STRICTLY CONFIDENTIAL CEL-SCI Corporation
EXHIBIT 1.1
August
21, 2017
STRICTLY CONFIDENTIAL
CEL-SCI
Corporation
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Xxxxx Xxxx., Xxxxx 000
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Xxxxxx,
Xxxxxxxx 00000
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Attn:
Geert X. Xxxxxxx, Chief Executive Officer
Dear
Xx. Xxxxxxx:
This
letter agreement (this “Agreement”) constitutes
the agreement between CEL-SCI Corporation (the “Company”) and Xxxxxx
& Xxxxxxx, a unit of X.X. Xxxxxxxxxx & Co., LLC
(“Xxxxxx”), that Xxxxxx
shall serve as the exclusive agent, advisor or underwriter in any
offering (each, an “Offering”) of securities
of the Company (“Securities”) during the
Term (as defined below) of this Agreement, including, but not
limited to, the solicitation of the exercise of certain warrant
holders of the Company. The terms of each Offering and the
Securities issued in connection therewith shall be mutually agreed
upon by the Company and Xxxxxx and nothing herein implies that
Xxxxxx would have the power or authority to bind the Company and
nothing herein implies that the Company shall have an obligation to
issue any Securities. It is understood that Xxxxxx’x
assistance in an Offering will be subject to the satisfactory
completion of such investigation and inquiry into the affairs of
the Company as Xxxxxx xxxxx appropriate under the circumstances and
to the receipt of all internal approvals of Xxxxxx in connection
with the transaction. The Company expressly acknowledges and agrees
that Xxxxxx’x involvement in an Offering is strictly on a
reasonable best efforts basis and that the consummation of an
Offering will be subject to, among other things, market conditions.
The execution of this Agreement does not constitute a commitment by
Xxxxxx to purchase the Securities and does not ensure a successful
Offering of the Securities or the success of Xxxxxx with respect to
securing any other financing on behalf of the Company. Xxxxxx may
retain other brokers, dealers, agents or underwriters on its behalf
in connection with an Offering.
A. Compensation;
Reimbursement. At the closing of each Offering (each, a
“Closing”), the Company
shall compensate Xxxxxx as follows:
1. Cash Fee. The Company shall pay to
Rodman a cash fee, or as to an underwritten Offering an underwriter
discount, equal to 7.0% of the aggregate gross proceeds raised in
each Offering.
2. Warrant Coverage. The Company shall
issue to Xxxxxx or its designees at each Closing, warrants (the
“Xxxxxx
Warrants”) to purchase that number of shares of common
stock of the Company equal to 5% of the aggregate number of shares
of Common Stock placed in each Offering (and if the Securities are
convertible or include a “greenshoe” or
“additional investment” option component, such number
of shares of Common Stock underlying such Securities or options,
with the warrant issuable upon conversion of the Securities or the
exercise of the option). If the Securities included in an Offering
are non-convertible, the Xxxxxx Warrants shall be determined by
dividing the gross proceeds raised in such Offering divided by the
then market price of the Common Stock. The Xxxxxx Warrants shall
have the same terms as the warrants issued to investors in the
applicable Offering, except that such Xxxxxx Warrant shall have an
exercise price equal to 125% of the public offering price per share
in the applicable Offering. If no warrants are issued to investors
in an Offering, the Xxxxxx Warrants shall be in a customary form
reasonably acceptable to Xxxxxx, have a term of 5 years and an
exercise price equal to 125% of the then market price of the Common
Stock.
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3. Expense
Allowance. Out of the proceeds of each Closing, the Company
also agrees to pay Xxxxxx (a) up to $5,000 for out-of-pocket
expenses; plus (b) up to $25,000 for non-accountable expenses; plus
the additional reimbursable amount payable by the Company pursuant
to Section D.3 below; provided, however, that such reimbursement
amount in no way limits or impairs the indemnification and
contribution provisions of this Agreement.
