Exhibit 1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement"), entered into
effective this 3rd day of July 2001, by and among Generex Biotechnology
Corporation, a Delaware corporation, with headquarters located at 00 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx X0X 0X0 (the "Company"), and the investors
signatory hereto (each, severally, the "Buyer").
WHEREAS:
A. The Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("Regulation D") promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
B. The Buyer wishes to purchase, upon the terms and conditions stated
in this Agreement, units of securities of the Company (the "Units") consisting
of shares of the Company's Common Stock ("Company Common Stock"), par value
$.001 per share (the "Shares") and warrants in substantially the same form
attached hereto as Exhibit A to acquire shares of Company Common Stock (the
"Warrants"), each Unit to consist of one Share and a Warrant to purchase
one-quarter (0.25) shares of the Company's Common Stock upon exercise of the
Warrant ("Warrant Shares"); and
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit B (the "Registration Rights
Agreement") pursuant to which the Company has agreed to register the Shares and
the Warrant Shares under the 1933 Act and SEC rules and regulations promulgated
thereunder.
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF COMMON SHARES AND WARRANTS.
a. Purchase of Shares and Warrants. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below,
the Company shall issue and sell to the Buyer and the Buyer agrees to purchase
from the Company at the Closing, as hereinafter defined), that number of Units
set forth on the signature page hereto (the "Committed Units"), at a price per
Unit equal to nine dollars and twenty-five cents (US$9.25) (the "Unit Purchase
Price").
b. The Buyer understands that, contemporaneously with its
offer of Units to the Buyer, the Company is offering additional Units to other
purchasers (the "Other Purchasers") in reliance on Regulation D and/or
Regulation S promulgated under the 1933 Act. Buyer consents to such
contemporaneous offers and sale of Units to Other Purchasers provided that (i)
offers to Other Purchasers shall only be made to one or more qualified
institutional buyers as that term is defined by Rule 144A promulgated under the
1933 Act or accredited investors as that term is defined by Rule 501(a)
promulgated under the 1933 Act, on substantially similar terms to those set
forth in this Agreement, and (ii) the aggregate number of Units (including the
Shares and the Warrant Shares) sold to Buyer and the Other Purchasers shall not
exceed 19.9% of the total number of shares of Company Common Stock outstanding
prior to the first of such sales.
c. Subject to the satisfaction (or waiver) of the conditions
contained in Sections 5 and 6, the Buyer shall pay the Units Purchase Price for
the Committed Units to the Company on the Closing Date by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions, and the Company shall thereupon issue and deliver or cause to be
issued and delivered to such Buyer certificates in such denominations as the
Buyer shall request representing the Shares and Warrants comprising the
Committed Units purchased by the Buyer, duly executed on behalf of the Company
and registered in the name of the Buyer or its designee (the "Units
Certificates"). The Closing Date, shall be such date as the Company and the
Buyer shall agree upon, but in no event later than July 5, 2001 (such date being
hereinafter referred to as "Closing Date"). The term "Closing" as used herein
shall mean the delivery of the Units Certificates, the payment of the Unit
Purchase Price for the Committed Units, and the delivery of such other documents
and taking of such other actions as are required to be delivered or taken at the
Closing pursuant to this Agreement.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer represents and warrants that:
a. Investment Purpose. Buyer is acquiring the Shares and
Warrants comprising the Units, purchased hereunder, and any Warrant Shares
subsequently purchased (such Shares, Warrants and Warrant Shares being
hereinafter sometimes referred to as the "Securities") for its own account for
investment only and not with a view towards, or for resale in connection with,
the public sale or distribution thereof, except pursuant to an effective
registration statement under the 1933 Act or an exemption from registration the
1933 Act; provided, however, that by making the representations herein, such
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption from
registration under the 1933 Act.
b. Investor Status. Buyer is a "qualified institutional buyer"
as defined in Rule 144A under the 1933 Act and/or an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
c. Reliance on Exemptions. Buyer understands that the
Securities are being offered and sold to it in reliance on Regulation D and that
the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of Regulation D and the eligibility of the Buyer to acquire such
Securities.
d. Information. Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by the Buyer. Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by the Buyer or
its advisors, if any, or its representatives shall modify, amend or affect the
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below. The Buyer understands that its investment in the Securities
involves a high degree of risk. The Buyer has sought such accounting, legal and
tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities.
