4.00. As further consideration for the second extension, Mr.
de ▇▇▇▇▇ received warrants to purchase 184,930 shares of the
Company's common stock at a price of $5.00 per share at any
time prior to January 6, 2015. On May 13, 2011, to recognize
Mr. de Clara's willingness to agree to subordinate his note to
the convertible preferred shares and convertible debt as part
of the settlement agreement, the Company extended the maturity
date of the note to July 6, 2015.
Schedule 3.1(t): None
Schedule 3.1(w): The Company received a noncompliance notice with
listing requirements on July 18, 2013 from the NYSE MKT
exchange. Based on the Company's quarterly report on Form 10-Q
for the period ended March 31, 2013, noncompliance was noted
with respect to the requirement of Section 1003(a)(iv) of the
Company Guide for NYSE MKT. The Company was afforded the
opportunity to submit a plan to regain compliance, and on
August 19, 2013 the Company submitted its plan to the
Exchange. On August 30, 2013, the Exchange notified the
Company that it accepted the Company's plan of compliance and
granted the Company an extension until September 30, 2013 to
regain compliance with the continued listing standards. On
October 3, 2013, the NYSE MKT granted the Company an extension
until October 31, 2013 to regain compliance with the
Exchange's continued listing standards. On October 17, 2013,
the Company received notification from NYSE Regulation that
the Company was now considered to have regained compliance
with the listing requirements.
39