EXHIBIT 4.5
INVESTMENT BANKING AGREEMENT
THIS AGREEMENT is made as of July 1, 2003, by and between Generex
Biotechnology Corporation, a Delaware Corporation having its principal office at
00 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX X0X-0X0 (the "Company"), and Xxxx Xxxxx
Financial, Inc., a Florida corporation having an office at 0000 X. Xxxxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000 ("GAF").
In consideration of the mutual premises contained herein and on the
terms and conditions hereinafter set forth, the Company and GAF agree as
follows:
1. PROVISION OF SERVICES. The Company hereby retains GAF to perform
non-exclusive consulting services related to corporate finance and investment
banking matters, and GAF hereby accepts such retention and shall undertake all
reasonable efforts to perform for the Company the duties described herein. In
this regard, GAF shall devote such time and attention to the business of the
Company as shall be reasonably determined by GAF necessary to perform the duties
described herein.
(a) GAF agrees, to the extent reasonably required in the conduct of the
business of the Company, and at the Company's written request to GAF's Senior
Vice President of Corporate Finance (or such other person designated by GAF), to
place at the disposal of the Company its judgment and experience and to provide
business development services to the Company including the following:
(i) advice with regard to stockholder relations and public
relations matters, and
(ii) evaluation of financial matters and assistance in financial
arrangements and investment banking transactions, including assistance and
advice with regard to maximization of shareholder value and merger and
acquisition candidates.
(b) [Intentionally omitted.]
(c) At GAF's request, the Company will provide "due diligence"
presentations to Registered Representatives of GAF and other brokerage firms.
GAF agrees to use reasonable efforts to arrange such meetings.
(d) Notwithstanding the foregoing, GAF shall provide general services
to the Company in connection with mergers, acquisitions, consolidations, joint
ventures, divestitures and similar corporate finance transactions; however,
subject to paragraph 3(d) below, for each such specific transaction or
transactions, GAF and the Company will formalize their arrangement in a separate
agreement at the time specific service is provided.
(e) GAF shall use reasonable efforts in furnishing advice and
recommendations, and for this purpose GAF shall at all times maintain or keep
and make available qualified personnel or a network of qualified outside
professionals for the performance of its obligations under this Agreement, at
its sole expense. To the extent reasonably practicable, GAF shall so use its own
personnel rather than outside professionals.
(f) If warranted and mutually agreed upon by and between the Company
and GAF, the Company shall use reasonable efforts to invite a representative
appointed by GAF to attend and participate in at least one meeting of its Board
of Directors for every year that this Agreement is in effect. The Company shall
provide notice of such meetings to GAF at least two (2) days prior to the date
that the meeting is scheduled to occur. GAF will use its reasonable efforts to
attend any other meetings of the Company's Board of Directors to which the
Company requests GAF's attendance. Any expenses incurred by GAF in attending
such meetings shall be borne by the Company.
2. TERM. Unless otherwise provided for in this Agreement, GAF's retention
hereunder shall be for a term of two (2) years, commencing on the date hereof
and expiring on the second anniversary date of this Agreement (the "Termination
Date"). Except as provided for in paragraph 8 below, GAF may not terminate this
Agreement without the written consent of the Company prior to the Termination
Date. In the event that the Company desires to terminate this Agreement, without
"cause", prior to the Termination Date, it shall provide GAF with at least sixty
(60) days prior written notice of its intention to terminate this Agreement and
this Agreement shall so terminate following the expiration of this sixty (60)
day period, without any further responsibility for either party; provided,
however, that GAF shall be entitled to receive all compensation and
un-reimbursed expenses, if any, outstanding as of the date of termination.
3. COMPENSATION. In consideration for the services provided by GAF hereunder,
the Company shall:
(a) pay to GAF the sum of $120,000, payable in accordance with Schedule
A of this Agreement.
(b) pay all reasonable travel related expenses incurred by GAF in its
performance of this Agreement. The Company shall make all necessary travel and
lodging arrangements for GAF personnel, and shall prepay such expenditures
relating to any travel and lodging required pursuant to GAF's duties hereunder.