4. Right
of First Refusal. If, from the date hereof until the
12-month anniversary following consummation of each Offering, the
Company or any of its subsidiaries (a) decides to dispose of or
acquire business units or acquire any of its outstanding securities
or make any exchange or tender offer or enter into a merger,
consolidation or other business combination or any
recapitalization, reorganization, restructuring or other similar
transaction, including, without limitation, an extraordinary
dividend or distributions or a spin-off or split-off, and the
Company decides to retain a financial advisor for such transaction,
Xxxxxx (or any affiliate designated by Xxxxxx) shall have the right
to act as the Company’s exclusive financial advisor for any
such transaction; or (b) decides to finance or refinance any
indebtedness using a manager or agent, Xxxxxx (or any affiliate
designated by Xxxxxx) shall have the right to act as lead manager,
lead placement agent or lead agent with respect to such financing
or refinancing; or (c) decides to raise funds by means of a public
offering or a private placement of equity or debt securities using
an underwriter or placement agent, Xxxxxx (or any affiliate
designated by Xxxxxx) shall have the right to act as lead
underwriter or lead placement agent for such financing. If Xxxxxx
or one of its affiliates decides to accept any such engagement, the
agreement governing such engagement will contain, among other
things, provisions for customary fees for transactions of similar
size and nature and the provisions of this Agreement, including
indemnification, which are appropriate to such a transaction. If
Xxxxxx should decline such retention or fails to respond within 5
business days’ notice of the Company, the Company shall have
no further obligations to Xxxxxx under this Section 4 as to such
financing.
B. Term and Termination of Engagement;
Exclusivity. The term of Xxxxxx’x exclusive engagement
will begin on the date hereof and fifteen (15) days thereafter (the
“Term”). Notwithstanding
anything to the contrary contained herein, the Company agrees that
the provisions relating to the payment of fees, reimbursement of
expenses, right of first refusal, indemnification and contribution,
confidentiality, conflicts, independent contractor and waiver of
the right to trial by jury will survive any termination of this
Agreement. During Xxxxxx’x engagement hereunder: (i) the
Company will not, and will not permit its representatives to, other
than in coordination with Xxxxxx, contact or solicit institutions,
corporations or other entities or individuals as potential
purchasers of the Securities and (ii) the Company will not pursue
any financing transaction which would be in lieu of a Offering.
Furthermore, the Company agrees that during Xxxxxx’x
engagement hereunder, all inquiries, whether direct or indirect,
from prospective investors will be referred to Xxxxxx and will be
deemed to have been contacted by Xxxxxx in connection with an
Offering. Additionally, except as set forth hereunder, the Company
represents, warrants and covenants that no brokerage or
finder’s fees or commissions are or will be payable by the
Company or any subsidiary of the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker,
bank or other third-party with respect to any
Offering.
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C. Information;
Reliance. The Company shall furnish, or cause to be
furnished, to Xxxxxx all information requested by Xxxxxx for the
purpose of rendering services hereunder and conducting due
diligence (all such information being the “Information”). In
addition, the Company agrees to make available to Xxxxxx upon
request from time to time the officers, directors, accountants,
counsel and other advisors of the Company. The Company recognizes
and confirms that Xxxxxx (a) will use and rely on the Information,
including any documents provided to investors in each Offering (the
“Offering
Documents” which shall include any Purchase Agreements
(as defined below)), and on information available from generally
recognized public sources in performing the services contemplated
by this Agreement without having independently verified the same;
(b) does not assume responsibility for the accuracy or completeness
of the Offering Documents or the Information and such other
information; and (c) will not make an appraisal of any of the
assets or liabilities of the Company. Upon reasonable request, the
Company will meet with Xxxxxx or its representatives to discuss all
information relevant for disclosure in the Offering Documents and
will cooperate in any investigation undertaken by Xxxxxx thereof,
including any document included or incorporated by reference
therein. At each Offering, at the request of Xxxxxx, the Company
shall deliver such legal letters (including, without limitation,
negative assurance letter), opinions, comfort letters and
officer’s certificates, all in form and substance
satisfactory to Xxxxxx and its counsel as is customary for such
Offering. Xxxxxx shall be a third party beneficiary of any
representations, warranties, covenants and closing conditions made
by the Company in any Offering Documents, including
representations, warranties, covenants and closing conditions made
to any investor in an Offering.
D. Related
Agreements. At each Offering, the Company shall enter into
the following additional agreements:
1. Underwritten
Offering. If an Offering is an underwritten Offering, the
Company and Xxxxxx shall enter into a customary underwriting
agreement in form and substance satisfactory to Xxxxxx and its
counsel.