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e. No Governmental Review. Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. Buyer understands that except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the 1933 Act or any state securities laws, and
may not be offered for sale, sold, assigned or transferred unless (i)
subsequently registered thereunder, (ii) such Buyer shall have delivered to the
Company an opinion of counsel, in a form reasonably acceptable to Company
counsel, to the effect that such Securities to be sold, assigned or transferred
may be sold, assigned or transferred without registration under the 1933 Act and
in compliance with an applicable exemption from such registration.
g. Securities. Buyer understands that the certificates or
other instruments representing the Securities, except as set forth below, shall
bear a restrictive legend in substantially the following form (and the Company
shall be required to issue a stop-transfer order against transfer of such stock
certificates if the Securities are not transferred in accordance with the
following legend):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR ANY STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED EXCEPT (1)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE 1933 ACT OR (2) IN A TRANSACTION THAT MAY BE EFFECTED WITHOUT
REGISTRATION UNDER THE 1933 ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for sale under the 1933 Act and the Buyer has sold the
Securities and has fulfilled the applicable prospectus delivery requirements (a
"prospectus sale"), (ii) in connection with any transaction other than a
prospectus sale, such holder provides the Company with an opinion of counsel, in
a form reasonably acceptable to Company counsel, to the effect that a public
sale, assignment or transfer of the Securities has been or will be made without
registration under the 1933 Act.
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h. Validity; Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable against such Buyer in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
i. Residency. Buyer certifies that it resides or has a bona
fide place of business at its address set forth on Schedule 1.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyer that:
a. Organization and Qualification. The Company and its
"Subsidiaries" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns a controlling position of capital
stock or holds a controlling position of an equity or similar interest) are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power and authorization to own their properties and to carry on their
business as now being conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect"
means any material adverse effect on the business, properties, assets,
operations, results or operations, financial condition or prospects of the
Company and its Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements and instruments to be entered into in
connection herewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents (as defined below).
b. Authorization; Enforcement; Validity. (i) The Company has
the requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement, the Warrants and each of the other
agreements entered into by the parties hereto in connection with the
transactions contemplated by this Agreement (collectively, the "Transaction
Documents"), and to issue the Securities in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including without limitation the issuance of the Shares and the
Warrants and the reservation for issuance and the issuance of the Warrant Shares
issuable upon exercise thereof, have been duly authorized by the Company's Board
of Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders, (iii) the Transaction Documents have
been duly executed and delivered by the Company, and (iv) the Transaction
Documents constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights and
remedies.
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c. Issuance of Securities. The Shares are duly authorized and,
upon issuance in accordance with the terms hereof, shall be (i) validly issued,
fully paid and non-assessable and (ii) free from all taxes, liens and charges
with respect to the issue thereof. The shares of Common Stock issued pursuant to
this Agreement have been duly authorized and reserved for issuance upon exercise
of the Warrants. Upon exercise in accordance with the Warrants, the Warrant
Shares will be validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of Company Common Stock.
d. No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without limitation,
the Company's issuance of the Common Shares and the reservation for issuance and
issuance of the Warrant Shares) will not (i) result in a violation of the
Company's Certificate of Incorporation, as amended and as in effect on the date
hereof (the "Certificate of Incorporation") or the Company's By-laws, as amended
and as in effect on the date hereof (the "By-laws") or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the Principal Market (as defined below)) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected. Neither the Company nor
its Subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation, or By-laws or their organizational charter or
by-laws, respectively. Neither the Company or any of its Subsidiaries is in
violation or any term of or in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except for
possible conflicts, defaults, terminations, amendments which would not have a
Material Adverse Effect. The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any law, ordinance,
regulation of any governmental entity, except for possible violations the
sanctions for which either individually or in the aggregate would not have a
Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the 1933 Act, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents in accordance with the terms hereof or
thereof. All consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company is not in violation of the listing
requirements of the Principal Market (as defined below).