All other travel related expenditures in excess of $100 per month shall be
approved, in writing, by the Company prior to any such expenditures. Subject to
the above, the Company shall reimburse GAF for all expenses reasonably incurred
by GAF immediately upon its receipt of an expense accounting from GAF.
(c) issue to GAF a warrant (the "Warrant") to purchase up to 600,000
shares of the common stock of the Company (the "Underlying Common Stock") on the
following terms at a per share price of $2.00 (the "Strike Price"). The Warrant,
which will be issued upon execution and delivery of this Agreement, will vest as
follows: 300,000 shares, the ("First Tranche") ninety (90) days from execution,
and 300,000 shares, the ("Second Tranche") six (6) months from execution .
Notwithstanding the foregoing, the Warrant shall immediately and completely
vest, in favor of GAF, and shall become immediately exercisable, in the event of
(i) a termination of this Agreement for any reason other than for "cause;" or
(ii) the sale of the Company (or substantially all of the assets thereof) or the
acquisition (or merger) transaction of the Company by or into another entity.
The Warrant shall be issued to GAF in the form of a warrant agreement (the
"Warrant Agreement"), which shall be in form and content satisfactory to GAF.
The Warrant Agreement shall provide for, among other provisions, the above terms
and the following:
(i) subject to paragraph 3(c) (i) and (ii) above, that GAF may
exercise the Warrant at any time after the first anniversary date of the Warrant
Agreement. The Warrant shall expire six (6) years from the date that the Warrant
Agreement is issued.
(ii) [intentionally deleted]
(iii) that, in lieu of any cash payment required by GAF in
connection with the exercise of the Warrant, the holder(s) of the Warrant shall
have the right at any time and from time to time, to exercise the Warrant in
full or in part by surrendering the Warrant Agreement as payment of the
aggregated Strike Price. The number of shares of Underlying Common Stock to be
issued upon exercise shall be determined by multiplying the number of the shares
of common stock within the Warrant to be exercised by an amount equal to the
aggregate market price per share of common stock within the Warrant to be
exercised less the Strike Price per share of common stock within the Warrant to
be exercised, and then dividing the product thereof by the market price per
share. Solely for the purposes of this paragraph, market price shall be
calculated as the average of the market prices for each of the five (5) trading
days preceding the date notice is given that the holder(s) intend(s) to exercise
the Warrant.
(iv) that the Company shall reserve, and at all times have
available, a sufficient number of shares of its common stock to be issued upon
the exercise of the Warrant. Furthermore, the Company shall accept, and shall so
instruct its transfer agent to accept, an appropriate Rule 144 opinion letter
from any qualified securities attorney (not just an opinion from the Company's
counsel) representing GAF or any of its employees or agents that are holders of
the Warrant.
(v) that the Company shall, subject to the conditions listed
below, grant "piggy back" registration rights to include the shares of the
Underlying Common Stock in any registration statement (except for Form S-4 or
S-8 filings, or any equivalent thereto) filed by the Company under the
Securities Act of 1933 relating to an underwriting of the sale of shares of
common stock or other security of the Company, subject to customary and
reasonable underwriter imposed lock-up requirements. In the event that the
Company grants registration rights to any other stockholder on terms and
conditions that GAF deems to be more favorable than those granted hereunder, the
Company shall grant the same rights to GAF. Furthermore, in the event that the
Company grants registration rights to any other stockholder, the Company shall
issue written notice thereof to GAF at least 10 business days prior to the date
that the Company files any such registration statement.