2. Best
Efforts Offering. If an Offering is on a best efforts basis,
the sale of Securities to the investors in the Offering will be
evidenced by a purchase agreement (“Purchase Agreement”)
between the Company and such investors in a form reasonably
satisfactory to the Company and Xxxxxx. Prior to the signing of any
Purchase Agreement, officers of the Company with responsibility for
financial affairs will be available to answer inquiries from
prospective investors.
3. Escrow
and Settlement. In respect of each Offering, the Company and
Xxxxxx shall enter into an escrow agreement with a third party
escrow agent, which may also be Xxxxxx’x clearing agent,
pursuant to which Xxxxxx’x compensation and expenses shall be
paid from the gross proceeds of the Securities sold. If the
Offering is settled in whole or in part via delivery versus payment
(“DVP”), Xxxxxx shall
arrange for its clearing agent to provide the funds to facilitate
such settlement. The Company shall bear the cost of the escrow
agent and shall reimburse Xxxxxx for the actual out-of-pocket cost
of such clearing agent settlement and financing, if any, which cost
shall not exceed $10,000.
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4. FINRA
Amendments. Notwithstanding anything herein to the contrary,
in the event that Xxxxxx determines that any of the terms provided
for hereunder shall not comply with a FINRA rule, including but not
limited to FINRA Rule 5110, then the Company shall agree to amend
this Agreement (or include such revisions in the final
underwriting) in writing upon the request of Xxxxxx to comply with
any such rules; provided that any such amendments shall not provide
for terms that are less favorable to the Company than are reflected
in this Agreement.
E. Confidentiality.
In the event of the consummation or public announcement of any
Offering, Xxxxxx shall have the right to disclose its participation
in such Offering, including, without limitation, the Offering at
its cost of “tombstone” advertisements in financial and
other newspapers and journals.
F. Indemnity.
1. In
connection with the Company’s engagement of Xxxxxx as
Offering agent, the Company hereby agrees to indemnify and hold
harmless Xxxxxx and its affiliates, and the respective controlling
persons, directors, officers, members, shareholders, agents and
employees of any of the foregoing (collectively the
“Indemnified
Persons”), from and against any and all claims,
actions, suits, proceedings (including those of shareholders),
damages, liabilities and expenses incurred by any of them
(including the reasonable fees and expenses of counsel), as
incurred, (collectively a “Claim”), that are (A)
related to or arise out of (i) any actions taken or omitted to be
taken (including any untrue statements made or any statements
omitted to be made) by the Company, or (ii) any actions taken or
omitted to be taken by any Indemnified Person in connection with
the Company’s engagement of Xxxxxx in reliance upon any
actions taken or omitted to be taken by the Company referenced in
clause (i) above, or (B) otherwise relate to or arise out of
Xxxxxx’x activities on the Company’s behalf under
Xxxxxx’x engagement, and the Company shall reimburse any
Indemnified Person for all expenses (including the reasonable fees
and expenses of counsel) as incurred by such Indemnified Person in
connection with investigating, preparing or defending any such
claim, action, suit or proceeding, whether or not in connection
with pending or threatened litigation in which any Indemnified
Person is a party. The Company will not, however, be responsible
for any Claim that is finally judicially determined to have
resulted from the gross negligence or willful misconduct of any
person seeking indemnification for such Claim. The Company further
agrees that no Indemnified Person shall have any liability to the
Company for or in connection with the Company’s engagement of
Xxxxxx except for any Claim incurred by the Company as a result of
such Indemnified Person’s gross negligence or willful
misconduct.
2. The
Company further agrees that it will not, without the prior written
consent of Rodman, settle, compromise or consent to the entry of
any judgment in any pending or threatened Claim in respect of which
indemnification may be sought hereunder (whether or not any
Indemnified Person is an actual or potential party to such Claim),
unless such settlement, compromise or consent includes an
unconditional, irrevocable release of each Indemnified Person from
any and all liability arising out of such Claim.
