STRICTLY CONFIDENTIAL CEL-SCI Corporation
Exhibit 1.1
June
26, 2018
STRICTLY CONFIDENTIAL
CEL-SCI
Corporation
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0000
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 X.X.
Xxxxxxxxxx & Co., LLC (“Xxxxxxxxxx”), that
Xxxxxxxxxx shall serve as the exclusive agent, advisor or
underwriter in any offering (each, an “Offering”) of securities
of the Company (the “Securities”) during the
Term (as hereinafter defined) 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 Xxxxxxxxxx and nothing herein implies that
Xxxxxxxxxx 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
Xxxxxxxxxx’x assistance in an Offering will be subject to the
satisfactory completion of such investigation and inquiry into the
affairs of the Company as Xxxxxxxxxx deems appropriate under the
circumstances and to the receipt of all internal approvals of
Xxxxxxxxxx in connection with the transaction. The Company
expressly acknowledges and agrees that Xxxxxxxxxx’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 Xxxxxxxxxx to
purchase the Securities and does not ensure a successful Offering
of the Securities or the success of Xxxxxxxxxx with respect to
securing any other financing on behalf of the Company. Xxxxxxxxxx
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 Xxxxxxxxxx as
follows:
1.
Cash Fee. The Company shall pay to Xxxxxxxxxx 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 Xxxxxxxxxx or its designees at each Closing, warrants (the
“Xxxxxxxxxx
Warrants”) to purchase
that number of shares of common stock of the Company equal to 5.0%
of the aggregate number of shares of common stock placed in each
Offering (and if an Offering includes a “greenshoe” or
“additional investment” option component, such number
of shares of common stock underlying such additional option
component, with the Xxxxxxxxxx Warrants issuable upon the exercise
of such option). If the Securities included in an Offering are
convertible, the Xxxxxxxxxx Warrants shall be determined by
dividing the gross proceeds raised in such Offering divided by the
Offering Price (as defined hereunder). The Xxxxxxxxxx Warrants
shall have the same terms as the warrants issued to investors in
the applicable Offering, except that such Xxxxxxxxxx Warrants shall
have an exercise price equal to 125% of the offering price per
share (or unit, if applicable) in the applicable Offering and if
such offering price is not available, the market price of the
common stock on the date an Offering is commenced (such price, the
“Offering
Price”). If no warrants
are issued to investors in an Offering, the Xxxxxxxxxx Warrants
shall be in a customary form reasonably acceptable to Xxxxxxxxxx,
have a term of five (5) years and an exercise price equal to 125%
of the Offering Price.
3.
Expense
Allowance. Out of the proceeds
of each Closing, the Company also agrees to pay Xxxxxxxxxx (a)
$35,000 for non-accountable expenses; (b) up to $5,000 for
out-of-pocket expenses; plus the additional reimbursable amount
payable by the Company pursuant to Paragraph D.3 hereunder;
provided, however, that such reimbursement amount in no way limits
or impairs the indemnification and contribution provisions of this
Agreement.
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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, Xxxxxxxxxx (or any affiliate designated by Xxxxxxxxxx)
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,
Xxxxxxxxxx (or any affiliate designated by Xxxxxxxxxx) shall have
the right to act as sole book-runner, sole manager, sole placement
agent or sole 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, Xxxxxxxxxx (or any affiliate designated by
Xxxxxxxxxx) shall have the right to act as sole book-running
manager, sole underwriter or sole placement agent for such
financing. If Xxxxxxxxxx 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 Xxxxxxxxxx should decline such retention or fails
to respond within five (5) business days’ notive of the
Company, the Company shall have no further obligations to
Xxxxxxxxxx pursuant to this Paragraph A.4.
B. Term
and Termination of Engagement; Exclusivity. The term of Xxxxxxxxxx’x exclusive
engagement will begin on the date hereof and end sixty (60) 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 or expiration of this Agreement. Notwithstanding
anything to the contrary contained herein, the Company has the
right to terminate the Agreement for cause in compliance with FINRA
Rule 5110(f)(2)(D)(ii). The exercise of such right of termination
for cause eliminates the Company’s obligations with respect
to the provisions relating to the right of first refusal.
Notwithstanding anything to the contrary contained in this
Agreement, in the event that an Offering pursuant to this Agreement
shall not be carried out for any reason whatsoever during the Term,
the Company shall be obligated to pay to Xxxxxxxxxx its actual and
accountable out-of-pocket expenses related to an Offering
(including the fees and disbursements of Xxxxxxxxxx’x legal
counsel). During Xxxxxxxxxx’x engagement hereunder: (i) the
Company will not, and will not permit its representatives to, other
than in coordination with Xxxxxxxxxx, 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 an
Offering. Furthermore, the Company agrees that during
Xxxxxxxxxx’x engagement hereunder, all inquiries, whether
direct or indirect, from prospective investors will be referred to
Xxxxxxxxxx and will be deemed to have been contacted by Xxxxxxxxxx
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.