(d) if the Company shall, within two years from the date of this
Agreement, enter into any agreement or understanding with any person or entity
first introduced by GAF involving (i) the sale of all or substantially all of
the assets and properties of the Company or the sale or acquisition by the
Company of a subsidiary or other division thereof, (ii) the merger, divestiture,
or consolidation of the Company (other than a merger or consolidation effected
for the purpose of changing the Company's domicile), or any subsidiary or other
division thereof, with or into another person or entity; or (iii) the
acquisition by the Company of the assets or stock of another business entity,
which agreement or understanding is consummated during such two year period or
within one year of the expiration of such two year period, the Company, upon
such consummation, shall pay to GAF an amount equal to the following percentages
of the consideration paid by or to the Company in connection with such
transaction:
(i) 5% of the first $1,000,000 or portion thereof, of such
consideration;
(ii) 4% of the second $1,000,000 or portion thereof, of such
consideration;
(iii) 3% of the third $1,000,000, or portion thereof, of such
consideration;
(iv) 2% of the fourth $1,000,000, or portion thereof, of such
consideration; and
(v) 1% of such consideration in excess of first $4,000,000 or
portion thereof, of such consideration.
The fee payable to GAF will be in the form of cash consideration (unless
otherwise agreed to in writing by GAF) in connection with any such transaction
falling under this paragraph. It is understood that the designation of GAF to
act as a finder is not exclusive and that the Representative shall not be
entitled to the foregoing amounts unless it participates in the introduction, or
is otherwise engaged by the Company to structure, facilitate or negotiate the
transaction.
4. REPRESENTATIONS AND WARRANTIES OF GAF. GAF represents and warrants that:
(a) it is a securities broker-dealer duly licensed and registered
pursuant to federal and state securities laws rules and regulations;
(b) it has the authority and ability to provide the services
contemplated in this Agreement; and
(c) it is a member in good standing with the NASD and is in good
standing with all states within which it is registered to conduct securities
business.
5. INDEMNIFICATION. The Company agrees to indemnify and hold harmless GAF and
its affiliates, the respective directors, officers, partners, agents and
employees and each other person, if any, controlling GAF or any of its
affiliates (collectively the "GAF Parties") from all losses, claims, damages,
liabilities and expenses incurred by them (including attorney's fees and
disbursements) that result from any violations of securities laws or rules or
any untrue statements made by the Company, its agents or employees, or any
statements omitted to be made in connection with securities related matters by
the Company, its agents or employees. GAF will indemnify and hold harmless the
Company and the respective directors, officers, agents and employees of the
Company (the "Company Parties") from and against all losses, claims, damages,
liabilities and expenses that result from malfeasance, or gross negligence in
the performance of GAF's duties hereunder (including attorney's fees and
disbursements). Each person or entity seeking indemnification hereunder shall
promptly notify the Company, or GAF as applicable, of any loss, claim, damage or
expense for which the Company or GAF as applicable, may become liable pursuant
to this Section 5. Neither party shall pay, settle or acknowledge liability
under any such claim without the written consent of the party liable for
indemnification, and shall permit the Company or GAF as applicable a reasonable
opportunity to cure any underlying problem or to mitigate damages. The scope of
this indemnification between GAF and the Company shall be limited to, and
pertain only to certain transactions contemplated or entered into pursuant only
to this Agreement.
The Company or GAF, as applicable, shall have the opportunity to defend any
claim for which it may be liable hereunder, provided it notifies the party
claiming the right to indemnification within fifteen (I5) days of notice of the
claim.
6. STATUS OF GAF. GAF shall at all times be an independent contractor of the
Company and, except as expressly provided or authorized in this Agreement, shall
have no authority to act for or represent the Company or bind it to any
agreements.
7. OTHER ACTIVITIES OF GAF. The Company recognizes that GAF now renders and may
continue to render financial consulting, management, investment banking and
other services to other companies that may or may not conduct business and
activities similar to those of the Company. GAF shall be free to render such
advice and other services and the Company hereby consents thereto. GAF shall not
be required to devote its full time and attention to the performance of its
duties under this Agreement, but shall devote only so much of its time and
attention as it deems reasonable or necessary for such purposes, in its sole
discretion.
8. COVENANTS OF THE COMPANY. The Company covenants, promises and agrees that:
(a) during the term of this Agreement, the Company shall provide GAF at
least fourteen (14) days prior written notice of the proposed sale of any
securities of the Company in a "Regulation S" or "Regulation D" offering. Such
notice shall specify the type of securities to be offered, the purchase price
thereof, the terms and conditions of the offering and the proposed offering
date. GAF shall be entitled to immediately terminate this Agreement and retain
all of the compensation set forth herein without offset and with no further
liability to the Company, in the event that, during the term of this Agreement,
the Company completes a sale of its securities pursuant to a Regulation D or S
offering, without GAF's prior written consent thereto.