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3. Promptly
upon receipt by an Indemnified Person of notice of any complaint or
the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person
shall notify the Company in writing of such complaint or of such
assertion or institution but failure to so notify the Company shall
not relieve the Company from any obligation it may have hereunder,
except and only to the extent such failure results in the
forfeiture by the Company of substantial rights and defenses. If
the Company so elects or is requested by such Indemnified Person,
the Company will assume the defense of such Claim, including the
employment of counsel reasonably satisfactory to such Indemnified
Person and the payment of the fees and expenses of such counsel. In
the event, however, that legal counsel to such Indemnified Person
reasonably determines that having common counsel would present such
counsel with a conflict of interest or if the defendant in, or
target of, any such Claim, includes an Indemnified Person and the
Company, and legal counsel to such Indemnified Person reasonably
concludes that there may be legal defenses available to it or other
Indemnified Persons different from or in addition to those
available to the Company, then such Indemnified Person may employ
its own separate counsel to represent or defend him, her or it in
any such Claim and the Company shall pay the reasonable fees and
expenses of such counsel. Notwithstanding anything herein to the
contrary, if the Company fails timely or diligently to defend,
contest, or otherwise protect against any Claim, the relevant
Indemnified Party shall have the right, but not the obligation, to
defend, contest, compromise, settle, assert crossclaims, or
counterclaims or otherwise protect against the same, and shall be
fully indemnified by the Company, including without limitation, for
the reasonable fees and expenses of its counsel and all amounts
paid as a result of such Claim or the compromise or settlement
thereof. Notwithstanding the above, the Company will only be liable
for the fees and expenses of one law firm for all Indemnified
Persons. In addition, with respect to any Claim in which the
Company assumes the defense, the Indemnified Person shall have the
right to participate in such Claim and to retain his, her or its
own counsel therefor at his, her or its own expense.
4. The
Company agrees that if any indemnity sought by an Indemnified
Person hereunder is held by a court to be unavailable for any
reason then (whether or not Xxxxxx is the Indemnified Person), the
Company and Xxxxxx shall contribute to the Claim for which such
indemnity is held unavailable in such proportion as is appropriate
to reflect the relative benefits to the Company, on the one hand,
and Xxxxxx on the other, in connection with Xxxxxx’x
engagement referred to above, subject to the limitation that in no
event shall the amount of Xxxxxx’x contribution to such Claim
exceed the amount of fees actually received by Xxxxxx from the
Company pursuant to Xxxxxx’x engagement. The Company hereby
agrees that the relative benefits to the Company, on the one hand,
and Xxxxxx on the other, with respect to Xxxxxx’x engagement
shall be deemed to be in the same proportion as (a) the total value
paid or proposed to be paid or received by the Company pursuant to
the applicable Offering (whether or not consummated) for which
Xxxxxx is engaged to render services bears to (b) the fee paid or
proposed to be paid to Xxxxxx in connection with such
engagement.
5. The Company’s
indemnity, reimbursement and contribution obligations under this
Agreement (a) shall be in addition to, and shall in no way limit or
otherwise adversely affect any rights that any Indemnified Party
may have at law or at equity and (b) shall be effective whether or
not the Company is at fault in any way.
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G. Limitation
of Engagement to the Company. The Company acknowledges that
Xxxxxx has been retained only by the Company, that Xxxxxx is
providing services hereunder as an independent contractor (and not
in any fiduciary or agency capacity) and that the Company’s
engagement of Xxxxxx is not deemed to be on behalf of, and is not
intended to confer rights upon, any shareholder, owner or partner
of the Company or any other person not a party hereto as against
Xxxxxx or any of its affiliates, or any of its or their respective
officers, directors, controlling persons (within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)),
employees or agents. Unless otherwise expressly agreed in writing
by Xxxxxx, no one other than the Company is authorized to rely upon
this Agreement or any other statements or conduct of Xxxxxx, and no
one other than the Company is intended to be a beneficiary of this
Agreement. The Company acknowledges that any recommendation or
advice, written or oral, given by Xxxxxx to the Company in
connection with Xxxxxx’x engagement is intended solely for
the benefit and use of the Company’s management and directors
in considering a possible Offering, and any such recommendation or
advice is not on behalf of, and shall not confer any rights or
remedies upon, any other person or be used or relied upon for any
other purpose. Xxxxxx shall not have the authority to make any
commitment binding on the Company. The Company, in its sole
discretion, shall have the right to reject any investor introduced
to it by Xxxxxx.
H. Limitation
of Xxxxxx’x Liability to the Company. Xxxxxx and the
Company further agree that neither Xxxxxx nor any of its affiliates
or any of its their respective officers, directors, controlling
persons (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act), employees or agents shall have any
liability to the Company, its security holders or creditors, or any
person asserting claims on behalf of or in the right of the Company
(whether direct or indirect, in contract, tort, for an act of
negligence or otherwise) for any losses, fees, damages,
liabilities, costs, expenses or equitable relief arising out of or
relating to this Agreement or the services rendered hereunder,
except for losses, fees, damages, liabilities, costs or expenses
that arise out of or are based on any action of or failure to act
by Xxxxxx and that are finally judicially determined to have
resulted solely from the gross negligence or willful misconduct of
Xxxxxx.
I. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to
agreements made and to be fully performed therein. Any disputes
that arise under this Agreement, even after the termination of this
Agreement, will be heard only in the state or federal courts
located in the City of New York, State of New York. The parties
hereto expressly agree to submit themselves to the jurisdiction of
the foregoing courts in the City of New York, State of New York.
The parties hereto expressly waive any rights they may have to
contest the jurisdiction, venue or authority of any court sitting
in the City and State of New York. In the event Xxxxxx or any
Indemnified Person is successful in any action, or suit against the
Company, arising out of or relating to this Agreement, the final
judgment or award entered shall be entitled to have and recover
from the Company the costs and expenses incurred in connection
therewith, including its reasonable attorneys’ fees. Any
rights to trial by jury with respect to any such action, proceeding
or suit are hereby waived by Xxxxxx and the Company.
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J. Notices.
All notices hereunder will be in writing and sent by certified
mail, hand delivery, overnight delivery or fax, if sent to Xxxxxx,
at the address set forth on the first page hereof, e-mail:
xxxxxxx@xxxx.xxx, Attention: Head of Investment Banking, and if
sent to the Company, to the address set forth on the first page
hereof, e-mail: xxxxxxxxx@xxx-xxx.xxx Attention: Chief Executive
Officer. Notices sent by certified mail shall be deemed received
five days thereafter, notices sent by hand delivery or overnight
delivery shall be deemed received on the date of the relevant
written record of receipt, notices delivered by fax shall be deemed
received as of the date and time printed thereon by the fax machine
and notices sent by e-mail shall be deemed received as of the date
and time they were sent.
K. Conflicts.
The Company acknowledges that Xxxxxx and its affiliates may have
and may continue to have investment banking and other relationships
with parties other than the Company pursuant to which Xxxxxx may
acquire information of interest to the Company. Xxxxxx shall have
no obligation to disclose such information to the Company or to use
such information in connection with any contemplated
transaction.
L. Anti-Money
Laundering. To help the United States government fight the
funding of terrorism and money laundering, the federal laws of the
United States requires all financial institutions to obtain, verify
and record information that identifies each person with whom they
do business. This means we must ask you for certain identifying
information, including a government-issued identification number
(e.g., a U.S. taxpayer identification number) and such other
information or documents that we consider appropriate to verify
your identity, such as certified articles of incorporation, a
government-issued business license, a partnership agreement or a
trust instrument.
M. Miscellaneous.
The Company represents and warrants that it has all requisite power
and authority to enter into and carry out the terms and provisions
of this Agreement and the execution, delivery and performance of
this Agreement does not breach or conflict with any agreement,
document or instrument to which it is a party or bound. This
Agreement shall not be modified or amended except in writing signed
by Xxxxxx and the Company. This Agreement shall be binding upon and
inure to the benefit of both Xxxxxx and the Company and their
respective assigns, successors, and legal representatives. This
Agreement constitutes the entire agreement of Xxxxxx and the
Company with respect to this Offering and supersedes any prior
agreements with respect to the subject matter hereof. If any
provision of this Agreement is determined to be invalid or
unenforceable in any respect, such determination will not affect
such provision in any other respect, and the remainder of the
Agreement shall remain in full force and effect. This Agreement may
be executed in counterparts (including facsimile counterparts),
each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
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In
acknowledgment that the foregoing correctly sets forth the
understanding reached by Xxxxxx and the Company, please sign in the
space provided below, whereupon this letter shall constitute a
binding Agreement as of the date indicated above.
Very
truly yours,
XXXXXX
& XXXXXXX, A UNIT OF X.X. XXXXXXXXXX & CO.,
LLC
By: /s/ Xxxxxx X.
Xxxxxxx
Name:
Xxxxxx X. Xxxxxxx
Title:
Chief Operating Officer
Accepted
and Agreed:
CEL-SCI CORPORATION
By: /s/ Xxxxx
Xxxxxxx
Name:
Xxxxx Xxxxxxx
Title:
CEO
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