C. Information;
Reliance. The Company shall
furnish, or cause to be furnished, to Xxxxxxxxxx all information
requested by Xxxxxxxxxx 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 Xxxxxxxxxx
upon request from time to time the officers, directors,
accountants, counsel and other advisors of the Company. The Company
recognizes and confirms that Xxxxxxxxxx (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 Agreement (as defined hereunder), 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
Xxxxxxxxxx or its representatives to discuss all information
relevant for disclosure in the Offering Documents and will
cooperate in any investigation undertaken by Xxxxxxxxxx thereof,
including any document included or incorporated by reference
therein. At each Offering, at the request of Xxxxxxxxxx, the
Company shall deliver such legal letters (including, without
limitation, negative assurance letters), opinions, comfort letters,
officers’ and secretary certificates and good standing
certificates, all in form and substance satisfactory to Xxxxxxxxxx
and its counsel as is customary for such Offering. Xxxxxxxxxx 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 Xxxxxxxxxx shall enter into
a customary underwriting agreement in form and substance
satisfactory to Xxxxxxxxxx and its counsel.
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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 Xxxxxxxxxx. Xxxxxxxxxx shall be a third party
beneficiary with respect to the representations and warranties
included in the Purchase Agreement. 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 Xxxxxxxxxx shall enter into an escrow
agreement with a third party escrow agent, which may also be
Xxxxxxxxxx’x clearing agent, pursuant to which
Xxxxxxxxxx’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”), Xxxxxxxxxx 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 Xxxxxxxxxx for the actual out-of-pocket cost of such
clearing agent settlement and financing, if any, which cost shall
not exceed $10,000.
4.
FINRA
Amendments. Notwithstanding
anything herein to the contrary, in the event that Xxxxxxxxxx
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 agreement) in
writing upon the request of Xxxxxxxxxx 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, Xxxxxxxxxx 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 Xxxxxxxxxx hereunder, the Company hereby agrees to indemnify and
hold harmless Xxxxxxxxxx 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, whether or not the Company is a party
thereto (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 Xxxxxxxxxx, or
(B) otherwise relate to or arise out of Xxxxxxxxxx’x
activities on the Company’s behalf under Xxxxxxxxxx’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 Xxxxxxxxxx
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 Wainwright, 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 is requested by
such Indemnified Person, the Company will assume the defense of
such Claim, including the employment of counsel for such
Indemnified Person and the payment of the fees and expenses of such
counsel, provided, however, that such counsel shall be
satisfactory to the Indemnified Party and provided further that if
the legal counsel to such Indemnified Person reasonably determines
that the use of counsel chosen by the Company to represent the
Indemnified Party 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,
such Indemnified Person will employ its own separate counsel
(including local counsel, if necessary) 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. If such Indemnified
Person does not request that the Company assume the defense of such
Claim, such Indemnified Person will employ its own separate counsel
(including local counsel, if necessary) 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 Person 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 therefor,
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 (including local counsel, if
necessary). 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 Xxxxxxxxxx is the Indemnified Person),
the Company and Xxxxxxxxxx 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 Xxxxxxxxxx on the other, in connection with
Xxxxxxxxxx’x engagement referred to above, subject to the
limitation that in no event shall the amount of Xxxxxxxxxx’x
contribution to such Claim exceed the amount of fees actually
received by Xxxxxxxxxx from the Company pursuant to
Xxxxxxxxxx’x engagement. The Company hereby agrees that the
relative benefits to the Company, on the one hand, and Xxxxxxxxxx
on the other, with respect to Xxxxxxxxxx’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
Xxxxxxxxxx is engaged to render services bears to (b) the fee paid
or proposed to be paid to Xxxxxxxxxx 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 Person may have at law or at equity and (b) shall
be effective whether or not the Company is at fault in any
way.
G. Limitation
of Engagement to the Company.
The Company acknowledges that Xxxxxxxxxx has been retained only by
the Company, that Xxxxxxxxxx is providing services hereunder as an
independent contractor (and not in any fiduciary or agency
capacity) and that the Company’s engagement of Xxxxxxxxxx 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 Xxxxxxxxxx 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 Xxxxxxxxxx,
no one other than the Company is authorized to rely upon this
Agreement or any other statements or conduct of Xxxxxxxxxx, 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 Xxxxxxxxxx to the Company in
connection with Xxxxxxxxxx’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. Xxxxxxxxxx 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 Xxxxxxxxxx.
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H. Limitation
of Xxxxxxxxxx’x Liability to the Company. Xxxxxxxxxx and the Company further agree that
neither Xxxxxxxxxx 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 Xxxxxxxxxx and that
are finally judicially determined to have resulted solely from the
gross negligence or willful misconduct of
Xxxxxxxxxx.
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
Xxxxxxxxxx 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 Xxxxxxxxxx and the
Company.
J. Notices.
All notices hereunder will be in writing and sent by certified
mail, hand delivery, overnight delivery or fax, if sent to
Xxxxxxxxxx, at the address set forth on the first page hereof,
e-mail: xxxxxxx@xxxxx.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 Xxxxxxxxxx and its affiliates may
have and may continue to have investment banking and other
relationships with parties other than the Company pursuant to which
Xxxxxxxxxx may acquire information of interest to the Company.
Xxxxxxxxxx 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 require all
financial institutions to obtain, verify and record information
that identifies each person with whom they do business. This means
Xxxxxxxxxx must ask the Company 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 Xxxxxxxxxx considers appropriate to
verify the Company’s 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 Xxxxxxxxxx and the Company. This Agreement shall be binding upon
and inure to the benefit of both Xxxxxxxxxx and the Company and
their respective assigns, successors, and legal representatives.
This Agreement constitutes the entire agreement of Xxxxxxxxxx and
the Company with respect to the subject matter hereof 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 or
electronic 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 Xxxxxxxxxx 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,
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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