(b) it shall immediately notify GAF in the event that it is de-listed
from the NASDAQ Small Cap Market. The Company understands and acknowledges that,
in the event of any such de-listing, GAF will be entitled to terminate this
Agreement, in its sole and absolute discretion. All unpaid and unsecured
compensation will be due up to the termination date.
(c) during the term of this Agreement, the Company shall furnish GAF
with copies of its annual, quarterly and proxy filings with the SEC, immediately
upon the Company's filing thereof.
9. CONTROL. Nothing contained herein shall be deemed to require the Company to
take any action contrary to its Certificate of Incorporation or By-Laws, or any
applicable statute or regulation, or to deprive its Board of Directors of their
responsibility for any control of the affairs of the Company.
10. PUBLIC DISCLOSURE REQUIREMENT. Within thirty (30) business days of the final
execution of this Agreement, the Company shall cause the release of a public
announcement which sets forth, in pertinent part, a description of this
Agreement, including without limitation, the name of GAF, the nature of the
services to be provided hereunder by GAF and the compensation paid to it in
connection herewith. At least three (3) business days prior to the dissemination
of any such public announcement or filing containing the above required
description, the Company shall submit to GAF, for its review and comment, the
proposed public announcement or description. GAF shall thereafter have three (3)
business days within which to submit its editions or amendments to the public
announcement and/or description for inclusion therein, which editions and
amendments shall be incorporated in the final version disseminated by the
Company, unless, in the reasonable judgment of counsel to the Company, such
editions or amendments cannot be incorporated. Furthermore, during the term of
this Agreement, the Company shall disclose in its quarterly and annual filings
the nature and terms of this Agreement.
11. NOTICES. Any notices hereunder shall be sent to the Company and GAF at their
respective addresses above set forth. Any notice shall be given by registered or
certified mail, postage prepaid, and shall be deemed to have been given when
deposited in the United States mail. Either party may designate any other
address to which notice shall be given, by giving written notice to the other of
such change of address in the manner herein provided.
12. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties with respect to its subject matter and
supersedes all prior discussion, agreements and understandings between them with
respect thereto. This Agreement may not be modified except in a writing signed
by the parties.
13. JURISDICTION AND VENUE. This Agreement has been made in the State of Florida
and shall be governed by and construed in accordance with the laws thereof
without regard to principles of conflict of laws. Any proceeding commenced by
GAF to enforce or interpret any provision of this Agreement may be brought in
the City of Tampa, State of Florida. The Company hereby submits to the
jurisdiction of the courts of the Florida, including the federal courts, for
such purposes.
14. NO ASSIGNMENT. Neither this Agreement nor the rights of either party
hereunder shall be assigned by either party without the prior written consent of
the other party.
15. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
16. NON-COMPLIANCE. If any provision of this Agreement conflicts with any law,
rule or regulation of any federal, state or self-regulatory organization,
including the Securities and Exchange Commission, the blue-sky laws of any
state, the National Association of Securities Dealers, Inc., or any other
governmental authority having jurisdiction over the activities or services
described herein, then in that event, the Company and GAF shall amend this
Agreement to bring any affected provision into compliance with such regulations.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
Xxxx Xxxxx Financial, Inc. Generex Biotechnology
---------------------------- ----------------------------
By: Xxxxxxx X. Xxxxx By: Xxxx X. Xxxxxxx
Its: Chief Executive Officer Its: Chief Executive Officer
SCHEDULE A
Date Amount Payable
Execution of Agreement $15,000.00
October 1, 2003 $15,000.00
January 1, 2004 $15,000.00
April 1, 2004 $15,000.00
July 1, 2004 $15,000.00
October 1, 2004 $15,000.00
January 1, 2005 $15,000.00
April 1, 2003 $15,000.00
Total Payments $120,000.00