e. SEC Documents; Financial Statements. As of the Closing, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
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Documents, at the time they were filed with the SEC, 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. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyer which is not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made, not
misleading. Neither the Company nor any of its Subsidiaries or any of their
officers, directors, employees or agents have provided the Buyer with any
material, nonpublic information.
f. Absence of Certain Changes. Since the most recent filing by
the Company with the SEC, there has been no material adverse change and no
material adverse development in the business, properties, operations, financial
condition, results of operations or prospects of the Company or its
Subsidiaries. The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law nor does
the Company or any of its Subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings.
g. Absence of Litigation. Except as set forth in the SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company, the Company's common stock, the
Common Shares or any of the Company's Subsidiaries or any of the Company's or
the Company's Subsidiaries' officers or directors in their capacities as such
that would have a Material Adverse Effect.
h. 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 require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company to third parties other than the
Buyer and Other Purchasers for purposes of the 1933 Act so as to render invalid
the exemption from registration provided under Regulation D or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated, nor will the Company or
any of its Subsidiaries take any action or steps that would require registration
of any of the Securities under the 1933 Act or cause the offering of the
Securities to be integrated with other offerings so as to render invalid the
exemption from registration provided under Regulation D.
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i. No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance has occurred or
exists, or is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement filed with the SEC
relating to an issuance and sale by the Company of the Company Common Stock and
which has not been publicly announced.
j. No General Solicitation. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 0000 Xxx) in connection with the offer or sale of the
Securities.
k. Employee Relations. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened.
l. Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. None of the Company's trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, government authorizations,
trade secrets or other intellectual property rights have expired or terminated,
or are expected to expire or terminate within two years from the date of this
Agreement. Except as set forth in the SEC Documents, the Company and its
Subsidiaries do not have any knowledge of any infringement or misappropriation
or alleged infringement or misappropriation by the Company or its Subsidiaries
of trademark, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service xxxx registrations, trade secret
or other similar rights of others, or of any such development of similar or
identical trade secrets or technical information by others and the Company and
its Subsidiaries are unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties.
m. Environmental Laws. The Company and its Subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
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n. Title. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the SEC Documents or
such as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company and
any of its Subsidiaries. Any real property and facilities held under lease by
the Company and any of its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
o. Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged and the Company does not have any reason to believe it
will not be able to renew its existing insurance coverage under substantially
similar terms for the next two (2) years.
p. Regulatory Permits. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses as presently conducted, and neither the Company nor any
such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit.
q. Tax Status. The Company and each of its Subsidiaries has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
s. Transactions With Affiliates. Except as set forth in the
SEC Documents filed at least ten days prior to the date hereof, none of the
officers, control parties, control entities, directors, or employees of the
Company is presently a party to any transaction with the Company or any of its
Subsidiaries (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, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
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t. Eligibility. The Company is currently eligible to register
the resale of the Shares and Warrant Shares on a registration statement on Form
S-3 under the 1933 Act.
u. The authorized capital stock of the company consists of
50,000,000 shares of Common Stock, $0.001 par value per share, of which
19,377,518 shares were issued and outstanding at June 29, 2001. At such date,
approximately 7.7 million shares of Company Common Stock were reserved for
issuance upon the exercise of outstanding options and warrants at an average
exercise price of approximately $8.93 per share. In addition, the Company has
1,000,000 shares of preferred stock, $0.001 par value per share, of which 2,000
shares were issued and outstanding at June 29, 2001, including 1,000 shares of
Special Voting Rights Preferred Stock and 1,000 shares of Series A Preferred
Stock (collectively, the "Preferred Stock"). All of the outstanding shares of
the Company's Common Stock and Preferred Stock have been duly and validly
authorized and are fully-paid and non-assessable. Except as disclosed in this
Agreement, the Registration Rights Agreement and/or the SEC Documents, there are
no options, warrants, contracts, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares of the
capital stock of the Company or options, securities or rights convertible into
shares of capital stock of the Company.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in Sections
5 and 6 of this Agreement.
b. Reporting Status. Until the earlier of (i) the date which
is one year after the date as of which the Investors (as that term is defined in
the Registration Rights Agreement) may sell all of the Shares or Warrant Shares
without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which the Investors shall have sold all
the Shares and Warrant Shares (the "Registration Period"), the Company shall
file all reports required to be filed with the SEC pursuant to the 1934 Act, and
the Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination.
c. Listing. The Company shall promptly secure the listing of
all of the Registrable Securities (as that term is defined in the Registration
Rights Agreement) on Nasdaq and shall use its best efforts to maintain, so long
as any other shares of Common Stock shall be so listed, such listing of all
Registrable Securities from time to time issuable under the terms of the
Transaction Documents. Neither the Company nor any of its Subsidiaries shall
take any action which would be reasonably expected to result in the delisting or
suspension of Company Common Stock on Nasdaq. The Company shall promptly, and in
no event later than the following business day, provide to the Buyer copies of
any notices it receives from the Nasdaq regarding the continued eligibility of
Company common stock for listing on such automated quotation system or
securities exchange. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section 4(c).
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d. Reservation of Shares. The Company shall take all action
necessary to at all times have authorized; and reserved for the purpose of
issuance, no less than 100% of the number of shares of common stock needed to
provide for the issuance of the shares of Warrant Shares upon exercise of all
outstanding Warrants.
e. Independent Auditors. The Company shall, until at least
three (3) years after the Closing Date, maintain as its independent auditors an
accounting firm authorized to practice before the SEC.
f. Corporate Existence and Taxes. The Company shall, until at
least the later of (i) the date that is three (3) years after the Closing Date
or (ii) the sale of all of the Common Shares purchased pursuant to this
Agreement, maintain its corporate existence in good standing (provided, however,
that the foregoing covenant shall not prevent the Company from entering into any
merger or corporate reorganization as long as the surviving entity in such
transaction, if not the Company, has common stock listed for trading on Nasdaq,
the New York Stock Exchange or the American Stock Exchange; and (iii) shall pay
all its taxes when due except for taxes which the Company disputes).
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the
Common Shares and Warrants to the Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing
the Buyer with prior written notice thereof:
a. The Buyer shall have executed each of the Transaction
Documents to which it is a party and delivered the same to Company.
b. The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Closing Date.
c. The Buyer shall have delivered to the Company such other
documents relating to the transactions as are contemplated by this Agreement.
d. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or issued by
any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by, or materially and
adversely affect the rights and/or obligations of the Company arising under this
Agreement.
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6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Units at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for the
Buyer's sole benefit and may be waived by the Buyer at any time in its sole
discretion by providing the Company with prior written notice thereof:
a. The Company shall have executed each of the Transaction
Documents and delivered the same to the Buyer.
b. The Company's common stock shall be authorized for
quotation on Nasdaq and trading in Company common stock shall not have been
suspended by the SEC or Nasdaq.
c. The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and complied with
the covenants, agreements and conditions required by the Transaction Documents
to be performed, satisfied or complied with by the Company at or prior to the
Closing Date.
d. The Company shall have delivered to Buyer the opinion of
the Company's counsel dated as of the Closing Date, in substantially the form of
Exhibit C attached hereto.
e. The Company shall have made all filings, other than those
contemplated by the Registration Rights Agreement, under all applicable federal
and state securities laws necessary to consummate the issuance of the Securities
pursuant to this Agreement in compliance with such laws.
f. The Company shall have delivered to the Buyer such other
documents relating to the transactions as are contemplated by this Agreement.
g. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or issued by
any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by, or materially and
adversely affect the rights and/or obligations of the Buyer arising under this
Agreement.
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7. INDEMNIFICATION.
In consideration of Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless the Buyer and each
other holder of the Securities and all of their stockholders, officers,
directors, employees and direct or indirect investors and any of the foregoing
person's agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (c) any cause of action, suit or claim brought
or made against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(d) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or (e) the
status of such Buyer or holder of the Securities as an investor in the Company.
To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
8. LIQUIDATED DAMAGES.
The Company agrees that Buyer will suffer damages if the
Company violates any provision of or fails to fulfill any of its obligations or
duties pursuant to the Transaction Documents (other than the Registration Rights
Agreement) and such violation or failure directly or indirectly restricts Buyer
from selling, transferring or disposing of its Common Shares (a "Company
Violation"), and that it would not be possible to ascertain the extent of such
damages. Accordingly, in the event of such Company Violation, the Company hereby
agrees to pay liquidated damages ("Liquidated Damages") to such Buyer following
the occurrence of such Company Violation in an amount determined by multiplying
(i) two percent (2%) of the Units Purchase Price per Common Share then held by
such Buyer by (ii) the percentage derived by dividing (A) the actual number of
days elapsed from the first day of the date that an uncured Company Violation
occurred or the end of the prior 30-day period, as applicable, to the day all
Company Violations have been completely cured, by (B) 30. Liquidated Damages
shall be paid in cash. The Liquidated Damages payable pursuant hereto shall be
payable within five (5) business days from the end of the 30-day period
commencing on the first 30-day period in which the Company Violation occurs.
Notwithstanding anything to the contrary herein, no Liquidated Damages shall be
payable under this paragraph in respect of any Company Violation which also
constitutes a Registration Default under the Registration Rights Agreement
entered into by Buyer and the Company as of the date of this Agreement.
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9. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction; Jury Trial. This Agreement
shall be governed by and construed in all respects by the internal laws of the
State of Delaware (except for the proper application of the United States
federal securities laws), without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of Delaware or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Delaware. Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in the City
of Philadelphia. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyer, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the Buyer, and no provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought.
f. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one business day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be as set forth below, or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party five days prior to the effectiveness of such change:
13
If to the Company:
Generex Biotechnology Corporation
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: E. Xxxx Xxxxx
With a copy to:
Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx, Esq.
If to a Buyer: to it at the address and facsimile number set forth on Schedule 1
with copies to such Buyer's representatives as set forth on Schedule 1.
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any Assignee of Securities. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Buyer. Buyer may assign some or all of its rights hereunder
without the consent of the Company, provided, however, that any such assignment
shall not release Buyer from its obligations hereunder unless such obligations
are assumed by such assignee and the Company has consented to such assignment
and assumption.
h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
i. Survival. Unless this Agreement is terminated under Section
9(k), the agreements and covenants set forth in Sections 4, 5 and 9, the
indemnification provisions set forth in Section 7, and the liquidated damages
provisions set forth in Section 8 shall survive the Closing. The Buyer shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.
14
j. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
k. Termination. If Closing does not occur due to the Company's
or Buyer's failure to satisfy the conditions set forth in Sections 5 or 6 above
(and the non-breaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party.
l. Placement Agent or Finder. The Company shall be responsible
for the payment of any fees or broker's commissions due to The Shemano Group,
Inc. or any other party relating to or arising out of the transactions
contemplated hereby as a result of any engagement or undertaking made by the
Company with the persons claiming such fees or commissions, and shall pay, and
hold the Buyer harmless against, any liability, loss or expense (including,
without limitation, attorneys' fees and out of pocket expenses) arising in
connection with any such engagement or undertaking by the Company.
m. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
n. Remedies. The Buyer and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law.
o. Payment Set Aside. To the extent that the Company makes a
payment or payments to the Buyer hereunder or pursuant to the Transaction
Documents or the Buyer enforces or exercise its rights hereunder or thereunder,
and such payment or payments or the proceeds of such enforcement or exercise or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are required to be
refunded, repaid or otherwise restored to the Company, a trustee, receiver or
any other person under any law (including, without limitation, any bankruptcy
law, state or federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not
occurred.
[signature page follows]
15
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY:
GENEREX BIOTECHNOLOGY
CORPORATION
By:____________________________
Name:__________________________
Title:_________________________
BUYER:
_______________________________
By:____________________________
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SCHEDULE 1: SECURITIES PURCHASED/BUYER DATA
Buyer's
Representatives'
Address and
Buyer's Address Purchase Number of Number of Facsimile Number
Buyer's Name and Facsimile Number Price Common Shares Warrant Shares (if any)
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EXHIBITS
Exhibit A Form of Warrant
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Company Counsel Opinion
2
